This Is Why The Dollar Avoided Liquidation
BOND MARKET RECAP
4/12/2005
June Bonds finished up 0-30 at 112-25, 0-06 off
the high and 1-06 up from the low.
June 10 Yr Treasury Notes finished up 0-190 at
110-070, 0-035 off the high and 0-230 up from the low.
The Treasury market continued the pattern
of strength, despite the fact that oil prices declined sharply and the Dollar
rose in the wake of another record in the Trade Deficit. Prior to the release of
the FOMC meeting minutes the Fed suggested that the US Trade and Budget deficits
were problems but that the problems were “manageable” and that would seem to
downplay the threats. The Fed’s Geithner also indicated that long term inflation
expectations are stable and that the Fed actions are key to maintaining the near
term inflation track. In short, the meeting minutes might be considered old news
compared to the actual Fed dialogue seen during the session on Tuesday.
Technical Outlook
BONDS (JUN) 04/13/2005: The market now above the
60-day moving average suggests the longer-term trend has turned up. Rising
stochastics at overbought levels warrant some caution for bulls. The major trend
could be turning up with the close back above the 18-day moving average. The
market’s close above the 2nd swing resistance number is a bullish indication.
The near-term upside objective is at 113-28. The next area of resistance is
around 113-14 and 113-28, while 1st support hits today at 112-03 and below there
at 111-05.
TNOTES (JUN) 04/13/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Studies are showing positive momentum but are now in overbought territory, so
some caution is warranted. The cross over and close above the 18-day moving
average indicates the longer-term trend has turned up. The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
The near-term upside target is at 110-295. The next area of resistance is around
110-205 and 110-295, while 1st support hits today at 109-250 and below there at
109-060.
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STOCK INDICES RECAP
4/12/2005
June S&P finished up 6.3 at 1190, 3.2 off the
high and 16.8 up from the low.
June S&P E-Mini closed up 6.25 at 1190. This was
17 up from the low and 3.25 off the high.
June Dow closed up 53 at 10516. This was 144 up
from the low and 29 off the high.
The equity market faded in the early action as
the old school was concerned with the soaring Trade deficit reading. However,
since the Dollar actually rallied off another record in the US trade deficit it
almost seemed like the market moved to fully embrace the argument from a former
Fed member, that the US trade deficit condition isn’t totally a negative. We
also think that another significant decline in energy prices reversed the action
in the early weakness in the stock market, as the main focal point of the
marketplace is on where energy prices are headed. In fact, a number of US ills
become less significant in the event that oil prices continue to slide.
Technical Outlook
S&P 500 (JUN) 04/13/2005: 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 indicates the longer-term
trend has turned up. The outside day up is a positive signal. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The next upside objective is 1204.97. The next area of resistance is
around 1199.35 and 1204.97, while 1st support hits today at 1180.65 and below
there at 1167.58.
SP EMINI (JUN) 04/13/2005: 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 outside day up is somewhat
positive. There could be more upside follow through since the market closed
above the 2nd swing resistance. The next upside target is 1205.37. The next area
of resistance is around 1199.75 and 1205.37, while 1st support hits today at
1180.75 and below there at 1167.38.
NASDAQ (JUN) 04/13/2005: 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 upside closing price reversal on the
daily chart is somewhat bullish. The close over the pivot swing is a somewhat
positive setup. The near-term upside objective is at 1515.25. The next area of
resistance is around 1506.50 and 1515.25, while 1st support hits today at
1477.50 and below there at 1457.25.
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CURRENCY MARKET RECAP
4/12/2005
June US Dollar finished up 28 at 8440, 40 off the
high and 45 up from the low.
June Euro finished down 0.57 at 129.46, 0.94 off
the high and 0.63 up from the low.
June Euro Dollar closed unchanged at 96.51. This
was 0.02 up from the low and 0.01 off the high.
June Canadian Dollar closed down 0.11 at 80.92.
This was 0.37 up from the low and 0.32 off the high.
June British Pound finished up 0.04 at 188.56,
0.64 off the high and 0.8 up from the low.
June Swiss closed down 0.38 at 83.81. This was
0.49 up from the low and 0.59 off the high.
June Japanese Yen closed down 0.01 at 93.32. This
was 0.67 up from the low and 0.13 off the high.
