Oil Lower — Here’s Why…

Technical Outlook

#BONDS (SEP) 06/29/04: The close below the 2nd
swing support number puts the market on the defensive. Near-term resistance
for bonds is at 105.18 and then again at 106.19, while swing support hits at
104.03 and below there at 103.21. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. 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 103.21.

T-NOTES(SEP) The daily stochastic’s 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 107.15. The market’s
close below the pivot swing number is a mildly negative setup. Near-term
resistance for the T-Notes is at 108.23 and then again at 109.13, while swing
support hits at 107.24 and below there at 107.15. The market’s short-term
trend is negative as the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

6/28/2004

Monday should have been a major up day for
stocks but they did manage to post some impressive gains early in the session
regardless of the upcoming FOMC meeting and the potential tribulations
expected from Iraq in the coming days. Some traders just feel uncomfortable
paying up for stocks so far off the last month’s lows and into the FOMC
meeting. With the market unable to hold the early gains and basically charge
into new high ground the bulls might wonder just what it will take to bring
about a move to a higher trading range.

Technical Outlook

#S&P500 (SEP) 06/29/04: The market’s close
below the pivot swing number is a mildly negative setup. Underlying support
comes in at 1125.65 and 1122.48, with overhead resistance at 1137.35 and
1145.88. The market’s short-term trend is negative as the close remains below
the 9-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 1122.48.

S&P E-Mini (SEP): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 1120.31. The market tilt is slightly
negative with the close under the pivot. Near-term resistance for the S&P Mini
is at 1139.13 and then again at 1149.81, while swing support hits at 1124.38
and below there at 1120.31. A positive signal for trend short-term was given
on a close over the 9-bar moving average.

NASDAQ (SEP) The downside closing price
reversal on the daily chart is somewhat negative. 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. The market should run into resistance at 1506.75 and above
there at 1523.13 with support at 1481.25 and 1472.13. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 1523.1.

MINI DOW (SEP) The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
The market should run into resistance at 10398 and above there at 10500 with
support at 10258 and 10220. Negative momentum studies in the neutral zone will
tend to reinforce lower price action. The next downside target is 10220. It is
a slightly negative indicator that the close was lower than the pivot swing
number.

 

CURRENCY MARKET RECAP

6/28/2004

The Dollar just didn’t act very impressively in
the face of a strong US equity market, a surprise and favorable development in
Iraq and in the face of stronger than expected US economic information. In
fact, one has to wonder what the Dollar needs to come into favor because that
type of information isn’t being discovered. The Pound and the Canadian seem to
be the most likely to benefit from the near term weakness in the Dollar. The
trade might have seen some additional selling of the Dollar because of the
upcoming FOMC meeting.

Technical Outlook

#CURRENCIES 06/29/04: YEN (SEP): 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. Swing resistance is targeted at 93.10 and
above there at 93.38, with the yen finding support around 92.66 and below
there at 92.50. 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 92.50.

EURO (SEP): 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 1.2245. The market is in
a bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2103, with overhead resistance at 1.2245.
The market’s short-term trend is positive on a close above the 9-day moving
average. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

PRECIOUS METALS RECAP

6/28/2004

The gold market looked too started out weaker,
managed a recovery run around the temporary bounce in the Dollar and then
finished weak. The silver market came under excessive pressure as it managed
to violate a series of critical support levels on the charts. The fact that
both gold and silver recently registered moderately long spec and fund
positions might have promoted the weakness seen Monday. We didn’t think that
gold and silver had that many flight to quality longs in position but maybe
the early hand over in Iraqi forced a number of longs from position.

Technical Outlook

#P-METALS 06/29/04: SILVER (SEP): The close
below the 2nd swing support number puts the market on the defensive. Initial
support for silver is at 577.5 and below there at 569.8 with resistance likely
at 601.7 and 606.5. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 601.7. The outside day down and close below the previous day’s low
is a negative signal. The downside closing price reversal on the daily chart
is somewhat negative.

