The Most Significant Thing About The US Numbers…

Technical Outlook

BONDS (DEC) 11/03/03: A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 109.12 and then again at 109.22, while swing support hits at 108.10 and below there at 107.18. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 109.22. Short-term indicators suggest buying dips today.

T-NOTES(DEC) 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 112.24. 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 112.18 and then again at 112.24, while swing support hits at 112.02 and below there at 111.23. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

10/31/2003

The stock market continued to have trouble sustaining the upward track despite extremely favorable macro economic information from the US. Apparently the trade was lifted by interest in insurance stocks, which were under pressure early in the week off the California fires. The most significant thing about the US numbers Friday were suggestions that the strength in the Chicago Purchasing Managers report were indicative of numbers that should foster employment. We have to think that only remaining burden to more new highs for the year in stocks is the concern for the jobs sector! Next week the market will confronted with another critical monthly jobs report and the numbers this week would seem to suggest that another improvement is likely.

Technical Outlook

S&P500 (DEC) 11/03/03: The market’s close below the pivot swing number is a mildly negative setup. Underlying support comes in at 1044.85 and 1043.13, with overhead resistance at 1050.15 and 1053.73. 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 1053.73.

S&P E-Mini (DEC): The market made a new contract high on the rally. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1054.31. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1050.63 and then again at 1054.31, while swing support hits at 1044.88 and below there at 1042.81. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (DEC) The market’s close above the 9-day moving average suggests the short-term trend remains positive. It is a slightly negative indicator that the close was lower than the pivot swing number. The market should run into resistance at 1421.50 and above there at 1431.75 with support at 1406.50 and 1401.75. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1431.8.

CURRENCY MARKET RECAP

10/31/2003

The Dollar has managed at least two full sessions of benefit from the much stronger than expected GDP reading. It did not seem like the Dollar saw any additional buying interest off the favorable US numbers released Friday morning until right before the close. With the Pound managing to trade higher on the day in the face of the strong Dollar it is clear that it is one of the stronger currencies. The US numbers are simply just too strong for the bears to be comfortable selling the Dollar.

Technical Outlook

YEN (DEC): 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 91.52 and above there at 92.22, with the yen finding support around 90.47 and below there at 90.12. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 90.12.

EURO (DEC): 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 1.1487. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1487, with overhead resistance at 1.1669. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

10/31/2003

The gold market showed impressive action in the face of a stronger Dollar. Gold and silver showed some strength following the second set of US economic numbers and that could be a sign that the metals are beginning to get a benefit from the hope for physical demand. The US Chicago Purchasing managers report showed some massive improvements and maybe the metals are sensing the chance for inflation. After all the Fed wants to leave interest rates low even with the economic numbers improving consistently. It is important to the bull camp that gold manages to disconnect itself from the exclusive focus on a lower Dollar.

Technical Outlook

SILVER (DEC): The close under the 40-day moving average indicates the longer-term trend could be turning down. The close below the 2nd swing support number puts the market on the defensive. Initial support for silver is at 497.0 and below there at 489.8 with resistance likely at 510.7 and 516.0. 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 489.8. 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.

GOLD (DEC): Support for gold today comes in near 377.70, while resistance is pegged at 392.90. The daily stochastic’s 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 next downside objective is now at 377.70. The market’s close below the pivot swing number is a mildly negative setup. The market’s short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat bullish.

COPPER MARKET RECAP

10/31/2003

A big range up in copper has to leave the market extensively overbought especially when one considers that the COT report released after the close Friday had to dramatically understate the size of the fund and small spec long position. We might also note that Shanghai copper stocks rose by more than 25,000 tons on the week and that is a large rise in inventory for a market that is supposedly in the midst of a significant shortage. Macro economically the copper market did see a pretty solid sweep of favorable information with the Chicago purchasing managers and University Michigan readings coming in very strong. In other words, the numbers seem to foster the idea that demand will continue to grow.

ENERGY MARKET RECAP

10/31/2003

The energy market showed some short covering incentive early in the action Friday morning but there didn’t seem to be too much fresh news to propagate continued buying. It would seem like the market was pricing cold weather in the west and above normal temps in the East and that would support natural gas and pressure heating oil. The natural gas market made a surprising run after some significant weakness in the prior session and that could be indicative of a bottoming. Intense fighting is being seen in Iraq and that could increase the chance of an attack against the pipelines.

