Renewed Concern Sends Dollar Lower…
BOND MARKET RECAP
3/8/2005
March Bonds finished down 0-28 at 112-14, 0-17
off the high and 0-06 up from the low.
March 10 Yr Treasury Notes finished down 0-150 at
109-240, 0-090 off the high and 0-040 up from the low.
The Treasury market came under aggressive
additional selling pressure in what appeared to be a delayed reaction to the
Monday afternoon consumer credit explosion. Adding to the bearish pressure in
Treasuries, were renewed fears of international rotation away from U.S.
investments that were prompted by a sharp slide in the Dollar. In fact, with the
U.S. Dollar falling to lowest level since early January, it’s understandable
that sellers were out in force. However, we are little surprised that bonds
managed such a significant washout, especially in the face of sharp energy price
gains and moderate early weakness in equity prices.
Technical Outlook
BONDS (JUN) 03/09/2005: The close below the
60-day moving average is an indication the longer-term trend has turned down.
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 close under the
18-day moving average indicates the longer-term trend could be turning down. The
market is in a bearish position with the close below the 2nd swing support
number. The next upside objective is 113-19. The next area of resistance is
around 112-27 and 113-19, while 1st support hits today at 111-26 and below there
at 111-16.
TNOTES (JUN) 03/09/2005: 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. There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. The near-term upside objective is at 110-135. The next area of
resistance is around 110-000 and 110-135, while 1st support hits today at
109-130 and below there at 109-070.
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STOCK INDICES RECAP
3/8/2005
March S&P finished down 4.7 at 1225.1, 5.5 off
the high and 1.8 up from the low.
March S&P E-Mini closed down 4.75 at 1225. This
was 1.75 up from the low and 5.75 off the high.
March Dow closed down 22 at 10945. This was 20 up
from the low and 35 off the high.
The stock market started out weak, gave ground
into mid-session, but attempted to recover into the early afternoon action. For
the stock market to have managed a midday rally attempt, in the face of rising
energy prices, is actually quite surprising and a little telling. It’s also will
surprising that U.S. stocks attempted the mid day bounce in the wake of
significant U.S. Dollar declines as may are growing even more fearful of
damaging international diversification. After all, the severe weakness in the
Dollar Tuesday probably discourage international buying and in a sense kicks up
the risk of being long. The U.S. government Energy Information Association also
added in additional anxiety into the marketplace Tuesday morning by suggesting
that gasoline prices could rise sharply into the come spring.
Technical Outlook
S&P 500 (JUN) 03/09/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The close below the 1st swing support could
weigh on the market. The near-term upside objective is at 1233.32. The next area
of resistance is around 1228.75 and 1233.32, while 1st support hits today at
1221.45 and below there at 1218.73.
SP EMINI (JUN) 03/09/2005: Rising stochastics at
overbought levels warrant some caution for bulls. 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 near-term upside objective is at 1233.75. The next area of
resistance is around 1229.25 and 1233.75, while 1st support hits today at
1221.75 and below there at 1218.75.
NASDAQ (JUN) 03/09/2005: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The major trend could be turning up
with the close back above the 18-day moving average. The close below the 1st
swing support could weigh on the market. The near-term upside objective is at
1566.62. The next area of resistance is around 1552.25 and 1566.62, while 1st
support hits today at 1531.75 and below there at 1525.63.
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CURRENCY MARKET RECAP
3/8/2005
March US Dollar finished down 82 at 8193, 73 off
the high and 11 up from the low.
March Euro finished up 1.41 at 133.73, 0.18 off
the high and 1.04 up from the low.
March Euro Dollar closed down 0.005 at 96.565.
This was 0.02 up from the low and 0.005 off the high.
March Canadian Dollar closed up 1.06 at 82.47.
This was 0.77 up from the low and 0.01 off the high.
March British Pound finished up 1.48 at 191.89,
0.38 off the high and 0.64 up from the low.
March Swiss closed up 1.08 at 86.61. This was
0.73 up from the low and 0.24 off the high.
March Japanese Yen closed up 0.46 at 96.24. This
was 0.18 up from the low and 0.39 off the high.