GOLD (AUG): Support for gold today comes in
near 396.70, while resistance is pegged at 407.50. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 407.50. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The market’s short-term trend
is positive on a close above the 9-day moving average. The outside day down is
a negative signal. The daily closing price reversal down puts the market on
the defensive.

 

COPPER MARKET RECAP

6/28/2004

We thought that copper might perform a little
more positively in the face of such rampant economic optimism and higher
equity prices but the market didn’t show that much upside interest. The
question of Chinese demand is still playing on the markets mind and with the
rest of the precious metals showing weakness we suspect that copper will
remain out of favor. In the recent past the platinum market has shown a
correlation with copper and the platinum market was under significant pressure
Monday. We think that Chinese demand hopes are capable of affecting both
copper and platinum.

 

ENERGY MARKET RECAP

6/28/2004

Energy prices were dashed by several issues
Monday morning the most important of which was an overriding view that more
supply was on the way. With the end of the Norway strike, a resumption of
Iraqi exports on Saturday and the surprise early hand over of Iraq it would
seem like the bull case was dealt a critical blow. With private sources
suggesting that a key terrorist was captured in Iraq (that later proved to be
false) we can understand why a number of longs rushed to the sidelines. The
trade apparently doesn’t have much concern for US domestic refinery issues and
that means that even lower chart support levels might be tested.

Technical Outlook

#ENERGIES 06/29/04: CRUDE OIL (AUG): The gap
down on the day session chart is bearish with more selling pressure possible
today. The market is in a bearish position with the close below the 2nd swing
support number. Support for crude is keyed on 35.72 and below there at 35.28,
with resistance pegged at 36.77 and 37.38. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The daily
stochastic’s gave a bearish indicator with a crossover down. The next downside
objective is now at 35.28.

UNLEADED GAS (AUG): Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next
upside target is 119.89. The close below the 2nd swing support number puts the
market on the defensive. Resistance today is at 119.89, while support should
be found around 109.09. The gap lower price action on the day session chart is
a bearish indicator for trend. The moving average crossover up (9 above 18)
indicates a possible developing short-term uptrend.

HEATING OIL (AUG): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 95.10, with resistance is at 101.90. 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. The daily stochastic’s gave a bearish indicator with a
crossover down. The next downside objective is now at 95.10. The gap down on
the day session chart is bearish with more selling pressure possible today.

 

CORN MARKET RECAP

6/28/2004

A lack of threatening weather for the start of
the pollination period just ahead and a lack of export news combined to
trigger more speculative selling in corn. Crop conditions are expected to
improve by 1-2% in the good to excellent category in tonight’s weekly crop
progress report. The weekend COT report with options showed that fund traders
were in a long liquidation mode and as of June 22nd were still net long nearly
37,000 contracts. Weekly export inspection came in at 28.54 million bushels as
compared with trade expectations at 28-33 million. Cumulative exports have
reached 1.507 billion bushels as compared with 1.218 billion last year at this
point. Positioning ahead of the USDA reports on Wednesday and ahead of the
first notice day for July corn added to the bearish tone. There are 26
contracts registered in deliverable position. December corn support comes in
at 276 and 269 3/4 with resistance at 282 3/4 and 286.

Technical Outlook

#CORN (DEC) 06/29/04: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The near-term upside objective is at 283
1/4. The market is in a bearish position with the close below the 2nd swing
support number. Market resistance comes in at 283 1/4 today, with support at
275 1/4. 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.

 

