The Dollar Pushed Into The Selling By Dialogue From Mr. Greenspan
BOND MARKET RECAP
2/17/2005
March Bonds finished down 0-15 at 114-25, 0-12
off the high and 0-06 up from the low.
March 10 Yr Treasury Notes finished down 0-035 at
112-000, 0-030 off the high and 0-055 up from the low.
While the Treasury market managed yet
another new low for the move it seemed to want to return to the vicinity of the
prior days low. The economic reports released Thursday were somewhat bearish to
Treasuries as they showed some improvement in the economy but the employment
component of the Philly Fed seemed to be weak enough to provide the market with
support. However, countervailing the recent upward bias in the Treasuries is the
ongoing concern over the US budget deficits and the additional threat of
international investment rotation.
Technical Outlook
BONDS (MAR) 02/18/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The close under
the 18-day moving average indicates the longer-term trend could be turning down.
It is a slightly negative indicator that the close was under the swing pivot.
The next downside target is 114-05. The next area of resistance is around 115-05
and 115-20, while 1st support hits today at 114-14 and below there at 114-05.
TNOTES (MAR) 02/18/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
tilt is slightly negative with the close under the pivot. The next downside
target is now at 111-210. The next area of resistance is around 112-055 and
112-115, while 1st support hits today at 111-265 and below there at 111-210.
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STOCK INDICES RECAP
2/17/2005
March S&P finished down 9.5 at 1201, 11 off the high and 0.2
up from the low.
March S&P E-Mini closed down 9.5 at 1201. This was 0.25 up
from the low and 11 off the high.
March Dow closed down 78 at 10759. This was 4 up from the low
and 86 off the high.
The stock market almost had an inside day down
but did manage to make a new low for the move briefly. We would have expected
the market to be supported by the slightly favorable economic numbers from the
US but once again the dialogue from Capitol Hill seemed to undermine sentiment,
as the talk of soaring budget deficits spooked some investors to the sidelines.
We also think that hints of a more hard line US stance toward Syria from the US
President also prompted some selling on Wall Street.
Technical Outlook
S&P 500 (MAR) 02/18/2005: 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 cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. The next downside target is 1192.50. The
next area of resistance is around 1206.60 and 1214.90, while 1st support hits
today at 1195.40 and below there at 1192.50.
SP EMINI (MAR) 02/18/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
next downside objective is 1192.44. Bearish daily studies indicate selling minor
rallies this session. The next area of resistance is around 1206.62 and 1214.93,
while 1st support hits today at 1195.38 and below there at 1192.44.
NASDAQ (MAR) 02/18/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The cross
over and close above the 18-day moving average indicates the longer-term trend
has turned up. The close below the 2nd swing support number puts the market on
the defensive. The next downside objective is now at 1500.75. The next area of
resistance is around 1538.50 and 1558.75, while 1st support hits today at
1509.50 and below there at 1500.75.
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CURRENCY MARKET RECAP
2/17/2005
March US Dollar finished down 24 at 8348, 40 off the high and
11 up from the low.
March Euro finished up 0.33 at 130.76, 0.18 off the high and
0.57 up from the low.
March Euro Dollar closed up 0.0125 at 97.0175. This was 0.0175
up from the low and 0.0025 off the high.
March Canadian Dollar closed up 0.46 at 81.34. This was 0.45
up from the low and 0.21 off the high.
March British Pound finished up 0.9 at 189.22, 0.13 off the
high and 1.02 up from the low.
March Swiss closed up 0.24 at 84.63. This was 0.48 up from the
low and 0.17 off the high.
March Japanese Yen closed down 0.27 at 94.88. This was 0.23 up
from the low and 0.22 off the high.
The Dollar continued to decline and might have
been pushed into the selling by dialogue from the Chairman reserve Chairman that
suggested the “problems with the US deficit are huge”. Even more surprising is
the fact that US economic numbers were mostly supportive of recovery but yet the
Dollar saw almost no benefit. In fact, the Dollar seems to have remained in the
liquidation mode with the Pound and Canadian getting the biggest benefit off the
US travails. The Yen which sees the US as an extremely important export market
seems to be under pressure along with the Dollar and that would seem to hint at
concern for the US growth rate.
