The CPI Number Gave Opportunities — Here’s Where They Were

Technical Outlook

BONDS (MAR) 02/23/04: The swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for bonds is at 112.26 and then again at 113.15, while swing support hits at 111.25 and below there at 111.13. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 113.15.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.05. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The major trend is down with the cross over back below the 40-day moving average. Near-term resistance for the T-Notes is at 114.25 and then again at 115.05, while swing support hits at 114.06 and below there at 113.30. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

2/20/2004

The stock market was mostly lower on the session as the trade didn’t get much help from the headlines. The fact that inflation up ticked slightly left many to fear that the potential for a US rate hike was rising. We are a little surprised that the upbeat Fed dialogue Friday didn’t give the bulls a little help but that must confirm a more intense focus on interest rates rather than growth. The Fed’s Bernanke suggested that the US Job market would strengthen considerably in 2004 and Greenspan also said that the labor market was improving. In short, the generally bullish stock market failed to respond to potentially bullish dialogue.

Technical Outlook

S&P500 (MAR) 02/23/04: The market’s close below the pivot swing number is a mildly negative setup. Underlying support comes in at 1137.95 and 1131.68, with overhead resistance at 1150.05 and 1155.88. 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 1131.68.

S&P E-Mini (MAR): The key reversal down puts the market on the defensive. The market made a new contract high on the rally. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 1130.81. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1150.38 and then again at 1157.31, while swing support hits at 1137.13 and below there at 1130.81. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (MAR) 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. The market should run into resistance at 1496.00 and above there at 1508.00 with support at 1471.00 and 1458.00. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1508.0.

MINI DOW (MAR) 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 10684 and above there at 10751 with support at 10563 and 10509. The daily stochastics have crossed over down which is a bearish indication. 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 next downside target is 10509. It is a slightly negative indicator that the close was lower than the pivot swing number.

CURRENCY MARKET RECAP

2/20/2004

In addition to the US Fed comments on the US economy and the moderate up tick in the US CPI, the currency markets also saw comments from the ECB that suggested one can never rule out Forex market intervention. Fears that the BOC might cut interest rates probably added to the downside pressure in the Canadian and with the US Dollar soaring a number of currency moved down below a series of critical technical points on the charts. In short, all the Dollar is lacking for a major bottom is decent US numbers.

Technical Outlook

YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The gap lower price action on the day session chart is a bearish indicator for trend. The close below the 2nd swing support number puts the market on the defensive. Swing resistance is targeted at 92.28 and above there at 93.23, with the yen finding support around 90.96 and below there at 90.59. 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 90.59. The 9-day RSI under 20 suggests the market is extremely oversold.

EURO (MAR): 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 1.2362. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2362, with overhead resistance at 1.2720. 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

2/20/2004

The gold market failed and did so primarily because of a soaring Dollar. While the Dollar hasn’t really turned its trend up the market is fearful of that development. Over the past 6 months the gold market has become more dependant on weakness in the Dollar. Therefore, the action in the Dollar probably scared a number of players out of the market. The silver market also weakened and with the net spec and fund long in silver a record early in the week its not surprising that stop loss selling pushed silver sharply lower.

Technical Outlook

SILVER (MAY): The swing indicator gave a moderately negative reading with the close below the 1st support number. Initial support for silver is at 644.7 and below there at 635.9 with resistance likely at 659.0 and 665.7. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The daily stochastics have crossed over down which is a bearish indication. 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 next downside target is 635.9. Short-term indicators on the defensive. Consider selling an intraday bounce.

GOLD (APR): Support for gold today comes in near 385.38, while resistance is pegged at 414.38. The daily stochastic’s gave a bearish indicator with a crossover down. The next downside objective is now at 385.38. 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.

