This Could Do Wonders For Investor And Consumer Sentiment
BOND MARKET RECAP
10/18/2004
December Bonds closed up 0-03 at 113-03. This was
0-12 up from the low and 0-01 off the high.
December 10 Yr Treasury Notes finished up 0-005
at 113-075, 0-010 off the high and 0-085 up from the low.
The Treasury market was sloppy for most of
the session Monday, as it traded on both sides of unchanged. We have to think
that the mid rally reversal in oil prices put some pressure on Treasuries and we
also have to think that a moderate recovery in equity prices contributed to the
mid day slide in bonds. However, in looking ahead we suspect that Treasury
prices will see a moderate amount of support under prices unless the outlook on
the economy improves. On the other hand seeing a follow through on the
moderately aggressive downside thrust in crude oil prices could do wonders for
investor and consumer sentiment. Late in the session the Fed’s Olson suggested
that the US Rate Outlook hinged on whether or not the economy was still
improving and that gave the bulls the ability to take prices back into positive
ground.
Technical Outlook
BONDS (DEC) 10/19/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market’s short-term trend is positive on
the close above the 9-day moving average. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next upside target is
113-20. The next area of resistance is around 113-14 and 113-20, while 1st
support hits today at 112-29 and below there at 112-17.
TNOTES (DEC) 10/19/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The close over the pivot swing
is a somewhat positive setup. The near-term upside target is at 113-170. The
next area of resistance is around 113-135 and 113-170, while 1st support hits
today at 113-030 and below there at 112-275.
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STOCK INDICES RECAP
10/18/2004
December S&P finished up 4.8 at 1113.1, 2.1 off
the high and 9.8 up from the low.
December S&P E-Mini closed up 4.75 at 1113. This
was 10.5 up from the low and 2.25 off the high.
December Dow closed up 20 at 9945. This was 95 up
from the low and 13 off the high.
December Dow E-Mini finished up 16 at 9941, 19
off the high and 91 up from the low.
The stock market started out weak, fell below
critical chart support around mid morning but then managed an impressive mid day
recovery that resulted in a solid move into position ground for the day. The
sharp reversal in energy prices certainly inspired the longs during what
appeared to be an entrenched downward bias. Earnings reports also contributed to
the upward tilt as the trade started out with a moderately negative tone for
high tech and financial stocks but then reversed its attitude toward those
stocks later in the session. Despite all the hoopla on the earnings, the real
driving force of equity prices in the near term will be the direction in energy
prices.
Technical Outlook
S&P 500 (DEC) 10/19/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s 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. The next downside target is now
at 1099.23. The next area of resistance is around 1118.95 and 1123.02, while 1st
support hits today at 1107.05 and below there at 1099.23.
SP EMINI (DEC) 10/19/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 9-day moving average is a negative
short-term indicator for trend. The close over the pivot swing is a somewhat
positive setup. The next downside target is now at 1098.07. The next area of
resistance is around 1119.12 and 1123.56, while 1st support hits today at
1106.38 and below there at 1098.07.
NASDAQ (DEC) 10/19/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market setup is supportive for early
gains with the close over the 1st swing resistance. The next downside objective
is now at 1416.25. The next area of resistance is around 1473.50 and 1484.25,
while 1st support hits today at 1439.50 and below there at 1416.25.
MINIDOW (DEC) 10/19/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The daily closing
price reversal up is a positive indicator that could support higher prices. The
market has a slightly positive tilt with the close over the swing pivot. The
next downside target is 9813. The next area of resistance is around 9996 and
10033, while 1st support hits today at 9886 and below there at 9813.
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CURRENCY MARKET RECAP
10/18/2004
December US Dollar finished down 7 at 8715, 16
off the high and 22 up from the low.
December Euro finished up 0.27 at 124.99, 0.34
off the high and 0.21 up from the low.
December Euro Dollar closed down 0.005 at 97.75.
This was 0.005 up from the low and 0.01 off the high.
December Canadian Dollar closed down 0.24 at
79.53. This was 0.08 up from the low and 0.33 off the high.
December British Pound finished down 0.31 at
179.24, 0.7 off the high and 0.54 up from the low.