Technical Outlook
YEN (MAR) 02/18/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close under the 18-day moving average
indicates the longer-term trend could be turning down. The market tilt is
slightly negative with the close under the pivot. The next upside objective is
95.32. The next area of resistance is around 95.10 and 95.32, while 1st support
hits today at 94.66 and below there at 94.43.
EURO (MAR) 02/18/2005: 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 mildly bullish
indicator that the market closed over the pivot swing number. The next upside
target is 131.41. The next area of resistance is around 131.13 and 131.41, while
1st support hits today at 130.39 and below there at 129.92.
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PRECIOUS METALS RECAP
2/17/2005
April Gold closed up 1.7 at 428.6. This was 2.7 up from the
low and 1.2 off the high.
March Silver finished up 0.115 at 7.37, 0.06 off the high and
0.13 up from the low.
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The gold market managed another upside probe on
the charts and could have pulled in small spec buyers with the action,
especially considering the gains being posted in other metals during the action
Thursday. Certainly the gold market was lifted by the slight technical failure
in the Dollar and it is also possible that some flight to quality buyers were
moving into gold and silver because of the Greenspan dialogue that suggested US
debt issues are “huge”. We also think that the comments from the President,
suggesting that relations with the country were not moving forward were cause
for some additional flight to quality interest.
Technical Outlook
SILVER (MAR) 02/18/2005: 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. Market positioning is positive with the close
over the 1st swing resistance. The next upside target is 754.3. The market is
becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 746.5 and 754.3, while 1st support hits today at 727.5 and
below there at 716.3.
GOLD (APR) 02/18/2005: The market now above the
40-day moving average suggests the longer-term trend has turned up. Rising
stochastics at overbought levels warrant some caution for bulls. 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 near-term
upside target is at 432.1. The next area of resistance is around 430.5 and
432.1, while 1st support hits today at 426.7 and below there at 424.4.
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COPPER MARKET RECAP
2/17/2005
March Copper closed up 4.55 at 149.35. This was 5.95 up from
the low and 0.65 off the high.
The highest copper price in a decade and a half
would seem to suggest that supplies continue to tighten or that demand remains
strong. We suspect that supplies remain tight and that demand remains constant
but we also think that prices are getting to a level where more supply might
find its way onto the market and that some buyers might be less inclined to pay
up for copper. However, the coming weekly Shanghai copper stocks reading (to be
released Friday morning) will be extremely critical as recent price action would
seem to suggest that bullish conditions are becoming more significant!
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ENERGY MARKET RECAP
2/17/2005
March Crude Oil closed down 0.79 at 47.54. This was 0.14 up
from the low and 1.11 off the high.
March Heating Oil closed down 2.92 at 131.28. This was 0.28 up
from the low and 3.02 off the high.
March Unleaded Gas finished down 4.63 at 123.65, 4.80 off the
high and 0.35 up from the low.
March Natural Gas finished down 0.19 at 5.92, 0.21 off the
high and 0.07 up from the low.
March Propane closed up 0.01 at 0.76. This was equal to the
low and 0.00 off the high.
The energy complex showed early strength but then
slid into a profit taking posture as the session wore on. We suspect that
another expansion of the annual natural gas surplus in the weekly inventory
report highlighted the lack of winter demand in North America. The market was
also put under pressure because of comments from the Algerian oil Minister who
suggested that current oil prices were too high to cut production in the March
OPEC meeting.
Technical Outlook
CRUDE OIL (MAR) 02/18/2005: 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. It is a slightly negative
indicator that the close was lower than the pivot swing number. The next upside
target is 49.03. The next area of resistance is around 48.16 and 49.03, while
1st support hits today at 46.92 and below there at 46.54.
UNLEADED (MAR) 02/18/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down. The
daily stochastics gave a bearish indicator with a crossover down. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The close under the 18-day moving average indicates the longer-term trend could
be turning down. The market setup is somewhat negative with the close under the
1st swing support. The next downside target is now at 119.62. The next area of
resistance is around 126.22 and 129.91, while 1st support hits today at 121.08
and below there at 119.62.