SOY COMPLEX RECAP

6/28/2004

November soybeans opened only 1/2 cent lower on
the session but quickly came under pressure from long liquidation selling and
a good weather outlook. The July and August contracts hit the 50-cent
limit-down price on the initial blast down as fund long liquidation selling
accelerated ahead of first notice day for the July contracts. The bearish
weather forecast into the coming weekend helped trigger early weakness in corn
and bled to the soybean market in the form of long liquidation selling. The
weekend COT report with options showed an overbought condition and the market
vulnerable to long liquidation selling with speculators holding a net long
position of nearly 22,000 contracts in soybeans, over 28,000 in meal and near
7300 contracts in oil. Weekly export inspection came in at 2.953 million
bushels as compared with trade expectations at 2-5 million. Cumulative exports
have reached 825.4 million bushels as compared with 981.6 million last year at
this point. First notice day for July contracts is also on Wednesday and long
liquidation is also active in the July contracts. Traders expect tonight’s
weekly crop progress report to show steady to 2% increase in crops rated in
good to excellent condition. A US animal received an inconclusive test result
for the first time since the “fast tests” began on June 1st. Traders await a
final test result which is now due for a few more days but the news is seen as
a double-edged sword for meal prices. Another mad cow confirmed in the US
could hurt livestock profitability and also meal demand but the news may also
spark stricter feeding rules which might increase the use of meal in feed for
the future. Support for November soybeans comes in at 683 3/4 and 676 1/2 with
699 and 709 as resistance.

Technical Outlook

#SOYBEANS (NOV) 06/29/04: The close below the
2nd swing support number puts the market on the defensive. The next area of
resistance is around 709 and 731, while 1st support hits today at 668 and
below there at 649. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The close under the 40-day moving
average indicates the longer-term trend could be turning down. Positive
momentum studies in the neutral zone will tend to reinforce higher price
action. The next upside target is 731.

MEAL (DEC): 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 234.8. First resistance
comes in at 225.1, with support at 209.6. The upside crossover (9 above 18) of
the moving averages suggests a developing short-term uptrend. The market is in
a bearish position with the close below the 2nd swing support number. The
major trend is down with the cross over back below the 40-day moving average.

BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. Positive
momentum studies in the neutral zone will tend to reinforce higher price
action. The next upside target is 25.24. It is a slightly negative indicator
that the close was lower than the pivot swing number. Daily swing resistance
is found at 24.98 and above there at 25.24. Support should be encountered at
24.28 and 23.84.

 

WHEAT MARKET RECAP

6/28/2004

Along with good weather for harvest for the
next few days and weakness in the other grain markets, futures are under
pressure from news that Egypt cancelled their tender to buy 50,000-60,000
tons. Positioning ahead of the USDA planted acreage and supply demand reports
has added to the bearish tone. CBOT registrations for deliverable stocks was
at 2200 lots on Friday, unchanged from Thursday. The weekend COT report with
options showed an oversold condition with speculators holding a net short
position of 11,000 contracts. Weekly export inspection came in at 14.62
million bushels as compared with trade expectations at 15-21 million.
Cumulative exports have reached 61.9 million bushels as compared with 50.6
million last year at this point. Excellent weather for harvest over the next 3
days in central and northern plains areas and the forecast for only scattered
rains for later this week has kept the market under pressure from seasonal
harvest sales and increased selling from fund traders who seem to be building
a larger net short position. September wheat moved to the lowest level since
October 29th with resistance at 353 1/2 and 356 1/4 with 342 1/2 and 339 as
next support.

Technical Outlook

#WHEAT (DEC) 06/29/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. Look
for near-term support at 357 1/2 and below there at 355 1/4, with resistance
levels at 361 and 362 1/4. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 355
1/4.

 

LIVE CATTLE RECAP

6/28/2004

August cattle closed 292 lower on the session
as fears of another mad cow in the US helped to trigger aggressive long
liquidation selling. The test results will not be seen until Tuesday at the
earliest and may take until Friday after an animal was found with the first
inconclusive reading from the fast test on Friday. Funds were noted as net
long over 36,000 contracts as of June 22nd which is seen as bearish. Slaughter
came in at just 119,000 head as compared with trade estimates at 124,000 to
128,000 head. The lower slaughter is seen as a bearish factor. Packers may not
want to get caught holding beef if export bans come back in full force if the
mad cow test comes out as positive. Boxed-beef cut-out values were up 7 cents
to $144.18 as compared with $144.80 last week at this time.

Technical Outlook

#CATTLE (AUG) 06/29/04: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
next upside target is 88.32. The close below the 2nd swing support number puts
the market on the defensive. Support should be encountered at 85.65 and below
there at 85.22. Market resistance is at 87.20 and then again at 88.32. 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.

