Next OPEC Meeting Pushed Back. What Does This Mean For Prices?
BOND MARKET RECAP
3/18/2005
March Bonds finished down 0-13 at 110-24, 0-08
off the high and 0-03 up from the low.
March 10 Yr Treasury Notes finished down 0-060 at
109-020, 0-035 off the high and 0-015 up from the low.
Treasury prices showed early weakness in
the wake of a rise in US import prices and probably because of the slightly
positive early tilt in US equity prices. However, the University of Michigan
sentiment readings showed a moderate rise and that added slightly to the
negative tilt in Treasury prices. In a potentially positive development for
Treasuries, Congress and the White House appear to be attempting to work on the
budget deficit situation, which could temper the international rotation threat
and in turn take some of the pressure off Treasury prices. Providing a counter
to the early weakness were reports that the University of Michigan current Index
contracted and the fact that energy prices once again showed the capacity to
recovery from initial weakness.
Technical Outlook
BONDS (JUN) 03/21/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close under the 18-day moving average indicates the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was under the swing pivot. The next upside target is 111-12. The
next area of resistance is around 111-01 and 111-12, while 1st support hits
today at 110-17 and below there at 110-11.
TNOTES (JUN) 03/21/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The market’s close below the
pivot swing number is a mildly negative setup. The near-term upside target is at
109-130. The next area of resistance is around 109-070 and 109-130, while 1st
support hits today at 108-300 and below there at 108-265.
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STOCK INDICES RECAP
3/18/2005
March S&P finished down 3.3 at 1190.8, 5.7 off
the high and 4.3 up from the low.
March S&P E-Mini closed down 3.5 at 1190.5. This
was 4 up from the low and 6.5 off the high.
March Dow closed down 15 at 10635. This was 55 up
from the low and 42 off the high.
The stock market appeared to be poised to mount a
short covering run early Friday morning but the economic information was
disappointing and the early energy declines were reversed and that seemed to
dash the initial bullish tilt in the marketplace. US import prices were also
found to have risen again and that prompted another sector of the market to fret
over the ongoing inflation threat. In the end the day to day action in the
equity market continues to be dictated by the energy market and with the market
showing strong volume on Friday (even after expiration) it would seem like
prices are set to remain extremely active and volatile.
Technical Outlook
S&P 500 (JUN) 03/21/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside target is now at 1181.25. The next area of resistance is around 1196.00
and 1201.25, while 1st support hits today at 1186.00 and below there at 1181.25.
SP EMINI (JUN) 03/21/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The market’s close below the pivot swing number is a mildly
negative setup. The next downside objective is now at 1180.63. The next area of
resistance is around 1195.75 and 1201.62, while 1st support hits today at
1185.25 and below there at 1180.63.
NASDAQ (JUN) 03/21/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The next downside target is 1473.63. The
next area of resistance is around 1498.75 and 1508.62, while 1st support hits
today at 1481.25 and below there at 1473.63.
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CURRENCY MARKET RECAP
3/18/2005
March US Dollar finished up 29 at 8210, 30 off
the high and 35 up from the low.
March Euro finished down 0.6 at 133.38, 0.14 off
the high and 0.48 up from the low.
March Euro Dollar closed down 0.005 at 96.51.
This was 0.005 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.05 at 83.16.
This was 0.3 up from the low and 0.26 off the high.
March British Pound finished down 0.39 at 191.08,
0.24 off the high and 0.66 up from the low.
March Swiss closed down 0.6 at 86.29. This was
0.29 up from the low and 0.14 off the high.
March Japanese Yen closed down 0.15 at 96.12.
This was 0.21 up from the low and 0.12 off the high.
The Dollar surprised many traders with yet
another rise Friday morning and did so in the face of slack numbers from the
University of Michigan. Even more surprising is the fact that the Dollar failed
to weaken even in the face of the mid morning recovery in energy prices.
