Two Reasons For Equity Buying Today…
BOND MARKET RECAP
9/29/2003
The Treasury bonds sagged Monday, partly because
of the recent 4-point rally and partially because of the surprisingly large
gains in the US equity markets. The personal income and spending reports from
the US also contributed to the liquidation seen Monday. Given the strength of
the equity market gains some players were attempting to circulate ideas that
Saddam might be in the crosshairs of coalition forces. During the session the US
seemed to be involved in an extensive firefight and eventually arrested 92
Iraqis. In looking forward to upcoming US economic reports most traders expect
the bonds to find support quickly after the profit taking has run its course.
Technical Outlook
BONDS (DEC) 09/30/03: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 110.31 and then again at 111.23, while swing support
hits at 109.28 and below there at 109.17. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. 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 109.17.
T-NOTES(DEC) The daily stochastics gave a
bearish indicator with a crossover down. 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 113.04. The market’s close
below the pivot swing number is a mildly negative setup. 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 113.25 and then again at 114.05, while swing support hits
at 113.09 and below there at 113.04. The market’s short-term trend is positive
on a close above the 9-day moving average.
STOCK INDICES RECAP
9/29/2003
Very impressive action in the stock market with
some suggesting that end of quarter window dressing provided the impetus behind
the rally. We do think that some players were buying stocks because the
aggressive firefight that was taking place inside Iraq as some were thinking
Saddam might have been cornered. According to Wall Street the market was seeing
strength from quarterly repositioning while others think the minor rise Monday
morning hints at some type of low and the funds are simply leading off on the
next quarter performance.
Technical Outlook
S&P500 (DEC) 09/30/03: With the close over the
1st swing resistance number, the market is in a moderately positive position.
The outside day up is a positive signal. The upside closing price reversal on
the daily chart is somewhat bullish. Underlying support comes in at 998.10 and
989.70, with overhead resistance at 1010.10 and 1013.70. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The major
trend could be turning up with the close back above the 40-day moving average.
Daily stochastics are trending lower, but have declined into oversold territory.
The next downside objective is now at 989.70.
S&P E-Mini (DEC): The outside day up is somewhat
positive. The daily closing price reversal up is a positive indicator that could
support higher prices. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The next downside objective is
988.94. The market setup is supportive for early gains with the close over the
1st swing resistance. Near-term resistance for the S&P Mini is at 1010.63 and
then again at 1014.44, while swing support hits at 997.88 and below there at
988.94. A negative signal for trend short-term was given on a close under the
9-bar moving average.
NASDAQ (DEC) 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. A positive setup occurred with
the close over the 1st swing resistance. The market should run into resistance
at 1351.00 and above there at 1359.00 with support at 1321.00 and 1299.00.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 1299.0. The cross over and close above the 40-day moving
average indicates the longer-term trend has turned up.
CURRENCY MARKET
RECAP
9/29/2003
The Dollar attempted to rally off early comments
that the US desire to pressure the Dollar lower would not be accomplished in the
long term. However, as the session wore on the Dollar slumped significantly and
ended up over 100 points below its high of the day. The euro and the Swiss were
the most impressive in the gains Monday suggesting that a resumption of the
trend seen early last week is in the cards for the coming sessions. It is a
little surprising that the Dollar caved in Monday because the international
numbers Monday morning were mostly disappointing when compared to the US
numbers.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. A new contract
high was made on the rally. 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. Swing resistance is targeted at 90.67 and above there at
90.97, with the yen finding support around 89.93 and below there at 89.49.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 90.97. The 9-day RSI over
70 indicates the market is approaching overbought levels.
EURO (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.1707.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.1331, with overhead resistance
at 1.1707. 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
9/29/2003
The gold market held up well in the early going,
as it had to confront a higher Dollar and mostly strong US equity market.
However, as the session wore on the Dollar faded significantly off its highs and
therefore we would have expected gold to mustered more gains into mid session.
