This Is What Gold Needs…
BOND MARKET RECAP
8/3/2004
September Bonds closed up 0-13 at 108-25. This
was 0-18 up from the low and 0-06 off the high.
September 10 Yr Treasury Notes finished up 0-065
at 111-025, 0-030 off the high and 0-115 up from the low.
The Treasury market slowly worked its way
higher after opening 3-5 ticks higher, it managed an additional 3-5 tick gain
off the 0.7% decline in Consumer Spending. The Treasury market then saw another
4-5 tick gain following the increase of 85 in the July Challenger Layoff report.
In total the market is beginning to question the size of the projected gain in
the monthly payroll report on Friday. We also think that seeing nearby crude
prices rise above $44.24 and seeing the OPEC Basket price reach a 14 year high
adds to the concern for future growth and that also favors the bonds. Minor
weakness in equity prices for most of the day also gave the bulls in the
Treasury market confidence.
Technical Outlook
#BONDS (SEP) 8/4/2004: The daily closing price
reversal up is a positive indicator that could support higher prices. The market
setup is supportive for early gains with the close over the 1st swing
resistance. Near-term resistance for bonds is at 109.05 and then again at
109.16, while swing support hits at 108.09 and below there at 107.24. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Stochastics are at mid-range, but trending higher which should reinforce a move
higher if resistance levels are taken out. The next upside objective is 109.16.
Daily studies suggest buying dips today.
T-NOTES(SEP) The upside closing price reversal on
the daily chart is somewhat bullish. 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 111.16. With the close over the
1st swing resistance number, the market is in a moderately positive position.
Near-term resistance for the T-Notes is at 111.09 and then again at 111.16,
while swing support hits at 110.25 and below there at 110.15. The market’s
short-term trend is positive on a close above the 9-day moving average. Consider
buying pull-backs since daily studies are bullish.
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STOCK INDICES RECAP
8/3/2004
September S&P finished down 8.2 at 1097.3, 8 off
the high and 0.8 up from the low.
September S&P E-Mini closed down 8.25 at 1097.25.
This was 0.75 up from the low and 9.25 off the high.
September Dow closed down 75 at 10090. This was 7
up from the low and 70 off the high.
September Dow E-Mini finished down 71 at 10094,
67 off the high and 11 up from the low.
At times the stock market is impressive in its
ability to discount potentially negative developments. Tuesday morning the stock
market was presented with nearby crude oil prices above $44.20 a barrel and saw
two of three US economic reports come in softer than expected. Unless the US
manages a strong reading from the payrolls Friday the stock market might not be
able to continue putting a favorable spin on the economy. However, the stock
market saw only moderate declines into mid session and continues to post fairly
light trading volume. News that several more arrests were made in Pakistan might
have prompted some traders to speculate on even more progress in the war on
terrorism.
Technical Outlook
#S&P500 (SEP) 8/4/2004: The market setup is
somewhat negative with the close under the 1st swing support. Underlying support
comes in at 1092.60 and 1090.15, with overhead resistance at 1101.40 and
1107.75. The close above the 9-day moving average is a positive short-term
indicator for trend. Momentum studies are rising from mid-range which could
accelerate a move higher if resistance levels are penetrated. The near-term
upside objective is at 1107.75.
S&P E-Mini (SEP): Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 1109.50. The swing indicator gave a moderately negative reading with
the close below the 1st support number. Near-term resistance for the S&P Mini is
at 1102.50 and then again at 1109.50, while swing support hits at 1092.50 and
below there at 1089.50. The market’s close above the 9-day moving average
suggests the short-term trend remains positive.
NASDAQ (SEP) A negative signal for trend
short-term was given on a close under the 9-bar moving average. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The market should run into resistance at 1392.75 and
above there at 1414.38 with support at 1363.25 and 1355.38. Stochastics are at
mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 1414.38.
