The Bull Case In Treasuries

Technical Outlook

#BONDS (SEP) 07/26/04: A positive setup occurred
with the close over the 1st swing resistance. Near-term resistance for bonds is
at 108.29 and then again at 109.02, while swing support hits at 108.13 and below
there at 108.02. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 108.02.

T-NOTES(SEP) Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 110.11. With the close over the 1st swing
resistance number, the market is in a moderately positive position. Near-term
resistance for the T-Notes is at 110.29 and then again at 110.32, while swing
support hits at 110.18 and below there at 110.11. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

7/23/2004

While earnings reports would seem to provide
support to the market it does seem like the trade is parsing through the
earnings and dredging up the negatives COKE posted a profit but yet the trade
focused on lower sales figures within the report. Keeping stocks weak early in
the session were suggestions from the Chicago Fed that interest rates couldn’t
remain low forever. However, the market could have been emboldened by the
additional comments from the Fed that recent inflation threats were transitory
and that they didn’t expect a residential housing bubble.

Technical Outlook

#S&P500 (SEP) 07/26/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Underlying support comes in at 1080.20 and 1076.20, with overhead resistance at
1090.20 and 1096.20. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 1076.20.
With a reading under 30, the 9-day RSI is approaching oversold levels.

S&P E-Mini (SEP): A bearish signal was triggered
on a crossover down in the daily stochastics. The next downside objective is
1074.81. The close below the 1st swing support could weigh on the market.
Near-term resistance for the S&P Mini is at 1090.88 and then again at 1098.31,
while swing support hits at 1079.13 and below there at 1074.81. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The market is approaching over sold levels on an RSI reading under 30.

NASDAQ (SEP) The sell-off took the market to a
new contract low. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
market should run into resistance at 1391.00 and above there at 1406.25 with
support at 1366.00 and 1356.25. Daily stochastics are showing positive momentum
from oversold levels which should reinforce a move higher if near-term
resistance is taken out. The next upside target is 1406.3.

MINI DOW (SEP) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10005 and above there at 10065 with support
at 9901 and 9857. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 9857. It is a slightly negative
indicator that the close was lower than the pivot swing number. The 9-day RSI
under 30 indicates the market is approaching oversold levels.

 

CURRENCY MARKET RECAP

7/23/2004

The Dollar extended the recent upward thrust
early Friday and did so without the benefit of a scheduled report. Certainly
more cheerleading from the Fed helped the Dollar mount the rally as did the
violation of a series of key technical levels on the charts. Some traders
suggested that the UK GDP reading for the 2nd quarter of only +0.9% really
highlights that the US economy is significantly stronger than other areas and
that might be the source of the new found bullish bias in the Dollar.

Technical Outlook

#CURRENCIES 07/26/04: YEN (SEP): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. It is a slightly negative indicator that the close was lower
than the pivot swing number. Swing resistance is targeted at 91.24 and above
there at 91.44, with the yen finding support around 90.85 and below there at
90.66. The close under the 40-day moving average indicates the longer-term trend
could be turning down. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 90.66.

EURO (SEP): Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 1.2006. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.2006, with overhead resistance at 1.2210. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The major
trend is down with the cross over back below the 40-day moving average. The gap
down on the day session chart is bearish with more selling pressure possible
today.

 

PRECIOUS METALS RECAP

7/23/2004

The entire metals complex came under liquidation
pressure and with the gold and silver holding a moderately overbought long
positioning it’s not surprising that sell stop action ensued. The fact that the
Dollar was higher for the 3rd session in a row certainly added to the downward
tilt in prices. In fact, some players are beginning to wonder if the trend in
the Dollar hasn’t shifted up and that could mean even more long liquidation in
gold in the weeks ahead. In short, live by the Dollar, die by the Dollar. The
Fed might also have dampened the outlook for gold by suggesting again Friday
morning, that interest rates couldn’t stay low forever.

