Surprising Break In Gold And Silver

Technical Outlook

#BONDS (SEP) 7/21/2004: There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Near-term resistance for bonds is at 108.32 and then again at
109.26, while swing support hits at 107.25 and below there at 107.12. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Rising stochastics at overbought levels warrant some caution for bulls. The next
upside objective is 109.26.

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 109.28. The market is in a
bearish position with the close below the 2nd swing support number. Near-term
resistance for the T-Notes is at 111.02 and then again at 111.21, while swing
support hits at 110.05 and below there at 109.28. The market’s short-term trend
is negative as the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

7/20/2004

After several sessions in which earnings seemed
almost no impact on prices, the stock-market responded favorably to good
earnings reports from Radio Shack and Corning. It also seemed as if a number of
short positions were being lifted ahead of the critical Greenspan commentary
around mid-session. As expected, the Chairman of the Federal Reserve talked up
the continuance of stable conditions in the U.S with inflation remaining low and
the foundation for more growth still in place. Greenspan also suggested that the
recent slow down was expected to be sustained and that probably gave the market
the biggest lift. We were actually surprised but that the stock-market was so
readily able to discount the much worse than expected early housing starts and
housing permits reports and that was apparently hinting at a hidden bullish
resolve.

Technical Outlook

#S&P500 (SEP) 7/21/2004: There could be more
upside follow through since the market closed above the 2nd swing resistance.
Underlying support comes in at 1104.40 and 1093.50, with overhead resistance at
1120.20 and 1125.10. 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 objective is at 1125.10.

S&P E-Mini (SEP): A bullish signal was given with
an upside crossover of the daily stochastics. The next upside target is 1127.50.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. Near-term resistance for the S&P Mini is at 1121.25 and
then again at 1127.50, while swing support hits at 1102.25 and below there at
1089.50. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

NASDAQ (SEP) A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The market should run into resistance at 1446.00 and above there at
1458.50 with support at 1410.00 and 1386.50. The daily stochastics have crossed
over up which is a bullish indication. The next upside objective is 1458.50.

MINI DOW (MAR) The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10227 and above there at 10274 with support at 10091 and 10002.
The crossover up in the daily stochastics is a bullish signal. The near-term
upside target is at 10274. Market positioning is positive with the close over
the 1st swing resistance.

 

CURRENCY MARKET RECAP

7/20/2004

Some traders suggested that the Dollar was up
ahead of the Greenspan dialogue off a short covering tilt. Some traders expected
the Chairman to be upbeat toward the US economy and hence they moved to the
sidelines and in the process bought Dollars. Even more surprisingly is the fact
that the Euro remained very weak despite the fact that German ZEW readings
before the opening were stronger than expected.

Technical Outlook

#CURRENCIES 7/21/2004: YEN (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. Swing resistance is targeted at 92.60 and
above there at 92.92, with the yen finding support around 92.08 and below there
at 91.88. 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 92.92.

EURO (SEP): Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. The next downside target is now at 1.2260. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.2260, with overhead resistance at 1.2402. The
close below the 9-day moving average is a negative 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

7/20/2004

The magnitude of the break in gold and silver was
surprising Tuesday, but with the U.S. Dollar showing amazing resiliency, the
move was partially justified. We suspect that in weakness in all of the metals
could have been prompted by the soft housing numbers early in the session.
However, once the equity market began to recover, one should have seen the
metals recover if the early break was indeed driven by macro economic concerns.
In the end, the strong stock market rally and the two day Greenspan testimony
seemed to lift the Dollar and that in turn prompted profit taking in gold and
silver. Greenspan downplayed inflation risks and that could have pressured gold
and silver.

Technical Outlook

#P-METALS 7/21/2004: SILVER (SEP): The market
tilt is slightly negative with the close under the pivot. Initial support for
silver is at 652.5 and below there at 639.7 with resistance likely at 659.0 and
670.0. A positive signal for trend short-term was given on a close over the
9-bar moving average. 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 639.7. The daily closing price reversal up is a positive indicator that could
support higher prices.