Therefore, it would seem like the dominate issue in the currency markets Friday
was technical balancing and not necessarily the fundamental condition. Toward
the end of the week the big story or focus in the Dollar was probably the
concern toward the European employment situation.
Technical Outlook
YEN (JUN) 03/21/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close below the 18-day moving average is an indication the longer-term
trend has turned down. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next downside target is now at 95.77. The
next area of resistance is around 96.28 and 96.42, while 1st support hits today
at 95.96 and below there at 95.77.
EURO (JUN) 03/21/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market now
above the 18-day moving average suggests the longer-term trend has turned up.
The gap lower on the day session chart is bearish and puts the market on the
defensive. The close below the 2nd swing support number puts the market on the
defensive. The next downside target is 132.68. The next area of resistance is
around 133.69 and 133.91, while 1st support hits today at 133.07 and below there
at 132.68.
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PRECIOUS METALS RECAP
3/18/2005
April Gold closed up 0.6 at 439.7. This was 3.6
up from the low and 0.7 off the high.
March Silver finished down 0.01 at 7.397, 0.013
off the high and 0.112 up from the low.
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The precious metals markets did a good job of
rejecting early weakness and managing to go positive in the wake of more slack
US economic information as another attempt to rally in energy prices. It would
almost seem like the metals were preparing to discount the Dollar strength, with
many traders thinking that the Dollar rally is insignificant until the June
Index manages a rise above 82.56. However, while some might discount the action
in the Dollar that focus has been the main element in the daily action for
almost the last two years. We continue to think that the slack economic outlook
is weighing on both gold and silver prices and with the COT report documenting
an ongoing overbought condition it would not be surprising to see some
additional weakness on Monday morning.
Technical Outlook
SILVER (MAY) 03/21/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
under the 18-day moving average indicates the longer-term trend could be turning
down. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside target is now at 724.8. The next area of
resistance is around 746.0 and 749.7, while 1st support hits today at 733.5 and
below there at 724.8.
GOLD (APR) 03/21/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The cross over
and close above the 18-day moving average indicates the longer-term trend has
turned up. The daily closing price reversal up is a positive indicator that
could support higher prices. The market’s close below the pivot swing number is
a mildly negative setup. The next downside objective is now at 434.7. The next
area of resistance is around 441.8 and 443.2, while 1st support hits today at
437.6 and below there at 434.7.
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COPPER MARKET RECAP
3/18/2005
March Copper closed up 0.25 at 150.70. This was
1.80 up from the low and 1.20 off the high.
The copper market showed early weakness Friday
morning, despite the fact that equity prices were showing strength, energy
prices were initially lower and most importantly that Shanghai weekly copper
stocks posted yet another decline. However, into mid session some value hunting
buying seemed to surface and lift copper despite the ongoing concern toward the
global economy. From the rejection of the initial range down action in the
copper it would seem like there continues to be a large contingent of willing
buyers, even with nearby prices holding just under contract highs. We might add
that the copper market forged the recovery burst Friday morning in the face of
some negative economic forecasts for the Chinese economy!
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ENERGY MARKET RECAP
3/18/2005
April Crude Oil closed up 0.33 at 57.24. This was
0.64 up from the low and 0.21 off the high.
April Heating Oil closed down 1.14 at 154.74.
This was 0.54 up from the low and 1.76 off the high.
April Unleaded Gas finished up 1.45 at 160.87,
0.63 off the high and 2.17 up from the low.
April Natural Gas finished up 0.02 at 7.39, 0.03
off the high and 0.10 up from the low.
April Propane closed up 0.00 at 0.92. This was
equal to the low and equal to the high.
Before the opening of the Pit action on Friday
morning it seemed as if a profit taking were set to pressure oil prices.
However, the market was apparently supported by the news that OPEC was pushing
back the April 10th meeting until late May or early June and that would seem to
leave supply tight well into the critical summer gasoline demand season. OPEC
was rumored to have put in place a mechanism to add in another 500,000 barrels
per day if oil prices remain high. In other words, the market is being tempted
to run even higher by statements from OPEC or even unofficial OPEC comments. It
is possible that Energy legislation from Washington will prompt some increased
price volatility but we are not sure that Washington can do anything to derail
the bull market.
