Two Reasons Energy Is Under Pressure
BOND MARKET RECAP
9/18/2003
The bond market probably forged a critical high
Thursday morning as prices soared ahead of critical economic reports but then
faded aggressively when the reports came in better than expected. Many traders
think that bonds saw more than the usual amount of buying because some Asian
central banks were buying Treasuries. If central banks were buying Treasuries
that could mean that the highs Thursday might be extremely difficult to
replicate in the future without significantly weak US numbers. The fact that
leading indicators came in strong and the US stock market posted some moderately
impressive gains added to the pressure on the Treasuries.
Technical Outlook
BONDS (DEC) 9/19/2003: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 109.22 and then again at 110.10, while swing support hits at 108.05
and below there at 107.08. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Rising stochastics at overbought levels
warrant some caution for bulls. The next upside objective is 110.10.
T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
113.17. It is a mildly bullish indicator that the market closed over the pivot
swing number. The major trend is down with the cross over back below the 40-day
moving average. Near-term resistance for the T-Notes is at 113.03 and then again
at 113.17, while swing support hits at 112.01 and below there at 111.13. The
market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
9/18/2003
The stock market seems to be all knowing as it
managed to maintain a positive view all week long and eventually saw numbers and
developments that justify that type of stance. With the leading indicators and
initial claims showing strength the concerns over the jobs situation was
mitigated. It also appeared as if the US was getting closer to France and
Germany with respect to control over Iraq and that also helped improve sentiment
and allow energy prices to weaken. Seeing better economics, better international
relations and lower energy prices is really a good day for the bulls in the
stock market.
Technical Outlook
S&P500 (DEC) 9/19/2003: There could be more
upside follow through since the market closed above the 2nd swing resistance.
Underlying support comes in at 1030.10 and 1019.50, with overhead resistance at
1044.90 and 1049.10. 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 objective is at 1049.10.
S&P E-Mini (DEC): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1033.25. It is a slightly negative indicator that the
close was lower than the pivot swing number. Near-term resistance for the S&P
Mini is at 1029.25 and then again at 1033.25, while swing support hits at
1021.75 and below there at 1018.25. The market’s close above the 9-day moving
average suggests the short-term trend remains positive.
NASDAQ (DEC) The outside day up is somewhat
positive. The market made a new contract high on the rally. The daily closing
price reversal up is a positive indicator that could support higher prices. 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. The market should run into resistance at 1419.00
and above there at 1429.50 with support at 1384.00 and 1359.50. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 1429.50.
CURRENCY MARKET
RECAP
9/18/2003
The Dollar was saved by the numbers and the
developments Thursday morning. If the US numbers had come in weak we would have
expected a strong thrust down in the Dollar. As it stands the numbers were
almost all better than expected and the sellers were scared away. In fact, given
the rally in the US stock market some traders might have been prompted to buy
the Dollar. The fact that the US, France and Germany appear to be making
progress over how to hand over control of Iraq is something that could be a very
important positive for the Dollar, so that situation deserves close attention.
Technical Outlook
YEN (DEC): A positive signal for trend short-term
was given on a close over the 9-bar moving average. If yesterday’s gap higher on
the day session chart holds, additional buying could develop this session. The
market has a bullish tilt coming into today’s trade with the close above the 2nd
swing resistance. Swing resistance is targeted at 87.20 and above there at
87.55, with the yen finding support around 86.70 and below there at 86.55.
Stochastics are at mid-range, but trending higher which should reinforce a move
higher if resistance levels are taken out. The next upside objective is 87.55.
The market is approaching overbought levels with an RSI over 70.
EURO (DEC): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.1355. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.1119, with overhead resistance at 1.1355. The close above
the 9-day moving average is a positive short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.
PRECIOUS METALS
RECAP
9/18/2003
The gold market suffered by alternative
competition Thursday as gains in the stock market caused some gold longs to take
profits and move to the sidelines. In addition to alternative investment
potentials the soaring stock market also helped lift the US Dollar and that in
turn caused a further deterioration of the bull view toward gold and silver.
Many traders voiced concern over the overly long positioning of gold and silver
even if that isn’t a new issue. The most surprising thing was the weakness in
the silver market which should have been supported by the action in the stock
market. We might have seen a critical failure in the metals Thursday morning.
Technical Outlook
SILVER (DEC): The market tilt is slightly
negative with the close under the pivot. Initial support for silver is at 517.5
and below there at 509.5 with resistance likely at 529.3 and 535.5. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Stochastics turning bearish at overbought levels will tend to support lower
prices if support levels are broken. The next downside objective is 509.5. The
market could take on a defensive posture with the daily closing price reversal
down.
GOLD (DEC): Support for gold today comes in near
373.35, while resistance is pegged at 382.95. 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 373.35. The close over the pivot
swing is a somewhat positive setup. The close below the 9-day moving average is
a negative short-term indicator for trend.
