Refinery Problems Behind Energy Spike?

Technical Outlook

#BONDS (SEP) 7/2/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 107.06 and then again at 107.15, while swing support hits at 106.12
and below there at 105.27. 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 107.15.

T-NOTES(SEP) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
110.03. It is a mildly bullish indicator that the market closed over the pivot
swing number. Near-term resistance for the T-Notes is at 109.29 and then again
at 110.03, while swing support hits at 109.12 and below there at 108.32. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

7/1/2004

Pre-holiday rumors associated with terrorism
seemed to spark the profit taking slide on Thursday. We also have to think that
the sharp rise in energy prices added to the liquidation tilt and with the
critical monthly payroll report due out Friday morning, it is not surprising
that equity prices were under pressure. The fact that US economic reports were
mostly below expectations Thursday morning also justifies the weakness in
prices, even if the big picture view is that the US recovery continues unabated.

Technical Outlook

#S&P500 (SEP) 7/2/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Underlying support comes in at 1117.05 and 1110.83, with overhead resistance at
1134.95 and 1146.63. 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 objective is now at 1110.83.

S&P E-Mini (SEP): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 1108.00. The close below the 2nd swing support number puts the market
on the defensive. Near-term resistance for the S&P Mini is at 1136.75 and then
again at 1151.00, while swing support hits at 1115.25 and below there at
1108.00. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

NASDAQ (SEP) A positive signal for trend
short-term was given on a close over 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 1512.50 and
above there at 1533.75 with support at 1476.50 and 1461.75. A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 1461.75.

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 10395 and above there at 10515 with support at 10208 and 10141.
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
10141. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness.

 

CURRENCY MARKET RECAP

7/1/2004

The US economic information released Thursday
morning was mostly disappointing for the Dollar bulls. However, the Dollar
surprisingly managed to hold in mostly positive ground on the session and that
probably comes from the expectation that the monthly payroll on Friday would be
strong enough to instill the idea that the US economy is still the strongest in
the G7. The Yen continues to show the most consistently positive stance in the
currency markets with the British Pound showing renewed strength in the wake of
more talk about higher interest rates in the country.

Technical Outlook

#CURRENCIES 7/2/2004: YEN (SEP): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
If yesterday’s gap higher on the day session chart holds, additional buying
could develop this session. The market setup is supportive for early gains with
the close over the 1st swing resistance. Swing resistance is targeted at 92.88
and above there at 93.12, with the yen finding support around 92.48 and below
there at 92.32. Stochastics turning bearish at overbought levels will tend to
support lower prices if support levels are broken. The next downside objective
is 92.32.

EURO (SEP): 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 1.2191. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.2115, with overhead resistance at 1.2191. The
close above the 9-day moving average is a positive short-term indicator for
trend. More selling pressure is likely given yesterday’s gap lower price action
on the day session chart.

 

PRECIOUS METALS RECAP

7/1/2004

The gold market was somewhat impressive in the
action Thursday, as the Dollar was higher and yet gold showed no ill affect.
With crude oil prices up nearly $2.00 in the gold pit session close we have to
think that gold and silver buyers jumped in and speculated that something was
taking place in the form of flight to quality in the energy sector. A sharply
higher energy thrust seemed to undermine the Dollar and that also sparked some
spec buying in gold.

Technical Outlook

#P-METALS 7/2/2004: SILVER (SEP): The market now
above the 40-day moving average suggests the longer-term trend is up. The market
setup is supportive for early gains with the close over the 1st swing
resistance. Initial support for silver is at 589.1 and below there at 580.8 with
resistance likely at 594.5 and 601.6. A positive signal for trend short-term was
given on a close over the 9-bar moving average. Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. The
next downside objective is 580.8.

GOLD (AUG): Support for gold today comes in near
392.88, while resistance is pegged at 398.68. 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 392.88. Market positioning is
positive with the close over the 1st swing resistance. The close below the 9-day
moving average is a negative short-term indicator for trend.