Technical Outlook

CRUDE OIL (DEC): The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 28.81 and below there at 28.38, with resistance pegged at 29.41 and 29.58. The market’s close on the 9-day moving average is neutral. . With a reading under 30, the 9-day RSI is approaching oversold levels.

UNLEADED GAS (DEC): Momentum studies are declining, but have fallen to oversold levels. The next downside target is 76.83. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 81.33, while support should be found around 76.83. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (DEC): The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 77.10, with resistance is at 82.10. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 77.10.

CORN MARKET RECAP

10/31/2003

The corn market fell sharply and then managed to recoil away from the steep losses into the close. A sale of 112,000 tons to an unknown destination in corn didn’t seem to support prices early but the market is pretty much expecting ongoing strength in export sales from the US. Traders are a little put off by the rate of climb in the corn and expressed the need for a correction and that probably facilitated the initial decline Friday morning. News that the US was moving closer to a compromise on the Energy Bill could provide some minor support to corn prices but the real issue will be just how much feed/protein share, the market thinks corn will garner from meal in the coming months. The market is also pretty much expecting to see China slow or halt corn exports.

Technical Outlook

CORN (DEC) 11/03/03: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 250 3/4. The market’s close below the pivot swing number is a mildly negative setup. Market resistance comes in at 250 3/4 today, with support at 241 3/4. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels.

SOY COMPLEX RECAP

10/31/2003

The soybean market made a moderate profit-taking slide Friday and did so in the face of a surprisingly large soybean meal sale. The trade talked about being concerned about deliveries but many doubt that delivery interest will be strong. However, a delivery of 2,600 lots certainly deflated some spec longs and prompted some players to bank profits on past long plays. Farmer selling might have picked up significantly but remains lower than would be expected given such stellar price gains in October. Soybean prices in Brazil and Argentina continued to rise this week and that should give the US soybean market some underlying support. It would seem that the soybean market will need to see a steady diet of sales to unknown destinations to keep the bullish hype fully in control of prices in the coming week.

Technical Outlook

SOYBEANS (JAN) 11/03/03: It is a slightly negative indicator that the close was lower than the pivot swing number. The next area of resistance is around 805 and 809 3/4, while 1st support hits today at 790 1/2 and below there at 780 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 809 3/4. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (DEC): The daily stochastic’s 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 next downside objective is now at 248.7. First resistance comes in at 254.0, with support at 250.2. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close below the 1st swing support number suggests a moderately negative setup for today. With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (DEC): 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 25.17. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 26.52 and above there at 26.89. Support should be encountered at 25.66 and 25.17.

WHEAT MARKET RECAP

10/31/2003

The wheat market managed to close slightly higher on the session Friday but showed signs of a failure earlier in the session. Apparently the market isn’t very patient in seeing some wheat sales to China. The European wheat market was also sluggish on the session and many recent longs might be concerned about the slide off the week’s highs. A sale of hard red winter wheat of 109,639 tons to an unknown destination probably saved the wheat market from a harder correction Friday into the close. The COT report in wheat showed a build up of the fund long and put the CBOT small spec long position into net long ground.

Technical Outlook

WHEAT (DEC) 11/03/03: The daily closing price reversal up is positive. It is a slightly negative indicator that the close was lower than the pivot swing number. Look for near-term support at 365 1/2 and below there at 361 1/2, with resistance levels at 373 and 376 1/2. 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 376 1/2.

LIVE CATTLE RECAP

10/31/2003

December cattle closed 25 higher on the session and up 102 on the week. The market found support from the firm cash markets on the week and a steady decline in slaughter and beef production. Beef production for the week was just 467.2 million pounds which was down 2.6% from the previous week and down 11.4% from last year. Boxed-beef cut-out values were 23 cents to 167.49. The $20 break in the beef market combined with the $5.00 rally in the cash cattle market left packer profit margins in a downward spiral which is likely to lead to sharply reduced packer demand for next week. Tyson alone is expected to slaughter near 25,000 head less cattle on Monday and others could follow suite. Next week should be one of weak demand but also tight supply.

Technical Outlook

CATTLE (DEC) 11/03/03: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 92.02. It is a slightly negative indicator that the close was lower than the pivot swing number. Support should be encountered at 90.22 and below there at 89.32. Market resistance is at 91.57 and then again at 92.02. 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.