COPPER MARKET RECAP

2/20/2004

The copper market paused but a 175-point break in an exploding bull market might only be a normal profit taking balancing move. Certainly the copper market was undercut by the fact that weekly Shanghai copper stocks expanded rapidly on the week and with the Dollar rising sharply it is possible that US copper prices have begun to look expensive to foreign traders. In short the copper market had gained 20 cents in the month of February alone and that is a massive move without any fresh supply disruptions. The net spec and fund long position, adjusted for the action since the COT report was measured has to put copper at an all time record long positioning.

ENERGY MARKET RECAP

2/20/2004

The expiration in the energy complex probably exaggerated the profit-taking sell off in the energy complex. Certainly, the revelation that US oil demand in January was lower than last year is a deflating issue as the energy complex has been factoring very strong demand. Both unleaded and crude oil were carrying significant spec and fund longs and therefore the expiration/normal week ending profit-taking incentive garnered some momentum. Slightly warmer temps ahead, has the market migrating toward that second quarter seasonal demand slump that OPEC is so fearful of. In the end, the fundamental bull case in energy prices hasn’t gone away but one might say that prices were a little overdone around the highs this week. The fact that Nigeria admitted that OPEC production cuts were not yet being implemented might have given the bears confidence to attack the market Friday afternoon.

Technical Outlook

CRUDE OIL (APR): The market’s close below the 1st swing support number suggests a moderately negative setup for today. Support for crude is keyed on 33.62 and below there at 32.89, with resistance pegged at 34.91 and 35.47. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 35.47.

UNLEADED GAS (APR): The daily stochastics have crossed over down which is a bearish indication. 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 next downside target is 103.71. The close below the 2nd swing support number puts the market on the defensive. Resistance today is at 112.11, while support should be found around 103.71. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (APR):The market is in a bearish position with the close below the 2nd swing support number. Heating oil should encounter support around 83.91, with resistance is at 91.91. 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. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 91.91.

CORN MARKET RECAP

2/20/2004

May corn closed 1/4 cent lower on the session and 2 1/4 higher on the week. The surge in soybeans supported the early gains but fears of the overbought condition and talk of bird flu spreading to Texas helped trigger long liquidation selling. Ideas that the Commitment-of-Traders report, released after the close, will show another record high net long position from the speculator helped trigger some profit-taking on the opening to new contract highs. Weekly export sales came in near trade expectations with old crop sales of 952,300 tons as compared with 672,700 tons necessary each week to reach the USDA projection. Major buyers were unknown destination at 308,100 tons, Japan at 137,800 tons and South Korea. Cumulative sales have reached 62% of the USDA forecast for the season as compared with 58% on average for this time of the year. A report of bird flu in Texas was seen as another bearish factor for the market to absorb. Rolling of March positions ahead of first notice day on February 27th and liquidation of the March options kept the trade choppy on the session. At the USDA Outlook Conference in Washington DC, the USDA projects 2004/2005 ending stocks at 821 million bushels as compared with 901 million this year. December corn closed 1 1/4 higher on the session and up 3 1/2 cents on the week.

Technical Outlook

CORN (MAY) 02/23/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 297 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 297 today, with support at 285 1/2. The market’s short-term trend is positive on a close above the 9-day moving average. The rally brought the market to a new contract high. The daily closing price reversal down puts the market on the defensive.