Apparently comments from a past Fed Chairman
concerning the real meaning of the soaring trade deficit allowed the US Dollar
to avoid a sell off on another record high US trade deficit. Not only did the
Dollar avoid liquidation, it rallied rather impressively following the Trade
deficit release. It would seem that the initial response to the FOMC meeting
minutes was supportive to the Dollar as the Fed was seen reserving the right to
act more aggressively in the future. In fact, some players think that the
minutes from the last FOMC meeting gave the hawks an edge over the doves but
others think that the recent weakness in US economic numbers is in fact serving
to diffuse the increased pricing pressure.
Technical Outlook
YEN (JUN) 04/13/2005: 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. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
upside objective is 93.98. The next area of resistance is around 93.72 and
93.98, while 1st support hits today at 92.92 and below there at 92.39.
EURO (JUN) 04/13/2005: 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. The outside day down and
close below the previous day’s low is a negative signal. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. The near-term upside target is at 131.10. The next area of resistance is
around 130.24 and 131.10, while 1st support hits today at 128.68 and below there
at 127.97.
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PRECIOUS METALS RECAP
4/12/2005
April Gold closed down 1 at 427.6. This was 1.1
up from the low and 2.6 off the high.
May Silver finished down 0.1 at 7.155, 0.155 off
the high and 0.055 up from the low.
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It was a negative day all the way around for gold
and silver as the Dollar rose off potentially disastrous US Trade figures and
the stock market was down hard during the metals pit trade. Therefore, the gold
and silver saw negative macro economic influence and negative currency action.
Fortunately for gold and silver recent gains were not so aggressive that the
market needed to balance positions with a major liquidation. The idea of central
bank gold sales might also be weighing on the market even though few expect this
weekends meeting to bring about a specific decision on the gold sale for debt
relief issue. Perpetually lower oil prices could serve to check up the slide in
equities, which in turn could then reduce the selling in both gold and silver.
Technical Outlook
SILVER (MAY) 04/13/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The major trend could be turning up with the
close back above the 18-day moving average. The outside day down is a negative
signal. The market is in a bearish position with the close below the 2nd swing
support number. The next upside objective is 739.0. The next area of resistance
is around 726.0 and 739.0, while 1st support hits today at 705.1 and below there
at 697.1.
GOLD (APR) 04/13/2005: 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. A negative signal was
given by the outside day down. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The next upside target is
431.6. The next area of resistance is around 429.4 and 431.6, while 1st support
hits today at 425.8 and below there at 424.3.
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COPPER MARKET RECAP
4/12/2005
May Copper closed down 2.90 at 149.60. This was
0.30 up from the low and 4.00 off the high.
The copper market ran aggressively into new high
ground but was certainly technically and fundamentally overdone. Weakness in
heavy industry stocks, airlines and autos combined, with the generally strong
ongoing high energy price situation certainly deteriorates the macro economic
out look and that undermines copper. We also think that the trade was picking up
on rumors that the Chinese were balking at ultra high price structure and that
is made worse by the fact that the US Dollar has firmed significantly into the
most recent news highs in copper. It is also possible that US copper prices were
hurt by the heavy industry weakness and the additional concern generated by the
27% decline in US February copper imports!
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ENERGY MARKET RECAP
4/12/2005
May Crude Oil closed down 1.85 at 51.86. This was
0.11 up from the low and 1.79 off the high.
May Heating Oil closed down 2.18 at 146.53. This
was 0.53 up from the low and 2.32 off the high.
May Unleaded Gas finished down 1.60 at 153.38,
3.62 off the high and 0.13 up from the low.
May Natural Gas finished down 0.22 at 7.09, 0.30
off the high and 0.01 up from the low.
May Propane closed up 0.00 at 0.85. This was
equal to the low and 0.00 off the high.
The fickle energy markets seemed to rekindle
demand concerns and refocus their attention on fresh revelations of rising near
term supply from OPEC. While the market saw the potential for increased OPEC
production last week it wasn’t married to forecasts of a demand decline. Last
week we wondered out loud about the EIA’s prediction of higher gasoline demand,
when last year they came in at this time of the year and predicted a 1% decline
in retail gasoline demand off of high prices. Given the IEA fears of sagging
demand it might be time for the US government to back track and that could serve
to send crude and unleaded gas prices down to the bottom of the last two months
consolidation pattern. The IEA pegged March OPEC production to be up 290,000
barrels per day and suggested that most of the increased flow was coming from
Saudi Arabia..