GOLD (AUG): Support for gold today comes in near
397.53, while resistance is pegged at 406.53. A crossover down in the daily
stochastics is a bearish signal. Momentum studies trending lower from overbought
levels is a bearish indicator and would tend to reinforce lower price action.
The next downside target is now at 397.53. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The close below
the 9-day moving average is a negative short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.

 

COPPER MARKET RECAP

7/20/2004

The copper market came under surprising
liquidation but didn’t really seem to slide much off the weaker than expected
housing readings from the US. In fact, the copper held together in the face of
poor housing stats and only began to fall more aggressively in the face of
strong gains in the equity market. In other words, the copper market is doing
anything but tracking macro economic developments. Copper might also have been
pressured by a stronger Dollar and reports that a major copper smelter might
curtail operations for maintenance.

 

ENERGY MARKET RECAP

7/20/2004

The energy complex showed more divergence between
crude oil and the products Tuesday, with the crude oil market holding together
and the products seeing extremely aggressive liquidation into mid session.
Initially crude managed an impressive rally that was within striking distance of
record prices but failed from that level rather significantly. However, it
appeared as if the market action Tuesday was a pre-emptive reaction to the
upcoming weekly inventory stats, which have recently shown tightening in crude
stocks and a rebuilding of product stocks.

Technical Outlook

#ENERGIES 7/21/2004: CRUDE OIL (SEP): The outside
day down gives the market a bearish tilt. The daily closing price reversal down
is a negative indicator for prices. The defensive setup, with the close under
the 2nd swing support, could cause some early weakness. Support for crude is
keyed on 39.72 and below there at 39.30, with resistance pegged at 41.16 and
42.18. The close below the 9-day moving average is a negative short-term
indicator for trend. A crossover down in the daily stochastics is a bearish
signal. Momentum studies trending lower from overbought levels is a bearish
indicator and would tend to reinforce lower price action. The next downside
target is now at 39.30.

UNLEADED GAS (SEP): Stochastics turning bearish
at overbought levels will tend to support lower prices if support levels are
broken. The next downside objective is 120.64. There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Resistance today is at 127.44, while support should be found
around 120.64. A negative signal for trend short-term was given on a close under
the 9-bar moving average.

HEATING OIL (SEP): The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Heating oil
should encounter support around 105.59, with resistance is at 113.39. The close
below the 9-day moving average is a negative short-term indicator for trend. A
crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The next downside target is now at 105.59.

 

CORN MARKET RECAP

7/20/2004

December corn is now down more than 40 cents off
of the June 29th highs with perfect weather for pollination and demand fears
contributing to more fund selling. The lack of a weather threat in the forecast
along with improving crop conditions in the weekly crop progress report
contributed to the increased selling pressure and move to the lowest level since
December 26th. Some light commercial buying was noted in the pit to help provide
support but fund trader selling (at least 2000 contracts) continues to pressure.
As of Sunday, the crop was rated 76% in good to excellent condition which was up
2% from last week and up from 66% as the 14-year average for this time of the
year. News that Thailand is offering corn for export into the Asia market added
to the bearish tone. While technically oversold basis traditional indicators,
there is still no sign of a near-term low. December corn support comes in at 240
1/2 and 237 with 245 1/4 and 249 as resistance.

Technical Outlook

#CORN (DEC) 7/21/2004: 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 237 1/4. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness.
Market resistance comes in at 248 1/4 today, with support at 237 1/4. The close
below the 9-day moving average is a negative short-term indicator for trend.
Selling may soon dry up since the RSI is under 20 indicating the market is
extremely oversold.

