Tuesday’s Market Focus
BOND MARKET RECAP
4/4/2005
March Bonds finished unchanged at 111-25, 0-14
off the high and 0-04 up from the low.
March 10 Yr Treasury Notes finished up 0-010 at
109-180, 0-075 off the high and 0-040 up from the low.
The treasury market saw a choppy inside
session Monday, but sentiment still seemed to be generally positive following a
lower than expected March payroll report released last Friday. The bond market
was able to shrug off comments from the St. Louis Fed President suggesting the
Fed may become more aggressive in raising rates to stem inflation pressures.
While remarks from Treasury Secretary Snow that high energy prices could “take a
toll” on the economy were supportive to bonds. A lack of economic reports Monday
kept bonds trading relatively quiet.
Technical Outlook
BONDS (JUN) 04/05/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The cross over
and close above the 18-day moving average is an indication the longer-term trend
has turned positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside objective is at
112-17. The next area of resistance is around 112-04 and 112-17, while 1st
support hits today at 111-14 and below there at 111-04.
TNOTES (JUN) 04/05/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The market has a slightly
positive tilt with the close over the swing pivot. The next upside objective is
110-015. The next area of resistance is around 109-255 and 110-015, while 1st
support hits today at 109-100 and below there at 109-020.
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STOCK INDICES RECAP
4/4/2005
March S&P finished up 2.1 at 1179.8, 2.2 off the
high and 9 up from the low.
March S&P E-Mini closed up 2 at 1179.75. This was
9 up from the low and 2.25 off the high.
March Dow closed up 9 at 10440. This was 70 up
from the low and 20 off the high.
The stock market proved that it was tied closely
to the direction of oil prices as a setback in oil prices into the close allowed
equity prices to recoil off the lows. Despite the weakness in the S&P the market
did manage to retain the pattern of higher lows and with the prospect of
earnings looming ahead maybe the constant negative drone of the energy complex
will be discounted in the coming sessions. However, the outlook for the market
is hardly improved dramatically because of the events Monday. The market is
looking ahead to a Greenspan speech on Tuesday as the speech will touch on
energies and could give some indication as to how much the economy is being held
back by high oil prices. n
Technical Outlook
S&P 500 (JUN) 04/05/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The upside daily closing price
reversal gives the market a bullish tilt. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next upside objective
is 1189.30. The next area of resistance is around 1185.39 and 1189.30, while 1st
support hits today at 1174.20 and below there at 1166.90.
SP EMINI (JUN) 04/05/2005: The stochastics
indicators are rising from oversold levels, which is bullish and should support
higher prices. The major trend has turned down with the cross over back below
the 18-day moving average. The upside daily closing price reversal gives the
market a bullish tilt. It is a slightly negative indicator that the close was
under the swing pivot. The next upside objective is 1189.31. The next area of
resistance is around 1185.37 and 1189.31, while 1st support hits today at
1174.13 and below there at 1166.82.
NASDAQ (JUN) 04/05/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The upside daily closing price
reversal gives the market a bullish tilt. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The next upside
objective is 1503.25. The next area of resistance is around 1495.50 and 1503.25,
while 1st support hits today at 1474.50 and below there at 1461.25.
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CURRENCY MARKET RECAP
4/4/2005
March US Dollar finished up 39 at 8479, 16 off
the high and 35 up from the low.
March Euro finished down 0.55 at 128.75, 0.38 off
the high and 0.34 up from the low.
March Euro Dollar closed down 0.005 at 96.515.
This was 0.005 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.33 at 81.95.
This was 0.08 up from the low and 0.25 off the high.
March British Pound finished down 0.5 at 186.96,
0.01 off the high and 0.52 up from the low.
March Swiss closed down 0.39 at 83.07. This was
0.28 up from the low and 0.27 off the high.
March Japanese Yen closed down 0.53 at 92.95.
This was 0.19 up from the low and 0.19 off the high.