MINI DOW (MAR) The close above the 9-day moving
average is a positive short-term indicator for trend. The market should run into
resistance at 10133 and above there at 10186 with support at 10055 and 10030.
Momentum studies are rising from mid-range which could accelerate a move higher
if resistance levels are penetrated. The near-term upside target is at 10186.
The market setup is somewhat negative with the close under the 1st swing
support.
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CURRENCY MARKET RECAP
8/3/2004
September US Dollar finished down 23 at 8970, 40
off the high and 8 up from the low.
September Euro finished up 0.15 at 120.43, 0.27
off the high and 0.34 up from the low.
September Euro Dollar closed unchanged at 98.08.
This was 0.015 up from the low and 0.01 off the high.
September Canadian Dollar closed up 0.83 at
75.91. This was 1 up from the low and 0.03 off the high.
September British Pound finished down 0.24 at
181.89, 0.11 off the high and 0.63 up from the low.
September Swiss closed down 0.06 at 78.26. This
was 0.18 up from the low and 0.24 off the high.
September Japanese Yen closed up 0.15 at 90.54.
This was 0.24 up from the low and 0.21 off the high.
The Dollar started out positive but faded
consistently as each wave of economic reports from the US disappointed the
trade. In fact with some of the information released for the July time frame the
favorable outlook for the US payroll report on Friday is downgraded. The
Canadian managed the most impressive rally Tuesday and that could be an
indication that the Canadian is coming into favor and will continue to show
strength against the Dollar. According to the Press the Canadian specifically
rallied off the weaker than expected US economic information. The information
flow is suggesting that the macro economic differential in North America is
moving to favor the Canadian economy over the US economy.
Technical Outlook
#CURRENCIES 8/4/2004: YEN (SEP): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market has a slightly positive tilt with the close over the swing pivot.
Swing resistance is targeted at 90.77 and above there at 90.98, with the yen
finding support around 90.32 and below there at 90.08. The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Rising from over sold levels, daily momentum studies would support higher prices
especially on a close above resistance. The next upside objective is 90.98.
EURO (SEP): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 1.1980. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1980, with overhead resistance at 1.2102. The
close below the 9-day moving average is a negative short-term indicator for
trend. The close below the 40-day moving average is an indication the
longer-term trend is down. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.
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PRECIOUS METALS RECAP
8/3/2004
October Gold closed up 2.1 at 395.2. This was 5.4
up from the low and 0.8 off the high.
September Silver finished up 0.065 at 6.685,
0.005 off the high and 0.205 up from the low.
October Platinum closed up 2.8 at 829.1. This was
10.1 up from the low and 0.7 off the high.
After seeing both gold and silver prices on the
rocks early in the session it is a psychological victory for the bull camp to
see prices come back. It continues to be clear that the gold market needs a
weaker Dollar to attractive buying but we also think that the gold buying
Tuesday was partially sparked by an increase in macro economic uncertainty. In
other words, gold is not totally a single focus market. Some traders were
reportedly moving into the long side of gold in advance of the Friday morning
payroll report as the trend of scheduled US reports is beginning to show
slowing. The combination of flight to quality terrorism pressure on top off
increased macro economic uncertainty could be enough to rekindle the type of
long interest seen from May to early July.
Technical Outlook
#P-METALS 8/4/2004: SILVER (SEP): The market
setup is supportive for early gains with the close over the 1st swing
resistance. Initial support for silver is at 658.0 and below there at 642.5 with
resistance likely at 665.6 and 679.0. A positive signal for trend short-term was
given on a close over the 9-bar moving average. Stochastics are at mid-range,
but trending higher which should reinforce a move higher if resistance levels
are taken out. The next upside objective is 665.6. Daily studies suggest buying
dips today. The outside day up is somewhat positive. The daily closing price
reversal up is a positive indicator that could support higher prices.
GOLD (OCT): Support for gold today comes in near
387.85, while resistance is pegged at 400.25. The crossover up in the daily
stochastics is a bullish signal. The near-term upside target is at 400.25.