Technical Outlook
CRUDE OIL (MAY) 03/21/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The upside daily closing
price reversal gives the market a bullish tilt. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next upside target is
57.98. The market is approaching overbought levels with an RSI over 70. The next
area of resistance is around 57.66 and 57.98, while 1st support hits today at
56.82 and below there at 56.29.
UNLEADED (MAY) 03/21/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The close over the pivot swing is a somewhat
positive setup. The next upside target is 163.28. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 162.26 and 163.28, while 1st support hits today at 159.47 and below there
at 157.69.
HEATING OIL (MAY) 03/21/2005: A crossover down in
the daily stochastics is a bearish signal. Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market’s close below the pivot swing number
is a mildly negative setup. The next downside target is 152.75. The 9-day RSI
over 70 indicates the market is approaching overbought levels. The next area of
resistance is around 155.89 and 157.34, while 1st support hits today at 153.59
and below there at 152.75.
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CORN MARKET RECAP
3/18/2005
May Corn finished down 3 3/4 at 219 3/4, 2
1/4 off the high and 1/2 up from the low. December Corn closed down 2 at 243.
This was 1 1/4 up from the low and 1 off the high.
Fund selling is pressuring the grain markets
today for fear of a slowing economy in China. Hefty world feedgrain stocks,
continued exports from China this week and talk of higher plantings this spring
helped trigger the fund selling which was up near 2500 contracts into the
mid-session. The reduced crop in Brazil due to drought could force Brazil to
import corn this year. Informa Economics, formerly Sparks Commodities, pegged
corn planted acreage at 82.8 million acres as compared with 80.9 million last
year. The estimate is in line with trade sentiment in February before soybeans
rallied $1.90/bushel and the soybean rally has brought current trade
expectations down to near 82 million acres. Resistance for May corn moves down
to 222 and 223 1/4 with support at 219 and 217.
Technical Outlook
CORN (MAY) 03/21/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. The next
downside objective is 217 1/2. The next area of resistance is around 221 and 222
3/4, while 1st support hits today at 218 1/2 and below there at 217 1/2.
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SOY COMPLEX RECAP
3/18/2005
May Soybeans finished down 22 1/2 at 649, 14 off
the high and 3 up from the low. November Soybeans closed down 10 1/2 at 626.
This was 6 1/2 up from the low and 6 off the high.
May Soymeal closed down 4.7 at 192.1. This was
1.5 up from the low and 1.9 off the high.
May Soybean Oil finished down 0.76 at 23.58, 0.51
off the high and 0.06 up from the low.
Light fund selling, the stronger US dollar and
fears of a slowdown in China demand helped pressure the soybean market Friday.
Just the threat that either changes in the monetary policy in China or the
threat of an interest rate hike in China could be enough to slow or derail the
China economy was enough to trigger aggressive fund long liquidation selling in
soybeans and in a wide range of commodity markets this morning. Rains in the
center-west area of Brazil should slow harvest this weekend and dryness in
southern Brazil could just add to the recent losses due to drought. Informa
Economics, formerly Sparks Commodities, pegged soybean planted acreage at 73.2
million acres as compared with 75.2 million last year. The estimate is below the
current trade sentiment and could help provide some underlying support to
November soybeans. Resistance for May soybeans comes in at 663 and 673 with 642
and 635 1/2 as next support.
Technical Outlook
BEANS (MAY) 03/21/2005: Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The market setup is somewhat
negative with the close under the 1st swing support. The next downside target is
now at 634 3/4. Short-term indicators on the defensive. Consider selling an
intraday bounce. The next area of resistance is around 657 1/2 and 668 3/4,
while 1st support hits today at 640 1/2 and below there at 634 3/4.
