Traders Finally Remember Rates Will Rise!

Technical Outlook

#BONDS (SEP) 07/22/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 108.16 and then again at 108.26, while swing support
hits at 107.23 and below there at 107.08. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The daily
stochastics have crossed over down which is a bearish indication. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
next downside target is 107.08.

T-NOTES(SEP) Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 109.27. The market’s close
below the pivot swing number is a mildly negative setup. Near-term resistance
for the T-Notes is at 110.23 and then again at 110.29, while swing support hits
at 110.06 and below there at 109.27. The market’s short-term trend is negative
as the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

7/21/2004

The stock market seemed to run out of fuel at
about the same time that the Chairman of the Federal Reserve suggested that
rates were still going to rise gradually. We also think that the market had
fooled itself into thinking that the rate hike issue was going to be left open
ended and now that the Fed seems to be moving toward higher and more normal
rates there is some disappointment in the market place. The stock market should
have been support by other Fed comments that suggested the labor market is not
stalling out but the market seemed to be set in a profit taking position into
mid session.

Technical Outlook

#S&P500 (SEP) 07/22/04: The market is in a
bearish position with the close below the 2nd swing support number. The outside
day down is a negative signal. The daily closing price reversal down puts the
market on the defensive. Underlying support comes in at 1078.00 and 1071.00,
with overhead resistance at 1104.00 and 1123.00. The market’s short-term trend
is negative as the close remains below the 9-day moving average. The daily
stochastic’s gave a bearish indicator with a crossover down. The next downside
objective is now at 1071.00.

S&P E-Mini (SEP): The outside day down is
somewhat negative. The market could take on a defensive posture with the daily
closing price reversal down. A bearish signal was triggered on a crossover down
in the daily stochastics. The next downside objective is 1070.38. The close
below the 1st swing support could weigh on the market. Near-term resistance for
the S&P Mini is at 1104.25 and then again at 1123.38, while swing support hits
at 1077.75 and below there at 1070.38. A positive signal for trend short-term
was given on a close over the 9-bar moving average.

NASDAQ (SEP) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The close
below the 2nd swing support number puts the market on the defensive. The market
should run into resistance at 1409.75 and above there at 1446.13 with support at
1361.25 and 1349.13. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 1349.1.

MINI DOW (SEP) The outside day down and close
below the previous day’s low is a negative signal. The downside closing price
reversal on the daily chart is somewhat negative. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10125 and above there at 10286 with support
at 9904 and 9844. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 9844. The swing indicator gave a
moderately negative reading with the close below the 1st support number.
Short-term indicators on the defensive. Consider selling an intraday bounce.

 

CURRENCY MARKET RECAP

7/21/2004

The Dollar bolted higher early in the trade and
managed to hold almost all of the gains. We have to think that dialogue flow
from 2 Fed members provided the positive tilt toward the Dollar but that the
Dollar can’t expect that same type of news flow in the coming sessions. It will
be interesting to see if the recent correction against the established trend
will continue once the economic report flow returns to a more normal pace. The
Canadian Dollar seemed to come under significant liquidation pressure in the
face of the Greenspan dialogue and that highlights the direct impact of the US
economy on the Canadian currency.

Technical Outlook

#CURRENCIES 07/22/04: YEN (SEP): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The gap lower price action on the day session chart is a
bearish indicator for trend. The close below the 2nd swing support number puts
the market on the defensive. Swing resistance is targeted at 91.70 and above
there at 92.34, with the yen finding support around 90.61 and below there at
90.16. The close under the 40-day moving average indicates the longer-term trend
could be turning down. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 90.16.

EURO (SEP): Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 1.2142. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.2142, with overhead resistance at 1.2332. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The gap
down on the day session chart is bearish with more selling pressure possible
today.

 

PRECIOUS METALS RECAP

7/21/2004

The gold and silver market came under
aggressively liquidation in the face of the much stronger than expected US
Dollar action. With both gold and silver falling below a series of support
levels on the charts and the Dollar managing to rise above critical resistance
some are wondering if a major trend change hasn’t taken place. Soothing words
from the US Federal Reserve also seemed to prompt long liquidation in gold and
silver as investors reacted to the prospect of lower anxiety ahead.

Technical Outlook

#P-METALS 07/22/04: SILVER (SEP): The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Initial support for silver is at 630.8 and below there at 622.1
with resistance likely at 644.7 and 651.3. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
next downside target is 622.1. Short-term indicators on the defensive. Consider
selling an intraday bounce.

