This Is What The Treasury Investors Are Doing Now
BOND MARKET RECAP
2/11/2005
March Bonds finished down 0-07 at 115-26, 0-11
off the high and 0-09 up from the low.
March 10 Yr Treasury Notes finished down 0-075 at
112-190, 0-100 off the high and 0-035 up from the low.
The Treasury market came under additional
liquidation pressure on Friday despite the fact that the scheduled economic
report slate was empty. We suspect that a sharp rally in the US stock market
undermined the bonds and we also think that longs were taking profits after the
significant run up forged early in the week. However, the rise in the stock
market was big enough to conclude that the economic outlook might be improving
and that could have fostered some of the first fundamental selling in Treasuries
in well over a week! In the near term the economic report slate remains thin and
that should serve to restrict trading ranges.
Technical Outlook
BONDS (MAR) 02/14/2005: 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 cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The market’s close below the pivot swing number is a mildly negative setup. The
next downside objective is 115-08. The next area of resistance is around 116-08
and 116-17, while 1st support hits today at 115-20 and below there at 115-08.
TNOTES (MAR) 02/14/2005: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The cross over and close above the 18-day moving
average indicates the longer-term trend has turned up. The market’s close below
the pivot swing number is a mildly negative setup. The next downside target is
112-085. The next area of resistance is around 112-275 and 113-030, while 1st
support hits today at 112-145 and below there at 112-085.
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STOCK INDICES RECAP
2/11/2005
March S&P finished up 9.9 at 1206.5, 3.3 off the high and 12.8
up from the low.
March S&P E-Mini closed up 10.25 at 1206.75. This was 13 up
from the low and 3.25 off the high.
March Dow closed up 60 at 10806. This was 99 up from the low
and 25 off the high.
The stock market surprised more than a few
players with the magnitude of the upside on Friday morning. However, it would
seem like more investors are seeing the potential for decent forward conditions
and are deciding to enter the market. We also think that a little liquidation
pattern in the Treasury market pushed some money toward the equities. In any
regard, the market did manage to regain a series of critical support levels on
the charts and that in turn probably extended the buying interest.
Technical Outlook
S&P 500 (MAR) 02/14/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. Since the close was above the 2nd swing resistance number, the
market’s posture is bullish and could see more upside follow-through early in
the session. The near-term upside objective is at 1220.22. The next area of
resistance is around 1214.55 and 1220.22, while 1st support hits today at
1198.45 and below there at 1188.03.
SP EMINI (MAR) 02/14/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. 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. The near-term upside objective is at 1220.56. The next area of
resistance is around 1214.87 and 1220.56, while 1st support hits today at
1198.63 and below there at 1188.07.
NASDAQ (MAR) 02/14/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. Since the close was
above the 2nd swing resistance number, the market’s posture is bullish and could
see more upside follow-through early in the session. The near-term upside target
is at 1564.75. The next area of resistance is around 1552.50 and 1564.75, while
1st support hits today at 1514.50 and below there at 1488.75.Â
CURRENCY MARKET RECAP
2/11/2005
March US Dollar finished up 4 at 8461, 15 off the high and 20
up from the low.
March Euro finished down 0.11 at 128.73, 0.29 off the high and
0.16 up from the low.
March Euro Dollar closed down 0.005 at 97.025. This was 0.005
up from the low and 0.005 off the high.
March Canadian Dollar closed up 0.22 at 80.81. This was 0.4 up
from the low and 0.1 off the high.
March British Pound finished down 0.08 at 186.43, 0.13 off the
high and 0.39 up from the low.
March Swiss closed down 0.18 at 82.78. This was 0.13 up from
the low and 0.24 off the high.
March Japanese Yen closed down 0.02 at 94.7. This was 0.03 up
from the low and 0.28 off the high.
The Dollar traded in a tight range despite the
sharp rise in the US equity market. The market showed almost no reaction to the
statements from the US Treasury that China was working toward a flexible
exchange rate. In the end the market saw the US Trade deficit readings this week
as an underpin for the Dollar but because the US economy hasn’t shown solid
expansion, money is apparently a little discouraged from entering the Dollar at
levels markedly above the last two months lows. Furthermore, the French recently
posted a better 4th quarter GDP estimate for the 18th report and that could also
have limited the Dollar.