 

SOY COMPLEX RECAP

7/20/2004

While the market collapse to a new low for the
move with a lack of threatening weather on the horizon, the lack of an organized
rain system for the next few days and solid gains in August soybeans supported
the 20 cent late surge in November soybeans to close near unchanged. The lack of
heat or any extended period of dryness in the weather forecast for the Midwest
helped to trigger early weakness in the November futures while the old crop/new
crop spread activity is helping to support the recovery in August soybeans.
There was some concern developing from a period of drier weather over the past
few weeks in just a few areas of the mid-west but the forecast for a wet period
coming into late July and early August and the short-term forecast for scattered
rains and cool weather was enough to trigger more long liquidation selling for
new crop soybeans. November soybean support comes in at 638 and 627 with 660 1/4
and 669 as resistance.

Technical Outlook

#SOYBEANS (NOV) 07/21/04 The market tilt is
slightly negative with the close under the pivot. The next area of resistance is
around 659 and 667, while 1st support hits today at 635 and below there at 619.
A negative signal for trend short-term was given on a close under the 9-bar
moving average. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 667.

MEAL (DEC): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside target is at 208.9. First
resistance comes in at 206.2, with support at 197.4. 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 signal for trend
short-term was given on a close over the 9-bar moving average. Stochastics are
at mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 24.61. It is a
slightly negative indicator that the close was lower than the pivot swing
number. Daily swing resistance is found at 24.11 and above there at 24.61.
Support should be encountered at 23.11 and 22.61.

 

WHEAT MARKET RECAP

7/20/2004

Declining crop conditions for the spring wheat
crop helped to support the firm opening but talk of good weather for the tail
end of harvest for the winter wheat crop (76% harvested by Sunday) and weakness
in the other grains helped trigger losses into the mid-session. Talk of
increased producer selling in the mid-west was seen as the reason for the weaker
basis levels and contributed to the futures sell-off. South Korea is tendering
for 20,000 tons of US wheat but other export news seems to be lacking. Spring
wheat crop conditions declined by 3% to 68% good to excellent condition. The
market seems to lack the trigger mechanism to see much in the way of
short-covering unless there is a major shift in the demand fundamentals. The
next chart support for September wheat comes in at October lows at 324 1/2 with
336 and 339 as resistance.

Technical Outlook

#WHEAT (DEC) 7/21/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 341 and below there at 338 1/4, with resistance levels at 348 and 352
1/4. A negative signal for trend short-term was given on a close under the 9-bar
moving average. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 338 1/4.

 

LIVE CATTLE RECAP

7/20/2004

August cattle closed near unchanged in choppy,
two-sided trade while October ended lower as more active spreading of positions
from August to October was the feature of the day for the second day in a row.
Weak beef prices helped to lead to some ideas that cash cattle may continue to
trend lower but ideas that the market is technically oversold helped to support.
Slaughter came in at 129,000 head as compared with trade expectations of
126,000-129,000 head. The higher than expected slaughter could be an indication
of stronger demand from packers. Boxed beef cut-out values, however, were down
$.62 to $136.28 as compared with $141.27 last week at this time.

Technical Outlook

#CATTLE (AUG) 7/21/2004: A bullish signal was
given with an upside crossover of the daily stochastics. The next upside
objective is 83.85. The market tilt is slightly negative with the close under
the pivot. Support should be encountered at 82.70 and below there at 82.15.
Market resistance is at 83.55 and then again at 83.85. The daily closing price
reversal up is a positive indicator that could support higher prices. A negative
signal for trend short-term was given on a close under the 9-bar moving average.

 

LEAN HOGS RECAP

7/20/2004

August hogs closed slightly higher and October
slightly lower in choppy, two-sided trade as the stiff discount of futures to
cash helped to support some light short-covering. Weakness in pork product
helped to trigger some early weakness but the discount and positioning ahead of
Wednesday’s Monthly Cold Storage report helped to support. The weekly cold
storage report was expected to show stocks decline by 500,000 to 2.0 million
pounds. Slaughter came in at 383,000 head as compared with trade expectations of
383,000-388,000 head. The CME 2-day lean index for the period ending July 16th
came in at 79.47, down 9 cents from the previous session and up from 79.09 one
week previous. The Index was near 63.00 last year at this time.