The Dollar continued to gain Monday as comments
from the St. Louis Fed President Suggested the Fed may be more concerned with
inflation than the market previously though and raises the odds that the Fed may
be more aggressive in raising rates. Continued gains in oil prices further
underpins these sentiments. Also supporting the Dollar was news that Japan had
no plans to change its foreign reserve currency distribution (heavily weighted
in Dollar securities) and that the European Commission lowered their Euro-zone
growth forecast for 2005 to 1.6%, from 2%.
Technical Outlook
YEN (JUN) 04/05/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The gap lower
price action on the day session chart is a bearish indicator for trend. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. The next downside target is now at 92.57. The 9-day RSI under
30 indicates the market is approaching oversold levels. The next area of
resistance is around 93.14 and 93.33, while 1st support hits today at 92.76 and
below there at 92.57.
EURO (JUN) 04/05/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside objective is 128.04. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 129.11 and 129.48,
while 1st support hits today at 128.39 and below there at 128.04.
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PRECIOUS METALS RECAP
4/4/2005
April Gold closed down 2 at 423.9. This was 1.2
up from the low and 2.4 off the high.
March Silver finished up 0.024 at 7.024, 0.021
off the high and 0.104 up from the low.
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A stronger Dollar and concern that the Fed may
become more aggressive in raising rates pressured gold despite further gains in
crude oil. There was also widespread concern that fund traders, who still have a
relatively large net long position, may decide to further liquidate their
position now that the quarter has ended. June gold seemed to be garnering some
support around the 200-day moving average at 425.60. While the UK appears to be
backing IMF gold sales to relieve 3rd world debt, the German Bundesbank has
opposed it.
Technical Outlook
SILVER (MAY) 04/05/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The major trend has turned down with the cross over back
below the 18-day moving average. The daily closing price reversal up is a
positive indicator that could support higher prices. The market’s close below
the pivot swing number is a mildly negative setup. The next upside objective is
712.8. The next area of resistance is around 708.7 and 712.8, while 1st support
hits today at 696.2 and below there at 687.9.
GOLD (APR) 04/05/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The next downside objective is 420.6. The next
area of resistance is around 425.7 and 427.8, while 1st support hits today at
422.1 and below there at 420.6.
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COPPER MARKET RECAP
4/4/2005
March Copper closed up 1.05 at 149.50. This was
2.50 up from the low and 0.10 off the high.
May copper held support at 147 to trade higher as
the market was able to over come early pressure from a strong Dollar while a
slowing of fund selling also helped the metal bounce back into positive
territory. While copper has been a favorite among fund traders given the metal’s
tightening stocks situation, there is growing speculation that fund investors
may begin to move away from copper since supply is expected to increase in the
2nd half of the year as mines are expected to increase output. Short-term, May
copper remains range bound between $152 and $145 and may need the Dollar to
resume its down trend in order penetrate solid resistance.
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ENERGY MARKET RECAP
4/4/2005
April Crude Oil closed down 0.26 at 57.01. This
was 0.41 up from the low and 1.19 off the high.
April Heating Oil closed down 2.16 at 164.22.
This was 0.22 up from the low and 4.08 off the high.
April Unleaded Gas finished down 0.94 at 172.16,
2.64 off the high and 1.61 up from the low.
April Natural Gas finished down 0.16 at 7.59,
0.26 off the high and 0.02 up from the low.
April Propane closed up 0.01 at 0.92. This was
equal to the low and equal to the high.
The energy complex rallied to new contract highs
but failed to hold the gains throughout the session possibly because the market
was floating ideas that OPEC was at least discussing another production
increase. Adding to the incentive to top were suggestions from the Norwegian Oil
Minister that lower oil prices were desirable. Also dampening bull sentiment
were concerns that the market was extensively overdone and that short term
technical indicators were extremely overbought. The market is also waiting for
political pressure on Saudi Arabia to yield more supply and considering the
recent OPEC promise to provide more oil in the event that prices remained high
we would expect to see some movement considering that prices Monday took out the
levels that were present when OPEC promised the extra oil. It was clear that the
unleaded price action was still dominating near term energy price action, which
is important considering that the bull news in crude oil is getting a little
stale.