Technical Outlook
YEN (MAR) 02/14/2005: A bullish signal was given
with an upside crossover of the daily stochastics. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close above
resistance. The close under the 18-day moving average indicates the longer-term
trend could be turning down. The close over the pivot swing is a somewhat
positive setup. The next upside target is 95.07. Some caution in pressing the
downside is warranted with the RSI under 30. The next area of resistance is
around 94.85 and 95.07, while 1st support hits today at 94.55 and below there at
94.46.
EURO (MAR) 02/14/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The close below the 18-day moving
average is an indication the longer-term trend has turned down. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside target is at 129.21. The next area of resistance is around
128.95 and 129.21, while 1st support hits today at 128.51 and below there at
128.32.Â
PRECIOUS METALS RECAP
2/11/2005
April Gold closed up 3.3 at 422. This was 4.3 up from the low
and 1.4 off the high.
March Silver finished up 0.245 at 7.21, 0.03 off the high and
0.17 up from the low.
The gold market surprised the trade again with an
upward extension and that would seem to entrench the up trend pattern. Even more
surprising is the fact that the gold made the run up in the wake of almost no
action in the US Dollar. It is also impressive that silver is leading gold and
all the precious metals have managed to rise in tandem. In other words, the
funds seem to be interested in the metals and the rise in the US equity market
certainly isn’t hurting the bull case. However, given the run up in gold and
silver prices we suspect that the current COT spec and fund long reading is
dramatically understated.
Technical Outlook
SILVER (MAR) 02/14/2005: The cross over and close
above the 60-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are trending higher but have entered
overbought levels. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The gap upmove on the day session chart is a
bullish indicator for trend. A positive setup occurred with the close over the
1st swing resistance. The next upside target is 737.5. With a reading over 70,
the 9-day RSI is approaching overbought levels. The next area of resistance is
around 731.0 and 737.5, while 1st support hits today at 711.1 and below there at
697.5.
GOLD (APR) 02/14/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. It is a mildly bullish indicator that the market closed over the pivot
swing number. The next upside objective is 426.9. The next area of resistance is
around 424.8 and 426.9, while 1st support hits today at 419.2 and below there at
415.6.Â
COPPER MARKET RECAP
2/11/2005
March Copper closed down 0.25 at 142.25. This was 1.45 up from
the low and 0.15 off the high.
The copper market made an early run that would
seem to have set the market up for an aggressive run but then prices faltered
into mid session. A major brokerage firm downgraded the stock of a major copper
producer and that could have undermined copper futures. However, with the
precious metals showing strength, the equity market rising and the Dollar quiet
for a change we are a little surprised that copper didn’t attempt to extend the
early rally. We might add that copper prices still managed to sustain most of
the big gains for the week and would therefore seem to be poised to make a
return visit to the old contract highs.Â
ENERGY MARKET RECAP
2/11/2005
March Crude Oil closed up 0.06 at 47.16. This was 0.41 up from
the low and 0.32 off the high.
March Heating Oil closed down 1.55 at 130.58. This was 0.33 up
from the low and 2.42 off the high.
March Unleaded Gas finished down 1.12 at 128.37, 1.73 off the
high and 0.77 up from the low.
March Natural Gas finished down 0.07 at 6.09, 0.02 off the
high and 0.07 up from the low.
March Propane closed up 0.01 at 0.75. This was equal to the
low and equal to the high.
The energy complex showed some divergence Friday
and we suspect that the market was somewhat overbought from the rally Thursday.
We also think that the product markets came under pressure because weekend
weather was expected to be really mild and the trade was beginning to question
the prior session’s upward demand revisions from the IEA. However, during the
morning session the London market was still driving up prices in response to the
strong demand forecasts from the prior session. We suspect that the potential
impact of the winter is waning and that the bulls are felling a little less in
control of the energy complex.
