The Current Risk To The Dollar

Technical Outlook

#BONDS (JUN) 05/25/04: The daily closing price
reversal up is positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Near-term resistance for bonds is at
105.27 and then again at 106.04, while swing support hits at 104.31 and below
there at 104.12. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Positive momentum studies in the neutral zone
will tend to reinforce higher price action. The next upside target is
106.04.

T-NOTES(JUN) The upside closing price reversal on the
daily chart is somewhat bullish. 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 109.16. 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 109.12 and then again at 109.16,
while swing support hits at 108.30 and below there at 108.21. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

5/24/2004

The stock market is just not getting the type of long
interest one would have expected when the fundamental picture looks bright.
Since energy prices were a fleeting development, it is understandable that the
early gains were lost. The inability to hold the rally is preventing long
interest from entering the market which leaves the market vulnerable to further
weakness. The stock market could be undermined by the talk that OPEC might raise
the banding mechanism to 30-34 dollars per barrel.

Technical Outlook

#S&P500 (JUN) 05/25/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1091.65 and 1085.98, with overhead resistance at 1102.35 and
1107.38. 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 1107.38.

S&P E-Mini (JUN): 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 1107.56. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1102.63 and then again at 1107.56, while swing support hits
at 1091.88 and below there at 1086.06. A positive signal for trend short-term
was given on a close over the 9-bar moving average.

NASDAQ (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. A positive setup
occurred with the close over the 1st swing resistance. The market should run
into resistance at 1428.00 and above there at 1437.00 with support at 1409.00
and 1399.00. Short-term indicators suggest buying dips today. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 1437.0.

MINI DOW (JUN) The daily closing price reversal up is
positive. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market should run into resistance at
10034 and above there at 10100 with support at 9913 and 9858. 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 10100. It
is a slightly negative indicator that the close was lower than the pivot swing
number.

 

CURRENCY MARKET RECAP

5/24/2004

So much for the hope that lower US energy prices
would kick the US economy back into an upward thrust as energy prices rejected
weakness and gasoline prices soared. With the US a heavy user of gasoline and
the US unable to get enough gasoline in position some economists think that the
US economy might be significantly more vulnerable to soaring oil prices than
other currencies and that have caused the Dollar to slide. Unless the US
economic report improves quickly the fundamental and technical sellers might
attack the Dollar.

Technical Outlook

#CURRENCIES 05/25/04: YEN (JUN): The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
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 88.92 and above there at 89.16, with
the yen finding support around 88.52 and below there at 88.36. The close under
the 40-day moving average indicates the longer-term trend could be turning down.
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 89.16.

EURO (JUN): 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 1.2073. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1911, with overhead resistance at 1.2073. The
market’s short-term trend is positive on a close above the 9-day moving average.
The gap down on the day session chart is bearish with more selling pressure
possible today.

 

PRECIOUS METALS RECAP

5/24/2004

The gold market continues to waffle under the
meandering of the Dollar. Some traders suggested that a higher OPEC banding
range of $30 to $34 a barrel might be such a high level that the economy might
be permanently held to lower growth levels which in turn could reduce the chance
of inflation. However, we have to think that higher energy prices in the near
term could undermine the Dollar and that could end up supporting gold prices. It
would still seem like gold and silver are assuming the flight to quality stance
while platinum and copper are periodically benefiting from the potential for
improved industrial demand. Consequently the gold and silver markets are not
seeing any lift off the idea that a recovering world economy will eventually
siphon off added supply.

Technical Outlook

#P-METALS 05/25/04: SILVER (JUL): A positive setup
occurred with the close over the 1st swing resistance. Initial support for
silver is at 588.0 and below there at 571.5 with resistance likely at 597.3 and
611.5. The market’s close above the 9-day moving average suggests the short-term
trend remains positive. Positive momentum studies in the neutral zone will tend
to reinforce higher price action. The next upside target is 597.3. Short-term
indicators suggest buying dips today. The outside day up and close above the
previous day’s high is a positive signal. The daily closing price reversal up is
positive.

