Technical Picture Improving, But…
BOND MARKET RECAP
2/25/2005
March Bonds finished up 0-07 at 113-31, 0-07 off
the high and 0-10 up from the low.
March 10 Yr Treasury Notes finished up 0-030 at
111-130, 0-030 off the high and 0-065 up from the low.
Yield flattening plays supported the bond
market Friday as the economic reports showed strong growth and mild inflation
suggesting the Fed would not have to accelerate their tightening trend. 4th
Quarter GDP was revised to +3.8%, but with the trade expecting a +4% GDP the
number did not have a negative impact on bond prices. With the inflation number
unchanged at +1.6% and existing home sales coming in -.1%, the data overall was
supportive. While March bonds held above 113.16, we think the upside will be
limited by further Dollar weakness rekindling fears that foreign central banks
will begin diversifying away from dollar denominated securities. Also the
decline in initial claims this month suggest the Feb payroll number could see a
big increase, possibly over 200,000. Therefore, March bonds should run into
solid resistance between 114-14 and 114-20.
Technical Outlook
BONDS (MAR) 02/28/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. With the close higher than the pivot swing number, the market is in
a slightly bullish posture. The next downside objective is now at 113-15. The
next area of resistance is around 114-12 and 114-18, while 1st support hits
today at 113-27 and below there at 113-15.
TNOTES (MAR) 02/28/2005: Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The daily closing
price reversal up is a positive indicator that could support higher prices. It
is a mildly bullish indicator that the market closed over the pivot swing
number. The next downside target is now at 111-040. The next area of resistance
is around 111-205 and 111-235, while 1st support hits today at 111-110 and below
there at 111-040.
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STOCK INDICES RECAP
2/25/2005
March S&P finished up 11.3 at 1212, 1 off the
high and 12 up from the low.
March S&P E-Mini closed up 11.25 at 1212. This
was 12.25 up from the low and 1.25 off the high.
March Dow closed up 91 at 10842. This was 105 up
from the low and 8 off the high.
The stock market rose sharply Friday supported by
an upward revision in the 4th quarter GDP while the inflation data suggested the
Fed would not have to become more aggressive in raising rates. Oil company
stocks led the way higher as earnings in this sector were projected higher with
crude oil maintaining prices above $50 per barrel. Merger talk with MCI and
Verizon close to a deal also helped support stocks. While the technical picture
for the market has improved over the last three sessions, we think the risk
outweighs the reward at getting long at current levels especially since ultra
high crude oil prices will likely be a drag on most corporate earnings while a
weaker trending Dollar could again bring foreign central bank diversification
back to the front burner.
Technical Outlook
S&P 500 (MAR) 02/28/2005: The crossover up in the
daily stochastics is a bullish signal. Momentum studies are rising from
mid-range, which could accelerate a move higher if resistance levels are
penetrated. The cross over and close above the 18-day moving average indicates
the longer-term trend has turned up. The market’s close above the 2nd swing
resistance number is a bullish indication. The next upside target is 1222.25.
The next area of resistance is around 1218.50 and 1222.25, while 1st support
hits today at 1205.50 and below there at 1196.25.
SP EMINI (MAR) 02/28/2005: The crossover up in
the daily stochastics is a bullish signal. Momentum studies are trending higher
from mid-range, which should support a move higher if resistance levels are
penetrated. The cross over and close above the 18-day moving average indicates
the longer-term trend has turned up. Since the close was above the 2nd swing
resistance number, the market’s posture is bullish and could see more upside
follow-through early in the session. The next upside target is 1222.87. The next
area of resistance is around 1219.00 and 1222.87, while 1st support hits today
at 1205.50 and below there at 1195.88.
NASDAQ (MAR) 02/28/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. 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 downside target is 1510.63. The next area of
resistance is around 1539.25 and 1543.62, while 1st support hits today at
1522.75 and below there at 1510.63.
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CURRENCY MARKET RECAP
2/25/2005
March US Dollar finished down 24 at 8265, 50 off
the high and 3 up from the low.
March Euro finished up 0.36 at 132.43, 0.04 off
the high and 0.82 up from the low.
March Euro Dollar closed down 0.005 at 97. This
was 0.0025 up from the low and 0.005 off the high.
March Canadian Dollar closed up 0.08 at 80.65.
This was 0.37 up from the low and 0.12 off the high.