GOLD (AUG): Support for gold today comes in near
390.98, while resistance is pegged at 404.78. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 390.98. The market is in a bearish position
with the close below the 2nd swing support number. The market’s short-term trend
is negative as the close remains below the 9-day moving average.

 

COPPER MARKET RECAP

7/21/2004

The copper market came under aggressive pressure
during the session but managed to reject the majority of the selling pressure
into the close. Apparently both fund and trade selling combined to hammer prices
early in the session. The fact that the dollar remained strong also undermined
copper prices as some arbitrage players could have decided to pitch previously
purchased coverage due to the currency action. While the Fed is upbeat on the US
economy the equity market continues to trade sloppy and that doesn’t provide
copper bulls with a reason to become aggressively long.

 

ENERGY MARKET RECAP

7/21/2004

The energy complex took out the prior days low
but did manage to reject some of the downside price action. The market continues
to focus on a number of iffy crude supply areas with Norway recently showing
labor problems, Saudi Arabia under constant threat and now the market is
beginning to watch political developments in Venezuela which could become
unsettled around an August 15th referendum. Some players were a little surprised
that talk of Saudi Production rising to 9.5 million barrels per day didn’t
result in less price strength. The weekly inventory readings showed a moderate
decline in DOE crude stocks and a moderately large build in gasoline stocks.
Therefore, it is clear that the market is focusing on crude oil instead of the
production markets.

Technical Outlook

#ENERGIES 07/22/04: CRUDE OIL (SEP): The upside
closing price reversal on the daily chart is somewhat bullish. The market’s
close below the pivot swing number is a mildly negative setup. Support for crude
is keyed on 40.13 and below there at 39.74, with resistance pegged at 41.03 and
41.54. The market’s short-term trend is positive on a close above the 9-day
moving average. Momentum studies are trending lower from high levels which
should accelerate a move lower on a break below the 1st swing support. The next
downside objective is now at 39.74.

UNLEADED GAS (SEP): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 120.44. It is a slightly negative indicator that the close was lower
than the pivot swing number. Resistance today is at 126.44, while support should
be found around 120.44. The daily closing price reversal up is positive. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

HEATING OIL (SEP): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 106.24, with resistance is at 112.04. The market’s short-term
trend is negative as the close remains below the 9-day moving average. Momentum
studies are trending lower from high levels which should accelerate a move lower
on a break below the 1st swing support. The next downside objective is now at
106.24. The upside closing price reversal on the daily chart is somewhat
bullish.

 

CORN MARKET RECAP

7/21/2004

Expectations for a major rain event across the
Midwest in the next two days along with cooler weather for next week has led to
ideas that the current USDFA yield estimate at a record 145 bu/acre may be too
low. This helped trigger more selling from funds and small speculators and has
also caused new end user buyers to back away from the market and wait for lower
prices. Funds were noted as net sellers of near 6000 contracts by mid-session.
Taiwan bought 56,000 tons of US corn overnight and will tender for 35,000 tons
this week. In addition, the USDA announced the sale of 110,000 tons of US corn
to unknown destination. In addition to expectations for a bumper crop, traders
are beginning to believe that the USDA demand numbers may be too high as well
due to the excess supply of feedwheat available in the US and in Eastern Europe.
For the weekly export sales report, released before the opening, traders are
looking for sales near 400,000-700,000 tons as compared with 1.08 million tons
last week. December corn support comes in at 233 1/2 and at 232 1/2 (contract
lows) with resistance at 239 1/4 and 243 1/2.

Technical Outlook

#CORN (DEC) 07/22/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 229 1/2. The market is in a bearish position with the close
below the 2nd swing support number. Market resistance comes in at 241 1/2 today,
with support at 229 1/2. 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. The gap down on the day session
chart is bearish with more selling pressure possible today.

 

SOY COMPLEX RECAP

7/21/2004

Expectations for good rains across the Midwest in
the next two days and the lack of threatening weather on the longer-term weather
maps helped to trigger aggressive speculative selling in old crop soybeans.
Tight supplies for US processors for the next few weeks until delta soybeans are
harvested helped to provide some initial support to the old crop. November
soybeans gathered more selling pressure on the move under yesterday’s lows to
the lowest level since December 24th. Demand fears for feedgrains due to Asia
bird-flu concerns and ideas that South American processors will dominate the
world meal export market in the months ahead helped to drive new crop meal down
more than $12.00 into late in the session. For the weekly export sales report,
released before the opening, traders are looking for soybean sales near 0-50,000
tons, meal sales at 0-25,000 tons and oil sales at 0-5,000 tons. Funds were
noted sellers of at least 4000 contracts by mid-session. November soybean
resistance moves down to 629 and 636 with 603 3/4 and 590 as next downside
objectives and support levels.