Short-term indicators suggest buying pullbacks today. Market positioning is
positive with the close over the 1st swing resistance. The close above the 9-day
moving average is a positive short-term indicator for trend. The outside day up
gives the market a positive tilt. The upside daily closing price reversal gives
the market a bullish tilt.
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COPPER MARKET RECAP
8/3/2004
September Copper finished down 0.25 at 130.30,
0.10 off the high and 1.55 up from the low.
The copper market tried to start out firmer but
then weakened into mid session off a series of softer than expected economic
readings. We also saw reports of strong profits at large copper producing
companies and that might mean that labor disputes will continue to surface as
workers attempt to get a bigger piece of the profit pie. A slightly softer US
Dollar seemed to provide some support under copper as that could promote
international physical interest in US copper supplies. While the copper market
has done a good job of discounting the prospect of a slower economy ahead, the
numbers are beginning to show a pattern and it is becoming a little more
difficult to downplay the threat of slowing demand for copper.
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ENERGY MARKET RECAP
8/3/2004
September Crude Oil closed up 0.33 at 44.15. This
was 0.65 up from the low and 0.07 off the high.
September Heating Oil closed up 1.73 at 118.15.
This was 1.80 up from the low and 0.75 off the high.
September Unleaded Gas finished up 0.04 at
128.66, 1.94 off the high and 1.46 up from the low.
September Natural Gas finished up 0.00 at 5.82,
0.04 off the high and 0.05 up from the low.
September Propane closed up 0.80 at 81.75. This
was equal to the low and equal to the high.
The energy complex looked to have a non descript
session from the overnight action but with some OPEC members suggesting that
OPEC might not be able to instantly raise production the market was given a
bullish lift into the early US action. Because Saudi Arabia countered the
bullish tilt by suggesting that they could quickly increase outflow by 1 million
barrels per day the trade lost its upward momentum into mid session. In short
the market would seem to remain on edge but the market is also technically
overbought. The strongest energy market in the action Tuesday was heating oil
and that could rekindle the talk that intense production focus on gasoline is
beginning to put the energy market in a position to see a winter supply shortage
in heating oil.
Technical Outlook
#ENERGIES 8/4/2004: CRUDE OIL (SEP): The market
rallied to a new contract high. The close over the pivot swing is a somewhat
positive setup. Support for crude is keyed on 43.79 and below there at 43.29,
with resistance pegged at 44.51 and 44.73. The close above the 9-day moving
average is a positive short-term indicator for trend. Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The near-term upside target is at 44.73. The market is becoming somewhat
overbought now that the RSI is over 70.
UNLEADED GAS (SEP): Stochastics are at mid-range,
but trending higher which should reinforce a move higher if resistance levels
are taken out. The next upside objective is 132.18. The market tilt is slightly
negative with the close under the pivot. Resistance today is at 132.18, while
support should be found around 125.38. The daily closing price reversal up is a
positive indicator that could support higher prices. A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average.
HEATING OIL (SEP): There could be more upside
follow through since the market closed above the 2nd swing resistance. Heating
oil should encounter support around 115.34, with resistance is at 120.44. The
close above the 9-day moving average is a positive short-term indicator for
trend. Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The near-term upside target is at 120.44.
The market is becoming somewhat overbought now that the RSI is over 70. The
market rallied to a new contract high.
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CORN MARKET RECAP
8/3/2004
September Corn finished up 1 at 219 1/4,
1/2 off the high and 3 up from the low. December Corn closed up 1 at 228 3/4.
This was 3 up from the low and 1/4 off the high.