Technical Outlook
CRUDE OIL (MAY) 04/05/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
daily closing price reversal down is a negative indicator for prices. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next upside objective is 58.80. The next area of resistance is around 57.80 and
58.80, while 1st support hits today at 56.21 and below there at 55.61.
UNLEADED (MAY) 04/05/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The daily closing price
reversal down puts the market on the defensive. The market has a slightly
positive tilt with the close over the swing pivot. The next upside objective is
176.66. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 174.28 and 176.66, while 1st support hits
today at 170.04 and below there at 168.17.
HEATING OIL (MAY) 04/05/2005: Daily stochastics
have risen into overbought territory which will tend to support reversal action
if it occurs. The cross over and close above the 18-day moving average indicates
the longer-term trend has turned up. The daily closing price reversal down puts
the market on the defensive. The market’s close below the pivot swing number is
a mildly negative setup. The near-term upside target is at 169.48. The market is
approaching overbought levels with an RSI over 70. The next area of resistance
is around 166.37 and 169.48, while 1st support hits today at 162.07 and below
there at 160.89.
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CORN MARKET RECAP
4/4/2005
May Corn finished down 3 at 209 3/4, 2 off
the high and 1/4 up from the low. December Corn closed down 2 at 235. This was 1
up from the low and 1/2 off the high.
With traders nervous of slow export demand due to
possible contamination of unapproved GMO corn, the market found some early
support from USDA news this morning that 276,464 tonnes of US corn was sold to
unknown destination. However, this did not seem to slow the fund selling which
hit old crop corn futures in spite of some commercial buying on the pullback.
Weekly export inspections, released during the session, came in at 30.8 million
bushels as compared with trade expectations at 28-33 million bushels. Cumulative
shipments have reached 50% of the USDA forecast for the season as compared with
56.9% as the 5-year average for this time of the year. The strong dollar and
weakness in other commodity markets has traders nervous over the possibility of
more fund long liquidation selling ahead. As of March 29th, the COT report with
options showed funds net long over 30,000 contracts and the lowest close since
February 18th for May corn could attract more selling this week. May corn
resistance comes in at 212 1/4 with 207 1/2 and 205 as next support.
Technical Outlook
CORN (MAY) 04/05/2005: The major trend has turned
down with the cross over back below the 60-day moving average. Momentum studies
are still bearish but are now at oversold levels and will tend to support
reversal action if it occurs. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
next downside target is now at 208. The next area of resistance is around 210
3/4 and 212 1/4, while 1st support hits today at 208 3/4 and below there at 208.
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SOY COMPLEX RECAP
4/4/2005
May Soybeans finished up 1 at 615, 5 1/2 off the
high and 5 up from the low. November Soybeans closed up 1 1/4 at 601 1/2. This
was 6 up from the low and 5 1/2 off the high.
May Soymeal closed down 0.6 at 183.2. This was
1.2 up from the low and 1.3 off the high.
May Soybean Oil finished up 0.12 at 22.8, 0.25
off the high and 0.32 up from the low.
Light fund selling pushed the market to Friday’s
lows before some light buying emerged to provide support. While fund sellers
turned more active in the other grains, soybeans remained choppy in low volume
quiet trade. Fears of a hefty US crop this year combined with talk that demand
is shifting to South America helped trigger some early selling. Heavy rains over
the weekend should slow South American harvest which is near half way complete.
With the higher US dollar, traders remain nervous over a possible resumption of
selling (long liquidation) from fund traders in grains and many other markets
but funds were mostly quiet today. After a 51 cent break off of Thursday’s peak,
the market is in a short-term oversold condition. Weekly export inspections,
released during the session, came in at 16.7 million bushels as compared with
trade expectations at 10-14 million bushels. Cumulative shipments have reached
88% of the USDA forecast for the season as compared with 80.9% as the 5-year
average for this time of the year. May soybean resistance comes in at 620 1/2
with support at 609 and 595 3/4.