Technical Outlook
CRUDE OIL (MAY) 04/13/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 18-day moving average is an indication
the longer-term trend has turned down. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next downside
objective is 50.38. The next area of resistance is around 52.81 and 54.18, while
1st support hits today at 50.91 and below there at 50.38.
UNLEADED (MAY) 04/13/2005: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Momentum studies are declining, but have fallen to oversold levels. The close
below the 18-day moving average is an indication the longer-term trend has
turned down. The daily closing price reversal down is a negative indicator for
prices. The market tilt is slightly negative with the close under the pivot. The
next downside objective is now at 150.51. The next area of resistance is around
155.25 and 158.00, while 1st support hits today at 151.51 and below there at
150.51.
HEATING OIL (MAY) 04/13/2005: The market back
below the 40-day moving average suggests the longer-term trend could be turning
down. Daily stochastics are trending lower but have declined into oversold
territory. The major trend has turned down with the cross over back below the
18-day moving average. The market setup is somewhat negative with the close
under the 1st swing support. The next downside target is 144.13. The next area
of resistance is around 147.95 and 149.82, while 1st support hits today at
145.11 and below there at 144.13.
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CORN MARKET RECAP
4/12/2005
May Corn finished up 1 at 206 3/4, 1/4 off
the high and 1 3/4 up from the low. December Corn closed up 1/4 at 231. This was
1 up from the low and 1 1/4 off the high.
The oversold condition of the market combined
with follow-through buying after the strong close yesterday helped support the
early gains. A warmer and drier outlook into the coming weekend helped to
provide selling resistance with talk of improving conditions to plant corn. In
the state report last night, Illinois producers reported that 14% of the
intended corn acres are already planted as compared with 4% last year. This came
as a bearish surprise. Talk that South Korea is having quality and shipping
delay issues with corn purchased from China helped to provide some support. The
cash tone is firm with producer selling slow. Support for May corn comes in at
205 and 203 3/4 with resistance at 208 3/4 and 210 1/2.
Technical Outlook
CORN (MAY) 04/13/2005: 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 market back below the 18-day moving
average suggests the longer-term trend could be turning down. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The next upside target is 208 1/4. The next area of resistance is around 207 3/4
and 208 1/4, while 1st support hits today at 205 3/4 and below there at 204 1/2.
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SOY COMPLEX RECAP
4/12/2005
May Soybeans finished up 3/4 at 617 1/2, 4 1/2
off the high and 4 up from the low. November Soybeans closed down 4 1/4 at 608
1/4. This was 2 3/4 up from the low and 7 3/4 off the high.
May Soymeal closed down 0.2 at 187.3. This was
1.8 up from the low and 1.5 off the high.
May Soybean Oil finished up 0.16 at 22.56, 0.17
off the high and 0.09 up from the low.
Follow-through technical buying from the positive
close yesterday and a firm tone for the cash market supported the early bounce
today. However, good weather for harvest in Brazil is clashing with good
planting progress for corn producers in the US. If planting weather is favorable
in the US, there is a tendency for producers to plant more corn and less
soybeans so the fast start to planting in Illinois is seen as a supportive
factor for new crop soybeans. A jump in the US dollar helped to limit the gains
after the early jump in prices and volume was slow. Another private forecast
from Brazil with a crop production estimate of near 51 million tonnes and news
that the official Ag Ministry estimate was lower to 53.1 million tonnes helped
to provide some support. The USDA lowered their estimate to 54 million tonnes on
Friday. The improved technical action after hitting a 6-week low yesterday
combined with talk of an oversold condition helped to support. May soybean
support comes in at 613 with 627 as next resistance.
Technical Outlook
BEANS (MAY) 04/13/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. 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 target is 626. The next area of
resistance is around 621 3/4 and 626, while 1st support hits today at 613 1/4
and below there at 609 1/4.