March British Pound finished up 0.71 at 191.64,
0.15 off the high and 0.9 up from the low.
March Swiss closed up 0.36 at 86.03. This was
0.62 up from the low and 0.04 off the high.
March Japanese Yen closed up 0.11 at 95.12. This
was 0.2 up from the low and 0.21 off the high.
The Dollar turned lower Friday as the upward
revision in the 4th quarter GDP failed to inspire any aggressive short covering.
The weak existing home sales report also added to the negative dollar sentiment.
March dollar index reached an inter day high at 83.15 which is half way back
into the gap area left last Tuesday and that was about all the technical
strength the market could muster. It seems that concerns over the current
account and budget deficits along with fears of foreign central bank reserve
diversification is outweighing the positives of a rising US interest rate
environment and strong US growth compared to other major economies. Therefore,
the path of least resistance remains for the Dollar.
Technical Outlook
YEN (MAR) 02/28/2005: Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The close over the pivot swing is a somewhat
positive setup. The near-term upside objective is at 95.53. The next area of
resistance is around 95.32 and 95.53, while 1st support hits today at 94.92 and
below there at 94.72.
EURO (MAR) 02/28/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The upside closing price
reversal on the daily chart is somewhat bullish. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The near-term
upside objective is at 133.09. The next area of resistance is around 132.86 and
133.09, while 1st support hits today at 132.00 and below there at 131.38.
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PRECIOUS METALS RECAP
2/25/2005
April Gold closed up 0.4 at 436.1. This was 2.4
up from the low and 0.8 off the high.
March Silver finished down 0.092 at 7.291, 0.059
off the high and 0.101 up from the low.
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The gold market closed near unchanged today after
spending the day inside yesterday’s range. The market may have been helped that
the 4th quarter GDP figure that was released this morning. While this was not
overly bullish against expectations, it was strong and did show an improvement
over the previous month’s estimate. This may hint a better physical demand
and/or increased prospects for inflation. On the other hand, a stronger US
economy does little to feed the flight to quality issue for precious metals.
Technical Outlook
SILVER (MAR) 02/28/2005: Daily stochastics
turning lower from overbought levels is bearish and will tend to reinforce a
downside break especially if near term support is penetrated. The cross over and
close above the 18-day moving average indicates the longer-term trend has turned
up. It is a slightly negative indicator that the close was under the swing
pivot. The next downside objective is 712.1. The next area of resistance is
around 737.1 and 744.1, while 1st support hits today at 721.1 and below there at
712.1.
GOLD (APR) 02/28/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The close over the pivot swing is a somewhat
positive setup. The next upside objective is 438.9. With a reading over 70, the
9-day RSI is approaching overbought levels. The next area of resistance is
around 437.7 and 438.9, while 1st support hits today at 434.5 and below there at
432.5.
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COPPER MARKET RECAP
2/25/2005
March Copper closed up 0.60 at 148.90. This was
4.00 up from the low and 0.10 off the high.
The copper market finished slightly stronger
today after trading sharply lower earlier in the session. The early declines
were attributed to strength in the dollar and some long liquidation going into
the weekend, but a generally favorable GDP number and a subsequent dollar
reversal lent support. The revised 4th quarter GDP number came in at +3.8%
versus the previous month’s estimate at +3.1%. This was considered to be a
strong number, even though a Fed governor’s comments earlier this week had
raised hopes for a number closer to 4.0%.
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ENERGY MARKET RECAP
2/25/2005
April Crude Oil closed up 0.10 at 51.49. This was
0.54 up from the low and 0.41 off the high.
April Heating Oil closed down 0.10 at 142.86.
This was 1.86 up from the low and 1.64 off the high.
April Unleaded Gas finished down 0.77 at 141.57,
1.13 off the high and 2.07 up from the low.
April Natural Gas finished up 0.26 at 6.72, 0.02
off the high and 0.30 up from the low.
April Propane closed unchanged at 0.79. This was
equal to the low and equal to the high.
The energy complex was hit by profit taking
Friday, but losses were trimmed by ongoing expectations of rising consumer
demand this year. Unleaded gas fell the hardest as the market may have had a
delayed reaction to the sharp rise in API gasoline stocks which were up 5.7
million barrels which left stocks 25.2 million barrels above year ago levels.