Technical Outlook

#HOGS (AUG) 7/21/2004: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 74.80 and
75.05 today, while support is around 74.05 and then 73.55. The close below the
9-day moving average is a negative short-term indicator for trend. 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 73.55.

 

COCOA MARKET RECAP

7/20/2004

The cocoa market failed to best the prior
sessions high and for a change the funds were reportedly banking profits instead
of launching into fresh buys. We have to think that minor gains in the Dollar
could have discouraged additional arbitrage buying of cocoa on the world market.
It is surprising that cocoa wasn’t supported by the fact that Ivory Coast bean
exports (for the 9 months ending in June) were slightly lower than the same
period in the prior year, especially since cocoa has been in such an strong
upward thrust lately.

Technical Outlook

COCOA (SEP) 07/21/04 The close below the 1st
swing support could weigh on the market. Cocoa should run into resistance at
1562 and above there at 1578 with support at 1538 and 1530. The 9-day RSI over
70 indicates the market is approaching overbought levels. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 1578.00.

 

COFFEE MARKET RECAP

7/20/2004

The coffee market managed a big range up and the
highest trade since July 2nd. Apparently the trade and the professional accounts
decided to short cover and that in turn must have prompted the funds to become
fresh buyers. In other words, the weather isn’t changing but maybe those that
were short off the mild weather have decided to take profits and move to the
sidelines. It is also possible that excess rain in Brazilian growing regions
prompted the professional buying in the action Tuesday afternoon.

Technical Outlook

COFFEE (SEP) 7/21/04 The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
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 75.10. The Coffee contract should run into
resistance at 74.50 and above there at 75.10 with support at 72.65 and 71.40.
The market’s short-term trend is positive on a close above the 9-day moving
average.

 

SUGAR MARKET RECAP

7/20/2004

October sugar inched lower in quiet trade as a
run at Monday’s highs failed to attract new buying support with the trade
nervous over the overbought condition of the market basis the COT reports and
from the trade nervous with the lack of confirmation of significant buying from
Russia. Buyers do not see the need to chase the market higher as there is still
little in the way of near-term fundamental news to help rationalize the recent
surge higher. Expectations for India, Russia and maybe even China to be buyers
later this year has supported massive fund and speculative buying in sugar but
unless there continues to be significant delays in the Brazil harvest, near-term
supplies look to be high enough to meet demand and buyers are hopeful to get
more active at lower price levels. Iraq issued a tender to buy 25,000 tons of
white sugar and traders await news on the large selling tender from Thailand for
400,000 tons of 2005 sugar.

Technical Outlook

#SUGAR (OCT) 7/21/2004: The market setup is
somewhat negative with the close under the 1st swing support. Swing resistance
comes in at 8.33, with support found at 8.15. The close below the 9-day moving
average is a negative short-term indicator for trend. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The next downside target is now at 8.15. Short-term
indicators on the defensive. Consider selling an intraday bounce.

 

COTTON MARKET RECAP

7/20/2004

The Cotton market surged higher in active trade
as increased trade house buying and light production concerns from India helped
support the strong gains. News that China will buy about 1.38 million bales in
order to start to replenish government reserves was enough to support the higher
opening and active new buying. In addition to the potential crop problems in
India, the expectation for increased cotton planted acreage for the coming year
in Brazil has cooled considerably. Cotton is an expansive crop to plant and with
high energy prices and lower international cotton prices; interest in planting
cotton in Brazil has diminished with producers now looking for more soybean and
less cotton.

Technical Outlook

#COTTON (OCT) 7/21/2004: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Next resistance area comes in at 49.21 and then again at 49.50,
while support is targeted at 48.16 and 47.40. Rising from over sold levels,
daily momentum studies would support higher prices especially on a close above
resistance. The next upside objective is 49.50. If yesterday’s gap higher on the
day session chart holds, additional buying could develop this session.