Technical Outlook
CRUDE OIL (MAR) 02/14/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend has turned down with the cross over back
below the 18-day moving average. The close over the pivot swing is a somewhat
positive setup. The next upside target is 47.86. The next area of resistance is
around 47.52 and 47.86, while 1st support hits today at 46.80 and below there at
46.41.
UNLEADED (MAR) 02/14/2005: 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 below the 18-day moving average is an
indication the longer-term trend has turned down. 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 upside
target is 131.11. The next area of resistance is around 129.62 and 131.11, while
1st support hits today at 127.12 and below there at 126.11.
HEATING OIL (MAR) 02/14/2005: Momentum studies
are trending higher from mid-range, which should support a move higher if
resistance levels are penetrated. The close below the 18-day moving average is
an indication the longer-term trend has turned down. The daily closing price
reversal down puts the market on the defensive. The market tilt is slightly
negative with the close under the pivot. The next upside objective is 133.85.
The next area of resistance is around 131.95 and 133.85, while 1st support hits
today at 129.21 and below there at 128.36. Â
CORN MARKET RECAP
2/11/2005
March Corn finished unchanged at 198 1/4, 3/4 off the high and
1 3/4 up from the low. May Corn closed unchanged at 206. This was 2 up from the
low and 3/4 off the high.
Some fund short-covering supported the early
bounce but a lack of new buying after the open helped trigger a pullback. Even a
surge in soybeans into the close did not support. Talk of the overbought
short-term technical condition of the market after a 2-day, 6 cent spurt helped
limit the new buying. A weaker tone in the cash market with March futures
bouncing to near $2.00 was also seen as a short-term bearish factor as some
increase in producer selling was noted. The USDA released baseline preliminary
planting and production estimates for 2005 and for corn, the initial forecast is
for a crop near 10.715 billion bushels. This compares with 2004/05 usage at
10.77 billion bushels. With a steady increase in ethanol consumption and
production, usage is expected to jump by near 250-350 million bushels. Support
for March corn comes in at 196 1/2 and 194 1/2 with resistance at 200 and 201
3/4 (50% correction of the January-February break).
Technical Outlook
CORN (MAR) 02/14/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The market has a slightly
positive tilt with the close over the swing pivot. The next upside target is 200
1/2. The next area of resistance is around 199 1/2 and 200 1/2, while 1st
support hits today at 197 and below there at 195 1/2. Â
SOY COMPLEX RECAP
2/11/2005
March Soybeans finished up 9 3/4 at 525 3/4, 2
3/4 off the high and 9 1/4 up from the low. May Soybeans closed up 11 1/4 at 526
1/2. This was 10 1/2 up from the low and 1/2 off the high.
March Soymeal closed up 1.9 at 157.1. This was
1.7 up from the low and 1.5 off the high.
March Soybean Oil finished up 0.82 at 20.01, 0.12
off the high and 0.81 up from the low.
The bullish technical action in the face of
bearish USDA report news this week combined with the background of speculators
holding a record net short position helped support more short-covering today.
March led the market higher with active buying late in the day supporting the
strong close near the late January highs. Fund short-covering and rolling of
shorts to the May contract added to the support for March soybeans. Talk of
lower Brazil production forecasts due to dry conditions in southern Brazil added
to the positive tone. The move to the highest level since January 26th has
helped trigger additional short-covering support. Midwest cash markets are mixed
after the rally this week in futures and cash helped trigger some increased
producer selling. Gulf basis was steady. The USDA released baseline preliminary
planting and production estimates for 2005 and for soybeans, the initial
forecast is for a crop near 2.91 billion bushels. This compares with 2004/05
usage at 2.818 billion bushels. Resistance for March soybeans comes in at 529
1/2 and 531 3/4 with support at 518 1/2 and 515.
Technical Outlook
BEANS (MAR) 02/14/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The cross over
and close above the 18-day moving average is an indication the longer-term trend
has turned positive. The market’s close above the 2nd swing resistance number is
a bullish indication. The next upside objective is 536. The next area of
resistance is around 531 3/4 and 536, while 1st support hits today at 519 3/4
and below there at 512 1/4.