Technical Outlook

#P-METALS 07/26/04: SILVER (SEP): The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Initial support for silver is at 628.8 and below there at 620.6
with resistance likely at 633.3 and 640.3. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The next downside target is 620.6. Short-term indicators on the defensive.
Consider selling an intraday bounce. The gap lower price action on the day
session chart is a bearish indicator for trend.

GOLD (OCT): Support for gold today comes in near
386.23, while resistance is pegged at 397.23. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 386.23. The market is in a bearish position
with the close below the 2nd swing support number. The market’s short-term trend
is negative as the close remains below the 9-day moving average. The gap down on
the day session chart is bearish with more selling pressure possible today.

 

COPPER MARKET RECAP

7/23/2004

The copper market fell away sharply after an
uneventful opening but with a strike effort ruled illegal in Mexico the bottom
eventually fell out of the market. WE also think that more gains in the US
Dollar caused some forward purchases to be thrown back onto the market and with
the lower strike threat the market had nothing to stop the technical washout
that followed. For at least two weeks the copper market had been discounting the
sagging global economic outlook and that might also have given the market an
added push lower.

 

ENERGY MARKET RECAP

7/23/2004

The energy complex made an early bid to extend
the recent gains and did so off reports of a German refinery fire. However, the
market seemed to be a little near term overbought into mid session and gave back
the early gains. The combination of Yukos fears and terrorism should continue to
be a support to the market but it is disappointing to the natural gas market to
see such low temps forecast in the Midwest for Friday night. In other words, the
high temperature support seen in the natural gas and crude oil market was short
lived.

Technical Outlook

#ENERGIES 07/26/04: CRUDE OIL (SEP): It is a
mildly bullish indicator that the market closed over the pivot swing number.
Support for crude is keyed on 41.42 and below there at 41.02, with resistance
pegged at 42.00 and 42.18. The market’s short-term trend is positive on a close
above the 9-day moving average. The daily stochastics gave a bullish indicator
with a crossover up. The near-term upside objective is at 42.18.

UNLEADED GAS (SEP): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 123.51. A positive setup occurred with the close over the 1st swing
resistance. Resistance today is at 129.31, while support should be found around
123.51. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

HEATING OIL (SEP): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 111.51, with resistance is at 116.31. The market’s
short-term trend is positive on a close above the 9-day moving average. The
daily stochastics gave a bullish indicator with a crossover up. The near-term
upside objective is at 116.31. The rally brought the market to a new contract
high.

 

CORN MARKET RECAP

7/23/2004

December corn ended the session 15 1/2 cents
lower on the week. The market recovered from Thursday’s contract lows on ideas
of an oversold condition and a lack of new selling interest from fund traders
who have been active sellers for the past three sessions. Also supportive were
reports that Taiwan bought 35,000 tonnes of US corn and South Korea bought
55,000 tonnes of optional origin. However, reports that 127,000 tonnes of US
corn sold to Japan had been switched from old crop to new crop was a limiting
factor in that it puts less stress on old crop supplies. Traditional technical
indicators are showing extreme oversold levels and traders believe that
tonight’s weekly Commitment-of-Traders report could show that funds are building
a hefty net short position. The report is “as of” Tuesday, so the aggressive
selling of the past two sessions will not be including until next week’s report.
A non-threatening weather forecast is seen as a limiting factor for the market
on the upside, but new sellers have backed away from the market as the weather
maps into early August could shift by Monday morning, so the market is seeing
short-covering today.

Technical Outlook

#CORN (DEC) 07/26/04: The daily stochastics gave
a bullish indicator with a crossover up. The near-term upside objective is at
235. The market’s close above the 2nd swing resistance number is a bullish
indication. Market resistance comes in at 235 today, with support at 229. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 30, the 9-day RSI is approaching oversold
levels.