The March Dollar Index fell to lowest level since
early January and did so off renewed concerns of massive international
investment rotation away from U.S. financial assets. Adding to the downside in
the Dollar were suggestions from the Fed, that the U.S. the trade deficit
problem might actually be solved by changing IS demographics. In other words,
even the Fed sees the trade balance issue as a very long-term problem for the
Dollar. With the market also extremely concerned about an explosion in U.S.
consumer credit, it is possible that the twin deficit problem has now become a
triple deficit problem. The primary benefactors of U.S. Dollar slide on Tuesday,
were the Euro, Pound and Canadian.
Technical Outlook
YEN (JUN) 03/09/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The next downside objective is 95.73. The next area of resistance is
around 96.52 and 96.86, while 1st support hits today at 95.96 and below there at
95.73.
EURO (JUN) 03/09/2005: The daily stochastics gave
a bullish indicator with a crossover up. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The market now above the 18-day moving average suggests the longer-term trend
has turned up. The gap up on the day session chart gave a bullish indicator and
more follow through could be seen this session. The market’s close above the 2nd
swing resistance number is a bullish indication. The near-term upside objective
is at 134.73. The next area of resistance is around 134.34 and 134.73, while 1st
support hits today at 133.12 and below there at 132.30.
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PRECIOUS METALS RECAP
3/8/2005
April Gold closed up 5.3 at 441.1. This was 4.4
up from the low and 0.2 off the high.
March Silver finished up 0.143 at 7.538, 0.072
off the high and 0.058 up from the low.
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The gold Market managed yet another upside
breakout Tuesday and managed to reach the highest level since early January. We
also suspect that the funds and small spec players were behind the run up, but
it should be noted that the precious metals seemed to be rising off a number of
different fundamental themes instead of the of the old standby a weak Dollar. In
addition to the potential for inflationary ramifications of sharply higher oil
prices, the gold might also have been lifted by a sharply lower Dollar and by
basic flight to quality concerns. The fact that both gold and silver managed to
violate a number of critical technical points on the charts, could facilitate
additional upside follow through in the sessions ahead.
Technical Outlook
SILVER (MAY) 03/09/2005: 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. Follow through buying looks likely if the
market can hold yesterday’s gap on the day session chart. There could be more
upside follow through since the market closed above the 2nd swing resistance.
The next downside target is now at 741.2. The next area of resistance is around
760.3 and 767.2, while 1st support hits today at 747.4 and below there at 741.2.
GOLD (APR) 03/09/2005: The crossover up in the
daily stochastics is a bullish signal. 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. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. The market’s close above the 2nd
swing resistance number is a bullish indication. The next upside target is
444.6. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The next area of resistance is around 443.4 and 444.6, while 1st support
hits today at 438.8 and below there at 435.5.
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COPPER MARKET RECAP
3/8/2005
March Copper closed up 0.30 at 149.95. This was
0.55 up from the low and 2.15 off the high.
The copper market thrust into new contract highs
early in the session Tuesday but failed to hold those gains in the close. We
suspect that a private bank analyst forecast early in the session, fostered the
initial buying wave, with the second buying wave prompted by it the massive
slide in the Dollar. With slightly weaker steel stock price action noted Tuesday
and reports of a decline in Chinese steel prices, it is possible that some
copper longs simply decided to bank profits after the significant early rally.
Is also possible that the net spec and fund long position in copper reached a
new all-time high, with a rally Tuesday morning, and that puts the market in a
more vulnerable technical position.
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ENERGY MARKET RECAP
3/8/2005
April Crude Oil closed up 0.69 at 55.23. This was
0.83 up from the low and 0.52 off the high.
April Heating Oil closed up 3.52 at 149.51. This
was 3.31 up from the low and 0.74 off the high.
April Unleaded Gas finished up 2.78 at 156.59,
1.21 off the high and 3.39 up from the low.
April Natural Gas finished up 0.13 at 6.98, 0.07
off the high and 0.04 up from the low.
April Propane closed up 0.02 at 0.84. This was
0.01 up from the low and equal to the high.
After starting out weaker, the energy complex
once again managed to recover and in the process thrust sharply higher. With the
EIA whipping up speculative fervor by suggesting that gasoline prices were
poised for sharp spring rally, it is not surprising that prices managed such a
strong run. Adding to the bullish interest were calls for a strike from the
Nigerian National Union, as they were once again upset with high domestic fuel
prices. The EIA also suggested that OPEC spare production capacity might have
declined by at 500,000 barrels per day in February and that is bullish as that
increases the concern of a major shortage in the event that demand rises. In
other words, demand looks to be on the rise, with OPEC production barely able to
keep pace. From several OPEC member comments on Tuesday, it would seem as if
many in the cartel are expecting another $2 to $3 higher crude oil rally in the
coming weeks.