MEAL (MAR) 02/14/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market now above the 18-day moving average suggests
the longer-term trend has turned up. A positive setup occurred with the close
over the 1st swing resistance. The next upside objective is 160.2. The next area
of resistance is around 158.7 and 160.2, while 1st support hits today at 155.5
and below there at 153.9.
BEANOIL (MAR) 02/14/2005: The market now above
the 40-day moving average suggests the longer-term trend has turned up. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. There
could be more upside follow through since the market closed above the 2nd swing
resistance. The near-term upside target is at 20.76. The next area of resistance
is around 20.47 and 20.76, while 1st support hits today at 19.55 and below there
at 18.91.Â
WHEAT MARKET RECAP
2/11/2005
March Wheat finished down 1 3/4 at 294 1/2, 3 1/4 off the high
and 1/4 up from the low. May Wheat closed down 1 1/2 at 303. This was 3/4 up
from the low and 2 off the high.
News that Iraq is tendering for 100,000-150,000
tons of US wheat along with continued speculative short-covering helped support
the early bounce. However, the market closed lower as the short-covering from
speculators dried up shortly after the higher opening and buying failed to
emerge even with a strong soybean market. A lack of new speculative buying with
the market up nearly 10 cents off of Monday’s lows helped contribute to the move
lower on the day into mid-session as some profit-taking selling was noted.
Strength in soybeans and a generally more bullish attitude from world money
managers over commodity markets helped provide some support. The USDA released
baseline preliminary planting and production estimates for 2005 and for wheat,
the initial forecast is for a crop near 2.155 billion bushels. This compares
with 2004/05 usage at 2.212 billion bushels. March wheat support comes in at 293
1/2 and 292 1/4 with resistance at 296 1/2 and 301 3/4.
Technical Outlook
WHEAT (MAR) 02/14/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The downside closing price reversal on the
daily chart is somewhat negative. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next upside objective is 298
3/4. The next area of resistance is around 296 1/4 and 298 3/4, while 1st
support hits today at 292 3/4 and below there at 291 3/4.Â
LIVE CATTLE RECAP
2/11/2005
April Live Cattle finished up 0.10 at 86.82, 0.52 off the high
and 0.10 up from the low.
March Feeder Cattle closed up 0.55 at 100.15. This was 0.50 up
from the low and 0.05 off the high.
April cattle pushed moderately higher early in
the session with help from a positive tone in the February futures, $90 cash
trade this week and on news that the USDA will delay allowing older cattle and
beef to move into the US from Canada on March 7th. The USDA is still on track to
allow the import of cattle 30 months or younger on March 7th unless the courts
or the Senate can delay the plan. Commercial selling emerged to knock the market
back down to near unchanged at mid-session. The news that Tyson foods was
re-starting idled packing plants helped provide some support. Boxed beef cutout
values were down $.61 into the mid-session to $146.78 as compared with $142.34
last week at this time.
Technical Outlook
CATTLE (APR) 02/14/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The major trend has turned down with the cross over back below the
18-day moving average. It is a slightly negative indicator that the close was
under the swing pivot. The next downside objective is now at 86.320. The next
area of resistance is around 87.120 and 87.550, while 1st support hits today at
86.520 and below there at 86.320.Â
LEAN HOGS RECAP
2/11/2005
April Lean Hogs finished up 0.75 at 72.52, 0.17 off the high
and 0.87 up from the low.
March Pork Bellies closed up 0.30 at 88.10. This was 0.85 up
from the low and 0.20 off the high.
Hog futures pushed higher on the session Friday
in spite of a steady to weak tone for the cash market. Ideas that this weeks
break was overdone, expectations for futures to move higher in the weeks ahead
from a seasonal perspective and news that the US may not have to absorb
increased cattle imports from Canada in March helped support. The sell-off in
the ham market late this week long with the drop in pork cut-out from Thursday
afternoon helped to limit the support. The CME 2-day lean index for the period
ending February 9th came in 69.88, down $.81 from the previous session and down
from 73.56 one week previous.
