The Short-Term Trend In Bonds
BOND MARKET RECAP
9/17/2003
The Treasury market seemed to re-evaluate the
words of the Fed and decide that there is still enough concern on the jobs front
to rationalize higher prices. However, some suggested that nearly two points of
gains Wednesday effectively factored a soft initial claims report for Thursday
morning. Early expectations for the initial claims call for a minor decline of
5,000 to 10,000 jobs, which means that the hurdle for a bullish reading isn’t
nearly as high as the price gains would suggest on their own.
Technical Outlook
BONDS (DEC) 09/18/03: 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. Near-term resistance for bonds
is at 109.20 and then again at 110.06, while swing support hits at 107.28 and
below there at 106.22. 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 110.06.
T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
113.10. With the close over the 1st swing resistance number, the market is in a
moderately positive position. The major trend is down with the cross over back
below the 40-day moving average. Near-term resistance for the T-Notes is at
112.31 and then again at 113.10, while swing support hits at 112.02 and below
there at 111.16. The market’s short-term trend is positive on a close above the
9-day moving average.
STOCK INDICES RECAP
9/17/2003
The stock market appeared to be exhausted around
the highs Wednesday, which is understandable given the recent rate of climb in
prices. However, with the FBI arresting some Wall Street Execs, housing starts
weak and US Treasuries soaring it was easy to find the negatives. Estimates from
the trade indicate a moderately overbought small spec position is in place and
that could make a failure of 101020.50 quite significant in the coming action.
We also see a number of longs concerned about the initial claims report to be
released Thursday morning. The whole jobless recovery issue sparked a rally in
Treasuries and could easily spark a washout in the stocks market.
Technical Outlook
S&P500 (DEC) 09/18/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. The daily closing
price reversal down puts the market on the defensive. Underlying support comes
in at 1022.00 and 1018.50, with overhead resistance at 1029.40 and 1033.30. 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 1033.30.
S&P E-Mini (DEC): A bullish signal was given with
an upside crossover of the daily stochastics. The next upside objective is
1040.19. The market has a slightly positive tilt with the close over the swing
pivot. Near-term resistance for the S&P Mini is at 1035.88 and then again at
1040.19, while swing support hits at 1019.63 and below there at 1007.69. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.
NASDAQ (DEC) A new contract high was made
on the rally. The downside closing price reversal on the daily chart is somewhat
negative. 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 1391.00 and above there at 1401.00 with support at 1371.00 and
1361.00. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 1401.0.
CURRENCY MARKET
RECAP
9/17/2003
A big range down in the December Dollar seemed to
be propagated by soft US economic numbers and soaring US Treasury prices. Many
are suggesting that US economic numbers have turned soft and that more concern
toward the US recovery is going to manifest itself in selling of the Dollar. The
primary benefactors of the Dollar weakness appear to be the Pound and the Euro!
In fact, some traders pressed the short side of the Dollar specifically because
of the initial claims report due out Thursday morning.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The downside
closing price reversal on the daily chart is somewhat negative. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Swing resistance is targeted at 86.56 and above there at 86.83, with the yen
finding support around 86.05 and below there at 85.81. The daily stochastics
have crossed over up which is a bullish indication. The next upside target is
86.83.
EURO (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.1344.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.1152, with overhead resistance
at 1.1344. 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
9/17/2003
The gold market appeared to gather itself
primarily because of the sharp decline in the US Dollar. In fact, given the
technical damage in the Dollar the bulls in gold might be getting a little
excited about near term prospects in gold. The gold market might have been held
back by stories from Russia that suggested an expansion in gold production in
the future but that consolidation was also expected. The silver market continues
to rally whether the Dollar is up or down and in fact manages to rally even in
the face of weak gold and equity prices. In other words, the silver market is
displaying some pretty impressive price action.
Technical Outlook
SILVER (DEC): 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. Initial support for silver is at
525.5 and below there at 520.5 with resistance likely at 528.7 and 533.0. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. 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 520.5.
GOLD (DEC): Support for gold today comes in near
373.90, while resistance is pegged at 379.90. 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 373.90. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The market’s
short-term trend is negative as the close remains below the 9-day moving
average.
COPPER MARKET RECAP
9/17/2003
The copper market continue to rise on the idea of
a shortage of concentrates in China and because exchange stocks continue to
decline. However, we would be a little concerned about owning copper high in the
recent trading range if the outlook for the US recovery is dealt a blow by the
regularly scheduled economic numbers. It should be noted that the US Treasury
market rallied two points during the session Wednesday and that would seem to
hint at some potential problems with the recovery! The trade is also aware that
short-term techs in copper are significant overbought.