Technical Outlook

#SOYBEANS (NOV) 07/22/04: The close below the 2nd
swing support number puts the market on the defensive. The next area of
resistance is around 625 1/2 and 644 3/4, while 1st support hits today at 598
1/2 and below there at 590 3/4. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 590 3/4. The 9-day RSI under 30 indicates the market is
approaching oversold levels.

MEAL (DEC): The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 183.3.
First resistance comes in at 194.1, with support at 185.6. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market is in a bearish position with the close below the 2nd swing
support number.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
daily stochastics have crossed over down which is a bearish indication. The next
downside target is 21.94. The close below the 2nd swing support number puts the
market on the defensive. Daily swing resistance is found at 23.03 and above
there at 23.64. Support should be encountered at 22.18 and 21.94.

 

WHEAT MARKET RECAP

7/21/2004

News that Egypt bought 60,000 tons of wheat from
France and none from the US in their overnight tender helped to push the market
lower early and weakness in the other grains added to the bearish psychology.
Good harvest weather and fears that US prices will need to move lower in order
to compete on the world market helped to trigger additional selling from
speculators. Funds are building a huge net short position in wheat and the bears
remain in full control with the now challenging the October 2003 lows. Funds
were noted sellers of near 2000 contracts into mid-session. The Ag Minister from
Hungry indicated that wheat yields were higher than expected and that the
country should have an exportable surplus of 2.3-2.5 million tons this season.
For the weekly export sales report, released before the opening, traders are
looking for sales near 200,000-400,000 tons as compared with 312,400 tons last
week. The next chart support for September wheat comes in at October lows at 320
1/2 and then 314 1/2 with 329 and 331 1/2 as resistance.

Technical Outlook

#WHEAT (DEC) 07/22/04: The close below the 2nd
swing support number puts the market on the defensive. Look for near-term
support at 334 and below there at 332, with resistance levels at 341 and 346.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 332. The 9-day RSI under
30 indicates the market is approaching oversold levels.

 

LIVE CATTLE RECAP

7/21/2004

August cattle led the market higher on
expectations for better beef prices ahead which led to solid buying from
speculators and commercial based traders who seem to be anticipating that cash
and beef prices may have reached a near-term low. Boxed beef cut-out values were
up $1.33 to $137.92 at noon as compared with $140.70 last week at this time.
Cheaper corn prices and bull spreading supported the market. In the Monthly Cold
storage report, frozen stocks were pegged at 411 million pounds as compared with
402.8 last month and 371.5 pounds last year. Positioning ahead of Friday’s USDA
reports added to the bullish tone.

Technical Outlook

#CATTLE (AUG) 07/22/04: 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 86.80.
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.
Support should be encountered at 84.25 and below there at 82.85. Market
resistance is at 86.22 and then again at 86.80. The gap upmove on the day
session chart is a bullish indicator for trend. The market’s close above the
9-day moving average suggests the short-term trend remains positive.

 

LEAN HOGS RECAP

7/21/2004

The hog market was under pressure and closed
moderately lower due to a weak tone for the cash market into late this week,
lower pork cut-out values and fears that pork production will continue to run at
a higher pace than last year. Bellies were under pressure from the bearish
weekly cold storage report but losses were limited due to positioning ahead of
the monthly cold storage report which was released after the close. Traders were
looking for end of June belly stocks to come in near record lows in the range of
33.0-36.7 million pounds as compared with 41.4 million last month and 43.5
million last year. The report was bearish with the USDA pegging belly stocks at
37.1 million pounds. Total pork stocks came in at 379.3 million pounds as
compared with trade expectations at 370-380 million pounds from 460 million last
year. The CME 2-day lean index for the period ending July 19th came in at 79.28,
down .19 from the previous session and about unchanged from the previous week.
However, traders look for more weakness in the cash market as the weather cools
in Iowa. Weekly average weights for Iowa/Minn for the week ending July 17th came
in at 261 pounds, down .8 pounds on the week but still up 2.6 pounds from last
years pace.

