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Technical Outlook

#BONDS (JUN) 5/14/2004: The close below the 1st
swing support could weigh on the market. Near-term resistance for bonds is at
103.32 and then again at 104.13, while swing support hits at 103.11 and below
there at 103.03. 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 103.03. More downside action may be limited by the RSI under 20 putting the
market in extremely oversold territory.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 107.25. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. Near-term resistance for the T-Notes is at
108.14 and then again at 108.23, while swing support hits at 107.31 and below
there at 107.25. The market’s short-term trend is negative as the close remains
below the 9-day moving average. With a reading under 20, the 9-day RSI indicates
the market is extremely oversold.

 

STOCK INDICES RECAP

5/13/2004

While the stock market was generally weaker on
the session we think the action Thursday was impressive as the ultra hot PPI
reading could have ignited another rising interest rate washout. In short the
rate hike crowd might be short and few others can be enticed to sell at such
cheap levels. Certainly more new highs in the energy complex, serves to keep the
anxiety from that issue on the mind of the stock market. Fighting in Karbala was
also intense and that was another issue that discouraged buying. In the end, the
market almost totally discounted the favorable news from Wal-Mart and that shows
the bulls are simply not waiting in the wings.

Technical Outlook

#S&P500 (JUN) 5/14/2004: The close over the pivot
swing is a somewhat positive setup. The daily closing price reversal down is a
negative indicator for prices. Underlying support comes in at 1088.55 and
1084.03, with overhead resistance at 1100.05 and 1107.03. 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 objective is at 1107.03.

S&P E-Mini (JUN): The downside closing price
reversal on the daily chart is somewhat negative. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The next upside target is 1107.06. 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 1099.88 and then again at
1107.06, while swing support hits at 1088.13 and below there at 1083.56. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

NASDAQ (JUN) The market could take on a defensive
posture with the daily closing price reversal down. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market has a
slightly positive tilt with the close over the swing pivot. The market should
run into resistance at 1420.25 and above there at 1434.38 with support at
1398.75 and 1391.38. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 1434.38.

MINI DOW (MAR) The daily closing price reversal
down is a negative indicator for prices. The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10033 and above there at 10104 with support at 9924 and 9886.
Stochastics are rising from over sold levels which is bullish and should support
higher prices. The near-term upside target is at 10104. It is a slightly
negative indicator that the close was under the swing pivot.

 

CURRENCY MARKET RECAP

5/13/2004

The Dollar soared as the prospect of rising US
rates improved with the ultra hot PPI release. It did appear as if the Dollar
reached an overbought standing around the highs Thursday but that overbought
status could be quickly forgotten if the overnight news hints at a rate cut by
the ECB. The Canadian economy continues to throw off very positive economic
information with auto sales rising on the heels of the largest trade surplus in
3 years. Therefore, the Dollar might charge higher against the Euro and Yen but
the Canadian might have the fundamental background to stand up to the Greenback!

Technical Outlook

#CURRENCIES 5/14/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The gap lower on the day session chart is bearish and puts the market on the
defensive. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. Swing resistance is targeted
at 87.58 and above there at 87.79, with the yen finding support around 87.23 and
below there at 87.09. The market back below the 40-day moving average suggests
the longer-term trend could be turning down. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The next downside
objective is 87.09. The market is approaching over sold levels on an RSI reading
under 30.

EURO (JUN): 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 1.1720. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1720, with overhead resistance at 1.1894. 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. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.

 

PRECIOUS METALS RECAP

5/13/2004

The gold and silver market showed almost no
response to the hotter than expected inflation readings. In other words, the
metals are simply not in a posture to benefit from an inflationary outlook.
Certainly the sharply rising US Dollar undercut gold’s ability to benefit from
the +0.7 increase in the US PPI report. In short the market is totally focused
on the direction of the Dollar and economic and political uncertainty in
addition to soaring energy prices is simply of no concern. Therefore, the metals
are left in a liquidation posture and can only hope for a total reshuffling of
the deck.

Technical Outlook

#P-METALS 5/14/2004: SILVER (JUL): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 555.8 and below there at 548.9 with resistance likely at 561.5
and 567.3. 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 548.9.
The daily closing price reversal up is a positive indicator that could support
higher prices.

GOLD (JUN): Support for gold today comes in near
370.35, while resistance is pegged at 379.95. 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 370.35. It is a slightly
negative indicator that the close was under the swing pivot. The close below the
9-day moving average is a negative short-term indicator for trend. Some caution
in pressing the downside is warranted with the RSI under 30.

