This Is What Traders Fear Now
BOND MARKET RECAP
4/20/2005
June Bonds finished down 0-03 at 114-09, 0-03 off
the high and 0-29 up from the low.
June 10 Yr Treasury Notes finished down 0-015 at
111-125, 0-025 off the high and 0-205 up from the low.
The Treasury market couldn’t help but pay
some attention to the hotter than expected CPI report reading and that served to
sink Treasury prices early in the session. However, once the US equity market
began to slide and oil prices showed signs of rising it became clear that the
threat against the US recovery was significant enough to push Treasury prices
back toward the opening levels. With the stock market suffering significant
losses we suspect that the fear of inflation will gradually dissipate and in the
process see Treasuries return to a pattern of consistent gains. In the near term
there would not seem to be much in the way of key scheduled reports to deter the
bulls from control prices.
Technical Outlook
BONDS (JUN) 04/21/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The daily closing price reversal up is a
positive indicator that could support higher prices. The close over the pivot
swing is a somewhat positive setup. The near-term upside objective is at 115-08.
With a reading over 70, the 9-day RSI is approaching overbought levels. The next
area of resistance is around 114-30 and 115-08, while 1st support hits today at
113-28 and below there at 113-03.
TNOTES (JUN) 04/21/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market has a slightly positive tilt with
the close over the swing pivot. The near-term upside target is at 112-030. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 111-285 and 112-030, while 1st support hits today
at 111-040 and below there at 110-175.
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STOCK INDICES RECAP
4/20/2005
June S&P finished down 15.9 at 1139.8, 17.7 off
the high and 3 up from the low.
June S&P E-Mini closed down 16.25 at 1139.5. This
was 2.75 up from the low and 20.25 off the high.
June Dow closed down 117 at 10020. This was 20 up
from the low and 168 off the high.
The stock market would seem to be in trouble as
an early sweep of favorable corporate earnings readings propped up prices early
but once the hotter than expected CPI reading surfaced the market turned
negative. On the heels of a mid morning jump up in energy prices the stock
market came under intense selling pressure, specifically off all the concerning
talk about soaring summer gasoline profits. In short, the short covering bounce
ended and the reality of concern for the future manifest itself in renewed
selling. Many traders have begun to fear stagflation, which was last present in
the wake of the 70’s oil scare!
Technical Outlook
S&P 500 (JUN) 04/21/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The outside day down and close below the previous day’s low is a
negative signal. The close below the 2nd swing support number puts the market on
the defensive. The next downside target is now at 1122.78. The 9-day RSI under
30 indicates the market is approaching oversold levels. The next area of
resistance is around 1150.14 and 1164.17, while 1st support hits today at
1129.45 and below there at 1122.78.
SP EMINI (JUN) 04/21/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
outside day down and close below the previous day’s low is a negative signal.
The close below the 2nd swing support number puts the market on the defensive.
The next downside target is 1120.88. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 1151.00 and
1166.87, while 1st support hits today at 1128.00 and below there at 1120.88.
NASDAQ (JUN) 04/21/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The outside
day down is somewhat negative. The market setup is somewhat negative with the
close under the 1st swing support. The next downside target is 1390.75. The
market is approaching oversold levels on an RSI reading under 30. The next area
of resistance is around 1428.50 and 1446.75, while 1st support hits today at
1400.50 and below there at 1390.75.
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CURRENCY MARKET RECAP
4/20/2005
June US Dollar finished down 23 at 8348, 58 off
the high and 10 up from the low.
June Euro finished up 0.46 at 131.01, 0.19 off
the high and 0.93 up from the low.
June Euro Dollar closed down 0.01 at 96.625. This
was 0.05 up from the low and 0.005 off the high.
June Canadian Dollar closed up 0.15 at 80.74.
This was 0.39 up from the low and 0.2 off the high.
June British Pound finished up 0.16 at 191.39,
0.27 off the high and 0.91 up from the low.
June Swiss closed up 0.4 at 85.2. This was 0.83
up from the low and 0.08 off the high.
June Japanese Yen closed up 0.05 at 94.01. This
was 0.57 up from the low and 0.24 off the high.
