This Is What Limited The Dollar’s Slide Today

Technical Outlook

#BONDS (JUN) 05/27/04: 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 106.20 and then again at 106.25, while swing support hits at 105.31 and
below there at 105.15. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next upside target
is 106.25.

T-NOTES(JUN) Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 110.10. The market’s close
above the 2nd swing resistance number is a bullish indication. Near-term
resistance for the T-Notes is at 110.05 and then again at 110.10, while swing
support hits at 109.17 and below there at 109.02. The market’s short-term trend
is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

5/26/2004

The June S&P saw follow through gains from
Tuesday’s sharply higher price action supported by declining energy prices, more
weakness in the Dollar and possibly on growing sentiment that the Fed may not be
in a rush to raise rates. The broader stock indices were able to shake off weak
economic news including a sharp decline in April New Home Sales and a weak
Durable Goods number. Reports that al Qaeda will attempt another terrorist
attack in the US this summer may have limited gains in the S&P. Next resistance
for the June S&P comes in at 1118.90. The Dow was under pressure from company
specific concerns including news that Comcast cable plans to offer local phone
service by 2006 which will further raise telecommunication competition.

Technical Outlook

#S&P500 (JUN) 05/27/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1112.25 and 1107.03, with overhead resistance at 1119.75 and
1122.03. The market’s short-term trend is positive on a close above the 9-day
moving average. Momentum studies are trending higher from mid-range which should
support a move higher if resistance levels are penetrated. The near-term upside
objective is at 1122.03.

S&P E-Mini (JUN): 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 1122.81. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1120.38 and then again at 1122.81, while swing support hits at
1112.13 and below there at 1106.31. A positive signal for trend short-term was
given on a close over the 9-bar moving average.

NASDAQ (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The market should run into resistance at 1463.00 and above there at 1467.00 with
support at 1448.00 and 1437.00. Studies are showing positive momentum, but are
now in overbought territory so some caution is warranted. The next upside target
is 1467.0.

MINI DOW (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10148 and above there at 10165 with support at 10093 and
10055. Positive momentum studies in the neutral zone will tend to reinforce
higher price action. The next upside target is 10165. With the close higher than
the pivot swing number, the market is in a slightly bullish posture.

CURRENCY MARKET RECAP

5/26/2004

The Dollar continued to trade weak on Wednesday
as weaker than expected economic data raised doubts as to the strength of the
economic recovery. New Homes sales fell 11.8% in April while April Durable Goods
Orders fell 2.9%. The Dollar has been under pressure as expectations for an
early Fed rate hike begin to fade in part due to high energy prices which many
fear will begin to slow economic growth. The decline in energy prices on
Wednesday may have helped to limit the Dollar’s slide. Geopolitical problems
with concerns about a new terrorist attack in the US this summer are also
weighing on the Dollar. June Dollar has support at 89.42. The Pound continued to
gain on ideas that the BOE will have to hike rates soon. Near-term resistance
for June Pound is at 183.00.

Technical Outlook

#CURRENCIES 05/27/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Swing resistance is targeted at 89.75 and above there
at 90.04, with the yen finding support around 89.32 and below there at 89.18.
The close under the 40-day moving average indicates the longer-term trend could
be turning down. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The next upside target is 90.04.

EURO (JUN): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.2156.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2050, with overhead resistance
at 1.2156. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap down on the day session chart is bearish with more
selling pressure possible today.

PRECIOUS METALS RECAP

5/26/2004

The gold market started out firm but gave up
those gains into mid session as the Dollar managed to recover to unchanged
levels. We are actually surprised that much weaker than expected US economic
numbers didn’t really undermine the Dollar and send gold prices sharply higher.
Apparently some gold and silver longs were concerned about deflation as a result
of massive declines in durable goods and new home sales. It was clear from the
gold and silver action Wednesday that increased US terrorism threats were not a
supportive issue for gold and silver and that means that flight to quality
issues were not in play.

Technical Outlook

#P-METALS 05/27/04: SILVER (JUL): It is a
slightly negative indicator that the close was lower than the pivot swing
number. Initial support for silver is at 598.0 and below there at 592.0 with
resistance likely at 608.5 and 613.0. The moving average crossover up (9 above
18) indicates a possible developing short-term uptrend. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 608.5. The downside closing price reversal
on the daily chart is somewhat negative.