 

COPPER MARKET RECAP

5/13/2004

The copper market could not manage to hold higher
price action especially with the US equity market under pressure and the Dollar
rising sharply. Even in the face of reports that US copper demand was starting
to rise the market decided to maintain a bearish tilt and in the process obsess
over the threat of falling Chinese copper demand. The market also continues to
see a number of minor production increases and even smaller daily LME stock
declines. In other words, the deficit continues but it would not seem like the
deficit is worsening at the pace seen early in the year.

 

ENERGY MARKET RECAP

5/13/2004

The corrective tilt in energy prices couldn’t
control the market even in the face of early price weakness. In fact, the energy
market still managed to forge fresh contract highs and close right around the
highs for the session, which is normally a sign of follow through strength.
Apparently the market saw reports that OPEC was planning to raise the 22 to 28
banding range and took that as a sign that OPEC was going to support ultra high
oil prices. We also think that declining gasoline inventory numbers from the
Wednesday report served to carry the market higher once those attempting to
short the market were forced out of position.

Technical Outlook

#ENERGIES 5/14/2004: CRUDE OIL (JUL): The market
rallied to a new contract high. The close over the pivot swing is a somewhat
positive setup. Support for crude is keyed on 40.58 and below there at 39.96,
with resistance pegged at 41.43 and 41.66. 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 41.66. The market is becoming somewhat
overbought now that the RSI is over 70.

UNLEADED GAS (JUL): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
136.99. The market has a slightly positive tilt with the close over the swing
pivot. Resistance today is at 136.99, while support should be found around
131.19. The market made a new contract high on the rally. 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.

HEATING OIL (JUL): The close over the pivot swing
is a somewhat positive setup. Heating oil should encounter support around
101.12, with resistance is at 105.92. 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 105.92. The market is becoming somewhat
overbought now that the RSI is over 70. The market rallied to a new contract
high.

 

CORN MARKET RECAP

5/13/2004

The market held support at yesterday’s lows and
closed above the 50% retracement level of the October to April rally for the
second day in a row. This may helped to provide underlying support. The outlook
for heavy rains across the central cornbelt in the next few days was enough to
trigger the early fund selling as export sales news was not enough to stir the
bulls nor the bears. Weekly export sales came in at 604,200 tons as compared
with trade expectations of 550,000-750,000 tons. Old crop sales were 506,200
tons as compared with 554,500 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 82.2% of the USDA forecast for the
season as compared with 79.3% on average for this time of the year. In overnight
trade, South Korea bought 157,500 tons of corn from the US or China and there is
talk that China offers may have been as much as $8.00/ton below the US for
September-October delivery. Deliveries this morning of 880 contracts added to
the negative tone but a strong commercial stopper took 698 contracts. December
corn support comes in at 287 1/2 and 286 with 291 3/4 and 295 as short-term
resistance.

Technical Outlook

#CORN (JUL) 5/14/2004: 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 290. It is a slightly negative
indicator that the close was under the swing pivot. Market resistance comes in
at 301 today, with support at 290. The close below the 9-day moving average is a
negative short-term indicator for trend. Some caution in pressing the downside
is warranted with the RSI under 30.

 

SOY COMPLEX RECAP

5/13/2004

The continued tight stocks situation for the old
crop season and some light concerns that the heavy rains through the mid-west
might slow planting progress helped to support the market into the close.
Weakness in the soybean oil, weakness at the China exchange overnight and the
outlook for rains across the central part of the cornbelt in the next two days
helped to trigger additional long liquidation selling early in the session but
the fund selling slowed in the afternoon. Oil deliveries were high enough to
spark more fund selling. Weekly export sales were seen as a positive factor but
net cancellations for old crop were seen as a bearish factor. Weekly export
sales came in at 169,300 tons as compared with trade expectations of
50,000-200,000 tons. Old crop sales were negative (cancellations) of 33,400 tons
as compared with 29,500 tons necessary each week to reach the USDA projection.
Cumulative sales came in at 98% of the USDA forecast for the season as compared
with 93.3% on average for this time of the year. Meal sales were 15,600 tons as
compared with 20,000-60,000 expected. Cumulative sales have reached 89.7% of the
forecast for the year as compared with 78.4% on average for this time of the
year. Oil sales were just 200 tons as compared with expectations of 0-5000.
Continued concerns over the possibility of importing soybeans from Brazil and a
weak demand tone from China added to the bearish concerns. July soybean support
points come in at 973 1/2 and 965 with resistance at 990 1/4 and 999 1/4.
Support for November soybeans comes in at 733 and 722 with resistance at 741 1/2
and 750 1/2.

