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BOND MARKET RECAP
8/5/2004
September Bonds closed up 0-09 at 109-00. This
was 0-11 up from the low and 0-07 off the high.
September 10 Yr Treasury Notes finished up 0-070
at 111-075, 0-045 off the high and 0-075 up from the low.
The weekly initial and ongoing claims
readings seemed to deflate Treasury prices as some longs took the reading to
mean that the jobs sector was in fact still improving. The fact that Treasury
bonds quickly rejected the negative influence of the initial claims report
highlights the pre-existing bullish stance in the Treasury market into the
monthly payroll report. Many traders think that expectations for the monthly
payroll report have declined to 200,000, while others think that expectations
have been forced even lower by recent employment measures.
Technical Outlook
#BONDS (SEP) 8/6/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 109.12 and then again at 109.19, while swing support hits at 108.25
and below there at 108.13. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Rising stochastics at overbought levels
warrant some caution for bulls. The next upside objective is 109.19.
T-NOTES(SEP) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
111.20. It is a mildly bullish indicator that the market closed over the pivot
swing number. Near-term resistance for the T-Notes is at 111.16 and then again
at 111.20, while swing support hits at 111.04 and below there at 110.28. The
market’s short-term trend is positive on a close above the 9-day moving average.
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STOCK INDICES RECAP
8/5/2004
September S&P finished down 18.4 at 1078.5, 19.5
off the high and 1.3 up from the low.
September S&P E-Mini closed down 18.5 at 1078.5.
This was 1.25 up from the low and 20.25 off the high.
September Dow closed down 172 at 9933. This was 8
up from the low and 192 off the high.
September Dow E-Mini finished down 171 at 9934,
188 off the high and 7 up from the low.
The stock market opened slightly higher but
eventually came under aggressive selling pressure off another sharp rise in
energy prices. The fact that traders were also revising monthly payroll gains
downward also contributed to the liquidation wave which had become rather
aggressive into mid session. With the Russian government withdrawing bank
account access from the troubled Oil Company Yukos it is reasonable to fear at
least temporary supply disruptions from Russia. If the economy is thought to be
weakening and oil prices are rising even further that just doesn’t bode well for
future profits. The stock market might also have seen some pressure off Kerry
proposals to roll back tax cuts.
Technical Outlook
#S&P500 (SEP) 8/6/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Underlying support comes in at 1068.10 and 1062.25, with overhead resistance at
1088.90 and 1103.85. The close below the 9-day moving average is a negative
short-term indicator for trend. A crossover down in the daily stochastics is a
bearish signal. The next downside objective is now at 1062.25.
S&P E-Mini (SEP): The daily stochastics have
crossed over down which is a bearish indication. The next downside target is
1062.25. The close below the 2nd swing support number puts the market on the
defensive. Near-term resistance for the S&P Mini is at 1090.25 and then again at
1105.25, while swing support hits at 1068.75 and below there at 1062.25. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.
NASDAQ (SEP) The market made a new contract low
on the break. A negative signal for trend short-term was given on a close under
the 9-bar moving average. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The market
should run into resistance at 1370.00 and above there at 1393.50 with support at
1338.00 and 1329.50. A bearish signal was triggered on a crossover down in the
daily stochastics. The next downside objective is 1329.50.
MINI DOW (MAR) The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10034 and above there at 10175 with support at 9839 and 9785. A
crossover down in the daily stochastics is a bearish signal. The next downside
target is now at 9785. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness.
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CURRENCY MARKET RECAP
8/5/2004
September US Dollar finished down 5 at 8978, 20
off the high and 19 up from the low.
September Euro finished up 0.23 at 120.56, 0.09
off the high and 0.42 up from the low.
September Euro Dollar closed up 0.01 at 98.09.
This was 0.005 up from the low and 0.01 off the high.
September Canadian Dollar closed down 0.19 at
75.85. This was 0.23 up from the low and 0.13 off the high.
September British Pound finished up 0.1 at
181.89, 0.18 off the high and 0.55 up from the low.
September Swiss closed up 0.12 at 78.5. This was
0.27 up from the low and 0.09 off the high.
September Japanese Yen closed down 0.39 at 89.68.
This was 0.02 up from the low and 0.36 off the high.
The currency markets continue to be locked in a
tight trading range with many suspecting that the upcoming US monthly payroll
report would be disappointing. The reason the Dollar didn’t come under pressure
Thursday is that investors and traders don’t see a strongly favored alternative.
