Washout In Copper — Here’s Why

Technical Outlook

#BONDS (SEP) 6/23/2004: The market tilt is slightly
negative with the close under the pivot. Near-term resistance for bonds is at
105.08 and then again at 105.19, while swing support hits at 104.24 and below
there at 104.19. A positive indicator was given with the upside crossover of the
9 & 18 bar moving average. Rising stochastics at overbought levels warrant
some caution for bulls. The next upside objective is 105.19.

T-NOTES(SEP) Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 108.24.
The market’s close below the pivot swing number is a mildly negative setup.
Near-term resistance for the T-Notes is at 108.18 and then again at 108.24,
while swing support hits at 108.08 and below there at 108.04. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

6/22/2004

The stock market was expected to open slightly higher
but didn’t show much in the way of positive leadership. Around mid morning
prices weakened and appeared to be in a mode to washout aggressively. In the
face of favorable weekly chain store sales and good Brokerage stock earnings one
would have expected the Blue Chip stocks to have performed better. In fact,
NASDAQ stocks were pretty much leaders Tuesday hinting at a divergence among
stock sectors. In short the stock market seemed to be in a profit taking mode
Tuesday and with the economy report slate mostly empty until Thursday one might
expect more directionless trade on Wednesday.

Technical Outlook

#S&P500 (SEP) 6/23/2004: Market positioning is
positive with the close over the 1st swing resistance. The upside daily closing
price reversal gives the market a bullish tilt. Underlying support comes in at
1128.70 and 1120.00, with overhead resistance at 1140.90 and 1144.40. 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 objective is
now at 1120.00.

S&P E-Mini (SEP): The daily closing price
reversal up is 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 1120.38. A positive setup
occurred with the close over the 1st swing resistance. Near-term resistance for
the S&P Mini is at 1141.00 and then again at 1144.38, while swing support
hits at 1129.00 and below there at 1120.38. The market’s close below the 9-day
moving average is an indication the short-term trend remains
negative.

NASDAQ (SEP) The outside day up is somewhat positive.
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 setup is supportive for early gains with
the close over the 1st swing resistance. The market should run into resistance
at 1493.25 and above there at 1501.38 with support at 1464.75 and 1444.38.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. The next downside objective is 1444.38.

MINI DOW (MAR) The upside daily closing price
reversal gives the market a bullish tilt. The close above the 9-day moving
average is a positive short-term indicator for trend. The market should run into
resistance at 10442 and above there at 10470 with support at 10339 and 10264.
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 10264. The close over the pivot swing is a somewhat positive
setup.

 

CURRENCY MARKET RECAP

6/22/2004

The currency market continues to lack a definitive
stance and with the US economy report slate empty and European stats only
slightly supportive of the Euro there doesn’t seem to be a prevailing trend.
However, the Canadian certainly got some extremely favorable news from the
scheduled reports and with the action Tuesday might be headed into a series of
gains. The Pound on the other posted a moderate failure on the charts and might
be in for a series of declines. In short, there are no clear cut leaders but
with the Canadian numbers coming in strong one might suggest that the Canadian
Dollar has a macro economic differential edge.

Technical Outlook

#CURRENCIES 6/23/2004: YEN (SEP): A positive signal
for trend short-term was given on a close over the 9-bar moving average. There
could be some early pressure today given the market’s negative setup with the
close below the 2nd swing support. Swing resistance is targeted at 92.25 and
above there at 92.84, with the yen finding support around 91.38 and below there
at 91.10. Rising stochastics at overbought levels warrant some caution for
bulls. The next upside objective is 92.84.

EURO (SEP): 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 1.2036. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2036, with overhead resistance at 1.2118. 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

6/22/2004

With the Dollar mostly higher on the session it is
pretty impressive that gold managed to show strength. Even after gold was
moderately lower on the session it managed to recover and did so with the Dollar
showing little overall movement. Another impressive thing about the gold action
Tuesday is that gold stayed positive while silver, platinum and copper were all
showing significant weakness. We might add that gold and silver forged gains
without the benefit of an anxiety event or the advantage of favorable Forex
action.