COPPER MARKET RECAP
9/18/2003
The copper simply got a sweep of much better than
expected economic numbers Thursday and with the recent pattern of large exchange
stock declines the bulls managed to control prices again. Seeing US leading
indicators rise and initial unemployment claims decline certainly rekindles the
hope of US recovery. If the US is recovering they join recently improved views
on the European and Asian economies. In other words, the macro economic outlook
is vastly improved and that directly benefits a market that is also seeing
tightening supply! Seeing a sharp rise in the US equity market also directly
benefited the copper bulls.
ENERGY MARKET RECAP
9/18/2003
Two things pressured the energy complex Thursday.
The most important development was the appearance of progress in the talks
between France, Germany and the US with respect to control over Iraq. The
headlines seemed to suggest that the US might turn over control of Iraq sooner
than many expected and that could lower the threat against Iraqi exports and
generally lower the anxiety. Secondly, when the energy complex failed to rally
off another pipeline explosion in Iraq, some longs had to throw in the towel.
Seeing international control over Iraq might not rule out sabotage but could
serve to reduce the number of threats against supply. In natural gas a triple
digit injection, weakness in the regular energy complex and heavy fund selling
knocked the market down toward a critical cyclical low.
Technical Outlook
CRUDE OIL (NOV): 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. Support for crude is keyed on 26.97
and below there at 26.61, with resistance pegged at 27.52 and 27.71. 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
26.61. Some caution in pressing the downside is warranted with the RSI under 30.
UNLEADED GAS (NOV): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 73.72. The market tilt is slightly negative with the close
under the pivot. Resistance today is at 76.92, while support should be found
around 73.72. A negative signal for trend short-term was given on a close under
the 9-bar moving average. The market is approaching over sold levels on an RSI
reading under 30.
HEATING OIL (NOV): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 71.22, with resistance is at 73.22. 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 71.22. Selling
may soon dry up since the RSI is under 20 indicating the market is extremely
oversold.
CORN MARKET RECAP
9/18/2003
The corn didn’t get hammered like the wheat and
it didn’t benefit like the soybean market. In fact, there are few times in
history where we can remember the grain complex showing as much divergence, as
was seen in the action Thursday. Few traders are buying into the threat that
heavy rains in the east will result in harvest delays for corn. The corn market
also isn’t getting the benefit of concerns for US yields nor is corn being
lifted by hopes of better export demand. Basis was quiet and the spec crowd just
isn’t interested in the long side of the market.
Technical Outlook
CORN (DEC) 9/19/2003: 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 222 1/2. It is a slightly
negative indicator that the close was under the swing pivot. Market resistance
comes in at 225 1/2 today, with support at 222 1/2. 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
9/18/2003
The soybeans continue to show very impressive
interday rallies and in the end managed to post another contract high close. The
trade is once again fretting yields in the US and is seeing very strong
leadership from the oil market. In fact, the soybean oil gains could easily be
considered the talk of the day if there were rumors of Chinese buying swirling
on the floor. In fact, the trade is expecting China to buy several cargos of
beans. Other traders suggested that harvest delays in the eastern belt might
also have served to support prices.
Technical Outlook
SOYBEANS (NOV) 09/19/03 The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
The next area of resistance is around 632 and 636 , while 1st support hits today
at 621 1/2 and below there at 615 . The market’s close on the 9-day moving
average is neutral. A bullish signal was given with an upside crossover of the
daily stochastics. The next upside objective is 636 . The market is approaching
overbought levels with an RSI over 70.
MEAL (DEC): 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 183.9. First resistance comes in
at 187.4, with support at 185.1. The close below the 9-day moving average is a
negative short-term indicator for trend. The close over the pivot swing is a
somewhat positive setup.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 23.86. 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 made a new contract high on the rally. Daily swing
resistance is found at 23.59 and above there at 23.86. Support should be
encountered at 22.95 and 22.58. The market is approaching overbought levels with
an RSI over 70.
WHEAT MARKET RECAP
9/18/2003
A major probe down off widely scattered rain in
the plains sparked the break and then the selling fed off damaged technicals.
With the export sales data delayed due to the hurricane the wheat market
basically had nothing to support prices against the bear track. The rain simply
lowers risk to the coming crop and with the charts in a major capitulation stage
it is easy to sell this market. Even the European wheat was lower off action in
the Euro which makes the wheat outlook bearish across the board.
Technical Outlook
WHEAT (DEC) 9/19/2003: The gap lower on the day
session chart is bearish and puts the market on the defensive. Could see some
early pressure today given the market’s negative setup with the close below the
2nd swing support. Expect near-term support around 336 1/2 and below there at
333 1/4, with resistance levels at 345 and 350 1/4. 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 333 1/4. The market is approaching over
sold levels on an RSI reading under 30.