The Dollar follow through on the downside and
with the US stock market coming under pressure and the US President hoping for a
magic wand to solve the gasoline problem in the US it would not seem like the
energy threat against the US economy is going to be averted easily. For the US
Dollar to fail to rally in the wake of hot PPI and CPI readings it is painfully
clear that the inflationary prospect has lost its ability to support the Dollar.
In the near term flight to quality concerns could easily drive the Euro, Pound
and Swiss sharply higher. Given the Japanese economy’s reliance on the US import
market and also the reliance on foreign oil the Yen might have trouble extending
recent gains.
Technical Outlook
YEN (JUN) 04/21/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
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 outside day up and
close above the previous day’s high is a positive signal. The close over the
pivot swing is a somewhat positive setup. The next upside objective is 94.73.
The next area of resistance is around 94.41 and 94.73, while 1st support hits
today at 93.61 and below there at 93.12.
EURO (JUN) 04/21/2005: The cross over and close
above the 60-day moving average is an indication the longer-term trend has
turned positive. Studies are showing positive momentum but are now in overbought
territory, so some caution is warranted. The major trend could be turning up
with the close back above the 18-day moving average. The outside day up and
close above the previous day’s high is a positive signal. A positive setup
occurred with the close over the 1st swing resistance. The next upside objective
is 131.94. The next area of resistance is around 131.57 and 131.94, while 1st
support hits today at 130.45 and below there at 129.71.
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PRECIOUS METALS RECAP
4/20/2005
June Gold closed up 2.3 at 436.7. This was 3.7 up
from the low and 0.7 off the high.
July Silver finished up 0.087 at 7.382, 0.018 off
the high and 0.142 up from the low.
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The gold market once again managed to weave
around some potentially negative developments and forge a move to even higher
ground. Certainly one can understand the desire to buy some gold in the wake of
a hot CPI report but the real impetus behind the gains in gold on Wednesday
seemed to be a weaker Dollar and ongoing fund buying off a number of metals
markets. While we doubt that gold and silver saw too much in the way of flight
to quality buying that is certainly possible considering the inflation readings
this week and the ongoing concern toward energy prices. In the end, the Dollar
has managed another downside breakout and would seem to be capable of lifting
gold prices consistently in the coming sessions, but only if the equity market
avoids an all out panic liquidation.
Technical Outlook
SILVER (JUL) 04/21/2005: 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. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
near-term upside target is at 751.1. The next area of resistance is around 746.2
and 751.1, while 1st support hits today at 730.3 and below there at 719.1.
GOLD (JUN) 04/21/2005: The major trend could be
turning up with the close back above the 40-day moving average. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next upside target is 440.3. The next area of resistance is around 438.9 and
440.3, while 1st support hits today at 434.5 and below there at 431.6.
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COPPER MARKET RECAP
4/20/2005
June Copper closed up 3.70 at 150.75. This was
2.45 up from the low and 0.15 off the high.
The copper market seemed to ignore the
deteriorating macro economic condition Wednesday at least in the early action.
However, in the afternoon session the market showed signs of banking some
profits in the wake of significant equity market losses. Supposedly spread price
incentives prompted the initial rally in copper prices but we have little doubt
in our minds that the favorable Chinese growth readings gave the market the
resolve to run back toward the old highs. A sharply lower US Dollar could have
added to the supportive tilt but it is also possible that gains across the board
in the metals were in some ways being fueled by fund buying. Traders should note
that copper prices were able to rise in the face of soaring Chinese copper
production readings and weak equity prices.
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ENERGY MARKET RECAP
4/20/2005
June Crude Oil closed up 0.46 at 54.03. This was
0.78 up from the low and 0.47 off the high.
June Heating Oil closed up 1.59 at 151.29. This
was 2.79 up from the low and 0.21 off the high.
June Unleaded Gas finished up 1.10 at 159.17,
1.33 off the high and 2.47 up from the low.
June Natural Gas finished up 0.01 at 7.15, 0.13
off the high and 0.01 up from the low.
June Propane closed up 0.01 at 0.86. This was
equal to the low and 0.02 off the high.