German numbers were weak Thursday morning and the BOE decided to hike interest
rates and that means alternative currencies may not offer a yield advantage. The
fact that the Yen and Canadian fell aggressively Thursday might be attributed to
soaring energy prices or the economic downgrade of the US!
Technical Outlook
#CURRENCIES 8/6/2004: YEN (SEP): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The close below the 1st swing support could weigh on the market. Swing
resistance is targeted at 89.87 and above there at 90.15, with the yen finding
support around 89.49 and below there at 89.39. The market back below the 40-day
moving average suggests the longer-term trend could be turning down. Rising from
over sold levels, daily momentum studies would support higher prices especially
on a close above resistance. The next upside objective is 90.15.
EURO (SEP): Stochastics are rising from over sold
levels which is bullish and should support higher prices. The near-term upside
target is at 1.2099. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. Swing support for the Euro comes in at
1.1997, with overhead resistance at 1.2099. The close above the 9-day moving
average is a positive short-term indicator for trend. The close below the 40-day
moving average is an indication the longer-term trend is down. More selling
pressure is likely given yesterday’s gap lower price action on the day session
chart.
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PRECIOUS METALS RECAP
8/5/2004
October Gold closed up 0.1 at 393.5. This was 1.9
up from the low and equal to the high.
September Silver finished up 0.013 at 6.75, 0.005
off the high and 0.105 up from the low.
October Platinum closed down 3.9 at 827.3. This
was 2.3 up from the low and 2.7 off the high.
The gold market showed little direction Thursday
because the Dollar showed little direction. However, it is a little surprising
that the gold and silver markets didn’t get some support from the liquidation in
the equity market. It is also surprising that the gold market didn’t see some
flight to quality interest as a result of the new high in crude prices as that
is certainly creating macro economic uncertainty. At times it still seems like
the metals are being held down by a creeping deflationary tilt that would
certainly be emphasized by a weaker than expected US monthly payroll report.
Technical Outlook
#P-METALS 8/6/2004: SILVER (SEP): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 669.5 and below there at 661.5 with resistance likely at 683.5
and 680.5. A positive signal for trend short-term was given on a close over the
9-bar moving average. Rising stochastics at overbought levels warrant some
caution for bulls. The next upside objective is 683.5. The market is approaching
overbought levels with an RSI over 70.
GOLD (OCT): Support for gold today comes in near
391.13, while resistance is pegged at 394.93. Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 394.93. The close over the pivot
swing is a somewhat positive setup. The close above the 9-day moving average is
a positive short-term indicator for trend.
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COPPER MARKET RECAP
8/5/2004
September Copper finished down 1.45 at 128.00,
2.95 off the high and 0.80 up from the low.
It seemed like copper was going to maintain early
gains off talk of physical tightness, but as the session progressed, the
negative macro economic influence seemed to increase its presence. Many traders
seem to be willing to talk up prices by referring to the forward looking supply
and demand situation but it is very difficult to accept that world demand for
copper is going to remain strong in the face of sharply rising world oil prices
and concern for the US payroll situation. In other words, copper has been
attempting to ignore recent evidence of slowing but the resurgence of high
energy prices has now fostered concerns that the June slowing might be
exaggerated.
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ENERGY MARKET RECAP
8/5/2004
September Crude Oil closed up 1.58 at 44.41. This
was 1.41 up from the low and 0.09 off the high.
September Heating Oil closed up 3.74 at 119.30.
This was 3.30 up from the low and 0.70 off the high.
September Unleaded Gas finished up 4.10 at
124.44, 0.56 off the high and 3.64 up from the low.
September Natural Gas finished up 0.05 at 5.71,
0.04 off the high and 0.09 up from the low.
September Propane closed up 1.50 at 83.75. This
was 0.50 up from the low and equal to the high.
The energy complex rejected a new low for the
move and might have found support off fresh news from Yukos. Apparently the
Russian Justice Ministry withdrew Bank account access from Yukos and suggested
that the authority initially granted was an unauthorized mistake. Therefore, it
would seem that the uncertainty of Russian supply flow is once again a major
issue. Countervailing the bullish tilt in prices Thursday were suggestions from
Venezuela that groups opposing PdVSA would attempt to “make Peaceâ€. The weekly
natural gas inventory report showed an 83 bcf injection and that expanded the
annual surplus! However, weather continues to be extremely negative to natural
gas prices.