SOY COMPLEX RECAP

2/20/2004

May soybeans gapped into new contract highs and closed 7 higher on the session and 54 3/4 cents higher on the week. The trade was active and volatile with a 16 cent range. Continued concerns for the soybean crop in Brazil and solid gains at the China exchange and in palm oil overnight helped to support. Long liquidation selling was seen after the higher opening as traders were nervous that the Commitment-of-Traders reports might show hefty net long positions for soybeans and the products. Heavy rains in the forecast for early next week in the Mato Grosso region (the same region which has experienced production losses from too much rain recently) leaves the weather very uncertain for early next week and could cause shorts to scramble for cover early next week if it is raining heavily on Monday. The southern areas of Brazil, which have been too dry look to stay dry and turn warmer into next week as well. March futures found more support from commercial bull spreading as next Friday is first notice day and warehouse receipts could be in strong demand. Nearly soybeans came within 6 cents of the 1997 highs. At the USDA Outlook conference, the 2004/2005 ending stocks forecast of 210 million bushels as compared with 125 million expected this season was seen as a potential limiting factor for new buyers. The forecast assumes a record production of 2.93 billion bushels. Oil and meal also moved to a new contract highs. Weekly export sales for soybeans came in near trade expectations with old crop sales of 198,700 tons as compared with 59,800 tons necessary each week to reach the USDA projection. Cumulative sales have reached 93% of the USDA forecast for the season as compared with 79.8% on average for this time of the year. Weekly export sales for soybean meal were higher than trade expectations with old crop sales of 80,800 tons as compared with 20,700 tons necessary each week to reach the USDA projection. Cumulative sales have reached 82.2% of the USDA forecast for the season as compared with 63.6% on average for this time of the year. Bird flu reported in Texas did not seem to have much of an impact on the markets. The focus seems to be on weather for Brazil for early next week.

Technical Outlook

SOYBEANS (MAY) 02/23/04: A new contract high was made on the rally. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 891 1/2 and 899 3/4, while 1st support hits today at 875 1/2 and below there at 867 3/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 899 3/4. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (MAY): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 274.0. The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. First resistance comes in at 271.9, with support at 267.9. The market’s short-term trend is positive on a close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (MAY): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 33.30. With the close higher than the pivot swing number, the market is in a slightly bullish posture. A new contract high was made on the rally. Daily swing resistance is found at 32.97 and above there at 33.30. Support should be encountered at 32.20 and 31.76. The 9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

2/20/2004

May wheat closed 1/2 cent lower on the session and 7 1/2 cents lower on the week with choppy, two-sided trade noted. The higher opening was met with speculative selling interest and the market moved lower due to some disappointment over the China import demand news. The USDA announced that China bought 100,000 tons of US spring wheat instead of 500,000 tons expected by the trade which helped to trigger the selling. Disappointing rain amounts for the western plains provided some support but the forecasts for rains next week and the following week was seen as a potential bearish development. Weekly export sales came in near trade expectations with old crop sales of 337,100 tons as compared with 317,700 tons necessary each week to reach the USDA projection. Major buyers were Mexico, Romania and Egypt. Cumulative sales have reached 84.2% of the USDA forecast for the season as compared with 77.3% on average for this time of the year. The strong US dollar and talk of increased competition on exports from Argentina and Australia added to the negative tone.

Technical Outlook

WHEAT (MAY) 02/23/04: The downside closing price reversal on the daily chart is somewhat negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Look for near-term support at 373 and below there at 367 , with resistance levels at 384 1/2 and 390 . 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 367 .

LIVE CATTLE RECAP

2/20/2004

April cattle closed 1 tick higher on the session and 20 higher on the week with dull and quiet trade for the past several sessions leading up to the USDA Cattle-on-Feed report, released after the close. The report is expected to show on-feed supplies near 105% of last year (range 104-107.2%) with placements during January at 83.9% (78.9-95.2) and Marketings at 89.2% (86-8-92.1). Slaughter for the week was 598,000 head as compared with 609,000 last week and 621,000 head last year. News that packers raised their bids to $78.00, steady to $1.00 higher than last week, helped provide some early support but weaker beef prices limited the advance. Boxed-beef cut-out values were down $1.97 to $126.16 at mid-session as compared with $126.34 last week at this time. Hopes of an end to the Mexico ban on US beef soon was offset by talk that Canadian cattle imports may flow more freely soon and from news of bird flu in Texas.

