New Highs In Coffee — But Now What?

Technical Outlook

BONDS (MAR) 01/27/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 111.27 and then again at 112.21, while swing support
hits at 110.18 and below there at 110.03. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
next downside target is 110.03.

T-NOTES(MAR) Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 112.31. The market’s close
below the pivot swing number is a mildly negative setup. The major trend is down
with the cross over back below the 40-day moving average. Near-term resistance
for the T-Notes is at 113.32 and then again at 114.15, while swing support hits
at 113.08 and below there at 112.31. The market’s short-term trend is negative
as the close remains below the 9-day moving average.

STOCK INDICES RECAP

1/26/2004

Good earnings news and gains in drug maker Merck
after a bullish newspaper article over the weekend boosted the Dow gave a
general lift to stock indexes. The strong report on Dec existing home sales
+6.9% suggest the housing sector continues to underpin the economy and could
help raise 4th quarter GDP. With the Fed likely to keep rates low and the
economy and corporate earnings outlook on the upswing, March S&P could see a
price extension higher.

Technical Outlook

S&P500 (MAR) 01/27/04: With the close over the
1st swing resistance number, the market is in a moderately positive position.
Underlying support comes in at 1146.65 and 1135.13, with overhead resistance at
1162.35 and 1166.53. The market’s short-term trend is positive on a close above
the 9-day moving average. The daily stochastics gave a bullish indicator with a
crossover up. The near-term upside objective is at 1166.53. With a reading over
70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract
high on the rally. A bullish signal was given with an upside crossover of the
daily stochastics. The next upside objective is 1167.38. The market setup is
supportive for early gains with the close over the 1st swing resistance.
Near-term resistance for the S&P Mini is at 1162.75 and then again at 1167.38,
while swing support hits at 1145.75 and below there at 1133.38. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. A positive setup
occurred with the close over the 1st swing resistance. The market should run
into resistance at 1570.25 and above there at 1579.38 with support at 1537.75
and 1514.38. Daily stochastics turning lower from overbought levels is bearish
and will tend to reinforce a downside break especially if near-term support is
penetrated. The next downside target is 1514.4.

MINI DOW (MAR) A new contract high was made on
the rally. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market should run into resistance at
10759 and above there at 10797 with support at 10608 and 10495. The daily
stochastics have crossed over up which is a bullish indication. The next upside
target is 10797. A positive setup occurred with the close over the 1st swing
resistance. Short-term indicators suggest buying dips today.

CURRENCY MARKET RECAP

1/26/2004

Apparently, more talk from Euro-zone officials on
the subject of limiting the Euro’s rise was enough to push the Euro currency
down against the Dollar. While we think that an ECB rate cut is unlikely since
there is not enough consensus among European officials and since the strong Euro
does not appear to be holding back growth, a close in the March Euro under $1.25
does some technical damage to the chart. Traders might be using the disharmony
among European officials as an excuse to book profits on long Euro positions. If
the March dollar moves through 87.69, another wave of short covering is likely.

Technical Outlook

YEN (MAR): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. It is a slightly
negative indicator that the close was lower than the pivot swing number. Swing
resistance is targeted at 94.46 and above there at 94.82, with the yen finding
support around 93.93 and below there at 93.76. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 94.82.

EURO (MAR): Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 1.2332. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.2332, with overhead resistance at 1.2642. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The gap
down on the day session chart is bearish with more selling pressure possible
today.

PRECIOUS METALS RECAP

1/26/2004

The strength in the Dollar against the Euro
pressured the gold market amid a lack of other fresh news. The possibility of
more central bank gold sales this year is another negative. April gold has
support at 406.30. March Silver traded sideways on a lack of market moving news
with the market stuck in a range between 641 and 620.

Technical Outlook

SILVER (MAR): It is a slightly negative indicator
that the close was lower than the pivot swing number. Initial support for silver
is at 627.2 and below there at 623.6 with resistance likely at 632.4 and 635.2.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 623.6.

GOLD (APR): Support for gold today comes in near
405.60, while resistance is pegged at 411.20. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 405.60. The market’s close below the pivot swing number is a mildly
negative setup. The market’s short-term trend is negative as the close remains
below the 9-day moving average.

COPPER MARKET RECAP

1/26/2004

March copper appears to be losing upward momentum
given the market’s technical divergence and a pull back to fill the gap between
110.45 and 109.70 is possible. Although the fundamentals are bullish with stocks
continuing to tighten, the physical market is quiet with the Chinese still on
holiday. The stronger dollar is also a minor negative.

ENERGY MARKET RECAP

1/26/2004

The energy complex broke hard on Monday as the
forecast for below normal temperatures is expected to ease by the end of the
week. Market sentiment is now leaning towards ideas that heating oil supplies
will be adequate to meet demand this winter. As a result March heating oil and
March natural gas markets are leading the complex lower especially since natural
gas stocks are significantly above year earlier levels. March crude oil may find
support at the $34 level since supplies are tight and it is unclear when Iraq
exports through the Turkish pipeline will resume.

