This Is Why The Dollar Isn’t Falling More

Technical Outlook

BONDS (SEP) 8/29/2003: The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
Near-term resistance for bonds is at 108.19 and then again at 109.00, while
swing support hits at 106.30 and below there at 105.22. A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Stochastics
are at mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 109.00.

T-NOTES(SEP) The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 112.23. With
the close over the 1st swing resistance number, the market is in a moderately
positive position. Near-term resistance for the T-Notes is at 112.12 and then
again at 112.23, while swing support hits at 111.05 and below there at 110.09.
The market’s short-term trend is positive on a close above the 9-day moving
average.

 

STOCK INDICES RECAP

8/28/03

The stock market posted some slightly more
impressive action Thursday as it shut off initial selling and managed to forge a
rally in the face of Treasury market concerns of ongoing job losses. In short,
the stock market might have gotten its fill of looking at the negatives and
could be poised to forge a little pre-holiday rally. We didn’t get the sense
from the action Thursday that volume was that significant so the mid afternoon
bulge in prices might not carry that much significance. Since there doesn’t
appear to be a jobs connection in the scheduled reports Friday morning maybe the
stock market will be able to get a benefit from the coming numbers.

Technical Outlook

S&P500 (SEP) 8/29/2003: There could be more
upside follow through since the market closed above the 2nd swing resistance.
The outside day up gives the market a positive tilt. The upside daily closing
price reversal gives the market a bullish tilt. Underlying support comes in at
994.55 and 985.78, with overhead resistance at 1008.05 and 1012.78. The close
above the 9-day moving average is a positive short-term indicator for trend.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The next downside objective is now
at 985.78.

S&P E-Mini (SEP): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 990.19. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Near-term resistance for the S&P Mini is at
998.38 and then again at 1000.69, while swing support hits at 993.13 and below
there at 990.19. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.

NASDAQ (SEP) A positive signal for trend short-term was given
on a close over the 9-bar moving average. The market setup is supportive for
early gains with the close over the 1st swing resistance. The market should run
into resistance at 1344.00 and above there at 1350.50 with support at 1320.00
and 1302.50. The market is approaching overbought levels with an RSI over 70.
Rising stochastics at overbought levels warrant some caution for bulls. The next
upside objective is 1350.50.

 

CURRENCY MARKET RECAP

8/28/03

For 5 sessions the Dollar has consolidated just
above the old breakout zone on the charts and it would appear that the market is
preparing for a decision. On the face it would seem like the US economy is
turning out positive numbers but between the lines the trade is conjuring up the
concern toward the US job sector. In other words, the idea that the US economy
is the strongest in the G7 has transitioned into a question mark! The only thing
keeping the Dollar from falling lower off the questioning of the job sector is
that no other country can claim to have a solid recovery going!

Technical Outlook

YEN (SEP): A positive signal for trend short-term
was given on a close over the 9-bar moving average. The market has a slightly
positive tilt with the close over the swing pivot. Swing resistance is targeted
at 85.40 and above there at 85.52, with the yen finding support around 85.11 and
below there at 84.94. Rising stochastics at overbought levels warrant some
caution for bulls. The next upside objective is 85.52.

EURO (SEP): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 1.0765. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.0765, with overhead resistance at 1.0959. The
close below the 9-day moving average is a negative short-term indicator for
trend. The close below the 40-day moving average is an indication the
longer-term trend is down. Selling may soon dry up since the RSI is under 20
indicating the market is extremely oversold. More selling pressure is likely
given yesterday’s gap lower price action on the day session chart.

 

PRECIOUS METALS RECAP

8/28/03

Gold deserved the correction Thursday given that
the action Wednesday was a little overstated. However, with the Dollar down and
concerns pretty high in the Middle East we have to think that moderate downside
action in gold will be met with fresh buying even if the short term positioning
of the market is over extended. We have seen other analysts begin to state their
concerns of the overbought status and that might discourage a few would be
buyers from jumping into the fray without a correction to near term support of
$368.2. We might add that the $368 to $370 level in December gold seemed to be a
critical pivot point in the big breakout up on Wednesday.

