Treasury Traders: Take Note Of The Fund And Spec Postioning

Technical Outlook

#BONDS (JUN) 06/08/04: The daily closing price
reversal up is positive. It is a slightly negative indicator that the close was
lower than the pivot swing number. Near-term resistance for bonds is at 105.17
and then again at 105.21, while swing support hits at 105.02 and below there at
104.23. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 104.23.

T-NOTES(JUN) The upside closing price reversal on
the daily chart is somewhat bullish. 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 108.25. The market’s close below the pivot
swing number is a mildly negative setup. Near-term resistance for the T-Notes is
at 109.14 and then again at 109.17, while swing support hits at 109.02 and below
there at 108.25. The market’s short-term trend is negative as the close remains
below the 9-day moving average.

 

STOCK INDICES RECAP

6/7/2004

The stock market managed another impressive
upside thrust and might have done so off the patriotic lift providing by the
Reagan moment of silence on the opening. Other market players suggested that the
residual from the May payroll reports provided the main thrust of the day as the
market expects ongoing growth and doesn’t think that the economy is growing fast
enough to justify a near term rat hike. Raised expectations for McDonalds 2nd
quarter EPS and generally lower energy prices gave the market an added lift.

Technical Outlook

#S&P500 (JUN) 06/08/04: The market’s close above
the 2nd swing resistance number is a bullish indication. Underlying support
comes in at 1133.45 and 1123.68, with overhead resistance at 1147.35 and
1151.48. The market’s short-term trend is positive on a close above the 9-day
moving average. Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 1151.48. With a reading
over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1155.75. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. Near-term resistance for the S&P Mini is at
1150.00 and then again at 1155.75, while swing support hits at 1130.50 and below
there at 1116.75. 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.

NASDAQ (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. 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. The market should run
into resistance at 1506.00 and above there at 1514.00 with support at 1477.00
and 1456.00. The 9-day RSI over 70 indicates the market is approaching
overbought levels. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 1514.0.

MINI DOW (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10444 and above there at 10482 with support at 10319 and
10232. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 10482. 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. The 9-day
RSI over 70 indicates the market is approaching overbought levels.

 

CURRENCY MARKET RECAP

6/7/2004

The Dollar managed a gap down range and did so
despite the fact that recent US payroll readings were very impressive. However,
the trade just doesn’t think that the US is prepared to hike interest rates and
that is apparently the primary driving force in the market. Primary benefactors
of the Dollar weakness continues to be the Canadian and the Yen which are huge
trading partners of the US. In looking at the upcoming economic schedule there
doesn’t seem to be enough significant information due out to alter the near term
trend in the Dollar.

Technical Outlook

#CURRENCIES 06/08/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The gap upmove on the day session chart is a bullish indicator for
trend. A positive setup occurred with the close over the 1st swing resistance.
Swing resistance is targeted at 91.43 and above there at 91.61, with the yen
finding support around 91.01 and below there at 90.77. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 91.61. Short-term indicators suggest buying
dips today.

EURO (JUN): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.2348.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2280, with overhead resistance
at 1.2348. The market’s short-term trend is positive on a close above the 9-day
moving average. With a reading over 70, the 9-day RSI is approaching overbought
levels. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

PRECIOUS METALS RECAP

6/7/2004

The gold and silver market showed some additional
gains after the opening pulse and did so without the benefit of significantly
lower US Dollar action. The fact that gold, silver, platinum and even copper
were sharply higher Monday hints that all metals are seeing some benefit from
the improved macro economic outlook. In other words, a stronger equity market
seems to facilitate buying interest. We suspect that the September Dollar will
begin to slow its slide once the consolidation level of 88.00 is encountered and
that could serve to take some of the upside momentum away from gold.

Technical Outlook

#P-METALS 06/08/04: SILVER (JUL): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 584.5 and below there at 577.5 with resistance
likely at 589.6 and 595.5. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 577.5.