The highest close in 5 trading sessions leaves
the market vulnerable to a short-covering bounce but the market still lacks a
good reason for a bounce. Trade was slow as traders view the news of a decline
in crop conditions as an offset to a forecast for a good rain across the central
Midwest and moderating temperatures ahead. As a result, the weather is expected
to help crop conditions improve in next weeks report. Crops rated in good to
excellent condition fell 1% this week instead of improving 1% as expected by the
trade. For corn crop production in the August USDA report history of the past 30
years, production has been reported lower from the July report in 18 years,
higher in 11 and unchanged from the July estimate in one year. The largest
increase has been 630 million bushels with the biggest decline of 1.184 billion
bushels. In July, the USDA pegged production at 10.635 billion bushels. Taiwan
bought 56,000 tons of US corn overnight while China exporters expect to receive
export quotas for the second half of the year for 7 million tons from 1.5
million in the first half. Support for December corn comes in at 227 1/2 and 225
1/2 with 231 1/2 and 233 3/4 as resistance.
Technical Outlook
#CORN (DEC) 8/4/2004: The crossover up in the
daily stochastics is a bullish signal. The near-term upside target is at 231
2/4. There could be more upside follow through since the market closed above the
2nd swing resistance. Market resistance comes in at 231 2/4 today, with support
at 224 2/4. The close above the 9-day moving average is a positive short-term
indicator for trend. Some caution in pressing the downside is warranted with the
RSI under 30.
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SOY COMPLEX RECAP
8/3/2004
September Soybeans finished up 3 1/4 at 572 3/4,
3/4 off the high and 10 3/4 up from the low. November Soybeans closed up 1 at
567. This was 8 1/2 up from the low and 1 off the high.
August Soymeal closed down 4.8 at 188.0. This was
0.5 up from the low and 5.0 off the high.
August Soybean Oil finished down 0.02 at 21.72,
0.02 off the high and 0.42 up from the low.
More talk of weak cash basis and near perfect
weather for soybean crop development helped to trigger another round of
speculative selling early in the session but commercial buying emerged in the
nearby contracts which helped support a recovery bounce. Iowa processor bids
were said to be down 5 cents this morning. End users await new crop soybeans in
the delta and the weekly crop progress report showed that Mississippi soybeans
were 1% harvested. Crop conditions improved in the good to excellent category
this week and traders view the weather forecast as ideal to see further
improvement next week. Oil was under additional pressure early in the session
but managed to hold support and close higher. News of good rains across the key
oilseed growing areas of India in the past few days helped pressure the market
early. Traders are looking for hefty rain amounts with the thunder-storm
activity over the next two days across the northern sections of the cornbelt.
December Meal moved to the lowest level since late November before closing above
the opening but still lower on the session. November soybeans held above
yesterday’s lows before closing higher with an inside trading session. November
soybean support comes in at 561 and 558 with 567 and 575 as resistance.
Technical Outlook
#SOYBEANS (NOV) 08/04/04 The market has a
slightly positive tilt with the close over the swing pivot. The next area of
resistance is around 571 2/4 and 574 2/4, while 1st support hits today at 562
and below there at 555 2/4. A negative signal for trend short-term was given on
a close under the 9-bar moving average. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The next downside
objective is 555 2/4. The market is approaching over sold levels on an RSI
reading under 30.
MEAL (DEC): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 170.6. First resistance comes in at
174.7, with support at 172.2. The close below the 9-day moving average is a
negative short-term indicator for trend. It is a slightly negative indicator
that the close was under the swing pivot. Some caution in pressing the downside
is warranted with the RSI under 30.
BEAN OIL (DEC): A negative signal for trend
short-term was given on a close under the 9-bar moving average. A bullish signal
was given with an upside crossover of the daily stochastics. The next upside
objective is 21.41. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Daily swing resistance is found at
21.27 and above there at 21.41. Support should be encountered at 20.76 and
20.39.
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WHEAT MARKET RECAP
8/3/2004
September Wheat finished unchanged at 317, 1/2 off the high
and 3 1/2 up from the low. December Wheat closed up 1/2 at 331 1/4. This was 4
1/4 up from the low and 1/4 off the high.