Technical Outlook

SILVER (DEC): The market has a slightly positive
tilt with the close over the swing pivot. Initial support for silver is at 511.3
and below there at 506.4 with resistance likely at 514.6 and 518.8. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Rising stochastics at overbought levels warrant some caution for bulls. The next
upside objective is 514.6.

GOLD (DEC): Support for gold today comes in near
367.80, while resistance is pegged at 375.80. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 375.80. It is a slightly negative indicator
that the close was under the swing pivot. The close above the 9-day moving
average is a positive short-term indicator for trend.

 

COPPER MARKET RECAP

8/28/03

With a noted copper producer “hoping” that copper
demand improves it is clear that at least one major producer isn’t on the cusp
of increasing production. With the Treasury bond and stock market focusing on
the weakness in the job sector instead of the other more favorable economic
reports being released it is clear that the macro outlook for copper demand is
undermined. Copper probably needed to consistent liquidation that has taken
place in the last few sessions because it was moderately over extended. Without
solid gains in equity prices, one can hardly expect decent performance in the
copper market.

 

ENERGY MARKET RECAP

8/28/03

The energy complex managed small gains in crude
and slightly more impressive gains in unleaded as the fundamental tightness
continues to play second fiddle to an extensively overbought technical
condition. The market should continue to get generalized support off the fears
of rising tensions in the Middle East as Israeli army vehicles were seen pulling
into GAZA Thursday afternoon. The natural gas market managed to get supportive
inventory readings with a 53 bcf injection (the expectations were for an
injection of 60 to 85 bcf) and there is also a concern of tropical storms. In
the end the natural gas needed the inventory support and the hurricane threat to
offset a pattern of cooling US temps.

Technical Outlook

CRUDE OIL (OCT): The close over the pivot swing
is a somewhat positive setup. Support for crude is keyed on 31.24 and below
there at 30.91, with resistance pegged at 31.77 and 31.97. The close above the
9-day moving average is a positive short-term indicator for trend. The crossover
up in the daily stochastics is a bullish signal. The near-term upside target is
at 31.97.

UNLEADED GAS (OCT): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 90.59. The market has a slightly positive tilt
with the close over the swing pivot. Resistance today is at 93.29, while support
should be found around 90.59. A negative signal for trend short-term was given
on a close under the 9-bar moving average.

HEATING OIL (OCT): The close over the pivot swing
is a somewhat positive setup. Heating oil should encounter support around 81.34,
with resistance is at 83.44. The close below the 9-day moving average is a
negative short-term indicator for trend. Stochastics trending lower at midrange
will tend to reinforce a move lower especially if support levels are taken out.
The next downside target is now at 81.34.

 

CORN MARKET RECAP

8/28/03

In a word, export sales in corn were much better
than expected at 1.145 million compared to an expected range of 700,000 to 1
million. The corn market closed at the highest level since June 20th and that
could prompt some shorts to consider exiting positions. However, the corn market
seemed to get a decent amount of support from the action in the soybean market,
where the trade was pricing in an improvement in demand. The weather is
certainly driving soybean prices higher, but probably isn’t directly stressing
the corn crop. However, the corn trade is seeing a lift from overly bullish
trading floor sentiment.

Technical Outlook

CORN (DEC) 8/29/2003: The crossover up in the
daily stochastics is a bullish signal. The near-term upside target is at 241
1/4. There could be more upside follow through since the market closed above the
2nd swing resistance. Market resistance comes in at 241 1/4 today, with support
at 234 3/4. The close above the 9-day moving average is a positive short-term
indicator for trend. The market is becoming somewhat overbought now that the RSI
is over 70.