Technical Outlook

#SOYBEANS (JUL) 05/14/04 The daily closing price
reversal up is a positive indicator that could support higher prices. The market
tilt is slightly negative with the close under the pivot. The next area of
resistance is around 994 and 1001, while 1st support hits today at 971 and below
there at 955. A negative signal for trend short-term was given on a close under
the 9-bar moving average. Momentum studies trending lower at mid-range could
accelerate a price break if support levels are broken. The next downside
objective is 955.

MEAL (JUL): 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 305.6. First resistance comes in
at 320.3, with support at 311.8. The close above the 9-day moving average is a
positive short-term indicator for trend. The close over the pivot swing is a
somewhat positive setup. The cross over and close above the 40-day moving
average is an indication the longer-term trend is up.

BEAN OIL (JUL): A negative indicator was given
with the downside crossover of the 9 & 18 bar moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 30.38. It is a slightly negative
indicator that the close was lower than the pivot swing number. Daily swing
resistance is found at 31.47 and above there at 31.72. Support should be
encountered at 30.80 and 30.38.

 

WHEAT MARKET RECAP

5/13/2004

While the export news was poor and the rains in
the northern plains this week helped re-charge the drought stricken spring wheat
areas, the trade seemed uncomfortable in pressing the short-side with forecasts
for frost into Kansas again for tonight. Poor export news and continued good
weather helped to trigger more selling early in the session but July wheat held
at yesterday’s lows. Egypt bought 60,000 tons of wheat from Australia overnight
and none from the US which was seen as a sign of continued stiff competition
ahead. Weekly export sales came in at just 167,100 tons as compared with trade
expectations of 200,000-400,000 tons. Old crop sales were just 84,200 tons as
compared with 287,400 tons necessary each week to reach the USDA projection.
Cumulative sales came in at 96.8% of the USDA forecast for the season as
compared with 91.9% on average for this time of the year. While the cold front
has brought significant moisture to the northern plains and there is more
moisture moving across the winter wheat belt this week, there is some concerns
that temperatures will dip below freezing into northern Kansas overnight. July
wheat resistance points come in at 375 1/2 and 378 1/4 with 366 1/2 and 359 1/4
as support points.

Technical Outlook

#WHEAT (JUL) 5/14/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 365 and below there at 360 3/4, with resistance levels at 373 2/4 and 377
3/4. 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 360 3/4. The
market is approaching over sold levels on an RSI reading under 30.

 

LIVE CATTLE RECAP

5/13/2004

June cattle closed sharply lower on the session
and down to the lowest level since May 3rd on continued long liquidation selling
from speculators and weaker cash news. There was talk that cattle traded in
Texas at $87.00 from $91.00 last week but volume was likely low and the sale was
not reported by mid-session. Ideas that the near-term bullish cash fundamentals
may have peaked and continued fund long liquidation selling added to the more
negative tone. Cattle slaughter came in at 131,000 head as compared with trade
expectations at 128,000-131,000 head. The higher than expected slaughter could
mean improved packer demand. While beef prices have come down this week, packers
may still need a hefty slaughter to fulfill near-term commitments. Boxed-beef
cut-out values were down 5 cents to 158.89 as compared with $159.54 last week at
this time.

Technical Outlook

#CATTLE (JUN) 5/14/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 81.35. The close below the 1st swing
support could weigh on the market. Bearish daily studies indicate selling minor
rallies this session. Support should be encountered at 81.65 and below there at
81.35. Market resistance is at 82.60 and then again at 83.25. A negative signal
for trend short-term was given on a close under the 9-bar moving average.

 

LEAN HOGS RECAP

5/13/2004

June hogs recovered part of yesterday’s losses to
close 72 higher on the session as higher cash trade and the surge in pork
cut-out values on the week helped support. In addition, June is at a significant
discount to the nearby futures and to the Lean Index. The 2-day lean index for
the period ending May 11th came in at 78.95, up $1.22 from the previous session
and up from 71.62 at the end of April. This leaves June at a 300 point discount.
Hog slaughter came in at 366,000 head as compared with trade expectations at
366,000-373,000 head. If the slaughter is declining due to tighter supply, it
should support but if the slaughter is below expectations due to weaker demand,
there will be a fear of a back-up of hogs in the country. Given the surge in
pork values, he lows slaughter is likely from tightening supply.