GOLD (AUG): Support for gold today comes in near
382.68, while resistance is pegged at 390.08. 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 390.08. It is a mildly
bullish indicator that the market closed over the pivot swing number. The
market’s short-term trend is positive on a close above the 9-day moving
average.

 

COPPER MARKET RECAP

5/24/2004

The copper market continues to be lifted by short
covering and potentially by fresh buying. Some traders think that last week’s
news regarding Chinese growth will be enough to thrust copper back into the old
uptrend channel. With copper prices hitting the highest prices in over two weeks
it is clear that something more than simple short covering has been in play.
However, with energy prices rejecting early weakness and the trade generally
doubtful that even more crude oil supply will end up providing more gasoline
supply to the US. The copper market managed to rise despite talk of production
increases in Zambia.

 

ENERGY MARKET RECAP

5/24/2004

The Saudi Oil Minister promised significant increases
in production perhaps as much as 2.5 million barrels per day but after opening
weakness it was clear that the market doubted that Saudi Arabia could either
provide all the oil itself or if the rest of OPEC would pitch in. Some even
suggested that the aggressive unilateral stance by Saudi Arabia might be cause
for a battle but the last time that OPEC battled the result was single digit oil
prices. Others suggested that extra oil might not get to the market in time
while others suggested that more crude oil production doesn’t necessarily mean
that gasoline supply in the US would begin to rise.

Technical Outlook

#ENERGIES 05/25/04: CRUDE OIL (JUL): The rally
brought the market to a new contract high. The market’s close above the 2nd
swing resistance number is a bullish indication. Support for crude is keyed on
40.94 and below there at 39.81, with resistance pegged at 42.51 and 42.95. The
market’s short-term trend is positive on a close above the 9-day moving average.
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 39.81.

UNLEADED GAS (JUL): 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
131.95. 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. Resistance today is at 140.55, while support should be found around
131.95. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

HEATING OIL (JUL): The market’s close above the 2nd
swing resistance number is a bullish indication. Heating oil should encounter
support around 99.45, with resistance is at 108.65. The market’s short-term
trend is positive on a close above the 9-day moving average. 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 99.45.
The rally brought the market to a new contract high.

 

CORN MARKET RECAP

5/24/2004

Concerns that the weekend storms harmed parts of the
Iowa corn crop and will force significant re-planting in some areas helped
trigger aggressive speculative buying for new crop futures. Ideas that the
storms and high winds could have done some crop damage and a lack of aggressive
fund selling helped to support. Traders are looking for tonight’s weekly crop
progress report to show near 95% of the crop planted as compared with 92% last
week. Traders are also looking for the crops rated in good to excellent
condition to come in near 67-72%. In 1991, the first week of crop condition
reports showed the crop at 81% in good to excellent condition. Weekly export
inspections, released after the opening, came in at 38.7 million bushels as
compared with trade expectations at 28-38 million. Cumulative shipments reached
1.331 billion bushels as compared with 1.067 billion bushels last year at this
time. The USDA reported 115,000 tons of US corn sold to Mexico. Domestic demand
factors remain strong with high prices for gasoline, cattle, hogs and broilers.
December corn support moves up to 286 1/2 and 285 with 290 3/4 and 295 as
resistance.

Technical Outlook

#CORN (JUL) 05/25/04: The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at 300
3/4. The market’s close above the 2nd swing resistance number is a bullish
indication. Market resistance comes in at 300 3/4 today, with support at 288
3/4. The market’s short-term trend is positive on a close above the 9-day moving
average.