Technical Outlook

#P-METALS 6/23/2004: SILVER (SEP): The market now
above the 40-day moving average suggests the longer-term trend is up. The market
tilt is slightly negative with the close under the pivot. Initial support for
silver is at 584.3 and below there at 580.2 with resistance likely at 590.1 and
593.3. A positive signal for trend short-term was given on a close over the
9-bar moving average. 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 590.1.

GOLD (AUG): Support for gold today comes in near
392.58, while resistance is pegged at 398.78. Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 398.78. The close over the pivot
swing is a somewhat positive setup. The close above the 9-day moving average is
a positive short-term indicator for trend.

 

COPPER MARKET RECAP

6/22/2004

A significant washout in copper appears to have come
from weak price action in China and because of talk that Chinese copper players
might be “de-stocking”. In other words, those that bought forward are tossing
that high priced supply back onto the market and that really undermines the
fundamental outlook for copper prices. Given the magnitude of the recent
declines some traders suggested that the net spec position in copper might be
nearing a “net short”. Liquidation in other base metals like Zinc and lead add
to the negative attitude toward copper. Even platinum (which is also thought to
be very reliant on Chinese demand) is showing signs of liquidation pressure and
that doesn’t bode well for copper.

 

ENERGY MARKET RECAP

6/22/2004

Energy prices forged a tightened range but held a
positive bias in the early trade. It is possible that projections of continued
tight global oil stocks might have prompted some short covering as the Center
for Global Energy Studies suggested that the 1st half change in stocks only
resulted in a 1.55 million barrel per day rebuilding and that is supposedly not
enough to avoid a re-tightening in the 4th quarter. However, short term
expectations call for a build in US weekly crude oil stocks in the Wednesday
report and that could shift control back to the bear camp. Further increased
production talk from Libya suggested that they might be able to an output of 1.7
million barrels per day by August and that certainly fosters talk of increasing
world supply.

Technical Outlook

#ENERGIES 6/23/2004: CRUDE OIL (AUG): The upside
daily closing price reversal gives the market a bullish tilt. The close over the
pivot swing is a somewhat positive setup. Support for crude is keyed on 37.88
and below there at 37.38, with resistance pegged at 38.62 and 38.86. The close
above the 9-day moving average is a positive short-term indicator for trend.
Stochastics are rising from over sold levels which is bullish and should support
higher prices. The near-term upside target is at 38.86.

UNLEADED GAS (AUG): 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 123.21. The market setup is supportive
for early gains with the close over the 1st swing resistance. Resistance today
is at 123.21, while support should be found around 113.81. A positive signal for
trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (AUG): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 98.38, with resistance is at 105.18. Short-term indicators
suggest buying pullbacks today. The upside crossover of the 9 & 18 bar
moving average is a positive signal. Momentum studies are rising from mid-range
which could accelerate a move higher if resistance levels are penetrated. The
near-term upside target is at 105.18. The upside daily closing price reversal
gives the market a bullish tilt.

 

CORN MARKET RECAP

6/22/2004

The market has moved to the lowest level since
January 12th with more long liquidation and rolling of longs to other contracts
keeping the bearish tone in tact. The weather forecast looks ideal for improving
crop conditions ahead except for the colder than normal readings but with the
crop planted early, heat units are not a concern. The drier weather should help
boost conditions for the eastern cornbelt this week. The lack of heat in the
forecast into early July has traders more confident that pollination will occur
with the crop in good condition which increases the odds of new record high
yields. The slow export pace also provides less commercial support on weakness.
Basis levels were firm but from a lack of producer selling; not new export
business. Deliverable stocks in Chicago for the week ending June 18th came in at
5.55 million bushels as compared with 5.478 million last week and 2.473 million
last year. December corn support comes in at 276 and 274 3/4 with 281 and 288
1/4 as resistance.

Technical Outlook

#CORN (DEC) 6/23/2004: 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 272 3/4. The market setup is
somewhat negative with the close under the 1st swing support. Market resistance
comes in at 283 1/4 today, with support at 272 3/4. The close below the 9-day
moving average is a negative short-term indicator for trend. Short-term
indicators on the defensive. Consider selling an intraday bounce.