HEATING OIL (MAR) 02/18/2005: Momentum studies
are trending higher from mid-range, which should support a move higher if
resistance levels are penetrated. The major trend has turned down with the cross
over back below the 18-day moving average. The close below the 1st swing support
could weigh on the market. The near-term upside objective is at 135.26. The next
area of resistance is around 132.93 and 135.26, while 1st support hits today at
129.63 and below there at 128.67.
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CORN MARKET RECAP
2/17/2005
May Corn finished up 2 3/4 at 207, 1/2 off the high and 1 1/2
up from the low. December Corn closed up 2 at 231. This was 1 up from the low
and 3/4 off the high.
Strength in soybeans and weather concerns in
Brazil helped support the market early. Weekly export sales came in at 786,000
tons as compared with trade expectations at 600,000-800,000 tons. Cumulative
sales have reached 57.7% of the USDA forecast for the season as compared with
58% on average for this time of the year. However, South Korea bought 105,000
tonnes of optional origin corn overnight with traders suspicious that the
business is going to China. Support for May corn comes in at 204 1/2 with
resistance at 208 1/2.
Technical Outlook
CORN (MAY) 02/18/2005: 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 market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. The
near-term upside objective is at 208 3/4. The next area of resistance is around
208 and 208 3/4, while 1st support hits today at 206 and below there at 204 3/4.
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SOY COMPLEX RECAP
2/17/2005
May Soybeans finished up 18 1/4 at 553, 1 off the
high and 14 up from the low. November Soybeans closed up 19 3/4 at 566 1/2. This
was 15 up from the low and 1 1/2 off the high.
May Soymeal closed up 8.6 at 171.5. This was 7.0
up from the low and 0.5 off the high.
March Soybean Oil finished up 0.26 at 19.82, 0.28
off the high and 0.19 up from the low.
Concerns with hot and dry weather in southern
Brazil producing areas provided solid buying support and a solid recovery in
meal due to recent reports of firm demand helped support the higher trade. Ideas
that crop losses are ongoing for Rio Grande do Sul and Parana regions in Brazil
has analysts lower production forecasts for Brazil. Rumors that China is
stepping up to buy 5 cargos of Brazil soybeans this week also provided support
and there is still hope than China may book a few more US cargos for early March
shipment. Gulf basis was firm this morning. Taiwan passed on a tender overnight
to buy 40,000-60,000 tonnes of US or Brazil soybeans indicating that prices were
too high. Weekly export sales came in at 381,700 tons as compared with trade
expectations at 250,000-450,000 tons. Cumulative sales have reached 87.4% of the
USDA forecast for the season as compared with 83.4% on average for this time of
the year. For meal, weekly sales hit 175,300 tons as compared with trade
expectations at 50,000-100,000 tons. Cumulative sales reached 72% of the USDA
forecast for the season as compared with 67.8% on average for this time of the
year. Oil sales were 4400 tons as compared with 5,000-10,000 tons. Meal also
found support from news of active expansion for broiler production. Sharply
higher trade in palm oil overnight helped support the recovery bounce for oil.
Resistance for May soybeans comes in at 561 with support at 544 1/4 and 536.
Technical Outlook
BEANS (MAY) 02/18/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up.
Momentum studies are trending higher but have entered overbought levels. The
major trend could be turning up with the close back above the 18-day moving
average. If yesterday’s gap higher on the day session chart holds, additional
buying could develop this session. There could be more upside follow through
since the market closed above the 2nd swing resistance. The near-term upside
target is at 564 3/4. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 560 1/2 and 564 3/4,
while 1st support hits today at 545 1/2 and below there at 534 3/4.
MEAL (MAY) 02/18/2005: 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 gap upmove on the day session chart is a
bullish indicator for trend. The market’s close above the 2nd swing resistance
number is a bullish indication. The next upside target is 177.1. With a reading
over 70, the 9-day RSI is approaching overbought levels. The next area of
resistance is around 175.0 and 177.1, while 1st support hits today at 167.4 and
below there at 161.8.