For most of the session the gold showed strength while silver was weak and that
is possibly a sign that the Kodak news from last week continues to weigh on the
silver market. In our mind, the divergence between silver and gold Monday is
something that might become quite prevalent in the coming sessions.
Technical Outlook
SILVER (DEC): The close under the 40-day moving
average indicates the longer-term trend could be turning down. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Initial support for silver is at 500.0 and below there at 496.0
with resistance likely at 512.5 and 515.0. 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 496.0. Short-term indicators on the defensive.
Consider selling an intraday bounce.
GOLD (DEC): Support for gold today comes in near
378.53, while resistance is pegged at 388.33. 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 378.53. It is a mildly bullish indicator that
the market closed over the pivot swing number. The market’s short-term trend is
negative as the close remains below the 9-day moving average.
COPPER MARKET RECAP
9/29/2003
The copper market was impressive with its ability
reject the early selling pressure Monday. The Chinese players cited buying ahead
of an upcoming holiday but the US session started weaker and firmed into the
close in a rally that didn’t seem to be led by the international market action.
It did appear as if the copper market saw strength from the gains posted in the
equity market. It is also possible that the copper market took heart from the
personal income and spending readings released early in the session. The copper
might have found support off reports that Chilean copper output was down in
August by 0.3% to 389,377 tons, which means that supply looks to remain tight.
ENERGY MARKET RECAP
9/29/2003
Despite reports from a widely follow consumer
watch dog group that US gasoline prices declined by up to 10 cents over the last
two weeks the bias remained up in energy prices Monday. Maybe the colder than
expected weather forecast sparked short covering from a market that was
apparently shorter than most traders anticipated. However, the unleaded gasoline
market wasn’t able to keep pace with the crude and heating oil probably because
the unleaded came into the week with a moderate spec and fund long position. The
natural gas market is showing signs of making a moderate bottom with the trade
trying to talk up a pre-winter rally.
Technical Outlook
CRUDE OIL (NOV): It is a mildly bullish indicator
that the market closed over the pivot swing number. Support for crude is keyed
on 28.24 and below there at 28.11, with resistance pegged at 28.56 and 28.75.
The market’s short-term trend is positive on a close above the 9-day moving
average. Momentum studies are trending higher from mid-range which should
support a move higher if resistance levels are penetrated. The near-term upside
objective is at 28.75.
UNLEADED GAS (NOV): Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 80.09. It is a slightly negative indicator that the close was lower
than the pivot swing number. Resistance today is at 80.09, while support should
be found around 76.09. The downside closing price reversal on the daily chart is
somewhat negative. The market’s close above the 9-day moving average suggests
the short-term trend remains positive.
HEATING OIL (NOV): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 75.41, with resistance is at 77.21. The market’s
short-term trend is positive on a close above the 9-day moving average. Momentum
studies are trending higher from mid-range which should support a move higher if
resistance levels are penetrated. The near-term upside objective is at 77.21.
CORN MARKET RECAP
9/29/2003
The corn market got almost no support from the
strong soybean rally Monday and that is because the trade continues to think
that US corn yields were largely unaffected by adverse weather and that only
soybeans will be subjected to frost impacts off the cold front later this week.
Export inspections for corn were 31.6 million bushels to down from 32.0 million
bushels and that is below the expectations of 32 to 36 million bushels. The
trade is looking forward to the domestic usage in the report Tuesday and with
the livestock numbers remaining pretty high it is possible that the report
Tuesday flips on a bullish switch in corn.
Technical Outlook
CORN (DEC) 09/30/03: Daily momentum studies are
on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The near-term upside objective is at 230 1/2.
The market’s close below the pivot swing number is a mildly negative setup.
Market resistance comes in at 230 1/2 today, with support at 221 1/2. The upside
crossover (9 above 18) of the moving averages suggests a developing short-term
uptrend. The daily closing price reversal down puts the market on the defensive.
