What Does Today’s Anthrax Scare Have To Do With The Treasury Market?
BOND MARKET RECAP
3/15/2005
March Bonds finished down 0-09 at 110-17, 0-26
off the high and 0-06 up from the low.
March 10 Yr Treasury Notes finished down 0-035 at
108-230, 0-130 off the high and 0-030 up from the low.
The Treasury market was caught within a
range Tuesday and with the US economic information mixed and countervailing and
the Dollar listless we can understand the indecision in the marketplace. We do
think that the anthrax scare adds to the pressure in the Treasury market as
another widespread terrorist attack could explode the US budget deficit and slow
the economy and seeing the US under another attack might cause foreign investors
to accelerate their exodus from the US. We also think that expectations for the
upcoming Industrial production and capacity utilization reports caused some
longs to exit as the market is expecting a moderate gain in those readings
Wednesday.
Technical Outlook
BONDS (JUN) 03/16/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The market could take on a
defensive posture with the daily closing price reversal down. The close below
the 1st swing support could weigh on the market. The next downside target is now
at 109-21. The next area of resistance is around 110-30 and 111-20, while 1st
support hits today at 109-31 and below there at 109-21.
TNOTES (JUN) 03/16/2005: 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. The daily closing price reversal down
puts the market on the defensive. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next downside target is
108-090. Some caution in pressing the downside is warranted with the RSI under
30. The next area of resistance is around 108-305 and 109-095, while 1st support
hits today at 108-145 and below there at 108-090.
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STOCK INDICES RECAP
3/15/2005
March S&P finished down 9.6 at 1202.5, 13 off the
high and 0.7 up from the low.
March S&P E-Mini closed down 9.75 at 1202.25.
This was 0.5 up from the low and 14 off the high.
March Dow closed down 61 at 10779. This was 6 up
from the low and 91 off the high.
News of renewed terror threats (from anthrax)
seemed to combined with a less than expected US retail sales report to pressure
US equities. While the market didn’t seem too concerned about the anthrax
situation it was clear that increased production promises from OPEC failed to
weaken oil prices and that is an ongoing concern for the stock market.
Apparently the OPEC promise is for an increase in the production ceiling as in
the end might not provide any extra physical supply. In other words, the energy
issue continues to be a thorn in the side of the market. We suspect that the
economic report slate Tuesday was mostly disappointing with retail sales failing
to live up to expectations, the Chicago Fed readings unchanged and the New York
Fed readings somewhat supportive.
Technical Outlook
S&P 500 (JUN) 03/16/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The outside day down is somewhat negative.
The close below the 1st swing support could weigh on the market. The next
downside objective is 1191.88. The next area of resistance is around 1209.35 and
1219.27, while 1st support hits today at 1195.65 and below there at 1191.88.
SP EMINI (JUN) 03/16/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The outside day down is a negative signal. The market setup is
somewhat negative with the close under the 1st swing support. The next downside
target is 1191.13. The next area of resistance is around 1209.50 and 1220.12,
while 1st support hits today at 1195.00 and below there at 1191.13.
NASDAQ (JUN) 03/16/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The major trend has turned down with the cross over back
below the 18-day moving average. 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 next downside target
is now at 1496.25. The next area of resistance is around 1524.50 and 1538.25,
while 1st support hits today at 1503.50 and below there at 1496.25.
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CURRENCY MARKET RECAP
3/15/2005
March US Dollar finished up 21 at 8213, 7 off the
high and 53 up from the low.
March Euro finished down 0.51 at 133.45, 0.92 off
the high and 0.2 up from the low.
March Euro Dollar closed down 0.015 at 96.49.
This was 0.005 up from the low and 0.025 off the high.
March Canadian Dollar closed down 0.02 at 82.98.
This was 0.18 up from the low and 0.58 off the high.
March British Pound finished down 0.08 at 190.38,
1.28 off the high and 0.06 up from the low.
March Swiss closed down 0.34 at 86.37. This was
0.22 up from the low and 0.61 off the high.
March Japanese Yen closed up 0.37 at 96.38. This
was 0.12 up from the low and 0.34 off the high.
The Dollar posted some really surprising action
as it managed to stay positive, despite slack or mixed economic readings, an
anthrax scare and overt weakness in the US equity market. In the past terrorism
threats have provided the Dollar with flight to quality buying but it is a
little strange to see a potential isolated attack on the US and yet for the
Dollar to rise. For the Dollar to have managed a rise in the wake of a general
migration away from the Dollar is also really surprising. The biggest gainer on
the session was the Yen which seems to be picking up interest because of the
temporary softening of energy prices.