 

SOY COMPLEX RECAP

8/28/03

Export sales in soybeans came in at 618,700 tons
compared to expectations of 300,000 to 500,000 tons. Many traders might be
surprised to learn that the market posted another new contract high close as the
market seems to be making the gains without much fanfare. Apparently the market
is seeing strong demand and enough concern off recent hot and dry weather to
push prices higher. Even the CIF basis levels soared indicating that the futures
aren’t the only market seeing the improvement in fundamentals. The soybeans also
got a big lift from the meal, which were showing some physical tightness. Hot
and dry weather in August can serve to reduce oil production and that might be
another issue support the bean complex.

Technical Outlook

SOYBEANS (NOV) 08/29/03 The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
The next area of resistance is around 591 1/2 and 593 3/4, while 1st support
hits today at 584 1/2 and below there at 579 1/4. The market’s close on the
9-day moving average is neutral. Stochastics turning bearish at overbought
levels will tend to support lower prices if support levels are broken. The next
downside objective is 579 1/4. The market is approaching overbought levels with
an RSI over 70.

MEAL (DEC): Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. The next downside target is now at 181.3. First resistance comes in at
186.0, with support at 183.3. The close above the 9-day moving average is a
positive short-term indicator for trend. There could be more upside follow
through since the market closed above the 2nd swing resistance. The market is
becoming somewhat overbought now that the RSI is over 70.

BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 20.50. 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. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. Daily swing resistance is found at
20.44 and above there at 20.50. Support should be encountered at 20.22 and
20.06.

 

WHEAT MARKET RECAP

8/28/03

Export sales in wheat were very impressive at
1.29 million compared to estimates of 400,000 to 800,000. Therefore the trade
finally got some verification of what they had been hoping for. In other words,
wheat was already expecting exports to rise so that isn’t necessarily a directly
bullish development. In the end consistently strong export demand will certainly
put a floor in wheat prices. The IGC cut their world wheat output by 111 metric
tons and that was tempered by a minimal reduction in ending stocks of 5 million
tons. The IGC also put the world trade of wheat at 97 million tons and that is
down 6 million tons from last year and countervails the ending stocks decline.
Widespread rain coverage in Kansas could bust the drought prior to planting and
that certainly caused the market to end up lower.

Technical Outlook

WHEAT (DEC) 8/29/2003: 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. Expect near-term
support around 368 1/2 and below there at 366 1/2, with resistance levels at 375
1/2 and 380 1/2. A negative signal for trend short-term was given on a close
under the 9-bar moving average. Daily stochastics declining into oversold
territory suggest the selling may be drying up soon. The next downside objective
is 366 1/2.

 

LIVE CATTLE RECAP

8/28/03

After gap higher price action this week, Oct
cattle was pressured by profit taking and closed lower. However, we would not
give too much importance to today’s technical action since cash beef markets
remain very strong and the futures discount to the cash is still very bullish.
Therefore, today’s price break is not likely a topping signal, but merely some
profit taking ahead of a long holiday weekend. Strong demand for US choice beef
offsets the negatives associated with US issuing permits for some type of
Canadian beef.

Technical Outlook

CATTLE (OCT) 8/29/2003: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
83.62. The market tilt is slightly negative with the close under the pivot.
Support should be encountered at 81.37 and below there at 80.95. Market
resistance is at 82.72 and then again at 83.62. The market made a new contract
high on the rally. The market could take on a defensive posture with the daily
closing price reversal down. A positive signal for trend short-term was given on
a close over the 9-bar moving average. The market is approaching overbought
levels with an RSI over 70.

 

LEAN HOGS RECAP

8/28/03

A choppy trade with Oct hogs closing slightly
weaker as traders adjust positions ahead of the long holiday. Lower cash hog
prices, news one plant stopped slaughtering late this week, and reports that
most pork plants are covered for next week added pressure to the market.
Strength in the cattle market helped to limit pressure in hogs.