 

SOY COMPLEX RECAP

7/23/2004

November soybeans ended the session down 29 1/2
cents on the week but they did manage to climb 18 1/2 up off the week’s lows. A
report by an Iowa State plant pathologist that yield-cutting diseases were
showing up two weeks earlier than usual due to the cooler than temperatures
encouraged some short covering. Cash basis levels were mixed across the Midwest
with some processors declining to bid. Basis bids in Nebraska were down 5 cents
and Iowa bids were up 10 cents. While the weather outlook would appear to be
non-threatening on the horizon, shorts are a bit nervous with the potential for
a change in the pattern into early August, which might show up on Monday morning
so there is some short-covering helping to support today. China and Brazil have
agreed on sanitary standards for soybeans moving into China ports which might be
a sign of better trade ahead.

Technical Outlook

#SOYBEANS (NOV) 07/26/04: A positive setup
occurred with the close over the 1st swing resistance. The next area of
resistance is around 619 1/2 and 625 1/4, while 1st support hits today at 603
1/2 and below there at 593 1/4. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. Momentum studies
are declining, but have fallen to oversold levels. The next downside target is
593 1/4.

MEAL (DEC): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
181.6. First resistance comes in at 192.2, with support at 185.4. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. With the close over the 1st swing resistance number, the market is in a
moderately positive position.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 22.07. A positive setup occurred with the close over the 1st
swing resistance. Daily swing resistance is found at 22.68 and above there at
22.85. Support should be encountered at 22.29 and 22.07.

 

WHEAT MARKET RECAP

7/23/2004

December wheat ended the session 3 1/2 cents
lower on the week but managed to recover 6 3/4 cents off the 9-month low the
market set on Thursday. News that Egypt bought 175,000 tons of US wheat and
120,000 tons of wheat from France helped to provide support on the opening, as
Egypt had, in the previous two tenders, purchased only from France. The
inclusion of US wheat in their tender would suggest that US exporters are now a
bit more competitive. The oversold condition of the market, a slowdown in winter
wheat harvest selling pressures, concerns over vomitixon levels in the soft red
winter wheat crop and strength in the other grains were considered supportive
factors today.

Technical Outlook

#WHEAT (DEC) 07/26/04: 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. Look for near-term support at
339 3/4 and below there at 337, with resistance levels at 344 1/2 and 346. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 337.

 

LIVE CATTLE RECAP

7/23/2004

The cattle market settled back today after
yesterday’s surge higher on expectations (hopes?) that Japan would soon allow
the importation of US beef. October live cattle closed 0.82 lower at 89.30. With
no fresh news in that direction today, cattle traded inside of Thursday’s wide
range and well below that day’s limit-up close. Trade was quieter in
anticipation of the release of this afternoon’s USDA reports. The Cattle
Inventory report, released after the close, showed July 1st inventory of cattle
in the US at 103.6 million head versus an average estimate of 103.2 million head
(99.3% of last year) and a range of guesses between 102.9 and 103.4 million. The
calf crop was 37.7 million head or 99% of a year ago, which is the lowest since
1951 according to the USDA. The Cattle-on-Feed report, also released after the
close, showed on-feed supplies at 102% of last year versus expectations of
102.7% (range 100.3-104), June placements at 98% versus 103.3% expected (range
96.1-111) and June marketings at 93% versus 94.2% expected (range 92-99). The
market is called higher for Monday morning.

Technical Outlook

#CATTLE (OCT) 07/26/04: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next upside
target is 90.60. It is a slightly negative indicator that the close was lower
than the pivot swing number. Support should be encountered at 88.67 and below
there at 88.10. Market resistance is at 89.92 and then again at 90.60. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

 

LEAN HOGS RECAP

7/23/2004

October hogs closed 0.77 higher today at 65.47 on
follow through from yesterday’s technical reversal. Also supportive was the lack
of any fresh news on whether Japan would soon reopen its markets to the
importation of US beef. On Thursday there were several reports suggesting the US
and Japan would reach an agreement in that direction soon, which in turn sent
cattle futures limit up and pressured the hog market. Since Japan suspended US
beef imports in the wake of the discovery of a Mad Cow case in the US last
December, pork exports have increased, which has helped fuel the rally over the
past five months. Cash hogs were $1.00 lower today at Peoria. The CME 2-day lean
index for the period ending July 21st came in at 79.19, up 0.10 from the
previous session and down from 79.49 as of July 14th.