Technical Outlook
CRUDE OIL (MAY) 03/09/2005: The crossover up in
the daily stochastics is a bullish signal. Studies are showing positive momentum
but are now in overbought territory, so some caution is warranted. The major
trend could be turning up with the close back above the 18-day moving average.
The market setup is supportive for early gains with the close over the 1st swing
resistance. The near-term upside target is at 56.50. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 55.90 and 56.50, while 1st support hits today at 54.56 and below there at
53.81.
UNLEADED (MAY) 03/09/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day moving average. The market’s close above the 2nd swing resistance number
is a bullish indication. The near-term upside target is at 160.64. With a
reading over 70, the 9-day RSI is approaching overbought levels. The next area
of resistance is around 158.89 and 160.64, while 1st support hits today at
154.29 and below there at 151.45.
HEATING OIL (MAY) 03/09/2005: The market rallied
to a new contract high. The daily stochastics gave a bullish indicator with a
crossover up. 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. The market’s close above the 2nd
swing resistance number is a bullish indication. The next upside objective is
152.91. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 151.53 and 152.91, while 1st support hits
today at 147.49 and below there at 144.82.
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CORN MARKET RECAP
3/8/2005
May Corn finished up 1 at 214 1/4, 1 off
the high and 2 1/2 up from the low. December Corn closed up 1/2 at 235 1/4. This
was 2 1/4 up from the low and 1 1/2 off the high.
The early weakness was seen as corn followed the
soybean market lower. Commercial selling emerged on the rally to limit the
upside in the market in spite of strong gains in the other grains. Trade
sentiment remains bearish toward the export pace with traders looking for
another 25-50 million bushel decline in the USDA export forecast for Thursday’s
USDA supply/demand report. However, recent export news has come in with a
bullish tilt. Taiwan bought 60,000 tons of US corn in their tender for
30,000-60,000 tons of corn from the US or Argentina. In addition, Japan bought
140,208 tons of US corn and South Korea is tendering for 110,000 tonnes of corn.
Deliveries against the March contract totaled 100 contracts this morning.
Midwest cash basis levels were firm this morning. Support for May corn comes in
at 212 3/4 and 210 1/2 with resistance at 216 and 217.
Technical Outlook
CORN (MAY) 03/09/2005: 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 is an indication the longer-term trend
has turned positive. The daily closing price reversal up on the daily chart is
somewhat positive. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The next downside objective is now at 210 1/2.
The next area of resistance is around 216 and 217 1/4, while 1st support hits
today at 212 1/2 and below there at 210 1/2.
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SOY COMPLEX RECAP
3/8/2005
May Soybeans finished up 9 1/2 at 625 1/2, 5 1/2
off the high and 16 1/2 up from the low. November Soybeans closed up 2 at 612
1/2. This was 9 1/2 up from the low and 7 off the high.
May Soymeal closed up 0.6 at 181.2. This was 2.8
up from the low and 1.8 off the high.
March Soybean Oil finished up 0.58 at 23.42, 0.13
off the high and 0.87 up from the low.
Continued long liquidation selling hit the market
early in the session in conjunction with some forecasts for rains in southern
Brazil and from supply fears with harvest activity in Brazil expected to pick-up
in the weeks just ahead. Funds were noted buyers of near 3000 contracts into the
mid-session as the surging US dollar and strength in many commodity markets
helped support a more positive tone. Some traders look for scattered rains in
the southern Brazil region this week with more widespread rain expected on the
weekend. However, the market is still receiving underlying support from ongoing
losses in the southern Brazil region as dryness stress is still driving down
yield potential. Taiwan is tendering for 40,000-60,000 tonnes of US or Brazil
soybeans for late March to early April shipment so traders will monitor this
tender closely. The sharp drop in the US dollar is seen as a potentially
supportive factor. Resistance for May soybeans comes in at 634 and 638 with
support at 623 1/2 and 620 1/2.