Technical Outlook
YEN (JUN) 03/16/2005: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The market now above the 18-day moving average suggests the
longer-term trend has turned up. Market positioning is positive with the close
over the 1st swing resistance. The next downside objective is now at 95.98. The
next area of resistance is around 96.61 and 96.89, while 1st support hits today
at 96.15 and below there at 95.98.
EURO (JUN) 03/16/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The cross over and close above the 18-day moving
average indicates the longer-term trend has turned up. A negative signal was
given by the outside day down. The close below the 1st swing support could weigh
on the market. The next downside objective is 132.51. Bearish daily studies
indicate selling minor rallies this session. The next area of resistance is
around 134.01 and 134.75, while 1st support hits today at 132.89 and below there
at 132.51.
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PRECIOUS METALS RECAP
3/15/2005
April Gold closed down 0.2 at 441.4. This was 1.1
up from the low and 3.5 off the high.
March Silver finished down 0.003 at 7.407, 0.123
off the high and 0.107 up from the low.
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Early in the session the gold and silver markets
were divergent of the copper and platinum market and that seemed to be the
influence of a higher US Dollar. We suspect that the renewed concern of anthrax
in the US was seen by some gold and silver longs as a deflationary threat. In
fact, given the failure to see lower energy prices in the wake of the OPEC
production ceiling hike it would seem like soaring oil prices are going to
continue to hold back the world recovery, which in a sense robs the metals of
the potential for physical buying. In the end, the metals decided not to whip up
flight to quality interest and that is a little surprising.
Technical Outlook
SILVER (MAY) 03/16/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The major trend has turned down with the cross over back below the
18-day moving average. The market could take on a defensive posture with the
daily closing price reversal down. It is a slightly negative indicator that the
close was under the swing pivot. The next downside objective is 718.1. The next
area of resistance is around 752.2 and 764.1, while 1st support hits today at
729.3 and below there at 718.1.
GOLD (APR) 03/16/2005: Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The major trend could be turning up with the close back
above the 18-day moving average. The market tilt is slightly negative with the
close under the pivot. The next downside target is 437.4. The next area of
resistance is around 443.7 and 446.6, while 1st support hits today at 439.1 and
below there at 437.4.
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COPPER MARKET RECAP
3/15/2005
March Copper closed up 2.00 at 149.05. This was
1.45 up from the low and 1.45 off the high.
The copper market forged another upside probe but
seemed to back away from the optimism into the close. We suspect that strong
price action in other markets like zinc and lead supported copper but with the
US Dollar finishing higher in the face of new anthrax concerns and ongoing
energy prices concerns we have to think that copper is vulnerable to macro
economic pressures, especially in the face of 150 copper pricing. It should also
be noted that the small spec and fund positioning is at a historical extreme.
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ENERGY MARKET RECAP
3/15/2005
April Crude Oil closed unchanged at 55.65. This
was 0.75 up from the low and 0.45 off the high.
April Heating Oil closed up 1.66 at 151.48. This
was 2.48 up from the low and 0.52 off the high.
April Unleaded Gas finished down 0.08 at 154.16,
0.84 off the high and 2.36 up from the low.
April Natural Gas finished up 0.04 at 7.28, 0.06
off the high and 0.11 up from the low.
April Propane closed up 0.01 at 0.87. This was
equal to the low and equal to the high.
The energy complex showed only a minimal setback
in prices in the wake of news that the OPEC would immediately raise their
production ceiling by 500,000 barrels per day. Apparently the market doesn’t
necessarily see that as an actual additive to near term supply as crude remained
higher for most of the afternoon action and the heating oil market rose rather
sharply in the front months. OPEC even seemed to open up the potential for an
April 10th increase but if there isn’t more oil flowing, the market apparently
isn’t overly concerned. OPEC made it clear that the April 10th move wasn’t
carved in stone. Given the action in heating oil it is also clear that lingering
cold weather is giving some sectors a late boost in heating demand!
Technical Outlook
CRUDE OIL (MAY) 03/16/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next downside objective is now at 54.38. The market is approaching overbought
levels with an RSI over 70. The next area of resistance is around 56.25 and
56.77, while 1st support hits today at 55.05 and below there at 54.38.