MEAL (MAY) 03/21/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The next downside target is
188.8. The next area of resistance is around 193.8 and 195.6, while 1st support
hits today at 190.4 and below there at 188.8.
BEANOIL (MAY) 03/21/2005: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. The next
downside objective is 23.13. Daily studies pointing down suggests selling minor
rallies. The next area of resistance is around 23.86 and 24.26, while 1st
support hits today at 23.30 and below there at 23.13.
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WHEAT MARKET RECAP
3/18/2005
May Wheat finished down 10 at 356 1/2, 8 1/4 off the high and
1/2 up from the low. July Wheat closed down 10 at 364. This was 1 up from the
low and 8 off the high.
The overbought condition and a lack of new fund
buying on low volume kept the market down for much of the session Friday. The
market pulled back into yesterdays range experiencing a correction from the
surge higher late yesterday when funds were aggressive buyers. The grain markets
are seeing pressure from fears of a slowdown in the China economy and from the
bounce in the US dollar. Less competition than expected from Europe has provided
some underlying support after the EU granted just 8.94 euros per tonne on just
74,000 tonnes at their weekly export tender. South Korea bought 102,500 tonnes
of Canadian feedwheat overnight and other export news was quiet. Informa
Economics, formerly Sparks Commodities, pegged spring wheat planted acreage at
13.5 million acres as compared 13.8 million last year. The estimate may help
support Minneapolis wheat. Soft red winter wheat basis levels were steady to
higher this morning due to lighter producer sales. May wheat resistance comes in
at 364 with 354 1/4 as next support.
Technical Outlook
WHEAT (MAY) 03/21/2005: A crossover down in the
daily stochastics is a bearish signal. 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 cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. The next downside objective is now at 349 3/4. The next area of
resistance is around 360 3/4 and 367, while 1st support hits today at 352 1/4
and below there at 349 3/4.
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LIVE CATTLE RECAP
3/18/2005
April Live Cattle finished down 1.07 at 87.40,
1.05 off the high and 0.25 up from the low.
March Feeder Cattle closed down 0.27 at 105.62.
This was 0.22 up from the low and 0.12 off the high.
The cattle market collapsed to move sharply lower
early in the session on Friday after the Administration filed an emergency
appeal asking a federal court to remove a preliminary injunction on trade with
Canada which was suppose to resume on March 7th. If judges do not impact trade
on Monday morning, the results of the USDA Cattle-on-Feed this afternoon should
have an impact. Boxed-beef cut-out values at mid-session were down $.19 to
$156.36 as compared with $154.83 last week. For the Cattle on Feed report this
afternoon traders are looking for on feed supply near 102% (100-103 range),
February placements near 99.5% (92.3-108 range) and marketings near 97% (90-100
range).
Technical Outlook
CATTLE (APR) 03/21/2005: The market back below
the 60-day moving average suggests the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next downside target is now at 86.320. The next area of
resistance is around 88.050 and 88.900, while 1st support hits today at 86.770
and below there at 86.320.
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LEAN HOGS RECAP
3/18/2005
April Lean Hogs finished down 0.17 at 70.40, 0.40
off the high and 1.15 up from the low.
March Pork Bellies closed down 1.55 at 87.50.
This was 0.65 up from the low and equal to the high.
April hogs come under heavy selling pressure on
fears of absorbing a jump in beef production over the near-term if the emergency
appeal by the USDA allows the border to open soon. In addition, the slow
slaughter pace this week and the lack of a significant jump in pork values as a
result of the slaughter reduction has traders nervous that the ‘market will need
to absorb a mini-bulge in pork production in late March when the held-back,
extra-weight animals hit the market. Cash markets were slightly higher in the
morning but traders see reduced demand for slaughter next week due to holiday.
The 2-day lean index for the period ending March 16th came in at 70.19, down
1.17 on the session and down from 74.52 last week at this time.