 

SOY COMPLEX RECAP

5/24/2004

Old crop futures continue to find a lack of new
buying interest due to China demand woes but new crop found support from weekend
weather which might have caused more harm than good for the newly planted crop.
The market found early support from ideas that the heavy storms, high winds and
tornadoes across the Midwest may have caused some light damage to the crop. With
many areas of Iowa and across the northern cornbelt already receiving 4-5 inches
of rain for the month of May before this weekend, the trader logic is that the
extra rain this weekend does not help and may even cause some flooding problems
in some areas and has slowed fieldwork to a crawl. Iowa State Agronomists
indicated that the northern Iowa region (which received 6-10 inches of rain on
the weekend) will likely have areas flooded out and areas which need
re-planting. November soybeans led the early rally. Traders are looking for
tonight’s weekly crop progress report to show soybean plantings at about 65%
complete as compared with 54% last week. China demand concerns persist with
China exchange values down in overnight trade. Weekly export inspections,
released after the opening, came in at 4.66 million bushels as compared with
trade expectations at 3-7 million. Cumulative shipments reached 806.6 million
bushels as compared with 951.6 million bushels last year at this time. July
soybean support comes in at 856 1/4 and 852 with resistance at 882 1/2 and 889
1/2. November soybean support comes in at 693 with 707 1/2 and 720 3/4 as
resistance.

Technical Outlook

#SOYBEANS (JUL) 05/25/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. The next area of
resistance is around 877 1/2 and 889 3/4, while 1st support hits today at 854
1/2 and below there at 843 3/4. 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
843 3/4.

MEAL (JUL): Daily stochastics are trending lower, but
have declined into oversold territory. The next downside objective is now at
273.3. First resistance comes in at 283.4, with support at 276.2. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market’s close below the pivot swing number is a mildly negative
setup.

BEAN OIL (JUL): 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 27.63. The swing indicator gave a moderately negative reading with the
close below the 1st support number. Daily swing resistance is found at 28.66 and
above there at 29.11. Support should be encountered at 27.92 and 27.63. The
9-day RSI under 30 indicates the market is approaching oversold
levels.

 

WHEAT MARKET RECAP

5/24/2004

Strength in the other grains, continued fears of
declining crop conditions and speculative buying from funds helped support. With
hot and dry weather over the weekend in western Kansas, with parts of the crop
still in the sensitive heading and flowering stage, the market found additional
buying support. This is somewhat offset by good weather for the spring wheat
crop, the European crop and better rain for planting in Australia. The higher
opening is impressive in the face of the cancellation of the Egypt optional
origin tender on Saturday and still no word on the Pakistan tender and no
confirmation of exports to China. Weekly export inspections, released after the
opening, came in at 20.45 million bushels as compared with trade expectations at
15-20 million. Cumulative shipments reached 1.103 billion bushels as compared
with 818.6 million bushels last year at this time. Traders view the
Commitment-of-Traders reports as a positive development for the wheat market as
funds have shifted from a moderately large net long position to a net short
position for the week ending May 18th. July wheat support moves up to 374 and
371 with resistance 386 1/4 and 393 1/4.

Technical Outlook

#WHEAT (JUL) 05/25/04: 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 374
and below there at 368, with resistance levels at 382 1/2 and 385. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 385.

 

LIVE CATTLE RECAP

5/24/2004

August cattle traded sideways in a choppy session
Monday as prices try to find direction following a supportive Cattle-On-Feed
report (COF), but weakening cash beef prices. The friendly COF report may not
have been enough of a surprise to offset a sharp decline in boxed beef cut-out
values which have fallen over $6 from May 14th and there were early reports that
prices continued to soften this session. Packer profit margins are expected to
move deeper into the red at a -$4.15 per head today. After 5 higher trading
sessions, August cattle looks to be losing some upside momentum, especially
since the market failed to make a solid push through resistance around 86.40. We
would not be surprised to see a pullback in August cattle with support coming in
at 85.45.

