The Stock Market Rally Was Surprising — Here’s Why
BOND MARKET RECAP
9/10/2004
September Bonds closed up 0-09 at 112-10. This
was 0-03 up from the low and 0-20 off the high.
September 10 Yr Treasury Notes finished up 0-050
at 113-130, 0-110 off the high and 0-005 up from the low.
The Treasury market showed signs of
returning to the recent highs early in the session but seemed to lose momentum
into mid session. The Fed dialogue from the session would seem to have
undermined the bull case as Pianalto suggested that the Fed Feds rate must rise
and that the economy was in a sustained expansion. With Fed suggestions that it
would be normal to see rising interest rates we can understand some profit
taking by the longs. On the other hand, concern of rising energy prices and
lightly heightened terrorism concerns into the 9/11 anniversary date probably
leaves the edge in the market with the bull camp.
Technical Outlook
BONDS (DEC) 09/13/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. The market’s close below the pivot swing number
is a mildly negative setup. The next upside target is 112-01. The next area of
resistance is around 111-13 and 112-01, while 1st support hits today at 110-15
and below there at 110-04.
TNOTES (DEC) 09/13/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market’s short-term trend is positive on the close above the
9-day moving average. The market has a slightly positive tilt with the close
over the swing pivot. The next downside objective is now at 111-250. The next
area of resistance is around 112-160 and 112-275, while 1st support hits today
at 111-310 and below there at 111-250.
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STOCK INDICES RECAP
9/10/2004
September S&P finished up 5.4 at 1123, 2.5
off the high and 9 up from the low.
September S&P E-Mini closed up 5.5 at 1123.
This was 9.25 up from the low and 2.5 off the high.
September Dow closed up 21 at 10300. This was 65
up from the low and 15 off the high.
September Dow E-Mini finished up 24 at 10303, 14
off the high and 67 up from the low.
It almost seemed like the stock market was going
to open at and fall through critical support on the charts but after early
weakness the selling shut off. Some suggested that comments from the Fed
actually gave the stock market confidence as they seemed to think that the
economy was strong enough to be able to weather 2-3 minor rate hikes. Some
traders suggested that the fear of rising interest rates could put a lid on
prices in the future but the afternoon trade showed no such fear. Since prices
held together against the initial selling tilt but then gathered for an early
afternoon pulse up it is clear that upside momentum still lurks in the
marketplace. In the past, Al-Qaida taped messages were thought to be signals for
terrorist actions and with the 9/11 anniversary directly ahead, are surprised
that the market was able to pull in fresh long positions ahead of the the
weekend.
Technical Outlook
S&P 500 (SEP) 09/13/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. A positive signal for trend short-term was given
on a close over the 9-bar moving average. Market positioning is positive with
the close over the 1st swing resistance. The next downside target is now at
1109.88. The next area of resistance is around 1128.75 and 1132.87, while 1st
support hits today at 1117.25 and below there at 1109.88.
SP EMINI (SEP) 09/13/2004: 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 close above
the 9-day moving average is a positive short-term indicator for trend. With the
close over the 1st swing resistance number, the market is in a moderately
positive position. The next downside objective is 1109.57. The next area of
resistance is around 1128.87 and 1133.06, while 1st support hits today at
1117.13 and below there at 1109.57.
NASDAQ (SEP) 09/13/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. The market’s close above the 2nd swing resistance number is
a bullish indication. The next upside objective is 1435.50. The next area of
resistance is around 1427.50 and 1435.50, while 1st support hits today at
1399.50 and below there at 1379.50.
MINIDOW (SEP) 09/13/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The market’s short-term trend is positive on the
close above the 9-day moving average. The upside daily closing price reversal
gives the market a bullish tilt. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next downside objective
is now at 10211. The next area of resistance is around 10346 and 10372, while
1st support hits today at 10266 and below there at 10211.