GOLD (AUG): Support for gold today comes in near
391.60, while resistance is pegged at 396.80. 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 391.60. It is a mildly
bullish indicator that the market closed over the pivot swing number. The
market’s short-term trend is positive on a close above the 9-day moving average.
The major trend could be turning up with the close back above the 40-day moving
average. The gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session.

 

COPPER MARKET RECAP

6/7/2004

The copper market exploded into another upside
breakout and did so off a combination of internal and external market factors.
Internal fundamentals in copper perked up as the Chinese showed continued buying
interest and the big gains in the stock market seemed to give the bull’s added
confidence. The International Copper Study Group suggested that the world
refined 1st quarter copper deficit was 379,000 metric tons which was mostly
expected. However, around the 2004 highs the market was expecting the 3rd or 4th
quarter deficit to reach a level that nearly exhausts the above ground supply.

 

ENERGY MARKET RECAP

6/7/2004

Crude prices were generally weaker than unleaded
prices Monday and that is probably a trend that will continue. The risk premium
toward crude has naturally come down while the risk premium in unleaded is
holding together. The basket price of crude reached down to $34.94, which is
still significantly above the official upper banding extreme. More seasonal
temps and the start of the summer driving season are upon the market and the
ability to rebuild the gasoline stocks situation aggressively. In other words,
without rebuilding gas stocks in this week’s inventory report one has to begin
doubting the ability to rebuild.

Technical Outlook

#ENERGIES 06/08/04: CRUDE OIL (AUG): The upside
closing price reversal on the daily chart is somewhat bullish. It is a mildly
bullish indicator that the market closed over the pivot swing number. Support
for crude is keyed on 38.30 and below there at 37.70, with resistance pegged at
39.20 and 39.50. 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 37.70.

UNLEADED GAS (AUG): Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
113.51. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Resistance today is at 120.31, while support should be
found around 113.51. 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 (AUG): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 96.65, with resistance is at 101.65. 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 96.65. The upside closing price
reversal on the daily chart is somewhat bullish.

 

CORN MARKET RECAP

6/7/2004

December corn filled the gap left last week
before a recovery bounce at mid-session. Weekend dry weather allowed producers
one last chance to plant or replant crops and helped dry out soils in
water-logged areas of the mid-west. This was in sharp contracts to concerns for
heavy rains for parts of the US on the weekend which was the forecast on Friday.
Argentine 2003-2004 Corn sales are expected to come in up at 5.945 million tons
from 4.67 million two weeks ago and that shows competition to the US export
effort. Weekly export inspections came in at 40.9 million bushels as compared
with trade expectations for 36 to 41 million bushels. Cumulative shipments have
reached 1.406 billion bushels as compared with 1.125 billion last year at this
time. Traders expect tonight’s weekly crop progress report to be up for grabs
with some looking for a 1-3% decline in good-to-excellent ratings and others a
1-3% improvement in ratings. December corn support comes in at 297 and 294 3/4,
with 306 1/2 and 308 1/2 as resistance.

Technical Outlook

#CORN (DEC) 06/08/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 310 1/4. The market is in a bearish position with the close
below the 2nd swing support number. Market resistance comes in at 310 1/4 today,
with support at 294 1/4. 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.

 