BEANOIL (MAY) 02/18/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. If yesterday’s gap
higher on the day session chart holds, additional buying could develop this
session. The market’s close above the 2nd swing resistance number is a bullish
indication. The next upside target is 20.46. The next area of resistance is
around 20.15 and 20.46, while 1st support hits today at 19.63 and below there at
19.42.
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WHEAT MARKET RECAP
2/17/2005
May Wheat finished up 3 1/2 at 303 1/4, 1 1/2 off the high and
2 3/4 up from the low. July Wheat closed up 4 1/2 at 311. This was 3 up from the
low and 1 off the high.
Bullish demand news for exports this morning
helped to support the higher trade and support is also overflowing from the
soybean pit due to weather concerns in Brazil. Weekly export sales came in at
623,200 tons as compared with trade expectations at 250,000-400,000 tons.
Cumulative sales have reached 83.8% of the USDA forecast for the season as
compared with 76.9% on average for this time of the year. In addition, South
Korea bought 22,000 tons of US wheat overnight and Japan bought 86,000 tons of
wheat at their weekly tender with 45,000 tons of the total coming from the US.
Iraq has amended its tender to buy 100,000-150,000 tons of US hard white milling
wheat to include hard red winter wheat. A lack of production concerns from major
producing countries may be a limiting factor on the upside. May wheat support
comes in at 302 1/4 and 300 1/2 with resistance at 309.
Technical Outlook
WHEAT (MAY) 02/18/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. Market positioning
is positive with the close over the 1st swing resistance. The next upside
objective is 307. The next area of resistance is around 305 1/4 and 307, while
1st support hits today at 301 1/4 and below there at 298 3/4.
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LIVE CATTLE RECAP
2/17/2005
April Live Cattle finished down 0.37 at 87.30, 0.75 off the
high and 0.12 up from the low.
March Feeder Cattle closed down 0.10 at 100.62. This was 0.22
up from the low and 0.37 off the high.
April cattle closed moderately lower on the
session after the early move to a new high for the week failed to find new
buying support. Traders seem to have put too much emphasis on the wet weather in
the plains in the forecast for the next few days while underestimating the
current psychology of the retailer. Weather looks less threatening than earlier
this week while retailers do not want to be sitting on beef inventories when the
border opens on March 7th with Canada. The process of drawing down inventories
at the retail level should leave the appearance of weak retail demand. In fact,
traders have commented on the low volume of boxed-beef trade recently in spite
of the downtrend in beef price. Boxed-beef cut-out values at mid-session were
down $2.00 to $142.70 as compared with $147.39 last week. Slaughter came in at
117,000 head as compared with trade expectations at 117,000-118,000 head.
Technical Outlook
CATTLE (APR) 02/18/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The daily closing price reversal down is a negative indicator for
prices. The market setup is somewhat negative with the close under the 1st swing
support. The next downside objective is 86.600. The next area of resistance is
around 87.720 and 88.320, while 1st support hits today at 86.870 and below there
at 86.600.
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LEAN HOGS RECAP
2/17/2005
April Lean Hogs finished down 0.05 at 73.85, 0.50 off the high
and 0.35 up from the low.
March Pork Bellies closed up 0.02 at 85.97. This was 0.47 up
from the low and 0.37 off the high.
Hog futures pushed slightly lower on the session
as the bullish outlook for the cash market took a hit with the sharply lower
pork cut-out values from Wednesday afternoon. Traders have been impressed with
the ability of the market to absorb increasing pork production and still hold
pork values higher but the sharp break in pork values on Wednesday with more
hefty production due in the next few days helped to ease the bullish enthusiasm.
The 2-day lean index for the period ending February 15th came in at 67.25,
down.61 on the session and down from 69.88 last week. Slaughter came in at
400,000 head as compared with trade expectations at 398,000-401,000 head.
Cumulative slaughter this week is running 1.9% above last years pace and 5.7%
above last year.
Technical Outlook
HOGS (APR) 02/18/2005: The close under the 60-day
moving average indicates the longer-term trend could be turning down. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The close under the 18-day moving average
indicates the longer-term trend could be turning down. The market’s close below
the pivot swing number is a mildly negative setup. The next upside objective is
74.720. The next area of resistance is around 74.270 and 74.720, while 1st
support hits today at 73.450 and below there at 73.050.