Technical Outlook

CRUDE OIL (MAR): The market’s close below the 1st
swing support number suggests a moderately negative setup for today. Support for
crude is keyed on 34.21 and below there at 33.92, with resistance pegged at
34.74 and 34.98. The market’s short-term trend is positive on a close above the
9-day moving average. The daily stochastics gave a bearish indicator with a
crossover down. Momentum studies are trending lower from high levels which
should accelerate a move lower on a break below the 1st swing support. The next
downside objective is now at 33.92.

UNLEADED GAS (MAR): The daily stochastics have
crossed over down which is a bearish indication. Daily stochastics turning lower
from overbought levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside target is
96.01. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 102.81, while support should be found around
96.01. The gap lower price action on the day session chart is a bearish
indicator for trend. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.

HEATING OIL (MAR):The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 94.21, with resistance is at 100.71. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The daily stochastics gave a bearish indicator with a crossover down.
Momentum studies are trending lower from high levels which should accelerate a
move lower on a break below the 1st swing support. The next downside objective
is now at 94.21. The gap down on the day session chart is bearish with more
selling pressure possible today.

CORN MARKET RECAP

1/26/2004

The corn market pushed sharply higher and to new
contract highs due to poor weather for filling the crop in Argentina and
continued strong buying from funds and speculators. Funds were noted buyers of
near 5000 contracts. Weekly export inspections came in at 35.4 million bushels
as compared with trade expectations for 33-38 million. Cumulative shipments have
now reached 745.2 million bushels this season as compared with just 609.8
million bushels last year at this time. The exports are running 22.2% above last
years pace with the USDA projecting an increase of 24% from last year. Nearby
corn futures are just 4 cents under the September, 2002 highs which are the
highest since November of 1997.

Technical Outlook

CORN (MAR) 01/27/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 284 . The market’s close above the 2nd swing resistance number
is a bullish indication. Market resistance comes in at 284 today, with support
at 277 . The market’s short-term trend is positive on a close above the 9-day
moving average. With a reading over 70, the 9-day RSI is approaching overbought
levels. The rally brought the market to a new contract high.

 ^next^

SOY COMPLEX RECAP

1/26/2004

May soybeans closed 10 1/4 higher on the session
and scored a new contract high which alleviates the technical influence of
Friday’s reversal. Weather in Argentina remains as the primary bullish force for
the soybean complex. In addition, the Asian bird flu situation has yet to hurt
feed demand but could result in a jump in chicken exports to Japan and other
Asian customers to fill the void of the Thailand bird flu import bans. Weekly
export inspections came in at 29.2 million bushels as compared with trade
expectations for 25-30 million. Cumulative shipments have now reached 592.3
million bushels this season as compared with just 571.6 million bushels last
year at this time. Keep in mind, the USDA projects a drop of 13.8% from last
year. Wednesday morning’s Census Bureau monthly crush report is expected to show
crush near 143.3 million bushels for December with oil stocks near 1.616 billion
pounds as compared with 2.4 billion pounds last year at this time.

Technical Outlook

SOYBEANS (MAR) 01/27/04: With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
next area of resistance is around 852 1/2 and 858 , while 1st support hits today
at 842 1/2 and below there at 838 . The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The daily stochastics
have crossed over up which is a bullish indication. The next upside target is
858 . The 9-day RSI over 70 indicates the market is approaching overbought
levels.

MEAL (MAR): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 270.5.
First resistance comes in at 269.1, with support at 265.9. The market’s
short-term trend is positive on a close above the 9-day moving average. It is a
mildly bullish indicator that the market closed over the pivot swing number.
With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (MAR): The market’s close above the
9-day moving average suggests the short-term trend remains positive. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
next downside target is 29.33. A positive setup occurred with the close over the
1st swing resistance. Daily swing resistance is found at 30.11 and above there
at 30.33. Support should be encountered at 29.61 and 29.33.

WHEAT MARKET RECAP

1/26/2004

March wheat closed slightly lower on the session
but more than 6 cents off of the highs of the day as hefty export shipment
numbers were offset by the Egypt tender news and a lack of a cold blast for late
this week. News that Egypt bought 240,000 tons of wheat over the weekend and
just 60,000 from the US helped to pressure the market. The lack of a cold blast
in the forecast for the plains this week added to the long liquidation selling
and so did news that fund traders are holding a near record high net long
position. Weekly export inspections came in at 30.3 million bushels as compared
with trade expectations for 20-25 million. Cumulative shipments have now reached
726.2 million bushels this season as compared with just 585.5 million bushels
last year at this time.

Technical Outlook

WHEAT (MAR) 01/27/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 376 1/2 and below there at 372 1/2, with resistance levels
at 386 and 391 1/2. The moving average crossover down (9 below 18) indicates a
possible developing short-term downtrend. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 372 1/2.

