The Saudi Oil Minister May Have Changed Things — Here’s Why

Technical Outlook

#BONDS (JUN) 05/24/04: The downside closing price
reversal on the daily chart is somewhat negative. It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 105.16 and then again at 106.07, while swing support
hits at 104.16 and below there at 104.07. 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 106.07.

T-NOTES(JUN) The daily closing price reversal
down puts the market on the defensive. 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 109.26. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. Near-term resistance for the T-Notes is at 109.11 and then again at
109.26, while swing support hits at 108.20 and below there at 108.13. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

5/21/2004

While the stock market managed to rally early
Friday we are a little disappointed that the market didn’t post bigger gains
early and didn’t hold into the afternoon. The market apparently wasn’t
emboldened by the decline in energy prices, or by the upgrade in the outlook for
China. Even the Fed was out clarifying that they were not set to raise rates
rapidly but that didn’t prompt buyers into the fray. All in all some macro
economic negatives tempered Friday but the market showed it wasn’t primed to
rally ahead of a weekend where almost anything could happen in the energy area.

Technical Outlook

#S&P500 (JUN) 05/24/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1087.15 and 1082.73, with overhead resistance at 1097.85 and
1104.13. The market’s short-term trend is positive on a close above the 9-day
moving average. Daily momentum studies are on the rise from low levels and
should accelerate a move higher on a push through the 1st swing resistance. The
near-term upside objective is at 1104.13.

S&P E-Mini (JUN): Rising from over sold levels,
daily momentum studies would support higher prices especially on a close above
resistance. The next upside objective is 1104.38. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1098.00 and then again at 1104.38, while swing support hits at
1087.00 and below there at 1082.38. A negative signal for trend short-term was
given on a close under the 9-bar moving average.

NASDAQ (JUN) 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.
The market should run into resistance at 1417.25 and above there at 1425.88 with
support at 1398.75 and 1388.88. Positive momentum studies in the neutral zone
will tend to reinforce higher price action. The next upside target is 1425.9.

MINI DOW (JUN) 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 10014 and above there at 10074 with support
at 9916 and 9878. 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 10074. With the close higher than the pivot swing
number, the market is in a slightly bullish posture.

 

CURRENCY MARKET RECAP

5/21/2004

We would have expected the weaker energy prices
action to benefit the Dollar or specifically the US economy but the Forex
markets were simply not that interested in supporting the Dollar Friday.
Apparently the market is going to keep leaning on the US Dollar in the near term
and with few economic reports due out in the coming sessions there might not be
much to turn the Dollar away from the pattern of recent weakness. The primary
benefactor of the Dollar weakness continues to be Pound and the Euro.

Technical Outlook

#CURRENCIES 05/24/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The gap upmove on the day session chart is a bullish indicator for
trend. 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. Swing resistance is targeted at 89.39 and above there at 89.69, with
the yen finding support around 88.94 and below there at 88.79. 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 89.69.

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 1.2089. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1935, with overhead resistance at 1.2089. 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

5/21/2004

The gold market flashed higher Friday, partly
because the Dollar made a new low for the move and partly because the outlook
for Asian demand improved. It would also seem like the Wall Street Journal
articles on inflation inspired some buyers to re-enter the fray in all the
metals. The fact that gold, silver, platinum and copper all participated in the
early burst of buying interest suggests that the interest is more than a simple
passing fancy. The trade was also inspired early in the session by talk of
European Central Bank buying in the spot gold market. At least for the day the
sentiment toward metals improved dramatically.

Technical Outlook

#P-METALS 05/24/04: SILVER (JUL): A positive
setup occurred with the close over the 1st swing resistance. Initial support for
silver is at 581.0 and below there at 576.5 with resistance likely at 589.7 and
593.0. 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 589.7. Short-term
indicators suggest buying dips today.

GOLD (AUG): Support for gold today comes in near
380.08, while resistance is pegged at 391.48. 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 391.48. The market’s close
above the 2nd swing resistance number is a bullish indication. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

COPPER MARKET RECAP

5/21/2004

The copper market exploded off the idea that the
Chinese slowdown threat was overstated. The fact that the market noted Chinese
physical buying overnight simply added to the renewed optimism. With the Dollar
sharply lower even the arbitrage trade was prompted to buy copper. With energy
prices weak and equity prices trying to entrench a better attitude it’s not
surprising that the funds decided to liquidate some of their overly short
positioning. There even seemed to be some labor threats in the copper market and
that rounded out a pretty bullish setup.

 

ENERGY MARKET RECAP

5/21/2004

The Saudi Oil Minister might have started a
change in the energy complex. With the Saudi Oil Minister hinting at more
aggressive efforts to deflate the speculative bubble the longs might be a little
less interested in throwing money at the long side. Apparently the Saudi Oil
Minister wants to see OPEC raise production beyond the current 2 million barrel
ceiling it might take some fresh supply issues to rekindle the bull market. The
weekly COT report certainly showed a massively overbought small spec and fund
long position and that also suggested that the market was vulnerable to
technical stop loss selling.