Technical Outlook

CATTLE (APR) 02/23/04: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 73.65. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 72.42 and below there at 72.05. Market resistance is at 73.22 and then again at 73.65. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

2/20/2004

April hogs closed moderately higher on the session led by the generally perception that hog supplies and producer marketings are just not as high as traders had feared. This led to significant short-covering and fund buying in hogs late in the week which were trading at a stiff discount to the cash market. News of a bird flu case in Texas failed to trigger much in the way of selling but if the flu continues to spread, the export bans on US poultry are likely to be extended which leaves more total meat for the domestic market to absorb. Bellies also pushed higher and to contract highs ahead of the USDA Monthly Cold Storage report. Traders are looking for belly stocks near the highest end-of-January stocks in 5 years with the range of estimates between 58.5-64.7 million pounds which is up from 35.4 million pounds last year. Slaughter for the week was 1.896 million head as compared with 1.954 million last week and 1.875 million head last year.

Technical Outlook

HOGS (APR) 02/23/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 60.57 and 61.12 today, while support is around 59.62 and then 59.22. 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 59.22.

COCOA MARKET RECAP

2/20/2004

The continued news of Nigerian growers hoarding supplies seemed to be ignored by the cocoa market as prices trickled lower on the session. With the cocoa market suffering hard losses on the week and finishing the week down it would seem that sentiment remains bearish. It appears like the funds are willing to sell into the market even with prices hovering significantly below the early February levels. The fact that trade players were selling means that most major players are selling and that might bring the market to a quicker bottom.

Technical Outlook

COCOA (MAY)02/23/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1475 and above there at 1497 with support at 1438 and 1423. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1422.75.

COFFEE MARKET RECAP

2/20/2004

The coffee market forged nearly an identical trade to the prior session Friday but closed lower than the previous session. Expectations for a 2004-2005 coffee crop of 40.1 million bags was floated by a private source Friday (Exporter Comexim) and that is an increase on the prior year’s tally of 30.8 million bags. That estimate is slightly higher than recent forecasts and higher than the last Brazilian government forecast and therefore the forecast is a little negative. Ecuador’s January coffee exports were reported to be 36,399 on Friday while Ivory Coast coffee output for 2003-2004 was reported at 140,000 to 150,000 metric tons. In short, there was a lot supply news Friday and that could foster long liquidation in the absence of some fresh fundamental information.

Technical Outlook

COFFEE (MAY)2/23/04 The market tilt is slightly negative with the close under the pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 70.55.The Coffee contract should run into resistance at 72.80 and above there at 73.75 with support at 71.2 and 70.55. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/20/2004

With the nearby contract closing higher for the second week in a row, and speculators holding a massive net short position, the path of least resistance looks higher for this week. May sugar closed 10 higher on the session and up 20 points on the week. There are some indications that loading of sugar out of Brazil is on the rise. Talk of potential business from Iran and Egypt soon and pent-up demand from many Middle East countries could trigger a short-term burst in cash activity if the is any reason for buyers to switch from hand-to-mouth buying. While the longer-term fundamentals may not suggest higher prices ahead, in the eyes of the normal importer, the jump in world prices and the jump in the US dollar in the same week could spark a change in buying habits.

Technical Outlook

SUGAR (MAY) 02/23/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Swing resistance comes in at 5.95, with support found at 5.79. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 5.95. Consider buying pull-backs since daily studies are bullish.

COTTON MARKET RECAP

2/20/2004

May cotton closed 48 higher on the session and up 208 points on the week as active export sales for the past two weeks and news of active buying from China helped support. Weekly export sales came in at 566,700 bales as compared with trade expectations at 300,000-500,000 bales and 67,200 bales necessary each week to reach the USDA projection. China was the largest buyer at 309,200 bales with Turkey and Indonesia also strong importers. The news was bullish enough to turn the trade bullish but the slower than expected shipments helped to limit gains. Shipments were 287,100 bales as compared with expectations at 300,000-400,000 bales.

Technical Outlook

COTTON (MAY) 02/23/04: The market’s close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Next resistance area comes in at 70.86 and then again at 71.41, while support is targeted at 69.66 and 69.01. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 71.41. ORANGE JUICE (MAR)2/23/04 The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 61.20 and above there at 61.40 with support at 60.75 and 60.50. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 61.4.