The energy complex traded on both sides of
unchanged during the action Wednesday and really failed to show the type of
strong price action that one would expect considering the bullish weekly
inventory readings. The President’s push for a National Energy strategy fell on
deaf ears Wednesday and that call for change hardly dampened the markets light
upward track. In fact, the President’s dialogue might actually have supported
prices, as he suggested that Saudi Arabia was already pumping close to capacity
and that there was no quick fix to high oil prices. Later in the session the EIA
indicated that oil prices probably won’t fall back below $50.000 and that Non
OPEC oil output wouldn’t surge later this year. In other words, officials seem
to be fanning the flames of concern for energy prices.
Technical Outlook
CRUDE OIL (JUN) 04/21/2005: The daily stochastics
gave a bullish indicator with a crossover up. Daily momentum studies are on the
rise from low levels and should accelerate a move higher on a push through the
1st swing resistance. The major trend has turned down with the cross over back
below the 18-day moving average. The market has a slightly positive tilt with
the close over the swing pivot. The near-term upside target is at 55.20. The
next area of resistance is around 54.65 and 55.20, while 1st support hits today
at 53.41 and below there at 52.71.
UNLEADED (JUN) 04/21/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The close
over the pivot swing is a somewhat positive setup. The next upside objective is
162.68. The next area of resistance is around 161.07 and 162.68, while 1st
support hits today at 157.27 and below there at 155.09.
HEATING OIL (JUN) 04/21/2005: The daily
stochastics gave a bullish indicator with a crossover up. The stochastics
indicators are rising from oversold levels, which is bullish and should support
higher prices. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The market has a slightly positive tilt
with the close over the swing pivot. The next upside objective is 153.64. The
next area of resistance is around 152.79 and 153.64, while 1st support hits
today at 149.79 and below there at 147.65.
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CORN MARKET RECAP
4/20/2005
May Corn finished up 1 1/4 at 210 3/4, 3/4
off the high and 1 3/4 up from the low. December Corn closed up 1 3/4 at 234
3/4. This was 1 1/2 up from the low and 1/4 off the high.
Fund buying has helped support the market on the
two-day jump off of two-month lows for the new crop December futures. New crop
is receiving some support from heavy rains overnight in Iowa and the forecast
for two more rain producing systems in the next week which might slow or stop
planting progress. The Agriculture Secretary in Argentina raised their corn
production forecast to 19.2 million tonnes from 19 million as the March estimate
and from 15 million tonnes last year. The current USDA Argentina corn crop
estimate is at 19.5 million tonnes. The weekly export sales report, for release
before the opening, is expected to show corn sales at 800,000-1.1 million tonnes
as compared with 915,600 tonnes last week. Support for July corn comes in at 218
1/4 and 216 3/4 with resistance at 220 1/4 and 222 1/2.
Technical Outlook
CORN (MAY) 04/21/2005: 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 indicates the longer-term trend has turned up. The close over the
pivot swing is a somewhat positive setup. The next upside target is 213. The
next area of resistance is around 212 and 213, while 1st support hits today at
209 1/2 and below there at 208.
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SOY COMPLEX RECAP
4/20/2005
May Soybeans finished down 1/4 at 630 3/4, 9 1/4
off the high and 4 3/4 up from the low. November Soybeans closed down 2 3/4 at
626 1/4. This was 4 1/4 up from the low and 10 3/4 off the high.
May Soymeal closed down 0.1 at 194.8. This was
1.8 up from the low and 2.2 off the high.
May Soybean Oil finished down 0.17 at 22.66, 0.41
off the high and 0.15 up from the low.
The higher opening was triggered by surging
soybean futures at the China exchange overnight with some contracts up the limit
and others closing sharply higher. Floor traders are talking about a new
commodity index fund which had at least $500 million to invest in commodities as
the source of some of the buying yesterday. Strength in a wide range of
commodity markets helped support the market yesterday and many commodity markets
seem to be experiencing some follow-through technical buying today. While there
is talk of excess supply on the world market, new crop soybeans consolidated
near the 6.00 since late March before the upside break-out yesterday and the
technical set-up for the market looks more supportive. Midwest cash basis levels
were steady today in spite of talk of increased selling by producers. There is
also talk of active selling from commercial traders in meal and soybeans from
South America on the rally yesterday. However, producer selling out of Brazil is
said to be slower than expected and Brazil local basis levels are on the rise.