December Swiss closed up 0.18 at 81.46. This was
0.23 up from the low and 0.23 off the high.
December Japanese Yen closed down 0.08 at 91.78.
This was 0.13 up from the low and 0.12 off the high.
The Dollar slipped to fresh contract lows early
Monday but then found support off the fact that the US stock market recovered
and the fact that the NAHB Index gained 5 points. It is also possible that the
aggressive reversal in energy prices contributed to the Dollar’s mid day bounce,
as the US economy for some reason is be viewed under increasingly more intense
scrutiny due to high energy prices than other economies. The primary gainers
against the US Dollar were the Euro and the Swiss but surprisingly the Canadian
was weaker and that is a distinct change in that relationship.
Technical Outlook
YEN (DEC) 10/19/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. It is a slightly negative indicator that the close was
under the swing pivot. The next upside objective is 92.02. The next area of
resistance is around 91.90 and 92.02, while 1st support hits today at 91.66 and
below there at 91.53.
EURO (DEC) 10/19/2004: 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 close over
the pivot swing is a somewhat positive setup. The near-term upside target is at
125.57. The next area of resistance is around 125.26 and 125.57, while 1st
support hits today at 124.72 and below there at 124.48.
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PRECIOUS METALS RECAP
10/18/2004
December Gold closed down 2.5 at 417.6. This was
0.1 up from the low and 4.1 off the high.
December Silver finished down 0.123 at 6.987,
0.118 off the high and 0.017 up from the low.
October Platinum closed down 8 at 842. This was
equal to the low and 1 off the high.
The gold market started out positive Monday
probably a result of the new low in the Dollar. However, later in the session
the gold market seemed to fall into a liquidation tilt along with the industrial
metals. We are not sure that gold and silver were impacted by the reversal in
energy prices (off new all time highs) but one would have expected silver and
platinum to be benefited by the reversal in crude oil prices. The precious
metals have to make sure that fears of deflation don’t step up and take control
away from the flight to quality or physical buying expectation. Both gold and
silver continue to hold rather significant small spec and fund long positions
and that makes any violation of chart support a potentially significant
development.
Technical Outlook
SILVER (DEC) 10/19/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. 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 next downside target is 687.8. The next area
of resistance is around 705.5 and 714.7, while 1st support hits today at 692.0
and below there at 687.8.
GOLD (DEC) 10/19/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The close below the 1st swing support could weigh on the market. The
next downside target is now at 414.4. The next area of resistance is around
419.7 and 422.8, while 1st support hits today at 415.5 and below there at 414.4.
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COPPER MARKET RECAP
10/18/2004
December Copper finished down 2.50 at 128.40,
2.10 off the high and 1.40 up from the low.
The copper market seemed to give the bull tilt
that was seen off the lows from last week. Apparently some long funds were
stepping out of positions, possibly in a quick scalp from last week’s lows.
Apparently Asian copper premiums continue to hold together but we must note that
daily LME copper stock changes have narrowed again and that seems to take away
some of the speculative fervor. Surprisingly the combination of sharply lower
copper futures and a new low in the US Dollar failed to spark arbitrage buying
of US copper!
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ENERGY MARKET RECAP
10/18/2004
December Crude Oil closed down 1.13 at 52.84.
This was 0.74 up from the low and 1.06 off the high.
December Heating Oil closed down 3.77 at 151.20.
This was 1.20 up from the low and 3.60 off the high.
December Unleaded Gas finished down 5.40 at
135.59, 5.11 off the high and 2.39 up from the low.
December Natural Gas finished up 0.11 at 8.07,
0.17 off the high and 0.17 up from the low.
December Propane closed unchanged at 0.92. This
was 0.00 up from the low and equal to the high.
The energy complex started out firm and managed
to reach up into new high ground early. We suspect that talk of increased 3rd
and 4th quarter demand by OPEC provided the early pulse but later in the session
OPEC also increased the projected production by Iraq and that seemed to foster
the reversal in prices. Apparently Iraqi production increased by 372,000 barrels
per day in September and that basically countervails the increased demand
projection. Some traders suggested that higher margins caused some longs to
stand aside after the run rather than roll into more expensive positions for
future delivery. Surprisingly the natural gas market remained strong despite the
reversal in crude oil but many suggest that the funds were the primary buyers
boosting natural gas sharply above the last 4 days highs.