Technical Outlook

#CATTLE (AUG) 05/25/04: The daily stochastics have
crossed over up which is a bullish indication. The next upside target is 87.25.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. Support should be encountered at 86.05 and below there at
85.45. Market resistance is at 86.95 and then again at 87.25. The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

 

LEAN HOGS RECAP

5/24/2004

July hogs closed 50 higher supported by spread
trading, rollover activity and profitable packer margins. Cash hogs prices were
soft as more than the expected number of hogs were brought to market ahead of
the Memorial Day holiday weekend. However, packer margins for pork were reported
strong which prevented cash hog prices from falling too extensively. Pork
cut-out values weakened to 85.25 as of May 21st, down from 85.86 the previous
day. The 2-Day Lean Hog Index as of May 20th stood at 83.35, down 0.46. June
futures remained at a discount to cash which gave support to both the June &
July contracts. Resistance for July hogs is up at 75.80 with support around
73.90.

Technical Outlook

#HOGS (JUL) 05/25/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 75.87 and 76.22 today, while support is around 74.72 and then 73.92.
The upside closing price reversal on the daily chart is somewhat bullish. 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
73.92.

 

COCOA MARKET RECAP

5/24/2004

The cocoa market didn’t seem to be poised to add
directly to last weeks gains and with the political focus not nearly as intense.
The London trade thinks that cocoa is vulnerable and considering the magnitude
of the recent bounce cocoa will need to see some fresh fundamentals to offset
the higher surplus forecasts floated last week. With cocoa prices giving back
almost all of last weeks gains it would seem like the bear camp has the edge.

Technical Outlook

COCOA (JUL) 05/25/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1380 and above there at 1396 with support at 1356 and 1348. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 1395.50.

 

COFFEE MARKET RECAP

5/24/2004

September coffee closed sharply higher again and is
into a critical upside breakout from a technical perspective. Seeing a surge to
levels above 78 in the September contract certainly gets the attention of the
spec camp and might be cause for some follow through buying. With the funds
buying it would seem to be a technically driven situation but seeing the
roasters buying in would seem to give the rally some legs. So far, we have not
seen evidence that the rally was inspired by the weather but given the magnitude
of the run one can’t rule out some surprise development. It is still pretty
early to think that prices are reacting directly off some weather issue.

Technical Outlook

COFFEE (JUN) 5/25/04 The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Studies
are showing positive momentum, but are now in overbought territory so some
caution is warranted. The near-term upside objective is at 80.20. The Coffee
contract should run into resistance at 79.00 and above there at 80.20 with
support at 74.4 and 71.00. The market’s short-term trend is positive on a close
above the 9-day moving average. The major trend could be turning up with the
close back above the 40-day moving average.

 

SUGAR MARKET RECAP

5/24/2004

The sugar market managed to reject some early
weakness and close firm. With the sharp rise in gasoline prices and the rise in
crude oil we suspect that the whole ethanol impetus is adding some spec long
interest into the sugar market. Trade buying supported the market and that would
suggest that something fundamental might have shifted and that sugar might come
into persistent favor in the sessions ahead. With the close above 660 in the
June some traders suggested that a number of technical systems pushed the funds
into the market on the long side.

Technical Outlook

#SUGAR (JUL) 05/25/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.71, with support found at 6.49. 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 6.71.

 

COTTON MARKET RECAP

5/24/2004

December cotton was able to stabilize on Monday and
close 83 higher after prices held above the 58.40 low, which was tested twice
last week. The market may have finally exhausted the selling since the May 18th
COT report the market has dropped sharply and we would think that the combined
net position of the fund and spec traders is closing in on the record short
level near 29,000 contracts. The crop conditions report released after the close
showed planting progress at 75%. With the 3/4 of the crop planted, there seems
to be growing concern over dry weather in Texas. Now that the market has sold
off dramatically this year, a weather premium may begin to be factored in to new
crop prices. In fundamental news, the Alexandria Cotton Exporters Association
from Egypt sold 12 metric tons of cotton as of May 22nd and brings total sales
to 69,587 tons. The Cotlook A Index stood at 69.20, -0.20. Certified cotton
stocks rose to 353.314 bales as of May 21st, up 85 bales from
Thursday.

Technical Outlook

#COTTON (JUL) 05/25/04: The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. Next resistance area comes in at 64.17 and then again at 64.58,
while support is targeted at 62.92 and 62.08. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 62.08.