SOY COMPLEX RECAP

6/7/2004

The big range and higher close for July soybeans
indicates a rejection of last weeks lows and suggests that traders are unwilling
to become too concerned over the China crush industry problems with Friday’s
supply/demand report likely to have a more significant impact on old crop
prices. Traders were preparing to trade 1-3 inches of rain for the weekend on
Friday but a near total lack of rain over the weekend helped producers move
ahead on planting the crop and also helped improve crop conditions for the crops
already emerged. Traders expect tonight’s weekly crop progress report to show
that 82-87% of the crop is now planted against 77% last week. November soybeans
managed to take out the May lows by 1 tick before bouncing 19 1/2 cents off of
the lows into the close. China crusher financial difficulties continue but the
trade is still trying to determine the longer-term impact of potential
significant losses by the crushers and what impact this may have on demand for
soybean oil and soybean meal within China. Ultimately, China is attempting to
renegotiate near 30 cargoes of soybeans bought at high prices and booked at
record freight rates and the outcome may be settled in the courts. Fear that
crushers will try to dump meal on the domestic market to raise cash helped
pressure meal while oil is finding some support from ideas that the declining
crush pace will eventually tighten supply. Weekly export inspections came in at
906,000 bushels as compared with trade expectations for 2-6 million bushels.
Cumulative shipments have reached 809.5 million bushels as compared with 961.1
million last year at this time. Support for November soybeans comes in at 673
and 670 with 694 1/2 and 702 1/4 as resistance.

Technical Outlook

#SOYBEANS (NOV) 06/08/04: The swing indicator
gave a moderately negative reading with the close below the 1st support number.
The next area of resistance is around 699 1/2 and 704 3/4, while 1st support
hits today at 679 1/2 and below there at 664 3/4. The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 704 3/4.

MEAL (DEC): The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 209.3.
The gap down on the day session chart is bearish with more selling pressure
possible today. First resistance comes in at 216.0, with support at 212.0. 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 above the
9-day moving average suggests the short-term trend remains positive. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The next upside target is 25.76. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The daily closing price
reversal up is positive. Daily swing resistance is found at 25.52 and above
there at 25.76. Support should be encountered at 24.92 and 24.56.

 

WHEAT MARKET RECAP

6/7/2004

Less than expected rain for the Midwest on the
weekend combined with the sharp drop in the other grains helped to pressure the
market early. Dry weather has helped improve conditions for the soft red winter
wheat crop. With moderately heavy rains expected in the southern and central
plains for the middle to later parts of this week, the slowdown in harvest might
help to provide a slowdown in the commercial selling. In addition, rains in the
forecast for later this week in the Ohio Valley could increase disease concerns.
Weekly export inspections came in at 19.6 million bushels as compared with trade
expectations for 20-25 million bushels. Of the total, 145,000 tons were shipped
to China. Cumulative shipments have reached 13.67 million bushels as compared
with 11.8 million last year at this time. The marketing year began on June 1st.
Traders expect tonight’s weekly crop progress report to show that near 7-10% of
the crop is harvested. Better than expected crop production in China and the
advance of the monsoons in India are other weather-related bearish factors to
absorb. July wheat support comes in at 361 and 358 1/2 with resistance at 366
1/4 and 372.

Technical Outlook

#WHEAT (DEC) 06/08/04: 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. Look for near-term
support at 381 and below there at 377 3/4, with resistance levels at 387 and 389
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 377 3/4.

 

LIVE CATTLE RECAP

6/7/2004

Cattle futures rose sharply to fresh contract
highs on expectations of higher cash cattle prices this week. Last week cash
cattle traded as high as $90 per cwt with expectations for a $92 to $93 per cwt
trade this week. US Plains cattle were offered at $95 on Monday, but there were
no trades. Boxed-beef prices have been rising since May 27th with choice 600-750
lb at $152.70 as of June 4th, up $1.88. Packer profit margins came back into the
red at $4.60 per head on Monday vs negative 20 cents on Friday. The uptrend
shows no sign of cracking with the close in August cattle over Friday’s high
price of 91.15.

Technical Outlook

#CATTLE (AUG) 06/08/04: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 93.60. A positive setup occurred with the
close over the 1st swing resistance. Support should be encountered at 90.00 and
below there at 89.10. Market resistance is at 92.25 and then again at 93.60. A
new contract high was made on the rally. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The 9-day RSI
over 70 indicates the market is approaching overbought levels.