UNLEADED (MAY) 03/16/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The major trend could be turning up with the close back above the
18-day moving average. It is a mildly bullish indicator that the market closed
over the pivot swing number. The next downside target is 150.58. The next area
of resistance is around 155.76 and 156.98, while 1st support hits today at
152.56 and below there at 150.58.
HEATING OIL (MAY) 03/16/2005: The daily
stochastics have crossed over up which is a bullish indication. Momentum studies
are trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. The close
over the pivot swing is a somewhat positive setup. The next upside target is
153.99. The market is approaching overbought levels with an RSI over 70. The
next area of resistance is around 152.98 and 153.99, while 1st support hits
today at 149.98 and below there at 147.99.
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CORN MARKET RECAP
3/15/2005
May Corn finished up 7 1/2 at 228 1/2, 2
1/2 off the high and 5 1/4 up from the low. December Corn closed up 4 3/4 at 247
1/2. This was 3 1/4 up from the low and 2 off the high.
The surge higher in soybeans and meal helped
support the corn market today as traders view new crop corn as competition
against soybeans for planted acreage. Export news was slow this week but China
appears to have slowed the export pace after active movement of near 3 million
tonnes in the first two months of the year. Internal Chinese corn prices have
moved higher in the past week which might begin to slow the exports. Cash basis
in the Midwest is steady. The move to the highest level since September 20th
supported new buying and short-covering. Keep in mind, small traders were
holding a record net short position in corn as of March 8th and the market hit
significant new buying on the move through resistance at 225 for May futures.
Support for May corn comes in at 225 1/2 with 240 as next resistance.
Technical Outlook
CORN (MAY) 03/16/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The major trend could be
turning up with the close back above the 18-day moving average. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The next upside target is 235 1/2. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
232 1/4 and 235 1/2, while 1st support hits today at 224 3/4 and below there at
220 1/4.
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SOY COMPLEX RECAP
3/15/2005
May Soybeans finished up 25 at 681, 3 1/2 off the
high and 12 1/2 up from the low. November Soybeans closed up 10 at 644. This was
3 up from the low and 6 off the high.
May Soymeal closed up 6.5 at 202.2. This was 2.2
up from the low and 1.3 off the high.
May Soybean Oil finished up 0.55 at 24.23, 0.52
off the high and 0.3 up from the low.
The market pushed sharply higher in overnight
trade with talk of too much rain in key producing areas of Brazil this week
which might disrupt the harvest. The market is use to seeing easy access for
soybeans at this time of the year during the Brazil harvest but heavy rains in
parts of Brazil and continued deterioration of the crop in the south caught
commercial traders off-guard and supported a wide range of buying. In addition
to the commercial buying, small speculators are also caught short and as of
March 8th small speculators held a record net short position in soybeans. Funds
returned as active buyers and the bullish technical action continues to support
the uptrend. China futures were sharply higher overnight and palm oil futures
also surged higher. News that India increased their import price for soyoil by
10.3% and left other edible oils unchanged sparked the sharp rally in palm oil
futures as the move should enhance palm imports at the expense of soyoil. The
news is negative to soybean oil and could slow India imports. Talk that the Mato
Grosso region in Brazil could be hit with 3-4 more inches of rain in the next 5
days helped support the soybean rally overnight. The German newsletter Oil World
pegged the Brazil crop at 53.3 million tonnes from 58 million as previous
forecast. Support for May soybeans comes in at 670 1/4 with 685 and 693 as next
resistance.
Technical Outlook
BEANS (MAY) 03/16/2005: The crossover up in the
daily stochastics is a bullish signal. Rising stochastics at overbought levels
warrant some caution for bulls. The major trend could be turning up with the
close back above the 18-day moving average. 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 upside target is 694 3/4. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 689 and 694 3/4, while 1st support hits today at
673 and below there at 662 3/4.
MEAL (MAY) 03/16/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market now above the 18-day moving average suggests the longer-term
trend has turned up. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. 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 upside objective is 205.4.
The 9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 203.9 and 205.4, while 1st support hits today
at 200.5 and below there at 198.5.
BEANOIL (MAY) 03/16/2005: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The market setup is supportive for
early gains with the close over the 1st swing resistance. The next downside
target is now at 23.47. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 24.64 and 25.10, while 1st
support hits today at 23.82 and below there at 23.47.