GOLD (AUG): Support for gold today comes in near
385.68, while resistance is pegged at 394.68. 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 394.68. The market’s close
below the pivot swing number is a mildly negative setup. The market’s short-term
trend is positive on a close above the 9-day moving average. The daily closing
price reversal down puts the market on the defensive.

COPPER MARKET RECAP

5/26/2004

While July copper closed slightly weaker the
market traded within its recent range holding between 125 and 120. The economic
news was negative with April New Home sales falling 11.8% while April Durable
Goods Orders fell 2.9%. However, copper garnered support from a weaker US
dollar, higher stock prices and lower energy prices which helped to offset the
bearish economic news. Funds have been active buyers of copper recently and if
the Dollar continues to drop, more fund buying is likely to lift July copper
above the 125 resistance area. Declining LME warehouse stocks indicate there is
still active physical demand for the metal. Technical indicators have not yet
reached over bought levels. In supply news, Freeport McMoRan’s Grasberg mine in
Indonesia (the world’s 3rd largest) is expected to restart shipping copper
concentrate by the end of the month. The mine had been shut down due to a rock
slide last year.

ENERGY MARKET RECAP

5/26/2004

The energy complex failed to respond to the
weekly inventory reports as the gasoline stocks rebuilt slightly and the
refinery operating rate rose slightly. In other words, the market probably saw
the readings as slightly bearish but with the rebuilding season passing and only
minor builds being documented the bull case is still very much in place. We
suspect that statements from the Iranian Oil Minister that crude prices are
likely to hit $50 a barrel in 2004 are music to the ears of the spec trade and
that should provide the market with an underpin. The IEA called on OPEC to
provide an extra 3 million barrels per day by the 4th quarter and that clearly
shows the market is wanting more oil than OPEC is planning to give in the near
term.

Technical Outlook

#ENERGIES 05/27/04: CRUDE OIL (JUL): The market’s
close below the pivot swing number is a mildly negative setup. Support for crude
is keyed on 40.14 and below there at 39.76, with resistance pegged at 41.27 and
42.02. 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 39.76.

UNLEADED GAS (JUL): Daily stochastics turning
lower from overbought levels is bearish and will tend to reinforce a downside
break especially if near-term support is penetrated. The next downside target is
128.12. It is a slightly negative indicator that the close was lower than the
pivot swing number. Resistance today is at 138.12, while support should be found
around 128.12. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.

HEATING OIL (JUL): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 99.78, with resistance is at 105.38. 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
99.78.

CORN MARKET RECAP

5/26/2004

Forecasts for more rain across the mid-west for
much of the next week has raised fears that the replanted corn may not have
optimal yield potential and that more rain on top of the saturated soils will
cause additional problems helped to support the early bounce. However, the
buying support was limited by ideas that "rain makes grain" and that an extended
rally is unlikely unless there is more rains in the forecast each day. With much
of the cornbelt (except the Ohio River Valley) expected to receive little rain
in the next 3 days, the speculative selling increased into mid-session. In
addition, the bounce off of Friday’s lows has helped alleviate a short-term
oversold condition but traders are still a bit nervous that fund trader will
quickly resume a long liquidation trend if support levels fail. Traders are
hopeful that the recent drop in prices and the recent drop in freight rates will
attract near-term interest from Asia importers and also hopeful that the US will
get a decent share of next weeks tender from the Philippines for 340,000 tons of
corn for prompt delivery. At a presentation to traders and reporters at the
Chicago Board of Trade, private consultants "Cropcast" indicated that hot and
dry weather early in the summer could disrupt corn pollination and limit yield
potential in the eastern cornbelt. Weekly export sales, released before the
opening, are expected to come in near 700,000-900,000 tons as compared with
786,700 tons last week. December corn support comes in at 290 1/2 and 288 with
298 and 300 1/2 as resistance. A 50% correction of the April to May break leaves
key resistance all the way up at 309 3/4.

Technical Outlook

#CORN (JUL) 05/27/04: 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 306 1/2. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. Market resistance comes in at 306 1/2 today, with support at
296 1/2. The upside crossover (9 above 18) of the moving averages suggests a
developing short-term uptrend.