Technical Outlook
CRUDE OIL (DEC) 10/19/2004: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies trending lower
from overbought levels is a bearish indicator and would tend to reinforce lower
price action. 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 target is now at 51.12. The next area of resistance is around
53.74 and 54.72, while 1st support hits today at 51.94 and below there at 51.12.
UNLEADED (DEC) 10/19/2004: Daily stochastics
turning lower from overbought levels is bearish and will tend to reinforce a
downside break especially if near-term support is penetrated. A negative signal
for trend short-term was given on a close under the 9-bar moving average. The
market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is now at 128.77. The next area of
resistance is around 139.34 and 143.77, while 1st support hits today at 131.84
and below there at 128.77.
HEATING OIL (DEC) 10/19/2004: 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. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. The close below the 2nd swing support number puts the market on the
defensive. The next downside objective is 147.00. The next area of resistance is
around 153.60 and 156.60, while 1st support hits today at 148.80 and below there
at 147.00.
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CORN MARKET RECAP
10/18/2004
December Corn finished down 2 3/4 at 204, 2
1/2 off the high and 1/4 up from the low. March Corn closed down 2 1/4 at 214
1/2. This was 1/4 up from the low and 1 3/4 off the high.
The corn market experienced a lack of buying
support to close back into recent trading range. The active harvest weekend and
continued forecasts for a record crop helped to trigger some light speculative
selling early in the day. While soybeans recovered to higher on the session, the
weak weekly export inspections data and ideas that the market was overbought
after last weeks bounce helped to hold December corn inside of Friday’s range.
Weekly export inspections came in at 22.3 million bushels as compared with trade
expectations at 31-36 million. Cumulative exports have reached 199.9 million
bushels as compared with 216.7 million last year at this time. Gulf basis levels
were steady to higher on tight producer holding. For this afternoon’s weekly
crop progress report, traders are looking for harvest progress to reach near
40-50% complete. The USDA announced that 296,944 tons of US corn was sold to
Japan. Israel is tendering to buy 40,000 tons of US corn. South Africa dryness
is beginning to cause lower crop forecasts. Support for December corn comes in
at 203 1/4 and 202 1/4 with 207 1/4 and 210 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/19/2004: 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 market setup is somewhat negative with the
close under the 1st swing support. The next upside target is 207 1/4. The next
area of resistance is around 205 1/4 and 207 1/4, while 1st support hits today
at 202 3/4 and below there at 202.
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SOY COMPLEX RECAP
10/18/2004
November Soybeans finished up 3/4 at 514 3/4, 2
3/4 off the high and 6 1/4 up from the low. January Soybeans closed up 1 1/2 at
520 1/4. This was 6 3/4 up from the low and 2 1/4 off the high.
December Soymeal closed up 1.4 at 154.1. This was
2.1 up from the low and 0.2 off the high.
December Soybean Oil finished down 0.23 at 20.09,
0.16 off the high and 0.07 up from the low.
After holding last weeks lows, the market saw
some light short-covering from speculators which helped support the bounce. The
increased harvest activity failed to add to the downside and the market found
some light spec buying support. Talk of weaker demand from China may have added
to the early weakness and so did talk of better soil conditions in South America
after recent rain events in Brazil and Argentina. Talk that lower crush margins
in China and lower internal prices for oil and meal in China may hurt demand and
could slow China imports helped to pressure the market. Weekly export
inspections came in at 36.3 million bushels as compared with trade expectations
at 18-25 million. Cumulative exports have reached 99.0 million bushels as
compared with 83.7 million last year at this time. Gulf basis levels were steady
to lower with the advancing harvest over the weekend helping to pressure. For
this afternoon’s weekly crop progress report, traders are looking for harvest
progress to reach near 70-75% complete. November soybean resistance comes in at
519 and 523 1/4 with 509 1/2 and 506 as next support points.
Technical Outlook
BEANS (NOV) 10/19/2004: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The upside closing price
reversal on the daily chart is somewhat bullish. The market tilt is slightly
negative with the close under the pivot. The next upside objective is 522 3/4.