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CURRENCY MARKET RECAP
9/10/2004
September US Dollar finished down 46 at 8837, 53
off the high and 23 up from the low.
September Euro finished up 0.76 at 122.67, 0.38
off the high and 0.67 up from the low.
September Euro Dollar closed up 0.0125 at
98.1275. This was 0.01 up from the low and 0.0025 off the high.
September Canadian Dollar closed down 0.13 at
77.55. This was 0.22 up from the low and 0.3 off the high.
September British Pound finished up 1.16 at
179.6, 0.64 off the high and 0.92 up from the low.
September Swiss closed up 0.38 at 79.53. This was
0.29 up from the low and 0.32 off the high.
September Japanese Yen closed up 0.19 at 91.26.
This was 0.61 up from the low and 0.34 off the high.
After seeing the Dollar gap down below pivot
point support on the charts, it managed a fleeting rally back into positive
ground and then rollover again to the downside. With US PPI showing a
contraction it would seem that the rate hike threat in the US is pretty much on
hold and for some that is cause to get short the Dollar. Unfortunately for the
Canadian it was undermined by a softer than expected monthly payroll reading but
in the end one has to be impressed with the Canadian’s ability to discount the
negative news flow. The biggest gainer on the session was the Pound and since it
has recently been the weakest currency some think the gains were simple
technical short covering. On the other hand, the Pound did manage to regain
several levels on the charts and the rally would seem to be more than simple
short covering.
Technical Outlook
YEN (DEC) 09/13/2004: 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’s close above the
9-day moving average suggests the short-term trend remains positive. A positive
signal was given by the outside day up. The market has a slightly positive tilt
with the close over the swing pivot. The next downside objective is 90.65. The
next area of resistance is around 92.17 and 92.58, while 1st support hits today
at 91.21 and below there at 90.65.
EURO (DEC) 09/13/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. The
market has a bullish tilt coming into today’s trade with the close above the 2nd
swing resistance. The next upside target is 123.70. The next area of resistance
is around 123.18 and 123.70, while 1st support hits today at 122.00 and below
there at 121.33.
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PRECIOUS METALS RECAP
9/10/2004
December Gold closed up 3.4 at 403.8. This was
2.8 up from the low and 1.1 off the high.
December Silver finished down 0.023 at 6.165,
0.09 off the high and 0.015 up from the low.
October Platinum closed up 8.6 at 834.5. This was
2.5 up from the low and 4.5 off the high.
The gold market certainly performed better than
the silver market in the action Friday and that would seem to suggest that only
gold is directly driven by a falling Dollar. With the action Friday traders
might also suggest that silver is more adversely affected by the slow
economy/deflation condition than the gold market is by such outside factors. In
fact, when one considers that gold, platinum and copper were all higher on the
session and silver was down it is clear that silver is marching to a totally
different drummer.
Technical Outlook
SILVER (DEC) 09/13/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The market could take on a
defensive posture with the daily closing price reversal down. It is a slightly
negative indicator that the close was under the swing pivot. The next downside
target is 607.9. The market is approaching oversold levels on an RSI reading
under 30. The next area of resistance is around 621.8 and 628.9, while 1st
support hits today at 611.3 and below there at 607.9.
GOLD (DEC) 09/13/2004: The major trend could be
turning up with the close back above the 40-day moving average. Momentum studies
are still bearish but are now at oversold levels and will tend to support
reversal action if it occurs. A negative signal for trend short-term was given
on a close under the 9-bar moving average. There could be more upside follow
through since the market closed above the 2nd swing resistance. The next
downside objective is 399.5. The next area of resistance is around 405.7 and
407.2, while 1st support hits today at 401.9 and below there at 399.5.
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COPPER MARKET RECAP
9/10/2004
December Copper finished up 1.60 at 128.00, 1.20
off the high and 0.50 up from the low.