 

LEAN HOGS RECAP

6/7/2004

August hogs was supported early by higher cattle
prices, but ended up closing slightly weaker within Friday’s range. The upside
was limited by speculation of lower cash hog prices this week. Slaughter numbers
have been running above expectations last week and slaughter this week was
estimated to be as high as 1.95 million head vs 1.849 million last year at this
time. However, Monday’s actual slaughter came in at 381,000 head which was below
estimates ranging between 385,000 to 390,000 head and could support prices in
Tuesday’s session. The steady rise in Pork-cut-out values is a positive factor.

Technical Outlook

#HOGS (AUG) 06/08/04: The swing indicator gave a
neutral reading since the market’s close was equal to the pivot number.
Resistance levels comes in at 77.60 and 77.95 today, while support is around
76.75 and then 76.25. The market’s short-term trend is positive on a close above
the 9-day moving average. Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 77.95. With a reading
over 70, the 9-day RSI is approaching overbought levels.

 

COCOA MARKET RECAP

6/7/2004

The cocoa market managed a new low for the move
but then managed to regain almost all of the losses into the close. While
professional and industry buying continues to periodically support the market it
is clear that the buyers are only stepping up on weakness and are willing to
stand back at any time and allow prices to continue drifting downward. The COT
report positioning is approaching oversold status but isn’t so overextended that
one should anticipate a bottom.

Technical Outlook

COCOA (SEP) 06/08/04 The daily closing price
reversal up is positive. The market tilt is slightly negative with the close
under the pivot. Cocoa should run into resistance at 1359 and above there at
1368 with support at 1336 and 1322. Negative momentum studies in the neutral
zone will tend to reinforce lower price action. The next downside target is
1321.75.

 

COFFEE MARKET RECAP

6/7/2004

September coffee gapped down and might suffer
even more technical selling ahead as the weather seems to lack the support that
was present for most of last week. More origin hedging is to be expected
considering the price failure on the charts. With Mexican coffee exports
expected to hold steady and the 2003-2004 crop seen at 4.2 to 4.3 million bags
the coffee market would seem to lack supply uncertainty outside of the Brazilian
situation. Considering that the net spec and fund long in coffee was 31,000
contracts as of last Tuesday it’s understandable that consistent spec selling is
seen on the violation of chart support.

Technical Outlook

COFFEE (SEP) 6/8/04 The gap lower price action on
the day session chart is a bearish indicator for trend. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. 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 objective is now at 82.10. The Coffee
contract should run into resistance at 84.10 and above there at 85.10 with
support at 82.6 and 82.10. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

6/7/2004

October sugar posted a rather wide trading range
but did manage to post a new contract high close. A delayed Brazilian harvest
might be giving the market a little support but few players think that the delay
will actually result in lower production from the region. The fact that India
recently made some purchases gave the buyers a little added incentive even
though prices were reaching pretty lofty levels. The funds were buyers in the
action Monday and some suggest that could carry the market to even higher levels
in the days ahead.

Technical Outlook

#SUGAR (OCT) 06/08/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 7.76, with support found at 7.32. The market’s short-term trend is
positive on a close above the 9-day moving average. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 7.76. With a reading over 70, the 9-day RSI is approaching
overbought levels.

 

COTTON MARKET RECAP

6/7/2004

December cotton fell sharply as US weather
conditions continue to be conducive to strong production. Adding to the downside
pressure off the weather in the US there is also good weather in China. Small
specs selling continues to dominate the daily action and with more reports
suggesting that China is going to use domestic supply ahead of imported supply
there would seem to be justification for even more downside ahead. Crop
conditions in cotton were expected to confirm the favorable start to the North
American crop cycle and with the USDA report due out at the end of the week few
players are willing to hold onto long positions.

Technical Outlook

#COTTON (OCT) 06/08/04: 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.
Next resistance area comes in at 57.38 and then again at 58.86, while support is
targeted at 55.23 and 54.56. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 54.56. The 9-day RSI under 30
indicates the market is approaching oversold levels. The sell-off took the
market to a new contract low.