Technical Outlook

HOGS (OCT) 8/29/2003: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 54.85 and
55.62 today, while support is around 53.55 and then 53.02. The daily closing
price reversal down is a negative indicator for prices. The close above the
9-day moving average is a positive short-term indicator for trend. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The near-term upside target is at 55.62.

 

COCOA MARKET RECAP

8/28/03

We have to think that the ideas of spreading
drought in the Ivory Coast took over from the theme that political tensions are
driving cocoa prices upward. The fact that the cocoa market was banking on a
surplus production tally and is now seeing that stance threatened is pushing the
funds and the small specs into the market. Given the reports of aggressive fund
buying Thursday, we suspect that the funds gone from a massive net short
position, to a moderately large net long position. With the dryness seeming to
come in toward the later part of the crop year, we would not think that
significant damage will be incurred. However, with the uncertainty factor
expanding daily, the trade can simply assume a wide variety of production
scenarios, as effective crop forecasts are still well off into the future.

Technical Outlook

COCOA (DEC)08/29/03 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1785 and above there at 1806 with support at 1722
and 1680. The 9-day RSI over 70 indicates the market is approaching overbought
levels. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 1806.25.

 

COFFEE MARKET RECAP

8/28/03

With only trace amounts of rain expected in
Brazil’s coffee growing region through the weekend, speculators came in to cover
short positions ahead of the US long holiday weekend. Brazil’s coffee crop will
need to see good rains during September to avoid stress and damage. It is the
time of year when roasters become more active and buying by this group was a
noted supportive factor. Despite Thursday’s gains, Dec coffee still remains with
in the 65 to 62 trading range and a breakout will give the market its next
direction.

Technical Outlook

COFFEE (DEC)8/29/03 The market setup is
supportive for early gains with the close over the 1st swing resistance. The
daily stochastics have crossed over up which is a bullish indication. The
near-term upside objective is at 64.35.The Coffee contract should run into
resistance at 63.75 and above there at 64.35 with support at 62.5 and 61.85. The
market’s short-term trend is positive on a close above the 9-day moving average.
The market was pushed to a new contract low.

 

SUGAR MARKET RECAP

8/28/03

Heavy speculative and local selling drove Oct
sugar below support at 6.43 which now positions the market for a test of 6.30.
The lack of new buying from Russia as they begin their own beet harvest and the
lack of interest in extending coverage by traditional buyers has kept cash
premiums weak as sidelined as they smell blood and expect lower sugar prices.
Both fundamental and technical indicators are bearish for sugar.

Technical Outlook

SUGAR (OCT) 8/29/2003: The market setup is
somewhat negative with the close under the 1st swing support. Swing resistance
comes in at 6.60, with support found at 6.26. The close below the 9-day moving
average is a negative short-term indicator for trend. Stochastics are rising
from over sold levels which is bullish and should support higher prices. The
near-term upside target is at 6.60.

 

COTTON MARKET RECAP

8/28/03

Dec cotton had a volatile trade on Thursday
closing sharply higher as the focus turns toward weather. Traders are watching
for any rain that might hit the Delta or Southeast growing regions over the
weekend with a watchful eye on any developing tropical storms. With the funds
net short, a minor weather problem could touch off a wave of short covering.
With bolls now nearly all open, rain could affect the quality of the crop.
Export sales came in at 99,600 bales, which was in line with expectations
ranging between 75,000 to 150,000 bales. Annualized mill usage for July was
reported at 7.05 million bales as compared with trade expectations between 6.9
and 7.0 million bales and 6.6 million bales in June. This number suggest
domestic use will be higher than the USDA estimated.

Technical Outlook

COTTON (OCT) 8/29/2003: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. The market has
a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Next resistance area comes in at 57.50 and then again at 57.94,
while support is targeted at 56.01 and 54.96. 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 57.94. The outside day up is somewhat
positive. The daily closing price reversal up is a positive indicator that could
support higher prices.