The weekly export sales report, for release before the opening, is expected to
show soybean sales near 250,000-550,000 tonnes, meal sales at 50,000-100,000
tonnes and oil sales at 0-5,000 tonnes. The close was 9 cents under the highs
for July soybeans which turns the chart pattern a bit toppy. July soybean
support comes in at 633 1/2 with 647 and 653 1/4 as next resistance.
Technical Outlook
BEANS (MAY) 04/21/2005: 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
daily closing price reversal down is a negative indicator for prices. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next upside objective is 645 3/4. The next area of resistance is around 637 3/4
and 645 3/4, while 1st support hits today at 623 3/4 and below there at 618.
MEAL (MAY) 04/21/2005: 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 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 198.9. The next area of resistance is around 196.8 and 198.9,
while 1st support hits today at 192.8 and below there at 190.9.
BEANOIL (MAY) 04/21/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. 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 23.28. The next area of resistance is around 22.94 and 23.28, while
1st support hits today at 22.38 and below there at 22.17.
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WHEAT MARKET RECAP
4/20/2005
May Wheat finished up 2 3/4 at 310 3/4, 3 1/4 off the high and
2 1/2 up from the low. July Wheat closed up 3 1/4 at 321. This was 2 1/2 up from
the low and 3 off the high.
Fund traders turned more active at buying wheat
shortly after the opening which supported solid gains for the second day in a
row. July wheat has managed to bounce near 11 cents off of Monday’s lows with
Index fund buying and speculative short-covering as the foundation for the
rally. While traders view the short-term supply and demand fundamentals for US
wheat as bearish, there is also respect for the oversold condition and for the
buying power of the fund traders. News that the European Union raised its tender
to export free-market wheat outside of the EU to 3 million tonnes from 2 million
tonnes previous failed to pressure. The weekly export sales report, for release
before the opening, is expected to show wheat sales at 375,000-575,000 tonnes as
compared with 418,400 tonnes last week. July wheat support moves up to 319 with
325 1/2 and 330 1/4 as next resistance.
Technical Outlook
WHEAT (MAY) 04/21/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The major trend has turned down with the cross over back
below the 18-day moving average. It is a mildly bullish indicator that the
market closed over the pivot swing number. The near-term upside objective is at
316 1/2. The next area of resistance is around 313 1/2 and 316 1/2, while 1st
support hits today at 308 and below there at 305 1/4.
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LIVE CATTLE RECAP
4/20/2005
June Live Cattle finished up 0.12 at 85.52, 0.55
off the high and 0.27 up from the low.
May Feeder Cattle closed down 0.45 at 107.07.
This was 0.25 up from the low and 0.77 off the high.
June cattle closed 12 higher on the session but
the close was below the gap higher opening and 55 points off of the highs of the
day. A lack of cash trade in the panhandle had longs a bit nervous and futures
sold off from the highs of the day. The weaker technical action in feeder cattle
may have prompted some selling with August Feeder cattle closing lower on the
day after hitting a contract high early. Some cattle traded in Nebraska on a
dressed basis at $152 which was up $3.00-$4.00 on the day. Boxed beef cutout
values at mid session were up $.79 to $158.28 as compared with $155.40 one week
ago. Slaughter came in at 118,000 head as compared with trade expectations at
116,000-122,000 head.
Technical Outlook
CATTLE (JUN) 04/21/2005: 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. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The next upside
objective is 86.400. The next area of resistance is around 85.920 and 86.400,
while 1st support hits today at 85.120 and below there at 84.770.
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LEAN HOGS RECAP
4/20/2005
June Lean Hogs finished up 0.70 at 78.37, 0.32
off the high and 1.17 up from the low.
May Pork Bellies closed down 0.70 at 85.25. This
was 1.45 up from the low and 0.35 off the high.
June hogs closed 70 higher on the session and the
highest close since April 4th leaves the market in a position to experience
significant short-covering over the near-term. If the cash market trend turns
higher and pork values stay strong, the market is likely to see support. Cash
hogs were $1.00 higher on the session at Peoria which helped support. Weekly
average weights for Iowa/Minnesota for the week ending April 16th came in at
267.5 pounds as compared with 267.7 pounds the previous week and 265.1 pounds
last year at this time. The CME 2-day Lean Hog Index for the period ending April
18th came in at 70.03, up 0.16 on the day and up from 68.42 last week at this
time. Slaughter came in at 391,000 head as compared with trade expectations at
389,000-392,000 head.