Technical Outlook

#ENERGIES 05/24/04: CRUDE OIL (JUL): The market
is in a bearish position with the close below the 2nd swing support number.
Support for crude is keyed on 39.38 and below there at 38.97, with resistance
pegged at 40.48 and 41.17. The market’s short-term trend is negative as the
close remains below 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 38.97.

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
129.86. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 136.66, while support should be found around
129.86. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

HEATING OIL (JUL): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 97.30, with resistance is at 103.70. The market’s
short-term trend is negative as the close remains below 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 97.30.

 

CORN MARKET RECAP

5/21/2004

While closing 2 1/4 lower on the day, July Corn
also closed 2 1/4 lower on the week but December corn lost 4 cents on the week
with high yielding weather as the primary force to trigger additional long
liquidation selling. The market pushed to the lowest level since February 13th
as weakness in the other grains and moisture in Chicago added to the bearish
psychology and contributed to increased speculative long liquidation selling.
News from the USDA that 120,000 tons of US corn was sold to “unknown”
destination failed to provide much support. While demand factors continue to
look strong with record high belly prices and contract highs for October cattle
and hogs today, the outlook for early pollination and the bearish weather
forecast has kept supply fears on the front burner. December corn support comes
in at 278 3/4 and 274 3/4 with 282 1/2 and 285 1/2 as short-term resistance.

Technical Outlook

#CORN (JUL) 05/24/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 284. The market’s close below the pivot swing number is a
mildly negative setup. Market resistance comes in at 296 1/2 today, with support
at 284. The market’s short-term trend is negative as the close remains below the
9-day moving average.

 

SOY COMPLEX RECAP

5/21/2004

The early boost in prices came from continued
hopes that the US Food and Drug Administration would tighten rules on feeding to
cattle and livestock following mad cow problems in the US which might boost meal
usage. At a press conference today, the FDA did not indicate when they will
announce new safeguards which were promised near 4-months ago which kept the
trade very volatile in both soybeans and meal. In the end, the trade saw the
news as negative as the uncertainty will persist. Traders remain hopeful that
the FDA will eventually tighten rules for use of meat and bone meal. In addition
to the good weather for the Midwest this week, the market is trying to absorb
the impact of the financial problems with the China crushing industry.
Additional long liquidation selling pressured the market into mid-session with a
cluster of thunderstorms hitting LaSalle Street in Chicago. The market is now
considered oversold basis traditional technical indicators with July moving to
the lowest level since February 19th. From contract highs in April, open
interest is down 67,700 contracts to 208,023 which could indicate that the long
liquidation trend may be close to complete with open interest now down to the
lowest level since August of 2003. Key technical support for July soybeans comes
in at 856 1/4 and a close above the level and the close higher on the session
after hitting three-month lows is considered a reversal and a positive technical
development. Resistance comes in at 895 and 922 1/2. November soybean support
comes in at 683 and 677 1/2 with 698 1/2 and 720 1/2 as resistance.

Technical Outlook

#SOYBEANS (JUL) 05/24/04: The daily closing price
reversal up is positive. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next area of resistance is around 886 1/2
and 897 1/4, while 1st support hits today at 858 1/2 and below there at 841 1/4.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 841 1/4.

MEAL (JUL): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
272.1. First resistance comes in at 286.8, with support at 277.3. 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 28.01. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The daily closing price reversal up is
positive. Daily swing resistance is found at 29.48 and above there at 29.71.
Support should be encountered at 28.63 and 28.01.

 

WHEAT MARKET RECAP

5/21/2004

While lower on the session, July wheat closed 9
3/4 cents higher on the week. Talk of stressful conditions in Kansas helped to
support the early bounce along with ideas of an oversold technical condition but
weakness in the other grains and forecasts for improved moisture for the spring
wheat belt helped to turn the market lower and attract more long liquidation
selling. Soft red basis was steady but hard red winter basis is under pressure
with the harvest underway in Texas. In addition, improving crop conditions in
Australia and a USDA attaché report from Europe which indicated a sharp rise in
production this year added to the bearish tone. The trade will be looking for a
slight decline in crop conditions for the winter wheat belt on Monday and
traders will be monitoring the Commitment-of-Traders report over the weekend to
see the extent of long liquidation from speculators. July wheat support comes in
at 365 1/4 and 361 with resistance at 371 and 377.

Technical Outlook

#WHEAT (JUL) 05/24/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 364 and below there at 360 1/4, with resistance levels at
372 3/4 and 377 3/4. 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. The next downside target is 360
1/4.