Technical Outlook
#ENERGIES 8/6/2004: CRUDE OIL (SEP): The market
rallied to a new contract high. Market positioning is positive with the close
over the 1st swing resistance. Support for crude is keyed on 43.66 and below
there at 42.58, with resistance pegged at 45.16 and 45.58. The close above the
9-day moving average is a positive short-term indicator for trend. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The next downside target is now at 42.58.
UNLEADED GAS (SEP): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 119.47. The market has a slightly positive tilt
with the close over the swing pivot. Resistance today is at 127.87, while
support should be found around 119.47. A negative signal for trend short-term
was given on a close under the 9-bar moving average. The market now above the
40-day moving average suggests the longer-term trend is up.
HEATING OIL (SEP): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 114.65, with resistance is at 122.65. Short-term indicators
suggest buying pullbacks today. The close above the 9-day moving average is a
positive short-term indicator for trend. The crossover up in the daily
stochastics is a bullish signal. The near-term upside target is at 122.65. The
market rallied to a new contract high.
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CORN MARKET RECAP
8/5/2004
September Corn finished up 2 3/4 at 224, 1
off the high and 4 up from the low. December Corn closed up 3 1/2 at 234 3/4.
This was 4 3/4 up from the low and 1/2 off the high.
The market moved to the highest level since July
21st which might spark more short-covering ahead of next weeks reports. Solid
export sales news and short-covering helped to support the early gains and
strength in soybeans added to the positive tone. Weekly export sales came in at
1.116 million tons as compared with trade expectations at 650,000-900,000 tons.
Old crop sales came in at 470,600 tons as compared with 67,900 tons necessary
each week to reach the USDA projection. Cumulative sales have reached 99.4% of
the USDA forecast for the season as compared with 98.4% on average for this time
of the year. The weather remains ideal for development in most areas but there
were some light concerns with the early cold weather beginning to move into the
Midwest and the slower than normal maturity rate in the northern sections of the
cornbelt. Informa Economics, formerly Sparks, pegged corn production at 10.863
billion bushels as compared with the July USDA estimate of 10.635 billion
bushels. The USDA announced a daily export sale of 120,000 tons to unknown
destination which added to the positive demand tone. Support for December corn
comes in at 233 and 231 1/4 with 239 and 242 1/2 as resistance.
Technical Outlook
#CORN (DEC) 8/6/2004: Stochastics are rising from
over sold levels which is bullish and should support higher prices. The
near-term upside target is at 238 3/4. There could be more upside follow through
since the market closed above the 2nd swing resistance. Market resistance comes
in at 238 3/4 today, with support at 228 1/4. The downside crossover of the 9 &
18 bar moving average is a negative signal.
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SOY COMPLEX RECAP
8/5/2004
September Soybeans finished up 16 at 581 1/2, 1
1/2 off the high and 10 up from the low. November Soybeans closed up 14 1/4 at
571 1/4. This was 8 3/4 up from the low and 3 1/4 off the high.
August Soymeal closed up 3 at 186.8. This was 2.8
up from the low and 0.7 off the high.
August Soybean Oil finished up 0.91 at 22.67,
0.08 off the high and 0.67 up from the low.
The turn higher from the extreme oversold level
could attract more short-covering in the days ahead if speculators even up ahead
of the USDA reports next week. A lack of deliveries, strong export sales and
short-covering helped support higher prices early in the session. Continued talk
that China may have bought a few cargoes of US soybeans added to the bullish
tone. Weekly export sales came in at 349,600 tons as compared with trade
expectations at 50,000-250,000 tons. Meal sales were 112,700 tons as compared
with trade expectations at 30,000-60,000 tons. Old crop meal sales came in at
40,000 tons as compared with 6900 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 98.4% of the USDA forecast for the
season as compared with 94.3% on average for this time of the year. The weather
remains ideal for development but there were some light concerns with the early
cold weather beginning to move into the Midwest. Informa Economics, formerly
Sparks, pegged soybean production at 2.944 billion bushels as compared with the
July USDA estimate of 2.94 billion bushels and recent trade talk that production
could approach 3 billion bushels. The lower than expected estimate added to the
positive tone. Technical indicators reached oversold extremes and this has added
to the short-covering support. Oil export sales were 4400 tons as compared with
1000-4000 expected and higher palm oil prices combined with rumors that US oil
was sold to North Africa overnight added to the positive tone. November soybean
support moves up to 568 and 563 with 579 as next resistance.