 

SOY COMPLEX RECAP

6/22/2004

The July/November spread activity is still keeping
trade choppy as the July and August time frame seems to be historically tight
for soybeans but non-threatening weather seems to be limiting the upside for new
crop months. The CBOT announced that initial margin requirements for new crop
soybeans will go up to $2430 per contract on Wednesday from $2160 previous. New
crop meal moves to $1890/contract from $1755 previous and new crop oil margins
drop to $810 from $1,148 previous. While the drop in crop ratings helped to
provide some initial support for November soybeans, the weather outlook for this
week looks non-threatening and crop conditions are expected to improve for next
week which has triggered the long liquidation sell-off into mid-session. Spot
delivery cash basis jumped 10 cents in Decatur Illinois which helped support
July futures. Brazil exporters are expected to resume shipments to China which
have been banned recently but exporters are a bit slow to jump into new
contracts which may have higher quality standards. Support for November soybeans
comes in at 665 1/4 and 659 with 683 and 694 as resistance.

Technical Outlook

#SOYBEANS (NOV) 06/23/04 The market could take on a
defensive posture with the daily closing price reversal down. The market tilt is
slightly negative with the close under the pivot. The next area of resistance is
around 679 2/4 and 689 3/4, while 1st support hits today at 663 2/4 and below
there at 657 3/4. The market’s close on the 9-day moving average is neutral.
Rising from over sold levels, daily momentum studies would support higher prices
especially on a close above resistance. The next upside objective is 689
3/4.

MEAL (DEC): Stochastics are rising from over sold
levels which is bullish and should support higher prices. The near-term upside
target is at 215.7. First resistance comes in at 214.0, with support at 210.5.
The close above the 9-day moving average is a positive short-term indicator for
trend. The close over the pivot swing is a somewhat positive setup.

BEAN OIL (DEC): 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 23.43. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
outside day down is somewhat negative. The market could take on a defensive
posture with the daily closing price reversal down. Daily swing resistance is
found at 24.58 and above there at 25.17. Support should be encountered at 23.71
and 23.43. Short-term indicators on the defensive. Consider selling an intraday
bounce.

 

WHEAT MARKET RECAP

6/22/2004

The potential for more harvest selling pressures as
areas of the central winter wheat belt dry out in the next few days helped to
pressure the market along with ideas that export demand is weak due to sharp
jump in northern hemisphere wheat production this year. The move under last
week’s lows negates the weekly reversal and leaves the market in a technically
weak condition. News that Egypt cancelled their tender for 50,000-60,000 tons of
wheat added to the bearish export tone. With the market at the lowest level
since November, traders have expected to see increased export news but the
tender wire is quiet. In addition, traders believed that crops rated in good to
excellent condition would fall this week but the USDA pegged conditions at 42%
good to excellent on Monday, unchanged on the week. September wheat support
falls back to 351 and 247 1/2 with 358 and 363 as resistance.

Technical Outlook

#WHEAT (DEC) 6/23/2004: There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Expect near-term support around 359 and below there at 356, with
resistance levels at 368 and 374. 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 356.

 

LIVE CATTLE RECAP

6/22/2004

The market pushed lower in anticipation of lower cash
markets this week and concerns for demand after the 4th of July bookings are
complete. Beef prices were up 51 cents to $145.31 as compared with 148.59 last
week at this time. The move to a 6-session high early in the session failed to
attract new buyers and the trade psychology remains negative towards this weeks
cash market. Poor profit margins have helped to keep the tone negative and the
bounce in beef prices is unlikely to help profit margins much and was not seen
as a bearish factor. The lower close after a shallow recovery bounce keeps the
short-term technical outlook bearish.

Technical Outlook

#CATTLE (AUG) 6/23/2004: Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 85.70. The market tilt is slightly negative with the close
under the pivot. Support should be encountered at 86.32 and below there at
85.70. Market resistance is at 87.92 and then again at 88.87. The market could
take on a defensive posture with the daily closing price reversal down. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.