Technical Outlook

#HOGS (OCT) 07/26/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 65.95 and 66.35 today, while support is around
65.00 and then 64.45. The market’s short-term trend is positive on a close above
the 9-day moving average. Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The next downside
objective is now at 64.45.

 

COCOA MARKET RECAP

7/23/2004

The cocoa market managed another new high for the
move and reached the highest level since early January in the action Friday.
However, the market was hit with profit taking into the close and closed below
the prior close. The Press continues to suggest that funds provided a lion share
of the upside fuel and that should mean that the COT report understates the net
spec long positioning. The Press also suggested that trade selling came in to
cap off the run to new highs and that might suggest that the market is getting a
little more overbought.

Technical Outlook

COCOA (SEP) 07/26/04 The downside closing price
reversal on the daily chart is somewhat negative. The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1634 and above there at 1650 with support at 1607 and 1596. 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 1649.75.

 

COFFEE MARKET RECAP

7/23/2004

The coffee market returned the excessively weak
pattern of pricing seen in late June with a decline to new lows for the move.
Even the presence of roaster buying was unable to alter the downward track in
prices. It also seems like the market is no longer seeing the heavy rains
threatening the crop and that apparently rekindles long term stop loss selling
by the specs. A delay in harvest doesn’t have to have to mean that the crop will
shrink but that could tighten up the export tilt by slowing processing and
therefore buying the market off the rain isn’t that solid or sustained theme.

Technical Outlook

COFFEE (SEP) 7/26/04 The outside day down and
close below the previous day’s low is a negative signal. The downside closing
price reversal on the daily chart is somewhat negative. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. The daily stochastics have crossed over down which is a
bearish indication. The next downside objective is now at 67.80. The Coffee
contract should run into resistance at 71.10 and above there at 72.80 with
support at 68.6 and 67.80. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

7/23/2004

October sugar finished 2 higher and 22 ticks off
the low in a volatile session which was characterized by early fund liquidation
and aggressive speculative buying toward the end of the session. While the
technical action Friday suggests the market may resume its uptrend, we doubt
that traders have reduced their huge net long position enough to ease the
market’s very overbought condition. There is still no indication that Russia is
about to make a big purchase and with cash activity slow, it would seem
difficult to sustain prices back at recent highs unless physical demand begins
to pick up. With the Ukraine raising its 2004 white beet sugar production figure
and Russia refining less white sugar from raw imported sugar so far this year as
compared to last year, some trader may begin to doubt market expectations for
higher sugar demand this session.

Technical Outlook

#SUGAR (OCT) 07/26/04: The upside closing price
reversal on the daily chart is somewhat bullish. It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 8.20, with support found at 7.72. The market’s short-term trend is
negative as the close remains below the 9-day moving average. Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The next downside objective is now at 7.72.

 

COTTON MARKET RECAP

7/23/2004

About the most positive thing one can say about
the cotton action Friday is that it managed to reject the new low move but in
the end still closed lower. Apparently the market continues to see heavy options
related selling and is mostly discounting the potential for supportive
developments off India weather. The short covering early in the week is expected
to mitigate the oversold reading in the COT and right now the cotton market
might only be able to bottom of technical considerations. The weather will have
to prove that it has been an impact in the US and India before the market will
temper the entrenched bearish bias.

Technical Outlook

#COTTON (OCT) 07/26/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
It is a slightly negative indicator that the close was lower than the pivot
swing number. Next resistance area comes in at 47.07 and then again at 47.73,
while support is targeted at 45.83 and 45.25. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The next upside target is 47.73. The 9-day
RSI under 30 indicates the market is approaching oversold levels.