Most traders seemed to think that a sharply lower
US Dollar provided the buying interest in copper but with the Chinese market
showing early strength we have to think that hope for continued Chinese demand
played a role in the gains Friday. It is also clear that a failure to solve the
strike in southern Peru gave the bulls an additional lift. While the macro
economic condition might seem to undermine copper prices the fact that US copper
imports for the month of July jumped by 101% from the prior month and increased
by 80.9% from year ago levels really rekindles optimism toward US demand. It has
been a long time since the hope for increased US copper demand was important
enough to be a factor in the marketplace.
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ENERGY MARKET RECAP
9/10/2004
October Crude Oil closed down 1.80 at 42.81. This
was 0.29 up from the low and 2.14 off the high.
October Heating Oil closed down 6.38 at 116.42.
This was 0.92 up from the low and 6.93 off the high.
October Unleaded Gas finished down 6.12 at
116.42, 6.58 off the high and 0.92 up from the low.
October Natural Gas finished down 0.09 at 4.57,
0.12 off the high and 0.01 up from the low.
October Propane closed up 0.01 at 0.79. This was
equal to the low and 0.01 off the high.
The trade suggested that energy prices were
higher because of ongoing concerns about US product supply and part of that is
the result of the weekly inventory report and part was derived off concerns for
the incoming hurricane. A Wall Street Journal article might also have provided
support to prices by suggesting that OPEC appeared to have little ability to
send prices down. Even in the face of talk that OPEC might decide to raise the
output ceiling failed to discourage buying interest during the early action
Friday. Maybe the market is looking ahead to the OPEC meeting as supportive the
trade isn’t seeing OPEC make any big moves toward expanding their capacity.
Technical Outlook
CRUDE OIL (OCT) 09/13/2004: The market back below
the 40-day moving average suggests the longer-term trend could be turning down.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The close below the 9-day moving
average is a negative short-term indicator for trend. The daily closing price
reversal down puts the market on the defensive. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. The
near-term upside target is at 45.70. The next area of resistance is around 44.02
and 45.70, while 1st support hits today at 41.60 and below there at 40.85.
UNLEADED (OCT) 09/13/2004: The close under the
40-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. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside objective is at 125.33. The next area of resistance is around
120.17 and 125.33, while 1st support hits today at 112.67 and below there at
110.34.
HEATING OIL (OCT) 09/13/2004: The close under the
40-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 below the 9-day moving average is
a negative short-term indicator for trend. The outside day down is somewhat
negative. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The near-term upside target is at 125.77.
The next area of resistance is around 120.34 and 125.77, while 1st support hits
today at 112.50 and below there at 110.08.
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CORN MARKET RECAP
9/10/2004
December Corn finished down 4 1/4 at 222
1/4, 2 off the high and 1 1/2 up from the low. March Corn closed down 4 at 231
1/4. This was 1 1/2 up from the low and 2 off the high.
December Corn closed 8 ¾ cents lower on the
week. Confirmation of record crop with record yields was enough to trigger
increased selling from speculators as the bearish weather forecast added to the
negative tone. The USDA pegged corn production at 10.961 billion bushels as
compared with the average trade estimate at 10.853 billion bushels (range
10.774-11.041). This is up 38 million bushels from the August USDA estimate of
10.923 billion bushels and compares with last years production at 10.114 billion
bushels. Ending stocks were pegged at 1.209 billion bushels as compared with the
average trade estimate at 1.138 billion bushels (range 1.04-1.242). This is up
77 million bushels from the August USDA estimate of 1.132 billion bushels. The
USDA left demand forecasts unchanged from last month at 10.72 billion bushels.
World ending stocks for the 2004/2005 season are now pegged at 87.9 million tons
from 85.67 million tons as last month’s estimate and 92.53 million tons last
year. Weekly export sales came in at 583,600 tons as compared with trade
expectations of 650,000-850,000 tons and 890,400 tons necessary each week to
reach the USDA projection. December corn resistance comes in at 224 and 225 with
217 1/4 as next support.