Technical Outlook
HOGS (JUN) 04/21/2005: The crossover up in the
daily stochastics is a bullish signal. Daily momentum studies are on the rise
from low levels and should accelerate a move higher on a push through the 1st
swing resistance. The major trend could be turning up with the close back above
the 18-day moving average. The market has a slightly positive tilt with the
close over the swing pivot. The near-term upside objective is at 79.650. The
next area of resistance is around 79.100 and 79.650, while 1st support hits
today at 77.620 and below there at 76.670.
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COCOA MARKET RECAP
4/20/2005
July Cocoa finished up 8 at 1563, 15 off the high
and 12 up from the low.
Cocoa initially saw what appeared to be more fund
buying but the close was somewhat disappointing for the bull camp. Certainly the
soft Dollar conspired to lift cocoa prices but without fresh anxiety from the
Ivory Coast political front we are concerned that cocoa prices might be capable
of sliding back to the April lows down around 1520. There is a coming holiday at
the Ivory Coast and that could leave some specs playing for some type of
political event and that could serve to provide support to prices on near term
weakness.
Technical Outlook
COCOA (JUL) 04/21/2005: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. 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 near-term
upside objective is at 1590. The next area of resistance is around 1576 and
1590, while 1st support hits today at 1550 and below there at 1537.
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COFFEE MARKET RECAP
4/20/2005
July Coffee closed up 3.50 at 124.85. This was
5.10 up from the low and 0.15 off the high.
July coffee surged higher to close up 350 points
on the day and the market has already gained 1225 points off of Friday’s lows.
Funds were noted as active buyers for the second session in a row. Dryness in
Brazil and Vietnam continues to fuel bullish psychology for the cash coffee
industry and Brazil producers seem to be holding tight to inventory ahead of the
Brazil coffee crop estimate for release on Friday.
Technical Outlook
COFFEE (JUL) 04/21/2005: The cross over and close
above the 60-day moving average indicates 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 indicates the longer-term trend has turned up. The market setup
is supportive for early gains with the close over the 1st swing resistance. The
near-term upside objective is at 128.85. The next area of resistance is around
127.45 and 128.85, while 1st support hits today at 122.25 and below there at
118.40.
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SUGAR MARKET RECAP
4/20/2005
July Sugar closed up 0.01 at 8.44. This was 0.06
up from the low and 0.03 off the high.
After a lower opening, July sugar managed to
close slightly higher on the session as trade house buying helped to support.
Dryness at the end of the growing season may have pinched the Brazil
center-south cane production forecast and lower production from Thailand and
China this season combined with active demand for ethanol in the domestic market
for Brazil for the start of the harvest could keep the market tight if buyers
are active on this break. The oversold technical condition of the market and
uncertain production from Europe this summer are potential supportive factors.
Technical Outlook
SUGAR (JUL) 04/21/2005: 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 next upside target is 8.52. The next area of resistance is around 8.48 and
8.52, while 1st support hits today at 8.40 and below there at 8.35.
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COTTON MARKET RECAP
4/20/2005
July Cotton finished down 0.02 at 54.85, 0.55 off
the high and 1.60 up from the low.
Cotton closed mixed with new crop down, July near
unchanged on the session and May cotton experiencing a major upside break-out of
the recent consolidation. July closed 2 lower on the session after a 215 point
range. Active buying by a major US merchant supported the market early but when
the commercial buying slowed, speculative long liquidation selling triggered the
sell-off. The weekly export sales report, for release before the opening, is
expected to show cotton sales at 150,000-250,000 bales as compared with 265,400
bales last week. Export shipments are expected to come in near 350,000-450,000
bales as compared with 339,400 bales last week. The sharp sell-off in the US
stock market may have added to the bearish tone late in the day.
Technical Outlook
COTTON (JUL) 04/21/2005: 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
indicates the longer-term trend has turned up. The market tilt is slightly
negative with the close under the pivot. The next upside target is 56.73. The
next area of resistance is around 55.92 and 56.73, while 1st support hits today
at 53.78 and below there at 52.44.