Technical Outlook

#HOGS (JUN) 5/14/2004: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 76.47 and
76.80 today, while support is around 75.32 and then 74.50. The upside daily
closing price reversal gives the market a bullish tilt. 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 76.80.

 

COCOA MARKET RECAP

5/13/2004

The cocoa market gapped down and appeared to be
headed into a massive slide. However, into the close the July cocoa managed to
regain some of the losses and close within striking distance of the day’s highs.
Even in the face of protests against the UN report on the March massacre the
market showed no inclination to get long. Given the opening action it is
possible that most of the initial declines in cocoa were the primary result of
the Dollar exploding and foreign holders of US cocoa dumping positions.

Technical Outlook

COCOA (JUL) 05/14/04 The gap lower price action
on the day session chart is a bearish indicator for trend. The close below the
1st swing support could weigh on the market. Cocoa should run into resistance at
1352 and above there at 1357 with support at 1335 and 1323. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1322.75. Short-term indicators on the defensive. Consider selling an intraday
bounce.

 

COFFEE MARKET RECAP

5/13/2004

July coffee closed slightly higher on the day
with an inside trading session. Cash market premiums firmed on the week as
supplies in Brazil are tightening ahead of harvest. Brazil coop stocks at the
end of April were pegged at 2.71 million bags from 5.35 million bags last year
and 3.21 million bags last month. Demand, however, is also on the decline as
temperatures warm in the northern hemisphere. Continued talk of a 42-44 million
bag crop from Brazil (28.5 million last year) and continued good weather has
helped to depress prices. For the US Monthly Green Coffee stocks report, for
release on Monday after the close, traders are looking for stocks to be
unchanged to 50,000 bags higher. Last months stocks were 5.955 million bags.

Technical Outlook

COFFEE (JUN) 5/14/04 The market has a slightly
positive tilt with the close over the swing pivot. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The near-term upside objective is at 73.05.
The Coffee contract should run into resistance at 72.60 and above there at 73.05
with support at 71.35 and 70.55. The market’s short-term trend is positive on a
close above the 9-day moving average.

 

SUGAR MARKET RECAP

5/13/2004

July sugar closed 8 lower on the session and near
the lows of the day as persistent but light fund selling was enough to push the
market lower with trade houses only stepping in to buy on the break. Syria
bought 26,000 tons of raw sugar after canceling their white sugar tender for
26,000. Funds were noted sellers of near 2000-3000 contracts. Traders were
hopeful that China could be a significant importer by the middle of the year but
reports of tightening credit and talk of slower growth is beginning to dampen
this optimism. In addition, Russia is normally very active importers in the
first part of the year but have been mostly absent this year. The EU awarded
64,000 tons of export licenses as compared with trade expectations for
60,000-100,000 tons. Absorbing a record Brazil harvest in a slow demand period
with speculators holding a hefty net long position could be difficult without
lower prices unless there is a shift in the fundamentals.

Technical Outlook

#SUGAR (JUL) 5/14/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
6.43, with support found at 6.21. The close below the 9-day moving average is a
negative short-term indicator for trend. 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 6.21.

 

COTTON MARKET RECAP

5/13/2004

December cotton managed to close higher on the
session after early weakness failed to attract new selling. Weekly export sales
came in at 222,000 bales as compared with trade expectations of 100,000-150,000
bales. Old crop sales were 143,300 bales as compared with 20,400 bales necessary
each week to reach the USDA projection. Cumulative sales have reached 97.9% of
the USDA forecast for the season as compared with 101.1% on average for this
time of the year. Step 2 payments begin on Friday after a long period of no
support so there is talk of record shipments for next week. Shipments this week
were 290,200 bales. China was the largest buyer for the week at 36,100 bales and
shipped 120,900 bales for the week. The USDA raised china imports by 200,000
bales for the old crop season in their monthly supply/demand report this week.

Technical Outlook

#COTTON (JUL) 5/14/2004: A positive signal for
trend short-term was given on a close over the 9-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 66.54 and then again at 67.27,
while support is targeted at 64.14 and 62.47. The market now above the 40-day
moving average suggests the longer-term trend is up. Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
67.27.