Technical Outlook
CORN (DEC) 09/13/2004: The market was pushed to a
new contract low. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The gap down on the day session
chart is bearish with more selling pressure possible today. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. The
next downside target is 219. The next area of resistance is around 224 and 225
3/4, while 1st support hits today at 220 1/2 and below there at 219.
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SOY COMPLEX RECAP
9/10/2004
November Soybeans finished down 10 at 572, 15 off
the high and 15 up from the low. January Soybeans closed down 8 1/2 at 580 1/2.
This was 12 1/2 up from the low and 12 1/2 off the high.
December Soymeal closed down 2.5 at 167.8. This
was 4.8 up from the low and 3.2 off the high.
December Soybean Oil finished down 0.33 at 23.36,
0.64 off the high and 0.46 up from the low.
November soybeans closed 40 ¼ cents lower on the
week. After a call to open 7-10 higher on the session, the weak opening came as
a surprise to the bulls as the lower production forecast was offset by bearish
weather forecasts, weaker demand numbers in the Supply/demand report and a
forecast for higher world ending stocks. The USDA pegged soybean production at
2.836 billion bushels as compared with the average trade estimate at 2.883
billion bushels (range 2.846-2.938). This is down 41 million bushels from the
August USDA estimate of 2.877 billion bushels and compares with 2.418 billion
bushels last year. The USDA pegged ending stocks at 190 million bushels as
compared with the average trade estimate at 204 million bushels (range 175-253).
Crushing demand was lowered by 10 million bushels from last month to 1.615
billion bushels and exports were revised lower by 30 million bushels. World
ending stocks were pegged at 51.54 million tons from last months estimate of
50.20 million and 36.19 million tons this past year. Weekly export sales came in
at 391,700 tons as compared with trade expectations of 200,000-400,000 tons and
408,400 tons necessary each week to reach the USDA projection. Meal sales were
at 120,800 tons vs. expectations for 40,000-90,000 tons and oil sales were 600
tons from expectations of 5,000-13,000 tons. Moving lower on bullish USDA news
is seen as a bearish psychological factor. November soybean support comes in at
552 and 541 with resistance at 580 and 593 1/4.
Technical Outlook
BEANS (NOV) 09/13/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. The next downside objective is now at
542. The next area of resistance is around 587 and 602, while 1st support hits
today at 557 and below there at 542.
MEAL (DEC) 09/13/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside objective is now
at 159.4. The next area of resistance is around 171.8 and 175.4, while 1st
support hits today at 163.8 and below there at 159.4.
BEANOIL (DEC) 09/13/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The outside day down and close below the
previous day’s low is a negative signal. The close below the 2nd swing support
number puts the market on the defensive. The next downside target is 22.31. The
next area of resistance is around 23.91 and 24.50, while 1st support hits today
at 22.81 and below there at 22.31.
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WHEAT MARKET RECAP
9/10/2004
December Wheat finished up 13 1/4 at 333
1/2, 1/2 off the high and 18 up from the low. March Wheat closed up 13 at 343
1/4. This was 17 3/4 up from the low and 3/4 off the high.
The first close over the 40-day moving average
since June 1st could attract significant new short-covering ahead. Weakness in
the other grains and a bearishly construed supply/demand report helped to
pressure the market early but the market managed to hold minor support and ran
out of aggressive selling. A surge in fund short-covering helped support the
solid gains. The USDA left the supply numbers and the demand numbers unchanged
for the report and the world numbers were also near unchanged. The USDA pegged
ending stocks at 578 million bushels as compared with the average trade estimate
at 560 million bushels (range 531-578). In August, the USDA projection was 578
million bushels. For the world report, ending stocks were pegged at 142.33
million tons from 142.32 million tons last month and 132.3 million last year.