Technical Outlook
HOGS (APR) 03/21/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close below the 18-day moving average is an indication the
longer-term trend has turned down. It is a slightly negative indicator that the
close was under the swing pivot. The next downside target is 68.670. The next
area of resistance is around 71.170 and 71.750, while 1st support hits today at
69.650 and below there at 68.670.
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COCOA MARKET RECAP
3/18/2005
May Cocoa finished up 14 at 1844, 5 off the high
and 19 up from the low.
After several days of calm on the political front
the Press made the market aware of the potential for another Ivory Coast clash.
Apparently rebel forces are grouping and moving toward the demilitarized zone
between the North and South regions and that could have caused a number of spec
longs to move into the market in the early action Friday. While there isn’t a
much cocoa flow in motion at this time of the year a renewed outbreak of
violence would certainly begin to justify even higher cocoa prices. We do
suspect that part of the speculative long interest in the action Friday was
diffused by the rise in the US Dollar.
Technical Outlook
COCOA (MAY) 03/21/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The next upside objective is 1864. The 9-day RSI over
70 indicates the market is approaching overbought levels. The next area of
resistance is around 1856 and 1864, while 1st support hits today at 1832 and
below there at 1817.
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COFFEE MARKET RECAP
3/18/2005
May Coffee closed down 2.90 at 133.20. This was
2.20 up from the low and 3.55 off the high.
A little bit of profit taking in the Coffee is
understandable considering the magnitude of the gains posted in early March.
However, it should be noted that the Press noted increased commercial buying
following the early break in prices Friday morning. We suspect that some funds
were either inclined to bank profits ahead of the weekend or were pushed out
because of the weakness in prices but it is also possible that some longs were
afraid to confront the overbought small spec and fund long position in the COT
report. It would not seem like the fundamental track in coffee has changed so
much that one should expect a massive liquidation by the funds but the larger
the small spec and fund position becomes the more like the market is to exhibit
expanded daily price ranges.
Technical Outlook
COFFEE (MAY) 03/21/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. The
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. The next downside target is 127.80. The next area of resistance
is around 136.05 and 139.25, while 1st support hits today at 130.35 and below
there at 127.80.
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SUGAR MARKET RECAP
3/18/2005
May Sugar closed down 0.09 at 9.03. This was 0.03
up from the low and 0.07 off the high.
The sugar market initially gapped lower but did
manage to fill the downside gap before extending the early losses into mid
session. We suspect that London sugar weakness contributed to the US sugar
market weakness and with the trade interest apparently balking at sugar prices
above 925 the market might have made a distinction between fair and expensive
sugar pricing. The weekly COT report showed an ongoing overbought small spec and
fund long and that could have contributed to the book squaring selling early
Friday morning. In the end, a tempering of both trade and spec buying should
bring about a temporary setback in prices.
Technical Outlook
SUGAR (MAY) 03/21/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The close below the 18-day moving average is
an indication the longer-term trend has turned down. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside target is at 9.13. The next area of resistance is around 9.07
and 9.13, while 1st support hits today at 8.98 and below there at 8.94.
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COTTON MARKET RECAP
3/18/2005
May Cotton finished down 0.39 at 50.94, 0.81 off
the high and 0.34 up from the low.
The cotton market attempt to trade higher on the
session but quickly lost that resolve, possibly because of the higher US private
crop forecast of 14.24 million acres. While the cotton market has recently
managed to downplay the threat of oversupply the cold realization that the 2005
US crop is looming ahead, means that the supply concern is given another look.
Since the private crop forecast is almost 500,000 acres above the National
Cotton Council prediction and the USDA it is understandable that a profit taking
mentality took hold of prices. Off the February low, May cotton was up 10.20
cents and that is a significant rally for a market that hasn’t seen supply
pulled down or demand pushed up.
Technical Outlook
COTTON (MAY) 03/21/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The major trend has turned down with the cross over back
below the 18-day moving average. It is a slightly negative indicator that the
close was under the swing pivot. The next downside target is 49.91. The next
area of resistance is around 51.51 and 52.20, while 1st support hits today at
50.37 and below there at 49.91.