Despite the cushion coming into the spring driving season, expectations for
strong global oil demand this year along with a weaker US dollar, and a surge in
commodity fund interest in the energy sector have continued to provide buying
support. A forecast for below normal temperatures in the northeast/Midwest for
the next two weeks helped to support a sharp rally in the natural gas market and
helped heating oil recover from negative territory. However, the rally in nat
gas looks to be more technically based since the cold snap is coming at the end
of the winter season which is unlikely to put much of a dent in burgeoning
supplies. A 50% retracement in April natural gas of the Oct, 2004 to Jan, 2005
price decline is at 6.73, while a 61.8% retracement is b ack at 6.97.
Technical Outlook
CRUDE OIL (APR) 02/28/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
It is a mildly bullish indicator that the market closed over the pivot swing
number. The next upside objective is 52.40. The market is approaching overbought
levels with an RSI over 70. The next area of resistance is around 51.96 and
52.40, while 1st support hits today at 51.02 and below there at 50.51.
UNLEADED (APR) 02/28/2005: 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. It is a slightly negative
indicator that the close was under the swing pivot. The next upside objective is
144.53. The next area of resistance is around 143.16 and 144.53, while 1st
support hits today at 139.97 and below there at 138.14.
HEATING OIL (APR) 02/28/2005: 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 slightly
negative indicator that the close was lower than the pivot swing number. The
next upside target is 146.30. With a reading over 70, the 9-day RSI is
approaching overbought levels. The next area of resistance is around 144.61 and
146.30, while 1st support hits today at 141.11 and below there at 139.31.
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CORN MARKET RECAP
2/25/2005
May Corn finished up 8 at 221 1/2, 1 1/2
off the high and 6 3/4 up from the low. December Corn closed up 2 1/2 at 238
1/2. This was 2 1/2 up from the low and 3 1/2 off the high.
Drier than expected weather for the weekend for
southern Brazil and return to hot weather early next week helped support the
surge higher in soybeans today and supported another round of active buying and
short-covering from speculators. The rally pushed May corn prices to the highest
level since November 19th but open interest continues to decline and traditional
technical indicators are showing overbought readings. Solid export sales helped
support the market as well. Weekly sales for corn came in at 910,300 tons as
compared with trade expectations at 600,000-800,000 tons. Cumulative sales have
reached 59.5% of the USDA forecast for the season as compared with 59.6% on
average for this time of the year. Sales need to average 702,000 tons per week
to reach the projection. The USDA, at the annual Outlook Conference, indicated
that ending stocks for the coming season (2005/2006) could come in near 2.105
billion bushels as compared with 2.010 billion this season. For March corn
deliveries on Monday, traders are looking for 500-1000 contracts. Support for
May corn comes in at 216 and 214 1/4 with resistance at 223 1/4 and 229 3/4.
Technical Outlook
CORN (MAY) 02/28/2005: 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’s close above the 2nd swing
resistance number is a bullish indication. The next upside target is 228 1/4.
The 9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 225 1/2 and 228 1/4, while 1st support hits
today at 217 1/2 and below there at 212.
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SOY COMPLEX RECAP
2/25/2005
May Soybeans finished up 30 1/2 at 604 1/2, 1 1/2
off the high and 17 1/2 up from the low. November Soybeans closed up 26 1/2 at
608. This was 17 up from the low and 2 off the high.
May Soymeal closed up 8 at 178.2. This was 5.2 up
from the low and 0.8 off the high.
March Soybean Oil finished up 1.21 at 22.54, 0.01
off the high and 0.96 up from the low.
With only scattered rains in the forecast for the
dry areas of Brazil, May soybeans soared to the highest level since September
10th. A dry trend in southern Brazil supported active buying on the open as some
weather forecasts reduced and even eliminated scattered rains for some of the
southern Brazil growing areas over the weekend. As a result, traders suspect
further crop losses into early next week and shorts scrambled for cover. Strong
export news added to the positive tone. Weekly sales for soybeans came in at
429,100 tons as compared with trade expectations at 250,000-400,000 tons.
Cumulative sales have reached 89% of the USDA forecast for the season as
compared with 84.9% on average for this time of the year. Meal sales came in at
52,800 tons vs. trade expectations at 50,000-100,000 tons. Cumulative sales have
reached 73% of the USDA forecast for the season as compared with 67.9% on
average for this time of the year. The USDA, at the annual Outlook Conference,
indicated that meal sales for the 2005/2006 season could hit 6.4 million tons,
up 12%. Weekly sales for oil hit 7200 tons from expectations at 3,000-8,000
tons. For March soybean deliveries on Monday, traders are looking for up to 200
contracts. At mid-day on Friday, there were still 2264 oil registrations but
just 1 meal. Resistance for May soybeans comes in at 605 1/2 and 617 with
support at 598 and 584.