Technical Outlook
BEANS (MAY) 03/09/2005: 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 daily closing price reversal
up on the daily chart is somewhat positive. The market setup is supportive for
early gains with the close over the 1st swing resistance. The next downside
target is now at 600 3/4. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 636 1/2 and
644 3/4, while 1st support hits today at 614 1/2 and below there at 600 3/4.
MEAL (MAY) 03/09/2005: 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 daily
closing price reversal up is a positive indicator that could support higher
prices. The close over the pivot swing is a somewhat positive setup. The next
downside objective is 179.2. The next area of resistance is around 187.3 and
189.7, while 1st support hits today at 182.1 and below there at 179.2.
BEANOIL (MAY) 03/09/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. A
positive signal was given by the outside day up. The market setup is supportive
for early gains with the close over the 1st swing resistance. The near-term
upside objective is at 24.39. The market is approaching overbought levels with
an RSI over 70. The next area of resistance is around 23.97 and 24.39, while 1st
support hits today at 22.89 and below there at 22.23.
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WHEAT MARKET RECAP
3/8/2005
May Wheat finished up 5 at 337 1/4, 3 3/4 off the high and 6
3/4 up from the low. July Wheat closed up 5 3/4 at 343 3/4. This was 7 3/4 up
from the low and 3 1/4 off the high.
July wheat moved to a 7 session low before
finding support and closing moderately higher on the session. Wheat appeared to
show independent strength on the floor and led the grain markets higher on the
day with funds noted buyers of near 1500 contracts into the mid-session.
Overnight news appeared to have a bearish tilt but the market lacked new selling
interest after the opening in spite of continued weakness in the other grains.
Syria sold 100,000 tons of wheat to Egypt. In addition, French officials
indicated that soft wheat planted acreage for 2005 is up 3.13% from last year.
Deliveries against the March contract totaled 154 lots this morning. A wide
range of temperatures in the soft red winter wheat areas is seen as potentially
supportive to the market as another freeze/thaw cycle this weekend is not good
for the crop coming out of dormancy. Warm weather in the plains is seen as
supportive to improving the already good crop conditions in the central plains.
Basis for soft red wheat was steady/firm due to tight producer holding. May
wheat support comes in at 326 3/4 with resistance at 338 1/4 and 340 1/4.
Technical Outlook
WHEAT (MAY) 03/09/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The major trend could be turning up with the close
back above the 18-day moving average. The market setup is supportive for early
gains with the close over the 1st swing resistance. The next downside objective
is now at 326. The next area of resistance is around 342 1/2 and 347, while 1st
support hits today at 332 and below there at 326.
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LIVE CATTLE RECAP
3/8/2005
April Live Cattle finished up 0.35 at 89.25, 0.15
off the high and 0.35 up from the low.
March Feeder Cattle closed up 0.82 at 103.92.
This was 0.82 up from the low and 0.02 off the high.
June cattle closed moderately higher and made new
contract highs for the third session in a row. The market is finding support
from surging beef prices as the higher beef is supporting better packer profit
margins and has helped firm the tone for the cash market this week. The stiff
discount of futures to the cash market and a firm tone for the cash trade for
this week helped support. The weather looks to be a slightly negative force over
the near-term as near ideal weight gain weather is in the forecast for the
plains while the east coast gets hit with another snow-storm. Boxed-beef cut-out
values at mid-session were up $3.96 to $151.20 as compared with $140.82 last
week. Slaughter came in at 121,000 head from trade expectations for
114,000-120,000 head. The higher than expected slaughter could be a sign of
strong packer demand.
Technical Outlook
CATTLE (APR) 03/09/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The major trend could be
turning up with the close back above the 18-day moving average. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
upside objective is 89.700. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 89.500 and 89.700,
while 1st support hits today at 89.020 and below there at 88.720.
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LEAN HOGS RECAP
3/8/2005
April Lean Hogs finished up 0.60 at 76.10, 0.20
off the high and 0.70 up from the low.
March Pork Bellies closed up 0.07 at 89.05. This
was 0.95 up from the low and 0.25 off the high.