The next area of resistance is around 519 1/4 and 522 3/4, while 1st support
hits today at 510 1/4 and below there at 505.
MEAL (DEC) 10/19/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. A positive signal was given by the outside day up. Market
positioning is positive with the close over the 1st swing resistance. The next
downside objective is now at 151.4. The next area of resistance is around 155.2
and 155.9, while 1st support hits today at 153.0 and below there at 151.4.
BEANOIL (DEC) 10/19/2004: 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 negative as the close remains
below the 9-day moving average. The gap lower price action on the day session
chart is a bearish indicator for trend. The market setup is somewhat negative
with the close under the 1st swing support. The near-term upside target is at
20.34. The next area of resistance is around 20.20 and 20.34, while 1st support
hits today at 19.98 and below there at 19.89.
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WHEAT MARKET RECAP
10/18/2004
December Wheat finished down 4 1/2 at 314 3/4, 6 1/4 off the
high and 3/4 up from the low. March Wheat closed down 4 1/4 at 326 1/2. This was
1 up from the low and 5 1/2 off the high.
The move to the highest level since September
29th failed to find new buying interest as the 24 cent rally off of Tuesday’s
lows leaves the market in a short-term overbought condition. Good weather to see
the planting progress advance for tonight’s weekly crop progress report added to
the short-term bearish tilt. Weekly export inspections came in at 19.9 million
bushels as compared with trade expectations at 21-28 million. Cumulative exports
have reached 437.0 million bushels as compared with 443.4 million last year at
this time. The lower than expected exports may have helped trigger some
additional long liquidation selling. News that Canadian Grain Commission
inspectors went on strike in Vancouver will be watched closely to see if there
is a back-up of shipments or to see a shift to more US wheat. December wheat
support comes in at 311 3/4 and 309 with resistance at 318 1/2 and 321.
Technical Outlook
WHEAT (DEC) 10/19/2004: 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. The
downside closing price reversal on the daily chart is somewhat negative. The
market setup is somewhat negative with the close under the 1st swing support.
The near-term upside target is at 323. The next area of resistance is around 318
1/4 and 323, while 1st support hits today at 311 1/4 and below there at 309 1/4.
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LIVE CATTLE RECAP
10/18/2004
December Live Cattle closed up 0.30 at 89.05.
This was 0.32 up from the low and 0.25 off the high.
November Feeder Cattle finished down 0.10 at
112.27, 0.82 off the high and 0.27 up from the low.
The cattle market pushed sharply higher early in
the session and found support from a surging pork market and from a positive
tone for the cash market again this week. Beef prices were higher which added to
the positive tone for the cash market with talk that cash could trade $87.00
this week. Boxed-beef cutout values (600-750 choice) were up $.49 on the day at
mid-session to $139.47 as compared with $135.10 last week at this time. Packer
profit margins have improved in the past few weeks from deep in the red which
added to the positive tone. The late break in hogs and some concern with the
premium structure of the market during a period of cheap corn helped pressure
the market late.
Technical Outlook
CATTLE (DEC) 10/19/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside objective is at
89.600. The next area of resistance is around 89.320 and 89.600, while 1st
support hits today at 88.770 and below there at 88.470.
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LEAN HOGS RECAP
10/18/2004
December Lean Hogs closed down 1.75 at 65.10.
This was 0.25 up from the low and 3.37 off the high.
February Pork Bellies finished down 2.27 at
94.25, 2.95 off the high and 0.25 up from the low.
The hog market surged higher early in the session
on continued buying support from fund and commercial traders as the market tries
to absorb the news of the US commerce department anti-dumping duties slapped on
Canadian hog imports. While traders believe the duties will slow the flow of
hogs from Canada, the lack of near-term alternatives for the Canadian producer
until more slaughter capacity is built in Canada would be a reason to believe
that the impact on supply will be very minimal over the short run. The December
hogs broke 362 off of the highs to touch limit-down and the move below Friday’s
lows was seen as a bearish technical development. The CME 2-Day Lean Index for
the period ending October 14th was reported at 72.06, down $.86 from the
previous session.