 

COPPER MARKET RECAP

7/1/2004

The copper market managed a big upward pulse in
prices and continues to foster most of the bullish attitude off the idea that
the strike in Chile might extend. With the September copper managing to rise
above the mid June highs the market saw a wave of technical short covering. With
US economic reports soft, talk about an upgrade in the terrorism threat and
soaring energy prices the copper market seemed to extract some of the gains out
of prices into the close.

 

ENERGY MARKET RECAP

7/1/2004

The energy market soared and seemed to start the
session out firm and then managed a massive upward thrust into mid session. We
suspect that refinery problems were behind the rise as the products rose sharply
in sync with the crude oil. Apparently cash prices in Los Angeles seemed to lead
the charge while other suggested that a terrorist threat against oil facilities
might have been feared. However, the government seemed to refute that any fresh
threats were being seen. The fact that OPEC production for June was revised
downward by 650,000 barrels per day set the market up for the sharp reaction
Thursday, which in the end were supposedly sparked by concerns about Russian
supply flow.

Technical Outlook

#ENERGIES 7/2/2004: CRUDE OIL (AUG): There could
be more upside follow through since the market closed above the 2nd swing
resistance. Support for crude is keyed on 37.54 and below there at 35.91, with
resistance pegged at 39.95 and 40.73. 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 40.73.

UNLEADED GAS (AUG): A bullish signal was given
with an upside crossover of the daily stochastics. The next upside objective is
129.48. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. Resistance today is at 129.48, while support
should be found around 112.68. A positive signal for trend short-term was given
on a close over the 9-bar moving average. The market now above the 40-day moving
average suggests the longer-term trend is up.

HEATING OIL (AUG): There could be more upside
follow through since the market closed above the 2nd swing resistance. Heating
oil should encounter support around 98.92, with resistance is at 114.12. 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 114.12. The market rallied to a new contract high.

 

CORN MARKET RECAP

7/1/2004

The lack of any threatening weather for the first
ten days of July along with follow-through fund selling from yesterday helped
pressure the market in spite of positive export news. The selling slowed as the
market came close to downside swing objective of 261 1/4 and the close above the
opening and higher on the session is the first positive sign of a potential low
in quite some time. The USDA weekly export sales came in at 872,100 tons as
compared with trade expectations at 500,000-700,000 tons. Old crop sales were
810,100 tons as compared with 539,800 tons necessary each week to reach the USDA
projection. Cumulative sales stand at 89.9% of the forecast for the season as
compared with 91.8% on average for this time of the year. The Ag Minister in
Brazil lowered their crop estimate for the 2003/2004 crop to 42.4 million tons
from 42.7 million previous forecast and 41.5 million as the current USDA
forecast. Traders are a bit nervous that the overnight tender where South Korea
bought 55,000 tons of optional origin corn might have come from China. Basis is
firm, demand looks solid but weather seems to be the over-riding factor which
keeps fund traders in a long liquidation mode. December corn support moves up to
265 1/2 with 276 and 285 1/4 as initial resistance.

Technical Outlook

#CORN (DEC) 7/2/2004: 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 260 2/4. It is a slightly
negative indicator that the close was under the swing pivot. Market resistance
comes in at 272 today, with support at 260 2/4. The close below the 9-day moving
average is a negative short-term indicator for trend. Some caution in pressing
the downside is warranted with the RSI under 30. The upside daily closing price
reversal gives the market a bullish tilt.

 

SOY COMPLEX RECAP

7/1/2004

The tightness in near-term supply and firm cash
markets supported the early gains but the outlook for near perfect weather for
the first 10 days of July helped to trigger long liquidation selling into the
mid-session. Strength in meal basis, higher cash soybeans and commercial bull
spreading helped support strong gains in the nearby futures. The Ag Minister in
Brazil lowered their crop estimate for the 2003/2004 crop to 49.7 million tons
from 50.2 million previous forecast and 52.6 as the current USDA forecast. The
USDA weekly export sales came in at 206,800 tons as compared with trade
expectations at 50,000-100,000 tons. Old crop sales were 16,900 tons as compared
with 25,900 tons necessary each week to reach the USDA projection. Cumulative
sales stand at 99% of the forecast for the season as compared with 99.7% on
average for this time of the year. For meal, sales were 17,400 tons as compared
with trade expectations at 10,000-50,000 tons. Old crop sales were 4400 tons as
compared with 12,400 tons necessary each week to reach the USDA projection.
Cumulative sales stand at 95.5% of the forecast for the season as compared with
87.9% on average for this time of the year. Oil sales were only 200 tons. There
were no deliveries this morning against the July contracts and none so far.
November soybean support comes in at 656 1/2 and 653 1/2 with 674 and 683 3/4 as
resistance.