ENERGY MARKET RECAP
9/17/2003
The energy complex saw a pretty clean sweep of
bearish information from the API and DOE report as crude stocks rose by more
than 3 million barrels. It should also be noted that the DOE showed a fairly
large increase in gas and distillate stocks. We also have to think that some
seasonal stop loss selling is taking place considering the slack demand period
currently confronting the market. The natural gas market sagged because the
hurricane is becoming less of a supportive issue and because the trade is
expecting a 90 to 105 bcf injection in the weekly inventory report Thursday
morning.
Technical Outlook
CRUDE OIL (NOV): The market’s close below the 1st
swing support number suggests a moderately negative setup for today. Support for
crude is keyed on 26.76 and below there at 26.46, with resistance pegged at
27.56 and 28.06. 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 26.46.
With a reading under 20, the 9-day RSI indicates the market is extremely
oversold.
UNLEADED GAS (NOV): Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
72.59. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 79.59, while support should be found around
72.59. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The 9-day RSI under 30 indicates the market
is approaching oversold levels.
HEATING OIL (NOV): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 71.09, with resistance is at 75.09. 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 71.09. With a reading under 20,
the 9-day RSI indicates the market is extremely oversold.
CORN MARKET RECAP
9/17/2003
The corn market was mostly weak but rejected the
really negative chart action around the lows Wednesday. Apparently the trade
continues to see stories of good yields coming in Illinois and overall weak Gulf
basis action. Also weighing on prices were reports that the US harvest is going
on around the clock. So far the market is discounting ideas of dryness in
Argentina for the early-planted corn. Expectations for the weekly export sales
report call for 650,000 to 1,000,000 tons of corn compared to last weeks tally
of 920,400 tons. The market mostly discounted stories that up to 1.3 billion in
US crop are at risk to the hurricane and we seriously doubt that projection.
Technical Outlook
CORN (DEC) 09/18/03: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 222 . The market’s close below the pivot swing number is a
mildly negative setup. Market resistance comes in at 226 today, with support at
222 . The market’s short-term trend is negative as the close remains below the
9-day moving average. With a reading under 30, the 9-day RSI is approaching
oversold levels.
SOY COMPLEX RECAP
9/17/2003
It is impressive that beans managed to close 6
1/2 higher, with gulf basis levels showing early weakness and concern for the
coming harvest beginning to get the attention of the trade. Expectations for the
weekly export sales call for 300,000 to 500,000 tons and that compares to
282,500 tons last week. We see a general perception operating in the market that
the rally since the USDA report really hasn’t been enough to factor the
reduction in supply and the potential for further production losses since
September 1st. The market mostly discounted stories that up to 1.3 billion in US
crop are at risk to the hurricane and we seriously doubt that projection.
Technical Outlook
SOYBEANS (NOV) 09/18/03: A positive setup
occurred with the close over the 1st swing resistance. The next area of
resistance is around 621 and 624 , while 1st support hits today at 613 and below
there at 608 . The market’s close above the 9-day moving average suggests the
short-term trend remains positive. 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 608 .
MEAL (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 183.0. First resistance comes in at 186.9,
with support at 184.4. The market’s short-term trend is negative as the close
remains below the 9-day moving average. It is a mildly bullish indicator that
the market closed over the pivot swing number.
BEAN OIL (DEC): 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 23.22. 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. Daily swing resistance is found at
23.04 and above there at 23.22. Support should be encountered at 22.50 and
22.14. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
WHEAT MARKET RECAP
9/17/2003
A new low for the move and a poor close leaves
the bias down. However, the close did manage to hold above a critical pivot
point of 348 1/2. Expectations for the weekly export sales call for 500,000 to
800,000 tons with the prior weeks tally of 658,100 tons. Apparently the market
continues to follow the bear fundamentals of adequate near term supply and
little focus on the ever-growing export interest. Even the European market seems
to have lost the bullish buzz off the supply problems in that region. Argentina
is calling for a 6 million hectare planted area in the 2003-2004 crop and that
is slightly below prior estimates and largely unimportant.
Technical Outlook
WHEAT (DEC) 09/18/03: 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. Look
for near-term support at 345 1/2 and below there at 343 1/2, with resistance
levels at 353 1/2 and 359 1/2. 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 343 1/2.
LIVE CATTLE RECAP
9/17/2003
December cattle closed slightly higher in choppy,
two-sided trade while October was moderately higher on active bull spreading and
strong cash fundamentals. The USDA Ag Secretary announced that the US will
publish a proposed rule to allow some cattle from Canada to enter the US “in a
matter of weeks, not months”. This statement triggered a sharp inter-day
reaction on the floor but futures recovered into the close. Beef prices came in
at a new record high at mid-session at $163.66, up $1.64 from yesterday. For
Friday’s cattle-on-Feed report, traders are looking for on-feed supplies near
96.3% (range 95.7-98.8), placements at 104.2% (100.4-113) and marketings in
August at 97.6% (range 95.7-100).
Technical Outlook
CATTLE (DEC) 09/18/03: 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
82.37. It is a slightly negative indicator that the close was lower than the
pivot swing number. Support should be encountered at 83.05 and below there at
82.37. Market resistance is at 84.37 and then again at 85.02. The daily closing
price reversal up is positive. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative.