Technical Outlook
#SOYBEANS (NOV) 08/06/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next area of resistance is around 577 and 581 3/4, while 1st support hits today
at 565 and below there at 557 3/4. A negative signal for trend short-term was
given on a close under the 9-bar moving average. A bullish signal was given with
an upside crossover of the daily stochastics. The next upside objective is 581
3/4.
MEAL (DEC): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 171.2. First resistance comes in at
177.0, with support at 173.5. The close below the 9-day moving average is a
negative short-term indicator for trend. There could be more upside follow
through since the market closed above the 2nd swing resistance.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. Rising from over
sold levels, daily momentum studies would support higher prices especially on a
close above resistance. The next upside objective is 22.03. A positive setup
occurred with the close over the 1st swing resistance. Daily swing resistance is
found at 21.79 and above there at 22.03. Support should be encountered at 21.11
and 20.67. Short-term indicators suggest buying dips today.
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WHEAT MARKET RECAP
8/5/2004
September Wheat finished up 3 at 321 1/2, 1 1/2 off the high
and 3 1/2 up from the low. December Wheat closed up 3 1/4 at 336. This was 4 up
from the low and 3/4 off the high.
After a 1-year low was hit on Friday, and the
market moved to new lows on Monday morning, December futures have closed higher
for 4 sessions in a row and the weekly reversal may be seen as a positive
development to fund traders who are holding a hefty net short position. Strength
in the other markets and rumors that China may have bought 200,000 tons of US
milling quality wheat helped support. Weekly export sales came in at 504,100
tons as compared with trade expectations at 400,000-600,000 tons and 380,500
tons necessary each week to reach the USDA projection. Cumulative sales have
reached 37.1% of the USDA forecast for the season as compared with 25% on
average for this time of the year. Basis levels are steady and trade psychology
still bearish on ideas that surging world production will compete with US wheat
on the world market. Technically, the market is oversold and still operating
under the positive influence of the reversal on Monday with support for December
wheat at 334 and 331 1/2 with 338 and 343 1/2 as resistance.
Technical Outlook
#WHEAT (DEC) 8/6/2004: Daily studies suggest
buying dips today. The market setup is supportive for early gains with the close
over the 1st swing resistance. Expect near-term support around 334 and below
there at 330 3/4, with resistance levels at 338 2/4 and 339 3/4. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Stochastics are at mid-range, but trending higher which should reinforce a move
higher if resistance levels are taken out. The next upside objective is 339 3/4.
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LIVE CATTLE RECAP
8/5/2004
October Live Cattle closed down 0.10 at 87.40.
This was 0.65 up from the low and 0.40 off the high.
October Feeder Cattle finished down 0.10 at
111.95, 0.65 off the high and 0.55 up from the low.
The market pushed lower on quiet trade after the
early sharp break failed to find much in the way of follow-through selling.
Hopes of higher cash trade fizzled as traders seem to believe that packers will
be unwilling to pay-up in the cash market after a sharp break in beef prices
this week. The market recovered sharply off of the lows as traders wait to see
cash trade development. Boxed-beef cut-out values were down $1.04 to $138.39 at
mid-session as compared with $143.34 last week at this time. The further
weakness in beef has driven packer profit margins deep into the red.
Technical Outlook
#CATTLE (OCT) 8/6/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 86.30. The market has a slightly positive tilt
with the close over the swing pivot. Support should be encountered at 86.87 and
below there at 86.30. Market resistance is at 87.92 and then again at 88.40. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.
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LEAN HOGS RECAP
8/5/2004
October Lean Hogs closed down 0.05 at 70.15. This
was 0.65 up from the low and 0.70 off the high.
February Pork Bellies finished up 1.25 at 97.25,
1.75 off the high and 1.05 up from the low.
The market opened lower due to a weaker tone in
the pork product markets over the past few sessions but fund buying and some
professional buying helped to support and the October futures managed to inch
into new contract high territory late in the session. Cash hogs were steady to
slightly lower. The stiff discount of futures to cash and the steadier than
expected cash market trend has helped provide underlying support. The 2-Day lean
Index for the period ending August 3rd was down 5 cents to 79.29 from 79.04 one
week previous. Traders are a bit nervous with the overbought condition of the
market and the record open interest.