Technical Outlook
HOGS (DEC) 10/19/2004: The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Rising from oversold levels, daily momentum studies would support higher prices,
especially on a close above resistance. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The daily
closing price reversal down is a negative indicator for prices. The market setup
is somewhat negative with the close under the 1st swing support. The next upside
target is 69.500. The next area of resistance is around 66.900 and 69.500, while
1st support hits today at 63.300 and below there at 62.270.
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COCOA MARKET RECAP
10/18/2004
December Cocoa finished up 9 at 1456, 12 off the
high and 10 up from the low.
The cocoa market was only slightly higher despite
the fact that the Dollar was lower again and Ivory Coast farmers were moving to
block the unloading of trucks at the port. While the farmers planned to slow the
unloading for a week authorities made it difficult for the stoppage to get
started. In any regard, the cocoa market is getting some support for prices even
if the net result of that situation is negligible. Standing against the upside
tilt in cocoa prices is a slight bit of disappointment regarding the most recent
cycle of 3rd quarter grind readings. In order for cocoa prices to rise above
chart resistance the threat against physical supply at the Ivory Coast must
increase off actual physical violence.
Technical Outlook
COCOA (DEC) 10/19/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next upside target is
1478. The next area of resistance is around 1467 and 1478, while 1st support
hits today at 1445 and below there at 1435.
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COFFEE MARKET RECAP
10/18/2004
December Coffee closed down 0.80 at 73.85. This
was 0.45 up from the low and 0.65 off the high.
It would seem like the coffee market has mostly
ran through the weather liquidation. However, with the coffee market still
holding a net spec and fund long of close to 10,000 contracts and that would
seem to leave the market vulnerable to more long liquidation. Reports that
Brazilian September coffee stocks increased by 1.7% on the year to 7.63 million
bags is seen as a negative. The ICO pegged world coffee consumption to be
1113.08 million bags and that compares to 2003-2004 coffee output of 00.69
million bags. However, the fact that the 2004-2005 output was expected to rise
to 112-114 million bags would seem to leave the coffee market with significant
concern for upcoming supply.
Technical Outlook
COFFEE (DEC) 10/19/2004: Daily stochastics are
trending lower but have declined into oversold territory. A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. The next downside
objective is now at 72.85. The next area of resistance is around 74.40 and
75.00, while 1st support hits today at 73.35 and below there at 72.85.
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SUGAR MARKET RECAP
10/18/2004
March Sugar closed down 0.20 at 8.95. This was
0.02 up from the low and 0.14 off the high.
A massive gap down failure in March sugar would
seem to put a rather large net spec and fund long of 162,000 contracts in danger
of being forced from position. The Sugar contract did set another open interest
record and that is another reason why the market is fearful of massive stop loss
selling. Some traders suggested that slightly weaker energy prices might have
undermined sugar prices but we are not sure that the whole ethanol/alcohol/sugar
relationship is tracking that closely. The market might have been supported by
stories from Brazil that some producers were holding back on sales in hopes of
seeing even higher prices ahead.
Technical Outlook
SUGAR (MAR) 10/19/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The gap lower on the day
session chart is bearish and puts the market on the defensive. The market is in
a bearish position with the close below the 2nd swing support number. The next
downside target is now at 8.82. The next area of resistance is around 9.03 and
9.14, while 1st support hits today at 8.87 and below there at 8.82.
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COTTON MARKET RECAP
10/18/2004
December Cotton finished up 0.60 at 46.42, 0.08
off the high and 0.92 up from the low.
The cotton market rejected an early downside
breakout Monday and managed to close above the prior sessions close. While the
NCC indicated that they would support a US Trade Representative appeal of the
WTO ruling against US subsidies the trade continues to think that some reduction
in subsidies will be seen in the long run and that could be bullish. However, in
the near term the WTO situation is difficult to measure as a day to day
influence. The December continues to be bought against short back month
contracts and that would seem to indicate that the overall trend remains down.
Technical Outlook
COTTON (DEC) 10/19/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close below the 9-day moving average is a
negative short-term indicator for trend. The upside daily closing price reversal
gives the market a bullish tilt. The market has a slightly positive tilt with
the close over the swing pivot. The near-term upside target is at 47.21. The
next area of resistance is around 46.92 and 47.21, while 1st support hits today
at 45.92 and below there at 45.21.