LEAN HOGS RECAP
9/17/2003
December hogs closed 70 higher on the session but
below the opening and 115 points off of the highs of the day. The weak technical
action mirrors the performance on Tuesday except for the higher close. Cash hogs
came in steady at most locations but higher at some places which helped support
the sharply higher opening. In addition, traders seemed less concerned with the
possible negative impact on demand from the hurricane on the east coast and more
concerned with possible supply disruptions to the 2nd largest producing state if
the hurricane hits into North Carolina. Weekly average weights for
Iowa/Minnesota for the week ending September 13th came in at 257.9 pounds as
compared with 257.1 the previous week and 256.5 pounds last year at this time.
The data is slightly negative. Funds were active buyers early but the weakness
into the close attracted some commercial selling.
Technical Outlook
HOGS (DEC) 09/18/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 58.30 and 59.27 today, while support is around 56.70 and then 56.07.
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 56.07.
COCOA MARKET RECAP
9/17/2003
A sharp short covering rally in cocoa seemed to
be fueled by professional or commercial buying and that gives talk of a bottom
some credence. We also have to think that the market recently reached a
moderately oversold short-term technical condition. It is a little surprising to
see the cocoa rally so aggressively in the face of increased arrivals in Brazil
and little in the way of supportive fundamental information on the upcoming main
crop. Maybe the market was reacting in a delayed fashion to the news that the
main crop was coming in on expectations but that the crop would be smaller than
the prior year. Seeing a smaller crop than the prior year with improved demand
could mean a minor deficit and prices in the December around 1467 might be
considered too cheap.
Technical Outlook
COCOA (DEC)09/18/03 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1541 and above there at 1559 with support at 1490
and 1457. Momentum studies are declining, but have fallen to oversold levels.
The next downside target is 1456.75.
COFFEE MARKET RECAP
9/17/2003
After a significant washout the December coffee
appeared to find some chart support around 62.00. However, the rally seems to
have been limited to short covering and not interest in the long side of the
market. Brazilian coffee exports in the first half of September totaled 663,853
bags, which is significantly above the first half of August and hints at a
period of higher supply. Ecuador also suggested that their August coffee bean
exports rose by 104% and that 8-month export totals were running 32% above the
prior year. Therefore, there would seem to be enough supply to keep the market
from much in the way of upside gains. Good rains in Brazil in the middle of the
week pretty much ease concerns of dryness but more rain is needed to make
conditions good.
Technical Outlook
COFFEE (DEC)9/18/03 The daily closing price
reversal up is positive. The market has a slightly positive tilt with the close
over the swing pivot. Negative momentum studies in the neutral zone will tend to
reinforce lower price action. The next downside objective is now at 61.45.The
Coffee contract should run into resistance at 64.70 and above there at 65.25
with support at 62.8 and 61.45. The market’s short-term trend is negative as the
close remains below the 9-day moving average.
SUGAR MARKET RECAP
9/17/2003
Failure to move above Tuesday’s highs and a lack
of increased interest in the cash market for new business triggered the sharp
sell-off in sugar into the close. The market retraced much of the action from
Tuesday but closed moderately lower instead of near the highs. The close was the
lowest since January 16th. The International Sugar Organization made its first
forecast for the 2003/2004 sugar balance sheet predicting a world production
surplus of 1.503 million tons as compared with the production surplus of 6.12
million tons for this year. World production was pegged at 146.264 million tons,
down from 147.566 million this season. The EU beet production is expected to be
down 4%.
Technical Outlook
SUGAR (MAR) 09/18/03: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Swing resistance comes in at 6.34, with support found at 5.94. 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 5.94. Daily studies pointing
down suggests selling minor rallies.
COTTON MARKET RECAP
9/17/2003
December cotton closed sharply higher and into
new contract highs as the early weakness into the gap left from the USDA report
failed to generate new selling but did help to generate new buying interest from
the trade. Nearby futures soared to new 33-month highs with the projected
tightness ahead for world and US ending stocks as the foundation for the buying
spree. A large merchant trade house and fund traders were active buyers and
supported the strong gains. Weekly export sales, released before the opening,
are expected to show sales near 30,000-50,000 bales as compared with 29,800
bales last week. Shipments are expected near 100,000-120,000 bales as compared
with 115,400 bales last week.
Technical Outlook
COTTON (DEC) 09/18/03: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. 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. Next
resistance area comes in at 67.94 and then again at 68.67, while support is
targeted at 65.24 and 63.27. The daily stochastics have crossed over up which is
a bullish indication. The next upside target is 68.67. The 9-day RSI over 70
indicates the market is approaching overbought levels. The outside day up and
close above the previous day’s high is a positive signal. A new contract high
was made on the rally. The daily closing price reversal up is positive.