MEAL (MAY) 04/13/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The daily closing price reversal
down puts the market on the defensive. It is a mildly bullish indicator that the
market closed over the pivot swing number. The near-term upside objective is at
190.5. The next area of resistance is around 188.9 and 190.5, while 1st support
hits today at 185.7 and below there at 184.0.
BEANOIL (MAY) 04/13/2005: Daily stochastics are
trending lower but have declined into oversold territory. 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 downside target is
now at 22.32. The next area of resistance is around 22.69 and 22.84, while 1st
support hits today at 22.43 and below there at 22.32.
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WHEAT MARKET RECAP
4/12/2005
May Wheat finished down 2 1/2 at 311, 4 1/2 off the high and 1
1/2 up from the low. July Wheat closed down 2 1/4 at 321 1/4. This was 2 1/2 up
from the low and 3 1/4 off the high.
The oversold condition of the market and ideas
that futures are relatively cheap helped support a rebound early in the session.
However, improving crop conditions and the outlook for more rain in the plains
this weekend helped to trigger selling on the early rally. The higher opening
and lower close leaves the short-term technical action bearish in spite of the
oversold condition. The 2nd weekly crop progress report of the year, released
yesterday afternoon, showed the US winter wheat crop at 70% in good to excellent
condition as compared with 68% last week and 48% last year. The 15-year average
is at 56%. Crops in poor to very poor condition came in at 6%, unchanged from
last week and down from 21% last year and 15% as the 15-year average for this
time of the year. With the US crop in good shape for high yields and a lack of
problems in other key producing countries, the supply tone is bearish. Cash and
export news is quiet and the jump in the dollar did not help the already bearish
tone for new sales. May wheat resistance comes in at 314 and 320 1/2 with
support back at 307 1/2.
Technical Outlook
WHEAT (MAY) 04/13/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The major trend has turned down
with the cross over back below the 18-day moving average. The downside closing
price reversal on the daily chart is somewhat negative. The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
near-term upside target is at 317 3/4. The next area of resistance is around 314
and 317 3/4, while 1st support hits today at 308 and below there at 305 3/4.
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LIVE CATTLE RECAP
4/12/2005
April Live Cattle finished up 1.00 at 89.02, 0.12
off the high and 0.85 up from the low.
May Feeder Cattle closed up 1.17 at 106.15. This
was 1.00 up from the low and 0.15 off the high.
June cattle closed 100 higher on the session and
to the highest close since April 1st as the more active boxed-beef trade on
Monday helped improve the beef demand tone into April. While traders have
discussed the possibility of a few extra cattle moving off of feedlots in the
weeks ahead, the typical improving demand for beef in the spring has been
dismissed as a long shot. However, the more active boxed-beef trade volume
combined with the big discount of futures to cash helped support. Boxed beef
cutout values at mid-session were down 24 cents on the day to $154.45 as
compared with $154.46 a week ago. Slaughter came in at 122,000 head as compared
with trade expectations of 115,000-120,000 head which might be a sign of
improving packer demand.
Technical Outlook
CATTLE (APR) 04/13/2005: The major trend could be
turning up with the close back above the 60-day moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The next downside
objective is now at 87.870. The next area of resistance is around 89.500 and
89.800, while 1st support hits today at 88.550 and below there at 87.870.
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LEAN HOGS RECAP
4/12/2005
April Lean Hogs finished up 0.72 at 69.70, 0.02
off the high and 0.60 up from the low.
May Pork Bellies closed down 0.62 at 91.25. This
was 0.20 up from the low and 1.30 off the high.
June hogs opened higher and closed lower on the
session. Live hog cash trade was mostly steady to $1.00 higher at some locations
which was a bullish surprise against expectations. Talk that packer profit
margins were moving deeper into the red helped to keep sellers a bit more active
on ideas that supply is ample. Ideas that producer marketings will decline as
grain planting progress moves forward helped to provide underlying support. The
CME 2-day Lean Hog index for the period ending April 8th came in at 68.27, up.09
on the day and up from 67.36 last week at this time. Slaughter came in at
389,000 head vs. estimates between 389,000 and 393,000.