 

LEAN HOGS RECAP

6/22/2004

The market opened higher and closed lower basis the
August contract as traders remain fearful of a seasonal decline in cash prices
into late July and August and from concerns that Friday’s USDA Hogs and Pigs
report will show a hefty near-term supply of pork. The bullish news from the
Cold Storage report helped to temporarily support bellies and hogs but there was
a lack of new buying interest after the higher opening. In addition, the cash
markets were $2.00 higher at Peoria but traders see the strength in cash as a
temporary factor. The 2-day lean index for the period ending June 18th was
79.25, up 11 cents from the previous session and up from 79.20 one week 8.86 the
previous week.

Technical Outlook

#HOGS (AUG) 6/23/2004: The market setup is somewhat
negative with the close under the 1st swing support. Resistance levels comes in
at 76.25 and 77.42 today, while support is around 74.55 and then 74.02.
Short-term indicators on the defensive. Consider selling an intraday bounce. The
close below the 9-day moving average is a negative short-term indicator for
trend. 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 74.02.

 

COCOA MARKET RECAP

6/22/2004

Weak price action in cocoa reconfirms the bearish
bias in cocoa but once again the trade reported some light industry buying
around the lows. In other words, physical players are apparently going hand to
mouth but are willing to secure forward supply if the price is right. Given the
proximity to the June lows we wouldn’t be surprised if the Funds began to get a
little more interested in the short side as they seem to be heavily influenced
by the technicals. Continued origin sales would seem to give the bear camp an
additional measure of control.

Technical Outlook

COCOA (SEP) 06/23/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1352 and above there at 1360 with support at 1336 and 1328. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1328.00.

 

COFFEE MARKET RECAP

6/22/2004

September Coffee attempted to rally with a strong
opening based on ideas the futures were short-term oversold but a lack of new
buying interest and some light long liquidation selling helped to push the
market back to near unchanged on the session and well under the opening. The
London market managed to close slightly higher but near the lows of the day and
below the opening which keeps the market in a bearish set-up but oversold after
recent sharp losses. The lack of threatening weather on the longer-term weather
maps has helped to keep the market in a long liquidation mode but traders seem
hesitant to hold a short position after a near 1200 point break in just 7
trading sessions.

Technical Outlook

COFFEE (SEP) 6/23/04 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 75.05. The
Coffee contract should run into resistance at 76.90 and above there at 77.65
with support at 75.6 and 75.05. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

6/22/2004

October sugar pushed slightly lower with a quiet,
inside trading session. The 2003/2004 sugar crop from South Africa was hit with
drought conditions and sugar industry officials pegged the crop at 2.4 million
tons, down 12.4% from last year. The International Sugar Organization indicated
that the world production deficit for the 2004/2005 could be seen as high as 5
million tons or could be down to 2.0-2.5 million tons depending on the 2005
production from Brazil. The group indicates a surplus of 222,000 tons for the
2003/2004 season which was down from a surplus of 6.857 million tons the
previous year.

Technical Outlook

#SUGAR (OCT) 6/23/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
7.70, with support found at 7.40. The close above the 9-day moving average is a
positive short-term indicator for trend. 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 7.40.

 

COTTON MARKET RECAP

6/22/2004

December cotton moved to a new contract low as
improving crop conditions and a lack of commercial or speculative buying support
on the break kept the bears in control. Not only is the dry land areas in West
Texas in good condition, the California crop is off to an excellent start with
20% of the California cotton crop already setting bolls. The 6-10 day and 8-14
day forecast models from the National Weather Service call for above normal
precipitation for the West Texas region which would appear to be an ideal
forecast out through the first week in July.

Technical Outlook

#COTTON (OCT) 6/23/2004: A negative signal for trend
short-term was given on a close under the 9-bar moving average. The close below
the 1st swing support could weigh on the market. Next resistance area comes in
at 52.27 and then again at 53.42, while support is targeted at 50.64 and 50.16.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The next downside objective is 50.16. More downside action may
be limited by the RSI under 20 putting the market in extremely oversold
territory. The market made a new contract low on the break.