Weakness in the other grains contributed to the
minor sell-off early in the session and a lack of confirmation of new buying
interest from China for US wheat helped to trigger light long liquidation
selling. However, a recovery in soybean prices and the ability of the market to
hold support after Monday’s reversal helped to support the market into the
close. News of a drop in crop conditions for the spring wheat crop failed to
provide much support with the crop now rated 65% in good to excellent condition
as compared with 70% last week. Taiwan bought 43,000 tons of US wheat overnight
and South Korea bought 38,600 tons but traders view these sales as routine. Gulf
basis was said to be weak for soft red winter wheat due to increased producer
sales. Technically, the market is oversold and still operating under the
positive influence of the reversal on Monday as long as support at 309 holds and
a move over 318 1/2 will be necessary to confirm the low.
Technical Outlook
#WHEAT (DEC) 8/4/2004: The market has a slightly
positive tilt with the close over the swing pivot. Expect near-term support
around 329 and below there at 325 3/4, with resistance levels at 333 2/4 and 334
3/4. A negative signal for trend short-term was given on a close under the 9-bar
moving average. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 334 3/4.
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LIVE CATTLE RECAP
8/3/2004
October Live Cattle closed down 2.12 at 86.37.
This was 0.30 up from the low and 2.37 off the high.
October Feeder Cattle finished down 2.80 at
110.05, 2.95 off the high and 0.05 up from the low.
October was down 212 points to close lower for
the 5th session in a row with traders fearful that the weekly reversal last weak
could attract more active selling from fund traders soon. Funds are holding a
hefty net long position in the last traders report. Boxed-beef cut-out values
were up $.19 to $142.01 at mid-session as compared with $141.80 last week at
this time. Slaughter was 126,000 head as compared with trade expectations at
120,000 to 128,000 head. Both funds and commercial traders were noted sellers
and there was talk of cash trading as low as $82.00 this week which added to the
bearish tone.
Technical Outlook
#CATTLE (OCT) 8/4/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 84.22. There could be some early pressure today
given the market’s negative setup with the close below the 2nd swing support.
Support should be encountered at 85.05 and below there at 84.22. Market
resistance is at 87.70 and then again at 89.57. A negative signal for trend
short-term was given on a close under the 9-bar moving average.
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LEAN HOGS RECAP
8/3/2004
October Lean Hogs closed down 1.10 at 69.25. This
was 0.50 up from the low and 0.60 off the high.
February Pork Bellies finished up 0.87 at 94.67,
2.12 off the high and 0.42 up from the low.
Weakness in the cattle and a weak tone for the
cash hog market helped pressure futures early in the session and then stops were
activated to drive the market sharply lower. The overbought condition of the
market after recent strong gains along with record open interest has traders
nervous about holding long positions in a period of rising supply ahead.
However, exports have been strong and demand firm which has helped provide
underlying support. Cash markets were mixed which added to today’s weakness. The
2-Day lean Index for the period ending July 30th was up 10 cents to 79.42.
Slaughter was 385,000 head as compared with trade expectations at 375,000 to
382,000 head which might be seen as a positive development. The market views
lower beef prices as competition ahead but the higher slaughter suggests packer
demand may be higher than expected.
Technical Outlook
#HOGS (OCT) 8/4/2004: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 69.80 and 70.37 today, while support is around 68.70 and then 68.17.
The close above the 9-day moving average is a positive short-term indicator for
trend. Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The near-term upside target is at 70.37.
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COCOA MARKET RECAP
8/3/2004
September Cocoa finished up 31 at 1723, 9 off the
high and 43 up from the low.
The relentless march in cocoa continued with the
market reaching up to the highest price level since late last year. The trade
continues to suggest that the buying is coming primarily from the funds and that
would seem to suggest that we are indeed preparing to reach the highest spec
long position in the last 5-6 years! As long as conditions at the Ivory Coast
remain dry the bulls seem to be able to control prices. The expectation of
weaker Dollar action probably gives US cocoa an added long interest from the
arbitrage trade but with consistently higher overall pricing, the commercial and
professional players might be forced to take some additional forward coverage.