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COCOA MARKET RECAP
2/17/2005
May Cocoa finished up 31 at 1616, 1 off the high and 31 up
from the low.
The cocoa market managed to extend early gains
into the close and we suspect that a little arbitrage benefit might have been
seen in the US market. We also think that increased fund buying interest in a
cross section of markets might have added to the bullish impetus. However, in
order to pull in a wave of buying it might take a rise above the recent high of
$1,621 basis the May contract. While the speculative crowd seems to be draw into
the long side because of Ivory Coast arrival data we are not sure that lower
arrivals actually indicate a smaller crop or tighter future supply conditions.
Technical Outlook
COCOA (MAY) 02/18/2005: The daily stochastics
gave a bullish indicator with a crossover up. Stochastics are at mid-range but
trending higher, which should reinforce a move higher if resistance levels are
taken out. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The near-term
upside objective is at 1640. The next area of resistance is around 1632 and
1640, while 1st support hits today at 1600 and below there at 1577.
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COFFEE MARKET RECAP
2/17/2005
May Coffee closed unchanged at 119.50. This was 2.00 up from
the low and 2.40 off the high.
May coffee closed unchanged on the session with a
440 point range as the move to new contract highs failed to support new buying
but the market managed to find support on the break. Commercial volume was
thought to be slow as roaster buying demand only emerges on significant breaks.
With prices at a 5-year high, buyers are hesitant to build much inventory.
Digging into stocks with a significant world production deficit has been the
primary bullish force for coffee with May hitting contract highs in 9 of the
past 10 trading sessions.
Technical Outlook
COFFEE (MAY) 02/18/2005: The market made a new
contract high on the rally. The daily stochastics gave a bearish indicator with
a crossover down. Momentum studies are trending lower from high levels which
should accelerate a move lower on a break below the 1st swing support. The 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 downside objective is 115.20. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
121.65 and 124.00, while 1st support hits today at 117.30 and below there at
115.20.
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SUGAR MARKET RECAP
2/17/2005
May Sugar closed up 0.06 at 9.30. This was 0.10 up from the
low and 0.04 off the high.
News that Iraq was tendering for 25,000-50,000
tons of raw sugar and expectations for Indonesia to issue permits for 200,000
tons of white sugar supported the recovery off of yesterday’s collapse. May
sugar closed 6 higher with an inside trading session. After continued reports of
a major expansion in production in Brazil for the coming season, reports of dry
weather in Brazil’s top producing state of Sao Paulo helped provide underlying
support. A private Brazil analyst Datagro has forecast a record center-south
cane crop of 358 million tonnes, up 9.3% from last year.
Technical Outlook
SUGAR (MAY) 02/18/2005: The major trend could be
turning up with the close back above the 40-day moving average. The moving
average crossover down (9 below 18) indicates a possible developing short-term
downtrend. Stochastics trending lower at midrange will tend to reinforce a move
lower especially if support levels are taken out. The market back below the
18-day moving average suggests the longer-term trend could be turning down. The
market has a slightly positive tilt with the close over the swing pivot. The
next downside objective is now at 9.15. The next area of resistance is around
9.36 and 9.42, while 1st support hits today at 9.23 and below there at 9.15.
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COTTON MARKET RECAP
2/17/2005
May Cotton finished down 0.17 at 46.66, 0.31 off the high and
0.25 up from the low.
The market closed slightly lower in quiet trade
with a lack of surprises in the weekly sales report and traders waiting to see
deliveries on Tuesday before a significant move. Weekly export sales came in at
239,600 bales as compared with trade expectations at 150,000-250,000 bales.
Cumulative sales have reached 80.1% of the USDA forecast for the season as
compared with 84.3% on average for this time of the year. Shipments hit 308,600
bales which helped provide underlying support.
Technical Outlook
COTTON (MAY) 02/18/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. 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. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next upside objective is 47.23. The next area of resistance is around 46.93 and
47.23, while 1st support hits today at 46.38 and below there at 46.12.