Technical Outlook

#SOYBEANS (NOV) 07/02/04 The market tilt is
slightly negative with the close under the pivot. The next area of resistance is
around 676 2/4 and 685, while 1st support hits today at 658 and below there at
648. A negative signal for trend short-term was given on a close under the 9-bar
moving average. Momentum studies trending lower at mid-range could accelerate a
price break if support levels are broken. The next downside objective is 648.

MEAL (DEC): 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 202.0. First resistance comes in
at 211.0, with support at 205.5. The close below the 9-day moving average is a
negative short-term indicator for trend. The close over the pivot swing is a
somewhat positive setup.

BEAN OIL (DEC): A positive indicator was given
with the upside crossover of the 9 & 18 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 24.98. It is a
slightly negative indicator that the close was lower than the pivot swing
number. Daily swing resistance is found at 24.70 and above there at 24.98.
Support should be encountered at 24.20 and 23.98.

 

WHEAT MARKET RECAP

7/1/2004

The good weather for winter wheat harvest and
good weather in the forecast for the spring wheat belt helped to offset positive
demand news and helped pressure the market into mid-session. In addition,
weakness in July wheat, hefty deliveries and weakness in the other grains helped
to pressure the market with speculative selling active. The lowest close since
mid-October should keep fund traders adding to their net short position. Rising
open interest suggests that fund traders are selling more. Egypt bought 120,000
tons of wheat from the US and from France this morning. In addition, weekly
export sales came in at 496,200 tons as compared with trade expectations at
300,000-500,000 tons and 389,900 tons necessary each week to reach the USDA
projection. Cumulative sales stand at 28.2% of the forecast for the season as
compared with 15.5% on average for this time of the year. Shipments to China
were 37,400 tons on the week which left shipments on the month to 237,100 tons.
Deliveries were seen as hefty at 1140 contracts but a strong commercial stopper
took 855. Support for September wheat comes in at 337 1/2 and 332 with
resistance at 344 1/2 and 352 1/4.

Technical Outlook

#WHEAT (DEC) 7/2/2004: The market could take on a
defensive posture with the daily closing price reversal down. The close below
the 1st swing support could weigh on the market. Expect near-term support around
346 2/4 and below there at 343 3/4, with resistance levels at 355 2/4 and 361
3/4. A negative signal for trend short-term was given on a close under the 9-bar
moving average. A bearish signal was triggered on a crossover down in the daily
stochastics. The next downside objective is 343 3/4. The market is approaching
over sold levels on an RSI reading under 30.

 

LIVE CATTLE RECAP

7/1/2004

The market continued to push lower and moved to
the lowest level since late May as traders await news from the USDA on the
second animal with an inconclusive test in the quick test for mad cow in the
past week. The first animal had a negative result which helped support a mid-day
bounce but traders remain concerned with the results on the second animal with
rumors that the 2nd animal was an 8 year old cow. Cash bids were 84-85 with
offers still up at $90 so no trade occurred. Boxed-beef cut-out values were down
$1.34 to $143.17 as compared with $145.32 last week at this time.

Technical Outlook

#CATTLE (AUG) 7/2/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 83.92. The market tilt is slightly negative with the
close under the pivot. Support should be encountered at 84.55 and below there at
83.92. Market resistance is at 86.00 and then again at 86.82. A positive
indicator was given with the upside crossover of the 9 & 18 bar moving average.