LEAN HOGS RECAP

10/31/2003

December hogs closed 77 higher on the session and 87 higher on the week. A double bottom on the weekly charts and the higher close is a supportive technical development. The CME 2-day lean index was down 53 cents to 48.52 and unless the cash index turns higher, the premium of December to the cash market is a limiting factor. Slaughter for the week came in at 2.141 million head which left pork production at 242.2 million pounds, up 2.4% from the previous week and up .1% from last year. While cash markets were steady to lower, ideas that cash markets can begin to work higher next week along with steady pork values helped support.

Technical Outlook

HOGS (DEC) 11/03/03: With the close over the 1st swing resistance number, the market is in a moderately positive position. Resistance levels comes in at 54.05 and 54.55 today, while support is around 52.62 and then 51.70. The market’s short-term trend is positive on a close above the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 51.70.

COCOA MARKET RECAP

10/31/2003

A massive range in cocoa was countered again by renewed origin selling. It seemed like the market was in the process of an upside breakout that was mostly powered by technical buy stop action and not because of some fresh fundamental. We do think that some industry buyers were part of the buy orders as they probably had resting orders to cover future needs in the event that prices traded into new highs for the move. We don’t detect weather issues at the Ivory Coast and thus far the threat of violence hasn’t been evident.

Technical Outlook

COCOA (DEC)11/03/03 The daily closing price reversal up is positive. The market has a slightly positive tilt with the close over the swing pivot. Cocoa should run into resistance at 1478 and above there at 1511 with support at 1403 and 1361. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1511.25.

COFFEE MARKET RECAP

10/31/2003

December coffee closed sharply lower again and into new low ground. In fact, coffee closed at the lowest level since July and off the weekly charts might be primped for a slide to 57.50. The prospect of rains simply takes the weather premium out of prices and that forces the market liquidate whatever remaining small spec longs there are in position. In fact with the funds launching into short plays we have to think that prices will slide until the fund short reaches 25,000 contracts. There would seem to be enough rain in the forecast for the weekend to capitulate the longs. Once might not even be surprised to see prices slide to the early 2003 low around 55 cents.

Technical Outlook

COFFEE (DEC)11/3/03 The sell-off took the market to a new contract low. 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 57.40.The Coffee contract should run into resistance at 59.50 and above there at 60.70 with support at 57.85 and 57.40. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

10/31/2003

End of month long liquidation selling emerged after March sugar ran into trade house and producer selling on the early rally. The market broke 35 points off of the highs of the day to close at the lowest level since November 18th, 2002. After gapping higher and testing the highs of the week, producer selling helped drive the market 26 lower on the session and down 17 points on the week. Talk of the massive stocks to work through in Brazil and continued good weather for new crop sugars combined with a weak tone for new export business helped pressure the market. Taiwan was expected to re-tender for 35,000 tons of raw sugar last week but officials indicated that the import quota was maxed out and a new purchase would not be approved by the government. In addition, weak prices in Russia, the world’s largest importer added to the bearish tone. The Russian sugar producers union indicated that Russia had produced (thought October 29th) 1.106 million tons of refined sugar from this years beet crop, up 28.8% from this time last year.

Technical Outlook

SUGAR (MAR) 11/03/03: The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. The market is in a bearish position with the close below the 2nd swing support number. Swing resistance comes in at 6.35, with support found at 5.65. 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 daily stochastic’s gave a bearish indicator with a crossover down. The next downside objective is now at 5.65.

COTTON MARKET RECAP

10/31/2003

December cotton closed limit down for the second session in a row. The market was 300 lower on the session and down 538 points on the week. The weekly closing price reversal from a multi-=year high could attract additional long liquidation selling and new technical selling on Monday morning. A sharply lower opening on Monday, (third day down from a contract high) however, could attract some trade house and speculative buying. Failure to add to the bull market on very bullish news on Thursday helped trigger the liquidation selling. China is preparing to issue import permits for another 500,000 tons (2.18 million bales) for 2003 and if this is released, China buyers should be active on breaks which could support the market next week and possibly a resumption of the bull trend. Fears of a bearish Commitment-of-Traders report for Friday afternoon added to the bearish tone.

Technical Outlook

COTTON (DEC) 11/03/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Short-term indicators on the defensive. Consider selling an intraday bounce. The swing indicator gave a moderately negative reading with the close below the 1st support number. Next resistance area comes in at 77.37 and then again at 78.32, while support is targeted at 76.10 and 75.78. 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 75.78. The gap lower price action on the day session chart is a bearish indicator for trend.