Technical Outlook
HOGS (APR) 04/13/2005: 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 indicates the longer-term trend has
turned up. Follow through buying looks likely if the market can hold yesterday’s
gap on the day session chart. The market has a bullish tilt coming into today’s
trade with the close above the 2nd swing resistance. The next upside target is
70.170. The next area of resistance is around 70.000 and 70.170, while 1st
support hits today at 69.400 and below there at 68.950.
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COCOA MARKET RECAP
4/12/2005
May Cocoa finished up 15 at 1555, 5 off the high
and 25 up from the low.
The cocoa market continues to mark time within a
narrow consolidation pattern. As we have suggested a number of times over the
last few weeks, the cocoa market is really without a threat to supply and demand
is mostly level. Therefore, the ebb and flow of fund interest might be the most
critical element in the marketplace. Supporting prices up off the lows on
Tuesday were Press reports of industry buying and that is perhaps the most
concrete fundamental development in several sessions. Our biggest problem in
predicting the near term trend in prices is that prices are not quite down to
deflated levels yet but the trade is acting like the recent lows are close to a
value level.
Technical Outlook
COCOA (MAY) 04/13/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The upside closing price
reversal on the daily chart is somewhat bullish. The close over the pivot swing
is a somewhat positive setup. The near-term upside objective is at 1580. The
next area of resistance is around 1570 and 1580, while 1st support hits today at
1540 and below there at 1520.
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COFFEE MARKET RECAP
4/12/2005
May Coffee closed up 1.35 at 114.85. This was
2.05 up from the low and 0.95 off the high.
The move to the lowest level since February 9th
failed to generate new selling pressures from funds and July coffee managed to
close 140 higher on the session and up 185 from the lows of the day. The
reversal might attract some follow-through technical buying early on Wednesday.
Coffee open interest is down nearly 15,000 contracts from the July peak of near
123,000 contracts as the long liquidation trend has been the prominent bearish
force on the break off of the 5-year price peak in March. Brazil coop stocks for
March 31st were at 3.98 million bags which is down from 5.15 million at the end
of February but up from 3.21 million bags last year at this time.
Technical Outlook
COFFEE (MAY) 04/13/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. The upside closing price reversal on the daily chart is somewhat
bullish. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The next downside target is 111.60. The next area of
resistance is around 116.35 and 117.55, while 1st support hits today at 113.40
and below there at 111.60.
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SUGAR MARKET RECAP
4/12/2005
May Sugar closed up 0.10 at 8.45. This was 0.16
up from the low and 0.04 off the high.
July sugar closed 11 higher on the session and up
19 from the lows of the day. After moving to the lowest level since November
2nd, a lack of new selling interest from fund traders and some light buying from
locals triggered speculative short-covering into the close. A top India sugar
official indicated a recovery in production to near 17.5 million tonnes (up 5
million from last year) for the sugar crop this year as long as the
June-September monsoons are normal. The 47 point break from Friday’s highs
attracted some buying interest but it will likely take a sign of improving cash
demand to slow the long liquidation trend of the market.
Technical Outlook
SUGAR (MAY) 04/13/2005: The daily stochastics
have crossed over up which is a bullish indication. The stochastics indicators
are rising from oversold levels, which is bullish and should support higher
prices. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal up on the
daily chart is somewhat positive. The close over the pivot swing is a somewhat
positive setup. The near-term upside target is at 8.61. The next area of
resistance is around 8.54 and 8.61, while 1st support hits today at 8.35 and
below there at 8.22.
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COTTON MARKET RECAP
4/12/2005
May Cotton finished down 0.27 at 53.00, 0.30 off
the high and 0.25 up from the low.
The cotton market inched lower in quiet and
choppy trade with May futures down 27 into the close. Rolling positions to
distant months and a lack of fear of crop troubles due to the slow pace of
plantings in California kept the trade choppy. While the plantings pace is slow,
the condition of soils in Texas is better than most years which keeps the trade
optimistic for good yields again this year. Ideas that prices will need to stay
cheap in order to attract additional export business kept the buyers on the
sidelines. In addition, the last traders report indicated a hefty net long
position from the speculator.
Technical Outlook
COTTON (MAY) 04/13/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. It is a slightly negative indicator that the close
was lower than the pivot swing number. The near-term upside objective is at
53.56. The next area of resistance is around 53.27 and 53.56, while 1st support
hits today at 52.73 and below there at 52.47.