Technical Outlook
BEANS (MAY) 04/05/2005: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
The market’s close below the pivot swing number is a mildly negative setup. The
next downside objective is now at 604 3/4. The next area of resistance is around
620 1/4 and 625 1/2, while 1st support hits today at 609 3/4 and below there at
604 3/4.
MEAL (MAY) 04/05/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. The market tilt is slightly negative with the close under the
pivot. The next downside target is 180.8. The next area of resistance is around
184.4 and 185.7, while 1st support hits today at 182.0 and below there at 180.8.
BEANOIL (MAY) 04/05/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next downside target is now at 22.22. The next area of resistance is around
23.08 and 23.35, while 1st support hits today at 22.52 and below there at 22.22.
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WHEAT MARKET RECAP
4/4/2005
May Wheat finished down 6 at 316 1/2, 6 1/2 off the high and 1
1/2 up from the low. July Wheat closed down 7 3/4 at 325 1/4. This was 1 1/4 up
from the low and 6 1/4 off the high.
Fund long liquidation selling pushed the market
to the lowest level since February 22nd as slow export news and good weather for
the US winter wheat crop helped pressure. May wheat is down 54 cents in just 13
trading sessions. South Korea is looking to buy 18,000 tonnes of US wheat with
other export news slow. Weekly export inspections, released during the session,
came in at 12.3 million bushels as compared with trade expectations at 14-19
million bushels. Cumulative shipments have reached 87.6% of the USDA forecast
for the season as compared with 83.7% as the 5-year average for this time of the
year. The higher US dollar has traders nervous of continued fund selling. As of
March 29th, the Commitment-of-Traders report with options showed that funds were
holding a net long position of nearly 29,000 contracts. Rumors that Egypt bought
near 330,000 tonnes of wheat from Russia over the weekend added to the bearish
export outlook. May wheat resistance comes in at 320 with 309 1/2 and 306 1/4 as
next support.
Technical Outlook
WHEAT (MAY) 04/05/2005: The major trend has
turned down with the cross over back below the 60-day moving average. Momentum
studies are declining, but have fallen to oversold levels. The major trend has
turned down with the cross over back below the 18-day moving average. The close
below the 1st swing support could weigh on the market. The next downside target
is 309 3/4. Some caution in pressing the downside is warranted with the RSI
under 30. The next area of resistance is around 320 1/2 and 325 3/4, while 1st
support hits today at 312 1/2 and below there at 309 3/4.
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LIVE CATTLE RECAP
4/4/2005
April Live Cattle finished down 0.95 at 88.77,
1.42 off the high and 0.22 up from the low.
May Feeder Cattle closed down 0.55 at 105.30.
This was 0.20 up from the low and 1.45 off the high.
June cattle closed sharply lower on the session
as long liquidation developed after there was a lack of new buying interest from
speculators on the early rally. Feeder cattle hit contract highs before the
lower close. The discount of futures to the cash market and recent strength in
beef prices was seen as positive but speculative selling sent June futures to
the lowest close since March 18th. Boxed-beef cut-out values at mid-session were
up $.43 to $153.09 as compared with $149.28 last week. Slaughter came in at
114,000 head from trade estimates of 112,000-117,000 head. The willingness of
the market to hold a massive discount to the cash market suggests fear of a
near-term top in cash markets of fear of unexpected supply soon.
Technical Outlook
CATTLE (APR) 04/05/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The downside closing price reversal
on the daily chart is somewhat negative. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The near-term
upside target is at 90.720. The next area of resistance is around 89.600 and
90.720, while 1st support hits today at 87.970 and below there at 87.450.
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LEAN HOGS RECAP
4/4/2005
April Lean Hogs finished down 0.60 at 69.55, 0.87
off the high and 0.30 up from the low.