LIVE CATTLE RECAP

1/26/2004

The February cattle were limit-down for the
second session in a row while April futures were sharply lower. Boxed-beef
cut-out values were down $1.36 to $144.69 as compared with $142.99 last week at
this time. The lack of bids in the cash market early this week and the lack of
news which would indicate some let-up in the export ban kept the market in a
long liquidation mode as the trade expects weakness in the cash market ahead due
to a lack of exports.

Technical Outlook

CATTLE (APR) 01/27/04: The daily stochastics have
crossed over down which is a bearish indication. The next downside target is
73.10. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Short-term indicators on the defensive. Consider
selling an intraday bounce. Support should be encountered at 73.50 and below
there at 73.10. Market resistance is at 74.62 and then again at 75.35. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

LEAN HOGS RECAP

1/26/2004

February hogs closed nearly 100 higher on the
session due to improving cash market fundamentals but April closed 60 lower on
the session and down 115 points from the highs of the day. Cash is expected to
be near steady for Tuesday. Ideas that the weather will clear up in North
Carolina soon and that some hogs may be backed-up in the country helped pressure
the April. Slaughter was only 329,000 head as compared with 375,000-390,000
expected due to 3 plants closing in North Carolina from the weather.

Technical Outlook

HOGS (APR) 01/27/04: The market’s close below the
1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 56.97 and 57.87 today, while support is around
55.72 and then 55.37. The daily closing price reversal down puts the market on
the defensive. Daily studies pointing down suggests selling minor rallies. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The major trend is down with the cross over back below the
40-day moving average. Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The next downside
objective is now at 55.37.

COCOA MARKET RECAP

1/26/2004

While March cocoa was able to rebound from early
weakness, a break back towards $1,500 can not be ruled out given the
surprisingly weak US grind number and if calm continues in the Ivory Coast.
Short covering and a lack of origin sales were cited as the main reasons behind
today’s rebound. However, the strong dollar was a limiting factor.

Technical Outlook

COCOA (MAR)01/27/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1636 and above there at 1668 with support at 1572 and 1540. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 1539.50.

COFFEE MARKET RECAP

1/26/2004

May coffee closed sharply higher (up 270) and
nearby futures hit the highest level since October of 2000 with renewed active
buying from fund traders. The Commitment-of-Traders report showed that funds
were net long about 4000-6000 contracts LESS than trade expectations which
prompted the active buying. The lack of selling from Vietnam and slow export
activity from Brazil has provided support. CSCE exchange stocks were up 7416
bags to 4.394 with 58,340 bags pending review.

Technical Outlook

COFFEE (MAR)1/27/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. The
9-day RSI over 70 indicates the market is approaching overbought levels. Studies
are showing positive momentum, but are now in overbought territory so some
caution is warranted. The near-term upside objective is at 80.25.The Coffee
contract should run into resistance at 78.85 and above there at 80.25 with
support at 75.9 and 74.35. The market’s short-term trend is positive on a close
above the 9-day moving average.

SUGAR MARKET RECAP

1/26/2004

The market closed unchanged on the session but
down 12 points from the early highs. Speculative buying supported the move into
the middle of the recent consolidation pattern but producer selling, thought to
be Brazil, helped push the market back down to near unchanged on the session.
Hopes of a pick-up in cash demand helped support the market. Egypt officials
announced a tender for 60,000 tons of raw sugar. China buyers will be back from
Holiday on Wednesday and traders are hopeful of a jump in imports from China
this year to near 1 million tons. Russian buyers are usually most active buyers
in the first quarter. Cash premiums held steady on the week from last weeks
level which was seen as slightly supportive given the increased incentive for
Brazil millers to sell onto the world market.

Technical Outlook

SUGAR (MAR) 01/27/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 5.94, with support found at 5.66. The downside crossover (9 below
18) of the moving averages suggests a developing short-term downtrend. Momentum
studies are trending higher from mid-range which should support a move higher if
resistance levels are penetrated. The near-term upside objective is at 5.94.

COTTON MARKET RECAP

1/26/2004

May cotton closed slightly lower in choppy,
two-sided trade as a lack of new export news and steady cash markets left the
market to absorb some light long liquidation selling. The outside-day down after
hitting 2-months highs is a slightly negative technical development. Trade house
and some producer selling was noted and the market lacked the speculative buying
seen recently. China buyers are not back from holiday until Wednesday and
traders are hopeful to see a jump in export news soon. China has so far bought
3.262 million bales as compared with 658,600 bales last year at this time.

Technical Outlook

COTTON (MAR) 01/27/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. Next resistance area comes in at 76.23 and then again at 76.80,
while support is targeted at 75.05 and 74.44. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 76.80. The downside closing price reversal on the daily
chart is somewhat negative. ORANGE JUICE (MAR)1/27/04 The close below the 1st
swing support could weigh on the market. Orange Juice should run into resistance
at 61.70 and above there at 62.55 with support at 60.50 and 60.15. The 9-day RSI
under 30 indicates the market is approaching oversold levels. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. Momentum studies are declining, but have fallen to oversold levels. The
next downside objective is now at 60.15.