 

LEAN HOGS RECAP

6/28/2004

The market seemed to have the bearish news to
work lower on the day but for the second session in a row, the market found
support at the 40-day moving average and the higher close after a key USDA
report release is a positive development. Weakness in the live market clashed
with the discount of futures to the cash market and choppy trade in the
bellies to produce a slightly higher close within a wide range of trade.
Weakness in the Cattle market due to mad cow scare was seen as a bearish
influence early on in the session but ideas that pork exports would stay
strong if beef bans remain in effect helped to provide some support. The 2-day
lean index for the period ending June 24th was 81.47, up 63 cents from the
previous session and up from 79.25 one week previous. Slaughter came in at
342,000 head as compared with trade estimates at 337,000 to 348,000 head.

Technical Outlook

#HOGS (AUG) 06/29/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance
levels comes in at 76.87 and 78.35 today, while support is around 74.17 and
then 72.95. The market’s short-term trend is negative as the close remains
below the 9-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 72.95.

 

COCOA MARKET RECAP

6/28/2004

The cocoa market managed an impressive bounce
and might have forged the rise on simple short covering. Apparently the London
cocoa market saw a concentration of fund buying and that gave the cocoa market
a bullish tilt to start the week out. However, unless some story surfaces
regarding tensions at the Ivory Coast we suspect that the move Monday was
mostly short covering and that there will not be a sustained follow through
extension.

Technical Outlook

COCOA (SEP) 06/29/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1401 and above there at 1414 with support at
1365 and 1342. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The next upside target is 1414.00. Short-term
indicators suggest buying dips today.

 

COFFEE MARKET RECAP

6/28/2004

The coffee market opened weaker, slipped
sharply lower but then managed a smart recovery into the close. Apparently the
commercial interests saw the low Monday as an attractive price, as roasters
seemingly provided a bottoming force for the market. It does not appear as if
the weather was a major component of the recovery but the weather doesn’t look
to be as mild into the end of next week. Therefore, we suspect that some short
covering action was behind the reversal action. Some suggested that a US fund
might take delivery and that also gave the shorts a reason to move back to the
sidelines.

Technical Outlook

COFFEE (SEP) 6/29/04 The daily closing price
reversal up is positive. The market has a slightly positive tilt with the
close over the swing pivot. Momentum studies are declining, but have fallen to
oversold levels. The next downside objective is now at 71.90. The Coffee
contract should run into resistance at 75.80 and above there at 76.40 with
support at 73.55 and 71.90. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

6/28/2004

October sugar closed 9 ticks lower as profit
taking and rollover activity out of the July contract dominated trade. COT
report showing a large buildup of the combined net spec long position combined
with the recent price run up made the market susceptible to a profit taking
break. Technically, the outside day down action would suggest additional
selling pressure is likely. Deliveries against the July contract are expected
to be small.

Technical Outlook

#SUGAR (OCT) 06/29/04: The outside day down is
a negative signal. The daily closing price reversal down puts the market on
the defensive. The market’s close below the 1st swing support number suggests
a moderately negative setup for today. Swing resistance comes in at 7.86, with
support found at 7.46. The market’s short-term trend is positive on a close
above the 9-day moving average. Momentum studies are trending higher, but have
entered overbought levels. The near-term upside objective is at 7.86.

 

COTTON MARKET RECAP

6/28/2004

December cotton gave up most of last weeks
gains in the action Monday as the trade continues to see near perfect growing
conditions. Others suggested that the expected cotton acres decline would not
be enough to countervail the potential for good US yields. Some in the trade
suggested that options related selling applied pressure to prices Monday and
considering the steady declines in volume and open interest it wouldn’t take
much options related selling to accentuate the bearish attitude in cotton.
Favorable growing conditions simply discourage those that would even want to
buy cotton ahead of the upcoming report.

Technical Outlook

#COTTON (OCT) 06/29/04: The market’s close
below the 9-day moving average is an indication the short-term trend remains
negative. The close below the 2nd swing support number puts the market on the
defensive. Next resistance area comes in at 53.43 and then again at 54.91,
while support is targeted at 50.98 and 50.01. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The next upside target is 54.91.