 

LIVE CATTLE RECAP

5/21/2004

June cattle closed 47 higher on the session and
137 higher on the week finding support from the discount to the cash market
going into the Cattle-on-Feed report for release after the close. October cattle
closed higher for the 4th session in a row to a new contract high gaining 260
points on the week with expectations that the lower placements last month and
export business by the summer will help support higher prices. Beef production
for the week came in at 503.4 million pounds which was down slightly from last
week and down 10.3% from last year. Boxed-beef cut-out values were down $1.29 to
$151.79 as compared with $158.02 last week at this time. The Cattle-on-Feed
report showed May 1st On-Feed supplies at 98% as compared with the average trade
estimate of 99.2% (range 97.8% to 100%). April placements were pegged at 86% as
compared with trade estimates at 87.7% (range 80.2% to 93%) and April marketings
came in at 95% as compared with the average trade guess at 94.3% (91.4% to 97%
range. The report is considered slightly supportive against expectations as
producers sold a few more cattle than expected last month and placed a few less
cattle than anticipated. As a result, on-feed supplies were lower than expected.
The market is called 50-100 higher on the opening Monday morning.

Technical Outlook

#CATTLE (AUG) 05/24/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 84.62. A positive setup occurred with the close over the 1st swing
resistance. Support should be encountered at 85.45 and below there at 84.62.
Market resistance is at 86.60 and then again at 86.92. The market’s close above
the 9-day moving average suggests the short-term trend remains positive.

 

LEAN HOGS RECAP

5/21/2004

July hogs closed 77 higher on the session but 110
points off of the highs of the day. The market still managed to close 12 higher
on the week. The cold storage report was bullish and supported solid gains but a
lower cash market and ideas that high pork values will slow demand helped to
trigger light long liquidation selling after the early surge higher. Bellies
also closed sharply higher but near the middle of the days range. News that
Maple Leaf Foods would not strike added to the bullish tone. Slaughter for the
week came in at 1.895 million head, up 3.8% from last week and up 4.8% from last
year.

Technical Outlook

#HOGS (JUL) 05/24/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 75.32 and 76.20 today, while support is around
74.07 and then 73.70. The downside crossover (9 below 18) of the moving averages
suggests a developing short-term downtrend. 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 73.70.

 

COCOA MARKET RECAP

5/21/2004

The cocoa market fell back on the opening in a
sign that the prior day’s gains were a little overstated. Aggressive origin
sales were probably seen because the higher price offer pulled out supply! Many
expected the lower Dollar to give the US market an edge over London but
apparently the trade isn’t as concerned about the recent political tensions at
the Ivory Coast. Prior to the opening a private forecast pegged the 2003-2004
cocoa surplus to be 82,000 tons and that isn’t a big surprise but it does favor
the bear camp.

Technical Outlook

COCOA (JUL) 05/24/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1413 and above there at 1447 with support at 1352 and 1325. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 1447.25.

 

COFFEE MARKET RECAP

5/21/2004

September coffee closed higher again but stayed
within the prior sessions range. Reports that El Salvador production from
2003-2004 declined by over 5% might have given the market a little lift, but the
coffee trade is still combing through the Brazilian long range weather forecasts
for any sign of a cold weather threat. The funds were noted buyers but the
market would not seem to have a dominating theme to justify a breakout of the
recent consolidation. A forecast of a surplus in the 2003-2004 crop year of 5.27
million bags is a little negative compared to the prior year’s deficit of 8.5
million bags.

Technical Outlook

COFFEE (JUN) 5/24/04 The market has a slightly
positive tilt with the close over the swing pivot. 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 73.80.
The Coffee contract should run into resistance at 73.15 and above there at 73.80
with support at 71.5 and 70.50. The market’s short-term trend is positive on a
close above the 9-day moving average.

 

SUGAR MARKET RECAP

5/21/2004

After making a new low for the move the sugar
market managed to close higher on the session and well up in the range for the
week. Indications that the trade was buying probably came off the idea that
soaring ethanol demand and rising petrol prices were going to increase global
sugar demand. With ethanol makers looking for cheap feed stock and the new
ethanol contracts offering a final market hedge it is possible that ethanol
production expands at an even greater pace. The Press also noted general small
spec buying interest but the funds were the dominating feature of the session.

Technical Outlook

#SUGAR (JUL) 05/24/04: The upside closing price
reversal on the daily chart is somewhat bullish. With the close over the 1st
swing resistance number, the market is in a moderately positive position. Swing
resistance comes in at 6.72, with support found at 6.36. 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 6.72.
Consider buying pull-backs since daily studies are bullish.

 

COTTON MARKET RECAP

5/21/2004

December cotton made a miserable trade on the
charts and would seem to be working toward a massively oversold condition. About
the only positive we can see is that the December contract managed to respect
the prior low of 58.40. Considering the magnitude of the slide this week and the
relatively oversold level of the last COT report it is not surprising that the
small spec and fund short is moving toward the record short position of 29,000
contracts that the cotton market posted in 1999 and 1998. In 1999 monthly cotton
prices declined below 50.00 in order to take the net spec short position to
29,000 contracts.

Technical Outlook

#COTTON (JUL) 05/24/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
It is a slightly negative indicator that the close was lower than the pivot
swing number. Next resistance area comes in at 63.70 and then again at 64.50,
while support is targeted at 62.30 and 61.70. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 61.70.