SOY COMPLEX RECAP

5/26/2004

The market found follow-through buying support
early in the session from talk of possible cancellations of two cargoes of
Mexico soybeans from Brazil and several cargoes from China due to fungicide
contamination. If demand shifts away from Brazil there could be more demand for
Argentina or US soybeans. In addition, there are still rumors that China has
interest in US soybeans from the west coast. More heavy rains in the next week
(two systems) has also raised talk that the crop may not be off to a perfect
start if there are planting delays and if some of the acreage already planted
experiences flooding or ponding. However, with a good portion of the cornbelt
looking at relatively dry conditions for the next 3 days, there is more talk on
the floor that many areas will be in better condition to absorb more rains due
Sunday through Tuesday of next week. Much of the cornbelt may have to absorb
another 1-3 inches during this time frame. The Ohio Valley region, however, is
in the track for heavy rains in the next few days. The mid-day weather maps
indicated a better chance of drier weather for the June 3rd to 10th time frame
which may have been the factor to push the market lower late in the session.
News of a new bird flu case in Thailand may have helped pressure meal futures.
Weekly export sales, released before the opening, are expected to come in near
0-100,000 tons for soybeans, 20,000-50,000 tons for meal and 26,000-30,000 tons
for oil. Short-term support for July soybeans comes in at 857 and 835 with
resistance at 873 and 886. November soybean support comes in at 701 and 698 1/4
with 716 and 720 3/4 as next resistance.

Technical Outlook

#SOYBEANS (JUL) 05/27/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 886 1/2 and 904 3/4, while 1st support hits
today at 857 1/2 and below there at 846 3/4. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. Momentum
studies are declining, but have fallen to oversold levels. The next downside
target is 846 3/4.

MEAL (JUL): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
267.8. First resistance comes in at 283.5, with support at 271.2. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market is in a bearish position with the close below the 2nd swing
support number.

BEAN OIL (JUL): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 28.42. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Daily swing resistance is found at
29.10 and above there at 29.36. Support should be encountered at 28.63 and
28.42.

WHEAT MARKET RECAP

5/26/2004

Stressful weather conditions persist for the
western areas of the winter wheat belt and traders are also concerned that the
forecast of 1-3 inches of rain for the eastern cornbelt could raise the chances
of disease problems for the soft red winter wheat crop; especially in Ohio and
southern Indiana. While export news has been slow for the past few days, traders
are hopeful that large tenders for Jordon and Pakistan into next week (both have
unused US credits) could help boost demand for US wheat. In addition, Egypt
could be in the market over the weekend. Buying support has been limited due to
expectations for seasonal harvest selling pressures into June as the winter
wheat harvest moves north. Many areas of western Kansas have only received 1/2
inch or less of rain for the month of May. Weekly export sales, released before
the opening, are expected to come in near 150,000-350,000 tons as compared with
329,300 tons last week. July wheat support comes in at 374 and 371 with
resistance at 386 1/4 and 393 1/4.

Technical Outlook

#WHEAT (JUL) 05/27/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Look for
near-term support at 379 and below there at 376, with resistance levels at 383
1/2 and 385. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Positive momentum studies in the neutral zone
will tend to reinforce higher price action. The next upside target is 385.

LIVE CATTLE RECAP

5/26/2004

The cattle market closed higher led by the
advance in the nearby June contract with hopes that the cash market might trade
at $85.00 this week as compared with the June close at 82.67. The market pushed
lower during the morning session with a weak tone in the beef market. Boxed-beef
cut-out values were down 95 cents at $150.33 as compared with $154.03 last week
at this time. Ideas that the Canadian cattle import ban could remain in tact for
quite some time added to the positive tone.

Technical Outlook

#CATTLE (AUG) 05/27/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 84.47. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Support should be encountered at 85.17 and
below there at 84.47. Market resistance is at 86.17 and then again at 86.47. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

LEAN HOGS RECAP

5/26/2004

July hogs pushed lower after a gap lower opening
to close at their lowest level since April 27th. The sharp drop in pork cut-out
values over the past week along with concerns for a slowdown in the export flow.
The collapse in values has eaten in to the packer profit margin enough to have
cash markets called as much as $2.00 lower for Thursday morning. The weaker
packer demand may have caused a slowdown in the slaughter pace as well with
Wednesday’s slaughter pegged at 373,000 head as compared with trade expectations
at 375,000 to 380,000 head. The bullish weekly cold storage report was enough to
support solid gains in the belly market as demand for bacon continues to flow at
a surprisingly high level even before the main demand season ahead. Cash hogs
were lower and the 2-day lean index for the period ending May 24th came in at
82.04, down 66 cents on the session and down from 83.81 on May 19th.