The market closed moderately higher supported by
a solid uptrend in cash and pork product prices. The jump in loin values
yesterday supported the market as packer demand appeared to pick-up with rising
pork cut-out values. Cash markets were $1.00 higher and traders remain
optimistic over the export outlook for pork. The 2-day lean index for the period
ending March 3rd came in at 701.21, up.79 on the session and up from 70.49 last
week at this time. Slaughter came in at 386,000 head from trade expectations for
388,000-395,000 head. For the weekly cold storage report, released after the
close, traders are looking for a net increase of 1.6 to 2.5 million pounds.
Technical Outlook
HOGS (APR) 03/09/2005: 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 indicates
the longer-term trend has turned up. The market has a slightly positive tilt
with the close over the swing pivot. The next upside objective is 76.850. The
next area of resistance is around 76.520 and 76.850, while 1st support hits
today at 75.650 and below there at 75.100.
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COCOA MARKET RECAP
3/8/2005
May Cocoa finished down 7 at 1769, 30 off the
high and 2 up from the low.
According to recent press reports there has been
a resumption of violence at the Ivory Coast. Therefore in addition to concerns
about low arrivals and overall lower production fears, we are also saying the
reintroduction of a political anxiety premium. With cocoa prices rushing toward
1800 and then falling back to finish lower on the day, it is clear that the
market has reached an overdone short-term technical standing. It would be our
opinion that the around highs on Tuesday, the cocoa market probably reached a
new all-time spec and fund long position. However, because France appears to be
concerned about conditions at the Ivory Coast, we doubt that the recent run-up
in prices has totally run its course.
Technical Outlook
COCOA (MAY) 03/09/2005: 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 daily closing price
reversal down puts the market on the defensive. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside target
is at 1808. The market is approaching overbought levels with an RSI over 70. The
next area of resistance is around 1785 and 1808, while 1st support hits today at
1753 and below there at 1744.
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COFFEE MARKET RECAP
3/8/2005
May Coffee closed up 2.65 at 132.85. This was
1.65 up from the low and 3.05 off the high.
May coffee rose to fresh contract highs as funds
continue to add to long positions. Producer, are holding off on sales, although
they still have product on hanf, in hopes of higher prices. This leaves little
upside resistance while some roasters have been forced to chase the market
higher. With the International Coffee Organization forecasting a 7 million bag
deficit this year, speculators have flocked to the coffee market bringing the
combined speculative net long position to a record level.
Technical Outlook
COFFEE (MAY) 03/09/2005: 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 gap upmove on the day session chart is a
bullish indicator for trend. The close over the pivot swing is a somewhat
positive setup. The next upside objective is 137.90. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 135.15 and 137.90, while 1st support hits today at 130.50 and below there
at 128.50.
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SUGAR MARKET RECAP
3/8/2005
May Sugar closed up 0.18 at 8.96. This was 0.12
up from the low and 0.02 off the high.
May sugar rallied 18 on the session to
re-challenge 9.00 resistance after 5 days of losses. Strength in the US dollar
along with surging demand from fund traders for many commodity markets helped to
provide support. Traders are monitoring the cash trade activity to see if India,
Russia or maybe even China comes in to book more sugar. After weeks of long
liquidation selling, the fund traders were absent early in the session and the
lack of fund selling and surging values for London sugar along with the coffee
rally helped support.
Technical Outlook
SUGAR (MAY) 03/09/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The market setup is supportive for
early gains with the close over the 1st swing resistance. The next downside
objective is now at 8.80. The next area of resistance is around 9.03 and 9.07,
while 1st support hits today at 8.89 and below there at 8.80.
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COTTON MARKET RECAP
3/8/2005
May Cotton finished up 1.08 at 51.52, 0.18 off
the high and 0.97 up from the low.
May cotton closed at its highest level since
September 23rd today, driven by fund buying and general ideas of strong
international demand. This Thursday’s monthly USDA Supply/Demand report is not
expected to hold many surprises, particularly the US portion. Instead, traders
are looking ahead with anticipation to the USDA Planting Intentions report,
which is due out at the end of the month for the first indication for the new
crop. The heavy net spec long position in cotton (around 42,000 contracts as of
the March 1st Commitments of Traders report) suggests a potential for stop loss
selling if the market should turn lower.
Technical Outlook
COTTON (MAY) 03/09/2005: A bullish signal was
given with an upside crossover of the daily stochastics. 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. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next upside target
is 52.47. The next area of resistance is around 52.09 and 52.47, while 1st
support hits today at 50.95 and below there at 50.18.