May Pork Bellies closed down 2.52 at 94.40. This
was 0.12 up from the low and 2.45 off the high.
June hogs opened higher and closed sharply lower
on the session. The premium of futures to cash markets and long liquidation
selling helped to pressure the market. Traders expected steady cash markets this
morning but cash was $.50 to $1.00 lower. Hopes of strong exports faded after
there was lack of new buying interest on the higher opening. The CME 2-day lean
index was up 3 cents to 67.06 as compared with 68.15 the previous week.
Slaughter came in at 400,000 head from trade estimates of 395,000-398,000 head.
Technical Outlook
HOGS (APR) 04/05/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The market’s close below the
1st swing support number suggests a moderately negative setup for today. The
next upside target is 70.850. The next area of resistance is around 70.120 and
70.850, while 1st support hits today at 68.970 and below there at 68.520.
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COCOA MARKET RECAP
4/4/2005
May Cocoa finished up 17 at 1588, 7 off the high
and 28 up from the low.
May cocoa was able to hold support above $1,550
as fund liquidation from last week appears to have dried up or at least paused
on Monday. May cocoa was able to close higher despite a stronger Dollar and no
reports of politically motivated violence in the Ivory Coast stemming from Peace
talks going on in South Africa. The Ivory Coast reported cumulative cocoa
exports between Oct through March for the 2004/05 season were down about 1% from
the port of San Pedro, which exports about half of the country’s cocoa beans. So
far, the Ivory Coast has received enough rain to sustain the mid-crop, although
rainfall totals for the 2nd half of March (the beginning of the rainy season)
was running below last year’s levels.
Technical Outlook
COCOA (MAY) 04/05/2005: Daily stochastics are
trending lower but have declined into oversold territory. The major trend has
turned down with the cross over back below the 18-day moving average. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside target is 1548. The next area of resistance is around 1605 and 1617,
while 1st support hits today at 1571 and below there at 1548.
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COFFEE MARKET RECAP
4/4/2005
May Coffee closed down 0.90 at 123.05. This was
2.75 up from the low and 0.70 off the high.
July coffee closed 85 lower on the session but
managed to hold support on the initial break and closed 245 points off of the
lows of the day and up from the opening. Speculative long liquidation selling
hit coffee and other commodity markets early in the session but trade house
buying supported the coffee market. The Brazil government sold 37,600 bags of
the 100,000 auctioned on Friday and the government plans to auction another
100,000 bags this Friday. The auctions are for coffee purchased under the
2002/2003 producer options program. CSCE exchange stocks were down 8,017 bags to
4.507 million bags with 46,177 bags pending review.
Technical Outlook
COFFEE (MAY) 04/05/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside target is now at 119.10. The next area of resistance is around 124.75
and 125.95, while 1st support hits today at 121.35 and below there at 119.10.
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SUGAR MARKET RECAP
4/4/2005
May Sugar closed down 0.11 at 8.41. This was 0.01
up from the low and 0.16 off the high.
With speculators holding a net long position of
nearly 69,000 contracts in Friday’s COT report with options, the lowest close
since November 12th for July sugar leaves the market vulnerable to more long
liquidation selling this week. Traders await news of a tender for Egypt to buy
100,000 tonnes of raw sugar. With the Brazil harvest picking up steam and a lack
of significant buying from non-routine buyers like India or China, the market
remains in a long liquidation sell-off. Funds were aggressive sellers in New
York while London drifted lower in quiet trade.
Technical Outlook
SUGAR (MAY) 04/05/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next downside target
is 8.28. Some caution in pressing the downside is warranted with the RSI under
30. The next area of resistance is around 8.49 and 8.61, while 1st support hits
today at 8.33 and below there at 8.28.
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COTTON MARKET RECAP
4/4/2005
May Cotton finished down 0.20 at 52.60, 0.60 off
the high and 0.30 up fr