Production was revised higher by near 2 million tons. Weekly export sales came
in at 486,900 tons as compared with trade expectations of 400,000-600,000 tons
and 335,800 tons necessary each week to reach the USDA projection. Cumulative
sales have now reached 49.5% of the USDA forecast for the season as compared
with 36.1% on average for this time of the year. There were no deliveries
against the September contract. More rain in the forecast for the Canadian crop
next week and a lack of enough bearish news from the USDA to add to short
positions from the speculator helped to support the bounce into mid-session to
the highs of the day. Support for December wheat comes in at 323 ½ and 320 with
347 ¼ and 359 as resistance.
Technical Outlook
WHEAT (DEC) 09/13/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. The upside crossover of the 9 & 18 bar moving average is a
positive signal. A bullish signal was given with an upside crossover of the
daily stochastics. Momentum studies are rising from mid-range, which could
accelerate a move higher if resistance levels are penetrated. The market’s
short-term trend is positive on the close above the 9-day moving average. A
positive signal was given by the outside day up. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. The
near-term upside target is at 347 1/2. The next area of resistance is around 342
3/4 and 347 1/2, while 1st support hits today at 324 1/4 and below there at 310
3/4.
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LIVE CATTLE RECAP
9/10/2004
October Live Cattle closed up 2.42 at 85.02. This
was 0.42 up from the low and 0.57 off the high.
October Feeder Cattle finished up 2.57 at 110.32,
0.42 off the high and 1.12 up from the low.
October cattle closed 242 higher on the session
and up 230 points on the week. Cash cattle traded at $83.00-$83.50 in the plains
which was up $3.00-$3.50 on the week which sparked active buying across the
board. The stronger than expected cash market and hopes for better export demand
soon with US and Japanese officials trying to work on the steps to re-open the
export market helped to support. Boxed-beef cutout values (600-750 choice) were
down $0.62 on the day at mid-session to $129.86 as compared with $133.34 last
week at this time. Slaughter for Friday was estimated at 123,000 head as
compared with trade expectations at 123,000-125,000. Saturday slaughter was
estimated at 43,000 head vs. expectations at 30,000-50,000 head.
Technical Outlook
CATTLE (OCT) 09/13/2004: The daily stochastics
have crossed over up which is a bullish indication. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close above
resistance. The market’s short-term trend is positive on the close above the
9-day moving average. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart. There could be more upside follow
through since the market closed above the 2nd swing resistance. The near-term
upside target is at 86.050. The next area of resistance is around 85.500 and
86.050, while 1st support hits today at 84.520 and below there at 84.070.
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LEAN HOGS RECAP
9/10/2004
October Lean Hogs closed up 0.45 at 66.05. This
was 0.25 up from the low and 0.52 off the high.
February Pork Bellies finished down 0.47 at
93.70, 1.10 off the high and 0.85 up from the low.
October hogs closed 45 higher on the session and
up 65 points on the week. The surge in cattle helped support the early gains but
the market pulled back from the highs to close below the opening when trade
turned quiet late. Strong interest from packers for a large Saturday kill helped
support good packer demand in the cash market. The discount of futures to cash
added to the positive tone. The CME 2-Day Lean index for the period ending
September 8th was down just 22 cents to 71.98 which is down just 45 cents since
the end of August. Slaughter for Friday was estimated at 392,000 head as
compared with trade expectations at 394,000-399,000. Saturday slaughter was
estimated at 284,000 head vs. expectations at 200,000-250,000 head.
Technical Outlook
HOGS (OCT) 09/13/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
short-term trend is positive on the close above the 9-day moving average. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next upside target is 66.870. The next area of resistance
is around 66.420 and 66.870, while 1st support hits today at 65.670 and below
there at 65.350.
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COCOA MARKET RECAP
9/10/2004
December Cocoa finished down 17 at 1457, 36 off
the high and 3 up from the low.