Technical Outlook

#HOGS (AUG) 07/22/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 74.40 and 74.75 today, while support is around
73.62 and then 73.20. Daily studies pointing down suggests selling minor
rallies. The market’s short-term trend is negative as the close remains below
the 9-day moving average. Daily stochastics are trending lower, but have
declined into oversold territory. The next downside objective is now at 73.20.

 

COCOA MARKET RECAP

7/21/2004

The cocoa market exploded to the highest level
since January in the action Wednesday and that certainly got the attention of a
number of players. In other words, the gains in cocoa off the July low have
become so significant that something major seems to have changed. We seriously
doubt that the liquidation of the fund short continues to be the main force
behind the price gains. In fact the Press was reporting fresh fund buying in
cocoa and that should shift the net fund position into the net long category.
The presence of trade buying shows that the commercial interests are also buying
into the view that cocoa prices are now in an uptrend.

Technical Outlook

COCOA (SEP) 07/22/04 The outside day up and close
above the previous day’s high is a positive signal. The daily closing price
reversal up is positive. The market has a bullish tilt coming into today’s trade
with the close above the 2nd swing resistance. Cocoa should run into resistance
at 1642 and above there at 1662 with support at 1566 and 1510. 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 1662.00.

 

COFFEE MARKET RECAP

7/21/2004

The coffee market forged one of the largest
ranges since late May and ended up with an extremely negative posture on the
charts. Apparently buyers from the July rally decided to bank profits despite
more talk that rains in Brazil might result in lower quality coffee supply for
export. In other words, the market declined off developments that could have
driven prices even higher. The presence of mostly mild temps and massive
overhead resistance on the charts is keeping specs on the sidelines. Even the
cash market is quiet and that might prompt a significant narrowing of the
trading range ahead. The Press also reported origin selling and with the spec
liquidation that was more than enough under thin conditions to pressure prices.
Projections Wednesday morning of a global surplus of 5.43 million bags for
2003-2004 also caused some spec longs to liquidate but that story is mitigated
slightly by the news that the 2002-2003 makret was in a deficit of 8.3 million
bags.

Technical Outlook

COFFEE (SEP) 7/22/04 The outside day down and
close below the previous day’s low is a negative signal. The downside closing
price reversal on the daily chart is somewhat negative. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. 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 75.70. The Coffee contract should run
into resistance at 73.30 and above there at 75.70 with support at 69.5 and
68.10. The market’s short-term trend is negative as the close remains below the
9-day moving average.

 

SUGAR MARKET RECAP

7/21/2004

A big gap down move in sugar hints at a possible
technical correction ahead. The trade is well aware of the short term corrective
capacity in sugar, especially when one considers the magnitude of the small spec
and fund long. EU cash market action could be taken as a sign that increased off
take is possible in the near term while others think that the sharp decline in
Russian January through June Sugar output will increase the chance of future
imports into Russia. In the end it seemed like the action in sugar was more
technical than fundamental. InIn the In the

Technical Outlook

#SUGAR (OCT) 07/22/04: The gap lower price action
on the day session chart is a bearish indicator for trend. The market is in a
bearish position with the close below the 2nd swing support number. Swing
resistance comes in at 8.23, with support found at 8.01. The market’s short-term
trend is negative as the close remains below the 9-day moving average. Momentum
studies are trending lower from high levels which should accelerate a move lower
on a break below the 1st swing support. The next downside objective is now at
8.01.

 

COTTON MARKET RECAP

7/21/2004

The Cotton market acted like it was going to add
to recent gains but in the end fell victim to the liquidation being seen in the
grain markets. In other words, small specs were certainly major sellers in the
action as the market sees the hope for a major bottom partially rejected again.
However, some traders suggested that excess rain on the crop in some regions
will certainly lower quality and could be an issue for later in the season. In
somewhat positive and indirect news the cotton market did see some favorable
international weather developments in India but for the time being the trade is
infatuated with the US condition. For the weekly export sales report, released
before the opening Thursday, traders are looking for sales near 250,000-500,000
bales as compared with 337,500 bales last week.

Technical Outlook

#COTTON (OCT) 07/22/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. Next resistance area comes in at 48.60 and then again at 49.45,
while support is targeted at 47.40 and 47.05. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next upside target
is 49.45. The downside closing price reversal on the daily chart is somewhat
negative.