Technical Outlook

#HOGS (JUL) 05/27/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 73.15 and 73.65 today, while support is around
72.30 and then 71.95. The gap down on the day session chart is bearish with more
selling pressure possible today. Daily studies pointing down suggests selling
minor rallies. The market’s short-term trend is negative as the close remains
below the 9-day moving average. The major trend is down with the cross over back
below the 40-day moving average. Daily stochastics are trending lower, but have
declined into oversold territory. The next downside objective is now at 71.95.

COCOA MARKET RECAP

5/26/2004

A minor decline in cocoa prices left the market
in the recent range which means that the mid month rally might be losing
momentum. Hedge selling helped to pressure both NY and London markets while
light end-user buying helped to support the July contract above the 21 day
Moving Average at $1368. Political unrest is heating up in the Ivory Coast, but
has yet to ignite supply concerns, but could come into focus soon if the
situation gets worse. Resistance for July cocoa is at $1400. Brazil cocoa
arrivals to Bahia for the 2004/05 season as of May 23rd were down 54% from a
year ago.

Technical Outlook

COCOA (JUL) 05/27/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1397 and above there at 1412 with support at 1369 and 1356. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 1411.50.

COFFEE MARKET RECAP

5/26/2004

With weather forecasts in Brazil calling for
temperatures to drop to as low as 39 degrees for Thursday & Friday, funds were
active buyers ahead of the official start of the Brazil Freeze season. While
temperatures may not drop to freezing levels they are low enough to make traders
nervous about being short or not being in the market at all. Heavy producer
sales cut gains in July coffee, but the contract still ended up 2.35 at the
close. There has been some talk that this winter could be colder than expected
in Brazil and speculators appear to be buying coffee so as not to miss a
potential weather event during harvest. Areas of resistance for July coffee are
at 80.75 and 81.80.

Technical Outlook

COFFEE (JUN) 5/27/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. 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 near-term upside objective is at 84.05. The Coffee
contract should run into resistance at 82.10 and above there at 84.05 with
support at 78.25 and 76.35. The market’s short-term trend is positive on a close
above the 9-day moving average.

SUGAR MARKET RECAP

5/26/2004

The market opened near unchanged on the session
and surged higher to close at the highest level since April 30th as active fund
and speculative buyers pulled the market higher. Strength in London and strength
in the coffee market added to the positive tone early in the trading session.
Cash dealers believe that sugar shipements from Brazil are not likely to exceed
400,000 tons this month, down from expectations near 1 million tons, due to the
slow start of harvest. Producer selling helped limit the upside. While the
International Sugar Organization reported that high stocks keep the fundamental
outlook bearish, it is calling for a deficit of 2-2.5 million tonnes in the next
crop cycle starting in September.

Technical Outlook

#SUGAR (JUL) 05/27/04: The market’s close above
the 2nd swing resistance number is a bullish indication. Swing resistance comes
in at 7.13, with support found at 6.65. The upside crossover (9 above 18) of the
moving averages suggests a developing short-term uptrend. 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 7.13.

COTTON MARKET RECAP

5/26/2004

The cotton market opened higher but closed
moderately lower on the session finding selling pressure from light rains in the
Texas plains yesterday and more rain chances for today. Weekly export sales,
released before the opening, are expected to come in near 80,000-150,000 bales
as compared with 152,900 bales last week. Shipments are expected to come in near
300,000-400,000 bales as compared with 188,700 bales last week. Certified cotton
stocks deliverable against the exchange as of May 25th was reported at 351,414
bales, down 1900 from the previous session. The Cotlook A Index was unchanged at
69.45.

Technical Outlook

#COTTON (JUL) 05/27/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
The close below the 2nd swing support number puts the market on the defensive.
Next resistance area comes in at 63.48 and then again at 64.96, while support is
targeted at 61.23 and 60.46. The close under the 40-day moving average indicates
the longer-term trend could be turning down. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 60.46. The outside day down and close below the previous day’s low is a
negative signal. The downside closing price reversal on the daily chart is
somewhat negative.