SOY COMPLEX RECAP
9/29/2003
November soybeans closed 26 cents higher on the
session in an impressive rally sparked by concerns of late in the growing season
frost. US soybean export inspections came in at 6.76 million bushels from the
prior weeks 7.002 million and that comes off expectations of 7-10 million
bushels. Weekly crop progress report is expected so show how much of the bean
crop is vulnerable to the Wednesday/Thursday freeze threat. Also supporting
prices Monday was supportive Chinese import talk, as that country moved toward a
low tariff quota system. After the hot and dry August impact on the crop the
trade is unwilling to discount the chance that the crop could be pulled down
even further by the coming weather event.
Technical Outlook
SOYBEANS (NOV) 09/30/03: A new contract high was
made on the rally. The gap upmove on the day session chart is a bullish
indicator for trend. 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 next area of resistance is around 692 1/2 and 697 3/4, while
1st support hits today at 673 1/2 and below there at 659 3/4. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 697 3/4. The 9-day RSI over
70 indicates the market is approaching overbought levels.
MEAL (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 208.2.
The rally brought the market to a new contract high. First resistance comes in
at 206.5, with support at 200.0. The market’s short-term trend is positive on a
close above the 9-day moving average. The market’s close above the 2nd swing
resistance number is a bullish indication. With a reading over 70, the 9-day RSI
is approaching overbought levels.
BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. 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 23.65. 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. A new contract high was made on the rally.
The gap upmove on the day session chart is a bullish indicator for trend. Daily
swing resistance is found at 24.76 and above there at 25.05. Support should be
encountered at 24.06 and 23.65. The 9-day RSI over 70 indicates the market is
approaching overbought levels.
WHEAT MARKET RECAP
9/29/2003
December wheat fell even more aggressively than
corn despite the amazing strength in soybeans. Surprisingly US wheat was weaker
with European prices firm in the face of fresh buying by commercial accounts.
Basis action in wheat seemed help deflate wheat prices Monday as the trade took
that as a sign that export demand was weakening. Follow through selling was
attributed to ideas of higher production while others think the selling was
primarily a technical reaction to the action Friday that failed to “get above”
some key points on the charts.
Technical Outlook
WHEAT (DEC) 09/30/03: The swing indicator gave a
moderately negative reading with the close below the 1st support number. Look
for near-term support at 352 and below there at 349 1/2, with resistance levels
at 358 1/2 and 362 1/2. 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 362 1/2.
LIVE CATTLE RECAP
9/29/2003
December cattle moved from 95 lower in the
session early to close 130 points higher on the session as the market managed to
hold near the September lows. The showlist is tighter this week and packers are
concerned that limited supplies of market-ready cattle over the near-term could
keep cash steady. Slaughter for the day was only 119,000 head a compared with
trade expectations at 122,000-128,000 head and last years slaughter of 131,000
head. The fact that packers are no longer making big profits is seen as mixed.
Beef prices were down 28 cents to $159.76 for choice beef and down 87 cents to
$125.09 for select beef at mid-session.
Technical Outlook
CATTLE (DEC) 09/30/03: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 81.62. 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 83.35 and below there at 81.62.
Market resistance is at 85.75 and then again at 86.42. 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’s close above the 9-day moving average
suggests the short-term trend remains positive.
LEAN HOGS RECAP
9/29/2003
December hogs opened and closed at limited down
after mid-day trade which brought the market up 40 points from the lows was met
with active new selling pressures. Funds are caught with a large net long
position going into the report and the weak close Friday and the limit-down
close today leaves speculators scrambling to liquidate longs. There were near
300 unfilled buy orders in the pool at the close. December hogs have given back
more than half of the August-September rally with some chart support at 53.42.
Cash markets were $1.00-$2.00 lower after the bearish USDA report and after it
appears that producers may have backed-up hogs in the country last week.
Slaughter was 387,000 head as compared with expectations of 380,000-383,000
head. The report showed more hogs than trade expectations and also showed
producers expanding.