The cocoa market continued to slide but from the
action it would seem like the $1,450 level was considered a moderate support
zone on the charts. With the US reporting a 22% decline in cocoa imports in the
month of July and a smaller decline versus year ago imports we can understand
the continued liquidation effort. However, with the US Dollar breaking out to
the downside and the flat price in cocoa the lowest since early July it is
possible that US cocoa is viewed as attractive on the arbitrage market.
Technical Outlook
COCOA (DEC) 09/13/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside objective is 1427. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 1476 and
1504, while 1st support hits today at 1438 and below there at 1427.
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COFFEE MARKET RECAP
9/10/2004
December Coffee closed up 0.20 at 74.20. This was
0.80 up from the low and 0.40 off the high.
December coffee closed 20 higher on the session
and 200 higher on the week with quiet trade and a tight range on Friday. The
technical action remains positive and the market managed to consolidate the
week’s gains on Friday. The weather in Brazil looks favorable for the tail end
of harvest and Brazil exports were active in August which may have pressured the
market this week but the drop in warehouse stocks on the week and short-covering
from fund traders who are thought to be holding a hefty net short position
helped to support.
Technical Outlook
COFFEE (DEC) 09/13/2004: The daily stochastics
have crossed over up which is a bullish indication. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. It is a mildly bullish indicator that the market
closed over the pivot swing number. The near-term upside objective is at 75.30.
The next area of resistance is around 74.75 and 75.30, while 1st support hits
today at 73.60 and below there at 72.90.
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SUGAR MARKET RECAP
9/10/2004
October Sugar closed up 0.06 at 7.81. This was
0.18 up from the low and 0.02 off the high.
October sugar closed 6 higher on the session but
down 32 points on the week. The market gapped lower to attract long liquidation
selling buy trade houses supported the market on the break and technical traders
were a bit disappointed to see a large drop of nearly 15,000 contracts in the
open interest for the October futures on Thursday. In the USDA Supply/demand
report, production was revised slightly to 8.536 million tons which pulled
ending stocks down to 2.229 million tons from 2.27 million projected last month
but still up from 2.169 million last year and 1.661 million tons for the
2002/2003 season. Russia has harvested 1.39 million tons of sugar beet by
September 7th as compared with 1.14 million last year at this time.
Technical Outlook
SUGAR (MAR) 09/13/2004: Momentum studies are
trending higher but have entered overbought levels. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The upside daily
closing price reversal gives the market a bullish tilt. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next upside
objective is 8.80. The next area of resistance is around 8.74 and 8.80, while
1st support hits today at 8.55 and below there at 8.41.
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COTTON MARKET RECAP
9/10/2004
October Cotton finished down 1.30 at 51.25, 0.75
off the high and 0.75 up from the low.
The cotton market pushed moderately lower on the
session (down 156 December) and considering the bearish news from the USDA, the
market managed to hold support well above the week’s lows. The USDA pegged
production at 20.9 million bales as compared with the average trade estimate at
19.857 million bales and the range of estimates at 19.5-20.4 million. The
production was 720,000 bales above last months forecast and 1.043 million bales
above the average trade estimate. Production at 20.9 million bales would be up
2.64 million bales from last year. Ending stocks were pegged at 6.10 million
bales vs. the average trade guess at 5.62 million bales (range 5.3-6.0). This
was up 200,000 bales from last months forecast. The USDA raised usage for export
and domestic by 200,000 bales each. World production was pegged at 107.25
million bales, up from 106.59 million last month and up 12.92 million bales from
last year. Weekly export sales came in at 90,500 bales as compared with trade
expectations of 100,000-150,000 bales and 124,400 bales necessary each week to
reach the USDA projection. Cumulative sales have now reached 45.7% of the USDA
forecast for the season as compared with 40.8% on average for this time of the
year.
Technical Outlook
COTTON (DEC) 09/13/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The next downside target is now
at 49.26. The next area of resistance is around 51.52 and 52.47, while 1st
support hits today at 49.92 and below there at 49.26.