Technical Outlook
COCOA (SEP) 08/04/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1749 and above there at 1767 with support at 1697
and 1663. The 9-day RSI over 70 indicates the market is approaching overbought
levels. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 1766.50.
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COFFEE MARKET RECAP
8/3/2004
September Coffee closed up 0.35 at 66.80. This
was 0.30 up from the low and 0.60 off the high.
September coffee closed 35 higher on the session
as short-covering was seen as a positive force after the reversal-type action
from Monday. Monday’s lows came within 3 ticks of the November lows before the
selling slowed. Ideas that futures are oversold and a slowdown in producer
selling helped to provide some support. Some talk of colder weather into the
weekend may have triggered some of the short-covering support but the weather
still looks dry and not too cold into later this week which seems ideal for
harvest. Guatemala exported 330,127 bags in July which was down 7.8% from last
year. Foe the first ten months of the marketing year, exports reached 2.87
million bags, down 16.1% from last year.
Technical Outlook
COFFEE (SEP) 8/4/04 The market has a slightly
positive tilt with the close over the swing pivot. The 9-day RSI under 30
indicates the market is approaching oversold levels. Momentum studies are
declining, but have fallen to oversold levels. The next downside objective is
now at 66.00. The Coffee contract should run into resistance at 67.30 and above
there at 67.80 with support at 66.4 and 66.00. The market’s short-term trend is
negative as the close remains below the 9-day moving average.
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SUGAR MARKET RECAP
8/3/2004
October Sugar closed down 0.01 at 8.38. This was
0.05 up from the low and 0.05 off the high.
After hitting a new contract high early in the
session, the lower close and close below the opening for October sugar leaves
the market vulnerable to a technical correction. The reversal might attract some
technical selling with the recent COT report indicating an extreme overbought
condition. Dry weather in Brazil is expected to accelerate the harvest
activities. Rain delays have caused sugar production to lag last years pace by
8.7% and ethanol production by 22.5%. The cane harvest, however, is expected to
reach a record 320 million tons. The Philippines sold 30,000 tons of raw sugar
for export and the country is expected to sell another 50,000 tons soon.
Indonesia passed on a tender to buy 40,000 tons of raw sugar. A sugar industry
representative in India told Reuters that sugar production for the 2004/2005
crop season could be as low as 10-11 million tons due to poor monsoon rains.
This compares with 13.8 million tons this season and 20.1 million tons last
year. Consumption for the country is thought to be near 18 million tons.
Technical Outlook
#SUGAR (OCT) 8/4/2004: The market rallied to a
new contract high. The daily closing price reversal down is a negative indicator
for prices. The close over the pivot swing is a somewhat positive setup. Swing
resistance comes in at 8.48, with support found at 8.28. The close above the
9-day moving average is a positive short-term indicator for trend. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The near-term upside target is at 8.48.
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COTTON MARKET RECAP
8/3/2004
October Cotton finished up 1.16 at 45.46, 0.04
off the high and 1.66 up from the low.
After a lower opening due to improving crop
conditions, the fund and speculative selling dried up and the market managed a
move higher on the session. Talk of good weather in Texas and a possible bumper
crop this season with more and more crop estimates near 19 million bales from
last months forecast of 20 million has helped drive futures lower in the past
few weeks but the higher close in spite of the bearish weekly crop progress
report could signal a short-covering bounce ahead. Support for December cotton
moves up to 44.50 with 47.15 as good resistance.
Technical Outlook
#COTTON (OCT) 8/4/2004: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Next resistance area comes in at 46.31 and then again at 46.76,
while support is targeted at 44.61 and 43.36. A bullish signal was given with an
upside crossover of the daily stochastics. The next upside objective is 46.76.