Technical Outlook
HOGS (DEC) 09/30/03: The market is in a bearish
position with the close below the 2nd swing support number. Resistance levels
comes in at 54.05 and 54.35 today, while support is around 53.65 and then 53.55.
The gap down on the day session chart is bearish with more selling pressure
possible today. The downside crossover (9 below 18) of the moving averages
suggests a developing short-term downtrend. The major trend is down with the
cross over back below the 40-day moving average. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 53.55.
COCOA MARKET RECAP
9/29/2003
A very quiet trade in cocoa is surprising
considering the volatility seen last week. While one can never rule out a return
of political anxiety to the Ivory Coast we would have to think that the more
days that pass without some flare-up will begin to reduce the potential for
violence. The market could have buckled under the weight of the arrival
information with the Ivory Coast showing shipments to be running 7% above the
prior year. Seeing a moderate amount of cocoa move outside of the Ivory Coast
could begin to lessen the market sensitivity of cocoa.
Technical Outlook
COCOA (DEC)09/30/03 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 1624 and above there at
1636 with support at 1586 and 1560. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. The next upside target is
1635.50.
COFFEE MARKET RECAP
9/29/2003
December coffee ended slightly higher after
giving up most of the day’s gains pressured by fund selling. Brazil’s coffee
growing region is expected to get rain early this week, but then turn dry
Wednesday through the weekend before seeing showers again around Oct 6-8th.
London was lower on the rain event in Brazil. Technically the market is in a
bearish setup unless Dec can close back over 66.
Technical Outlook
COFFEE (DEC)9/30/03 The market tilt is slightly
negative with the close under the pivot. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 62.50.The
Coffee contract should run into resistance at 63.90 and above there at 64.60
with support at 62.85 and 62.50. The market’s short-term trend is negative as
the close remains below the 9-day moving average.
SUGAR MARKET RECAP
9/29/2003
The highest close since August 29th could awaken
some of the speculative bulls in sugar as the Friday reversal in the October
contract saw plenty of follow-through buyers today with the market up 15 points.
The loss in downside momentum and the oversold condition of the market were
factors which contributed to the rally but the extent of the follow-through
potential for the market on the upside should be limited. While there are light
showers in European beet areas, the weather does not seem to be a factor on the
current bounce off of the lows. The COT report with options showed funds net
short nearly 24,000 contracts so a technical bounce should not come as a major
surprise. The October contract goes off the board on Tuesday afternoon with most
traders looking for deliveries of Brazil sugar of near 250,000-300,000 tons.
Technical Outlook
SUGAR (MAR) 09/30/03: With the close over the 1st
swing resistance number, the market is in a moderately positive position. Swing
resistance comes in at 6.51, with support found at 6.25. The market’s short-term
trend is positive on a close above the 9-day moving average. Momentum studies
are trending higher from mid-range which should support a move higher if
resistance levels are penetrated. The near-term upside objective is at 6.51.
Consider buying pull-backs since daily studies are bullish.
COTTON MARKET RECAP
9/29/2003
Dec cotton saw a strong recovery rally on
aggressive fund buying after falling for 3 straight sessions last week as the
crop may be facing some quality issues. The latest 6 to 10 day forecast is
calling for above average precipitation between Oct 4th-7th for the Delta and
West Texas which could hurt the quality of the cotton crop since the bolls are
open. The close over 67 cents and a move to a new contract high keeps the Dec
cotton in a bullish formation despite being technically over bought. The next
upside target is at 70 cents.
Technical Outlook
COTTON (DEC) 09/30/03: 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. Next
resistance area comes in at 68.95 and then again at 69.58, while support is
targeted at 66.55 and 64.78. The daily stochastics have crossed over up which is
a bullish indication. The next upside target is 69.58. The 9-day RSI over 70
indicates the market is approaching overbought levels. The outside day up and
close above the previous day’s high is a positive signal. A new contract high
was made on the rally. The daily closing price reversal up is positive.