LIVE CATTLE RECAP
9/18/2003
Profit taking pressured December cattle prices
despite a strong cash market. Front month cattle closed firmer as October cattle
is still trading at a discount to cash. Cash cattle was trading between $89 to
$90 per cwt in the plains. There could be more pressure ahead of the Cattle on
feed report which is scheduled to be released Friday, but may be postponed due
to hurricane Isabel. Traders are expecting feedlot supplies as of Sept 1st to be
96.3% of a year ago.
Technical Outlook
CATTLE (DEC) 9/19/2003: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 82.60. The market tilt is slightly
negative with the close under the pivot. Support should be encountered at 82.92
and below there at 82.60. Market resistance is at 83.57 and then again at 83.87.
A negative signal for trend short-term was given on a close under the 9-bar
moving average.
LEAN HOGS RECAP
9/18/2003
December hogs closed firmer, but with in the
market’s recent trading range between 59.50 and 56.50. A firm cash market and
disruptions in hog shipments and slaughter activity due to hurricane Isabel gave
underlying support. Although Isabel was now only a category 2 hurricane, there
is still concern the storm could cause damage to pig crops in North Carolina, a
major hog producing state. Although futures appear to b e over bought
technically, the firm cash market suggests profit taking breaks could be
shallow.
Technical Outlook
HOGS (DEC) 9/19/2003: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 58.35 and
58.80 today, while support is around 57.50 and then 57.10. The close above the
9-day moving average is a positive short-term indicator for trend. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The next downside target is now at 57.10.
COCOA MARKET RECAP
9/18/2003
The cocoa tried to rally but the market simply
couldn’t hold the gains. With the market seeing origin selling the trade is
again reminded of the upcoming presence of supply flow. Apparently another wave
of small spec liquidation hit the market and given the technical failure it
would appear that more weak handed longs are set to liquidate. The bears seem to
have no fear and the bulls have nothing fundamentally to combat the selling
pressure. Down until the funds are oversold and exhausted.
Technical Outlook
COCOA (DEC)09/19/03 The close below the 1st swing
support could weigh on the market. Cocoa should run into resistance at 1499 and
above there at 1525 with support at 1458 and 1443. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1442.75. Short-term indicators on the defensive. Consider selling an intraday
bounce.
COFFEE MARKET RECAP
9/18/2003
The coffee market attempted to rally but failed
to sustain the bounce. The market continues to show an aggressive liquidation of
open interest as if some spec interest is moving to the sidelines. Both the US
and London coffee markets noted small spec selling, funds and local selling and
that would seem to present a conclusively bearish sentiment. Some traders
suggest that the market is right on top of chart support and that might
discourage fresh selling. The trade is also attempting to digest recent
increases in export numbers.
Technical Outlook
COFFEE (DEC)9/19/03 The downside closing price
reversal on the daily chart is somewhat negative. The close below the 1st swing
support could weigh on the market. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 61.05.The
Coffee contract should run into resistance at 63.55 and above there at 64.85
with support at 61.65 and 61.05. The market’s short-term trend is negative as
the close remains below the 9-day moving average. Daily studies pointing down
suggests selling minor rallies.
SUGAR MARKET RECAP
9/18/2003
A new low for the move was mostly rejected in
March sugar. The fact that the trade was a noted buying following the downside
breakout and that might suggest Thursdays low is a value zone. In fact, some of
the buying was made by commercial interests and that should at least provide
some hint of a bottom. The low Thursday was the lowest trade since early January
of this year which means the market is attempting to find a fundamental fair
value.
Technical Outlook
SUGAR (MAR) 9/19/2003: The upside daily closing
price reversal gives the market a bullish tilt. The close over the pivot swing
is a somewhat positive setup. Swing resistance comes in at 6.30, with support
found at 5.98. The close below the 9-day moving average is a negative short-term
indicator for trend. The crossover up in the daily stochastics is a bullish
signal. The near-term upside target is at 6.30.
COTTON MARKET RECAP
9/18/2003
After another new high for the move the cotton
market managed a pretty weak close. The market saw China announce a rise in its
2004 Cotton Tariff rate quota which is seen as a move to insure more domestic
supply and that would seem to tighten world supply equations. Even with the
expectation of higher Chinese production it would seem that they are looking to
insure domestic supply. There appeared to be a profit taking incentive in cotton
which hints at a possible topping pattern for the action Friday. Rain impact on
cotton probably isn’t as severe as the trade was expecting. The spec and
commercial trade might be little overly long from buying ahead of the hurricane.
The trade expected about 100,000 bales of damage off the hurricane.
Technical Outlook
COTTON (DEC) 9/19/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 66.49 and then again at 67.30, while support is targeted at 65.19
and 64.70. A bearish signal was triggered on a crossover down in the daily
stochastics. Stochastics turning bearish at overbought levels will tend to
support lower prices if support levels are broken. The next downside objective
is 64.70. The market is approaching overbought levels with an RSI over 70. The
market made a new contract high on the rally. The market could take on a
defensive posture with the daily closing price reversal down.