Technical Outlook
#HOGS (OCT) 8/6/2004: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 70.82 and
71.52 today, while support is around 69.47 and then 68.82. The market rallied to
a new contract high. The daily closing price reversal down is a negative
indicator for prices. The close above the 9-day moving average is a positive
short-term indicator for trend. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The near-term
upside target is at 71.52.
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COCOA MARKET RECAP
8/5/2004
September Cocoa finished down 24 at 1703, 6 off
the high and 30 up from the low.
The cocoa market finally corrected and took
profits and that wasn’t surprising given the overbought condition of the market
and the talk about a rain event at the Ivory Coast. Talk that the Nigerian crop
would be delayed could have supported prices but the market was apparently
entrenched in a bearish mode. Traders also suggested that weak London price
action gave the bear camp confidence to attack the bull market.
Technical Outlook
COCOA (SEP) 08/06/04 The close below the 1st
swing support could weigh on the market. Cocoa should run into resistance at
1721 and above there at 1733 with support at 1685 and 1661. The 9-day RSI over
70 indicates the market is approaching overbought levels. 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
1661.00.
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COFFEE MARKET RECAP
8/5/2004
September Coffee closed down 0.40 at 65.90. This
was 0.90 up from the low and 0.30 off the high.
The September coffee came within 20 points of the
near-term swing objective of 64.80 before a 90 point bounce to close 40 lower on
the session. London futures collapse to a new contract low before the US opening
which contributed to the early weakness but there was a lack of aggressive new
selling after the recent sharp break has left technical indicators quite
oversold. Some talk that Brazil crop estimates will be revised lower due to too
much rain in the early harvest season helped to provide the buying support.
While the weather turns cooler next week, there is still no calls for cold
enough weather to do damage.
Technical Outlook
COFFEE (SEP) 8/6/04 The sell-off took the market
to a new contract low. The market tilt is slightly negative with the close under
the pivot. The 9-day RSI under 30 indicates the market is approaching oversold
levels. Momentum studies are declining, but have fallen to oversold levels. The
next downside objective is now at 64.55. The Coffee contract should run into
resistance at 66.50 and above there at 66.95 with support at 65.3 and 64.55. The
market’s short-term trend is negative as the close remains below the 9-day
moving average.
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SUGAR MARKET RECAP
8/5/2004
October Sugar closed down 0.02 at 8.13. This was
0.15 up from the low and 0.06 off the high.
The market pushed lower on the session and
speculative long liquidation selling intensified early in the session on the
move back under 8.00 for October futures but trade house buying emerged to help
the market recover to fill the opening gap but activity slowed late in the
session with the market closing moderately lower. Libya tendered for 100,000
tons of white sugar. Local Brazil consultants Datagro pegged the center-south
cane production at 317 million tons as compared with 296.6 million tons last
year. Japan imported 128,030 tons in June which was up from 100,041 tons in May
and 106,650 tons last year.
Technical Outlook
#SUGAR (OCT) 8/6/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
8.32, with support found at 7.90. The close below the 9-day moving average is a
negative short-term indicator for trend. Stochastics trending lower at midrange
will tend to reinforce a move lower especially if support levels are taken out.
The next downside target is now at 7.90.
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COTTON MARKET RECAP
8/5/2004
October Cotton finished up 0.78 at 45.73, 0.07
off the high and 0.63 up from the low.
The oversold condition of the market and positive
news on export sales helped support the solid gains. Weekly export sales came in
at 300,600 bales as compared with trade expectations at 100,000 to 120,000
bales. New crop sales came in at 319,200 bales as compared with 140,000 bales
necessary each week to reach the USDA projection. Cumulative sales have reached
28.6% of the USDA forecast for the season as compared with 25.1% on average for
this time of the year. While the sales numbers are impressive (some was rollover
business from last month) the export shipment news was disappointing with
shipments of only 242,800 bales with traders looking for 275,000-325,000 bales.
Support for December cotton moves up to 45.77 with 47.15 and 48.12 as next
resistance points.
Technical Outlook
#COTTON (OCT) 8/6/2004: A positive signal for
trend short-term was given on a close over the 9-bar moving average. Daily
studies suggest buying dips today. The market setup is supportive for early
gains with the close over the 1st swing resistance. Next resistance area comes
in at 46.08 and then again at 46.29, while support is targeted at 45.38 and
44.89. Rising from over sold levels, daily momentum studies would support higher
prices especially on a close above resistance. The next upside objective is
46.29.