 

LEAN HOGS RECAP

7/1/2004

The market remained volatile in spite of the
early move to contract highs for August hogs as weakness in bellies and the late
break in cattle helped turn the tone weak late in the session. The downside
reversal for July and August hogs from contract highs could attract some
technical selling. Cash markets were steady and demand is in question from
packers who are cutting back on slaughter for the holiday weekend. The discount
of futures to cash helped support but weakness in cattle and a collapse in
bellies added to the late bearish tone. The 2-day lean index fell for the second
day in a row. The Index for the period ending June 29th was down 59 cents to
81.05 as compared with 80.84 one week previous.

Technical Outlook

#HOGS (AUG) 7/2/2004: It is a slightly negative
indicator that the close was under the swing pivot. Resistance levels comes in
at 77.45 and 78.92 today, while support is around 75.30 and then 74.62. 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. 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 78.92.

 

COCOA MARKET RECAP

7/1/2004

A new low for the move undermines the hopes of
the bulls that the market would respect the consolidation lows and avoid a
re-test of the contract lows. Reports that most African crops are developing
favorably simply add to the downside pressure and about the only positive
development Thursday were suggestions that Nigerian supply flow was beginning to
taper off. We doubt that a slight decline in origin sales is going to provide
the cocoa market with a reason to bottom, especially with the fund positioning
no-where near an oversold status.

Technical Outlook

COCOA (SEP) 07/02/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1348 and above there at 1365 with support at 1319 and 1307. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 1307.25.

 

COFFEE MARKET RECAP

7/1/2004

September coffee closed 40 lower on the session
but near the highs of the day as minor support held in spite of the bearish
weather forecast for Brazil coffee areas. Cash markets are very quiet as prices
seem to have moved low enough to slow producer selling. Buyers are already on
the sidelines and seem to have enough foreword coverage. If it remains dry and
warm through July 15th, the odds of impacting the crop diminish as more of the
crop is harvested and the seasonal odds of cold weather decline. Cash basis
levels were steady. Futures look oversold basis traditional technical
indicators.

Technical Outlook

COFFEE (SEP) 7/2/04 The market has a slightly
positive tilt with the close over the swing pivot. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The near-term upside objective is at 76.05.
The Coffee contract should run into resistance at 75.55 and above there at 76.05
with support at 74.25 and 73.45. The market’s short-term trend is negative as
the close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

7/1/2004

The sugar market held support on the early break
and closed 8 higher for the October contract. London futures pushed moderately
higher to help support. News that China plans to sell 536,000 tons of white
sugar from reserves into the domestic market was initially seen as a bearish
development, however, the sales indicate tight supplies and a rising price level
within China. While the sales may suggest less demand for imports over the
near-term, the actions suggest that imports may be necessary later this year to
hold off the higher price trend within China. The European Union sold 66,000
tonnes of white sugar at their weekly tender at a maximum rebate of 48.144 euros
per 100 kg. Traders were looking for 20,000-50,000 tons.

Technical Outlook

#SUGAR (OCT) 7/2/2004: The close over the pivot
swing is a somewhat positive setup. Swing resistance comes in at 7.93, with
support found at 7.53. 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 7.93.

 

COTTON MARKET RECAP

7/1/2004

December cotton closed 1.12 lower on the session
at 50.24, which is a new contract low close. The cotton market had opened
stronger on neutral to supportive export sales and shipments but sold off
sharply at midsession after the market fell through Wednesday’s close. Weekly
export sales, released before the opening, came in at 126,300 bales for old crop
and 146,900 for new. This put the total at 273,200 versus expectations of
200,000-300,000 bales and compared to 259,600 last week. Export shipments came
in at 231,500 bales versus expectations of 300,000-400,000 bales and compared
with 367,500 bales last week. December cotton’s collapse to new contract lows
today came as the market was still reeling from the high acreage numbers in
yesterday’s USDA report and ideas that crop conditions are improving.

Technical Outlook

#COTTON (OCT) 7/2/2004: 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. Next resistance area
comes in at 51.23 and then again at 52.99, while support is targeted at 48.88
and 48.29. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 48.29. The market
is approaching over sold levels on an RSI reading under 30. The outside day down
is somewhat negative. The market made a new contract low on the break. The
market could take on a defensive posture with the daily closing price reversal
down.