Technical Outlook
BEANS (MAY) 02/28/2005: 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. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The next upside objective is 619 1/2. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around 614
and 619 1/2, while 1st support hits today at 595 and below there at 581 1/2.
MEAL (MAY) 02/28/2005: The crossover up in the
daily stochastics is a bullish signal. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
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 next upside target is 184.1. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
182.3 and 184.1, while 1st support hits today at 176.9 and below there at 173.2.
BEANOIL (MAY) 02/28/2005: 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 market’s close above the 2nd swing
resistance number is a bullish indication. The next upside target is 23.56. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 23.27 and 23.56, while 1st support hits today at
22.26 and below there at 21.52.
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WHEAT MARKET RECAP
2/25/2005
May Wheat finished up 12 at 333 1/4, 3/4 off the high and 11
up from the low. July Wheat closed up 11 1/2 at 339 1/4. This was 9 3/4 up from
the low and 3/4 off the high.
The surge higher in soybeans supported additional
short-covering strength for wheat and better than expected export sales added to
the positive tone with May futures hitting the highest level since November
19th. Weekly export sales for wheat came in at 562,800 tons as compared with
trade expectations at 400,000-500,000 tons. Cumulative sales have reached 85.7%
of the USDA forecast for the season as compared with 78.3% on average for this
time of the year. While traders still talk of wheat sales lagging last year’s
pace, keep in mind that the USDA has projected a 134 million bushel drop in
exports this year as compared with last year. Weekly sales need to average
268,000 tons per week to reach the USDA projection for the season and sales for
the past 4 weeks have averaged 569,500 tons. The USDA, at the annual Outlook
Conference, indicated that ending stocks for the coming season (2005/2006) could
come in near 571 million bushels as compared with 558 million this season. While
production is projected to be down by near 60 million bushels, export demand is
expected to drop hard. At their weekly tender, Japan bought 90,000 tons of wheat
with 45,000 of the total coming from the US. For March wheat deliveries on
Monday, traders are looking for 1000 or more deliveries due to weak near-term
demand and hefty stocks at Toledo. May wheat support comes in at 328 and 324 1/2
with 339 as next resistance.
Technical Outlook
WHEAT (MAY) 02/28/2005: 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. Since the close was above the 2nd swing
resistance number, the market’s posture is bullish and could see more upside
follow-through early in the session. The near-term upside objective is at 342
1/4. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The next area of resistance is around 339 and 342 1/4, while 1st support
hits today at 327 1/2 and below there at 319.
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LIVE CATTLE RECAP
2/25/2005
April Live Cattle finished down 0.17 at 86.10,
0.10 off the high and 0.80 up from the low.
March Feeder Cattle closed down 0.67 at 98.40.
This was 0.57 up from the low and 0.55 off the high.
Weakness in pork and ideas that cash cattle would
trade lower, not steady on the week helped trigger the early break to match the
week’s lows for April cattle but the market managed to close just 17 lower on
the session and up 80 points from the lows of the day. Boxed-beef cut-out values
at mid-session were up $.72 to $139.98 as compared with $140.07 last week. Ideas
that the beef market may be near a low helped trigger the short-covering bounce.
Slaughter came in at just 106,000 head from trade expectations for
114,000-117,000 head.
Technical Outlook
CATTLE (APR) 02/28/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The market’s close below the pivot swing number is a mildly
negative setup. The next downside target is 85.050. The next area of resistance
is around 86.550 and 86.820, while 1st support hits today at 85.670 and below
there at 85.050.
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LEAN HOGS RECAP
2/25/2005
April Lean Hogs finished down 0.75 at 74.15, 0.35
off the high and 0.70 up from the low.
March Pork Bellies closed up 0.62 at 87.40. This
was 1.85 up from the low and 0.05 off the high.