Technical Outlook
HOGS (APR) 02/14/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. 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 downside target is 71.320.
The next area of resistance is around 73.050 and 73.400, while 1st support hits
today at 72.020 and below there at 71.320.Â
COCOA MARKET RECAP
2/11/2005
May Cocoa finished down 7 at 1560, 20 off the high and 4 up
from the low.
The cocoa market attempted to push into even
higher ground early Friday but then failed to hold the gains and eventually
finished lower. For a change there wasn’t a major impact from the Dollar but
talk that Ivory Coast arrivals were down 17% from last year probably gave the
market a little lift. We also suspect that talk about Indonesia becoming a net
importer served to kick up some buying interest but neither fundamental stories
seemed to be capable of holding prices up into the close. A private source came
out with a world ending stocks estimate showing a surplus of 50,000 tons and
that could also be considered bearish considering the recent bullish tilt off
the problems in the African Mid crop.
Technical Outlook
COCOA (MAY) 02/14/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The cross over
and close above the 18-day moving average is an indication the longer-term trend
has turned positive. The daily closing price reversal down puts the market on
the defensive. It is a slightly negative indicator that the close was lower than
the pivot swing number. The next downside objective is now at 1540. The next
area of resistance is around 1572 and 1588, while 1st support hits today at 1548
and below there at 1540.Â
COFFEE MARKET RECAP
2/11/2005
May Coffee closed down 0.30 at 116.20. This was 0.40 up from
the low and 1.80 off the high.
May coffee hit a new contract high for the 6th
session in a row before closing slightly lower on the session. The reversal,
combined with a hefty net long position of the speculator could spark some
short-term technical weakness. With world values hitting near 5-year highs,
Brazil producer selling was a bit more active this week and commercial selling
picked-up as the week progressed. Some weakness in London and a lack of new
demand news helped trigger some light selling late in the session.
Technical Outlook
COFFEE (MAY) 02/14/2005: The market rallied to a
new contract high. Rising stochastics at overbought levels warrant some caution
for bulls. The cross over and close above the 18-day moving average indicates
the longer-term trend has turned up. The market could take on a defensive
posture with the daily closing price reversal down. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside
objective is at 118.75. The market is becoming somewhat overbought now that the
RSI is over 70. The next area of resistance is around 117.30 and 118.75, while
1st support hits today at 115.15 and below there at 114.40.Â
SUGAR MARKET RECAP
2/11/2005
May Sugar closed down 0.09 at 9.44. This was 0.06 up from the
low and 0.09 off the high.
May sugar closed 9 lower on the inside trading
session with active two-sided trade through out the day. March futures in London
soared to a new contract high before the US opening which supported the market
early but a sharp break to lower on the day triggered some active long
liquidation selling in New York. London futures recovered to close higher on the
session. Active purchases from Pakistan and news that India bought 40,000 tons
of raw sugar overnight helped provide initial support but some buy the rumor,
sell the fact selling helped pressure the market late.
Technical Outlook
SUGAR (MAY) 02/14/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. The market setup is somewhat negative with the close under the 1st
swing support. The next upside objective is 9.59. The next area of resistance is
around 9.51 and 9.59, while 1st support hits today at 9.37 and below there at
9.30.Â
COTTON MARKET RECAP
2/11/2005
May Cotton finished up 0.32 at 46.19, 0.01 off the high and
0.39 up from the low.
Cotton pushed higher on follow-through technical
buying from the positive action on Thursday. The move to the highest level since
January 27th helped support additional technical buying Friday but we also think
that North American acreage projections (corn, soybeans, wheat, cotton) and
options expiration could have been fostering some long interest in cotton. With
a number of commodities reacting to fund buying this week and many markets also
speculating on a return of Chinese buying interest, we think that cotton was
possibly getting some spillover buying off the physical demand track.
Technical Outlook
COTTON (MAY) 02/14/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
close over the pivot swing is a somewhat positive setup. The near-term upside
target is at 46.49. The next area of resistance is around 46.38 and 46.49, while
1st support hits today at 45.99 and below there at 45.70.