April hogs closed moderately 75 lower on the
session but 70 points off of the lows of the day as commercial support emerged
after the early washout in livestock futures. The sharp break in pork values led
by loin prices helped trigger aggressive new selling and the premium of futures
to the cash market along with cash trading $1.00 lower on the session helped
pressure. The 2-day lean index for the period ending February 23rd came in at
69.75, up.74 on the session and up from 67.03 last week. Slaughter came in at
379,000 head from trade expectations for 383,000-390,000 head. The poor profit
margins from packers encouraged less demand for live inventory.
Technical Outlook
HOGS (APR) 02/28/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The cross over and close above the
18-day moving average indicates the longer-term trend has turned up. The gap
lower on the day session chart is bearish and puts the market on the defensive.
The swing indicator gave a moderately negative reading with the close below the
1st support number. The next upside objective is 75.100. The next area of
resistance is around 74.650 and 75.100, while 1st support hits today at 73.650
and below there at 73.020.
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COCOA MARKET RECAP
2/25/2005
May Cocoa finished down 2 at 1654, 9 off the high
and 18 up from the low.
Cocoa closed mixed but near unchanged across the
board as fund buying was offset by some position squaring into the weekend. May
cocoa close 2 lower after trading to a new high on the move earlier in the
session. News that Ivory Coast farmers’ unions were threatening strike action
again if current talks with industry groups fail to bring about any new
agreement was viewed as only mildly supportive. With most of the main crop
already in, a growers’ strike would not be expected to have much of an impact.
There were also reports that Ghana may lower its 2004-05 crop estimate due to
dry weather. NYBOT warehouse stocks dropped by 20,852 bags to 2,302,045 today,
after jumping 315,328 on Thursday.
Technical Outlook
COCOA (MAY) 02/28/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. The close over the pivot swing is a somewhat positive setup. The
near-term upside objective is at 1678. The next area of resistance is around
1667 and 1678, while 1st support hits today at 1641 and below there at 1625.
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COFFEE MARKET RECAP
2/25/2005
May Coffee closed down 4.00 at 117.40. This was
0.40 up from the low and 5.50 off the high.
May coffee closed 400 lower on the session Friday
and down 290 on the week. The weekly closing price reversal from a 5-year high
this week could trigger more aggressive long liquidation selling next week as
speculators could be holding a record net long position. Tonight’s
Commitment-of-Traders report will give an update. A slowdown in roaster buying
and a lack of new fundamental news to re-ignite speculative buying helped
trigger the long liquidation selling. Funds were noted sellers of near 3000
contracts.
Technical Outlook
COFFEE (MAY) 02/28/2005: 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 is an
indication the longer-term trend has turned positive. The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
next downside objective is 112.80. The next area of resistance is around 120.35
and 124.55, while 1st support hits today at 114.50 and below there at 112.80.
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SUGAR MARKET RECAP
2/25/2005
May Sugar closed down 0.13 at 9.03. This was 0.07
up from the low and 0.13 off the high.
The long liquidation trend continued into Friday
with May sugar down 13 on the day and down 18 for the week. With speculators
holding a massive net long position, the lowest close since January 13th could
trigger more speculative long liquidation selling on Monday; especially if the
weekend traders report shows the long liquidation trend in tact. Traders failed
to react to news of dry weather concerns for the main crop in Brazil or to
potential import demand from China.
Technical Outlook
SUGAR (MAY) 02/28/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close under the 18-day moving average indicates the longer-term trend
could be turning down. The market is in a bearish position with the close below
the 2nd swing support number. The next downside target is 8.85. The next area of
resistance is around 9.12 and 9.24, while 1st support hits today at 8.93 and
below there at 8.85.
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COTTON MARKET RECAP
2/25/2005
May Cotton finished up 1.43 at 50.18, 0.52 off
the high and 2.18 up from the low.
May cotton surge higher late in the session and
moved to the highest level since October 8th. Slow exports helped trigger
two-sided trade early but a surge in grain prices and active buying from funds
supported the late run. Weekly export sales for cotton came in at 220,100 bales
as compared with trade expectations at 225,000-250,000 bales. Cumulative sales
have reached 81.2% of the USDA forecast for the season as compared with 86.1% on
average for this time of the year. Shipments were 286,000 bales vs. trade
expectations near 250,000-300,000 bales.
Technical Outlook
COTTON (MAY) 02/28/2005: 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. Since the close was above the 2nd swing
resistance number, the market’s posture is bullish and could see more upside
follow-through early in the session. The near-term upside objective is at 52.46.
The market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 51.53 and 52.46, while 1st support hits today at
48.83 and below there at 47.07.