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WHEAT MARKET RECAP
3/15/2005
May Wheat finished up 14 at 368, 1 off the high and 9 up from
the low. July Wheat closed up 13 1/2 at 375. This was 10 up from the low and 1
off the high.
With funds buying, small specs caught net short
the market and commercial shorts also scrambled to cover, the market surged
higher to the highest level since July. The rally in soybeans overnight
triggered the gap higher opening and the market was void of new commercial or
speculative sellers. End user buyers were also caught short-bought and waiting
for a break to buy but had to scramble for some coverage on the rally. News that
Kansas crop conditions deteriorated in the past week helped provide some
support. Jordan will tender for 50,000 tons of wheat next week. The recent
slowdown in exports from the US in spite of the dollar movement has traders
concerned that the recent run-up in prices may have left US wheat less
competitive on the world market. The weekly crop progress reports showed that
Kansas winter wheat crops are rated 69% in good to excellent condition as
compared with 75% last week. May wheat support comes in at 362 1/2 with 376 as
next resistance.
Technical Outlook
WHEAT (MAY) 03/16/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The market now above the
18-day moving average suggests the longer-term trend has turned up. If
yesterday’s gap higher on the day session chart holds, additional buying could
develop this session. 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 near-term upside target is at 376. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 373 and 376, while 1st support hits today at 363 and below there at 356.
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LIVE CATTLE RECAP
3/15/2005
April Live Cattle finished up 0.65 at 89.75, 0.20
off the high and 0.50 up from the low.
March Feeder Cattle closed up 0.72 at 106.07.
This was 0.32 up from the low and 0.07 off the high.
The lack of new news from the courts, the
discount of futures to cash and higher beef prices were factors which helped
support cattle futures to trade higher. Snow in the plains and a smaller
showlist this week could support cash cattle this week as long as packers do not
believe that the border will open with Canada any day now. Boxed-beef cut-out
values at mid-session were up $1.13 to $157.08 as compared with $151.26 last
week. Slaughter came in at 121,000 head from trade expectations for
115,000-120,000 head.
Technical Outlook
CATTLE (APR) 03/16/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. A positive setup occurred
with the close over the 1st swing resistance. The next downside objective is
89.000. The next area of resistance is around 90.070 and 90.370, while 1st
support hits today at 89.400 and below there at 89.000.
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LEAN HOGS RECAP
3/15/2005
April Lean Hogs finished unchanged at 70.57, 0.77
off the high and 0.47 up from the low.
March Pork Bellies closed up 0.40 at 88.00. This
was 0.50 up from the low and equal to the high.
After moving to the lowest level since February
25th, June hogs help psychological support at 78.00 and managed to close higher.
Ideas that the recent break of 415 points off of the highs may have been a
little too much too soon helped to support the bounce. Cash hogs were down
$1.00-$1.50 at most locations and the tone was weak after a break in loin prices
on Monday. Packers have cut-back on slaughter but this has failed to support the
pork market. The 2-day lean index for the period ending March 11th came in at
74.17, down.35 on the session and up from 72.06 last week at this time.
Slaughter came in at 377,000 head from trade expectations for 375,000-382,000
head. For the weekly cold storage report, released this afternoon, traders are
looking for frozen belly stocks to increase by 2.0-2.5 million pounds from last
week.
Technical Outlook
HOGS (APR) 03/16/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. 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 target is now at 69.420. Some caution in
pressing the downside is warranted with the RSI under 30. The next area of
resistance is around 71.200 and 71.900, while 1st support hits today at 69.970
and below there at 69.420.
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COCOA MARKET RECAP
3/15/2005
May Cocoa finished up 13 at 1785, 10 off the high
and 12 up from the low.
May cocoa prices closed higher Tuesday, but
within Monday’s range as origin selling provided resistance against light
speculative buying. Funds have been aggressive buyers of cocoa recently on ideas
of tightening supply amid political strife. However, with the Ivory Coast
farmer’s union shelving their strike over government funding, some of the
political concern has been abated and might encourage more funds to take
profits. Friday’s reversal action is technically bearish and if the market now
has a hard time pushing back over $1,801, the funds may decide to book more
profits. Timely rains have helped the growing progress of Cameroon’s mid-crop.
CSCE warehouse stocks were up over 93,000 bags to 2.314 mil bags as of March
15th.
Technical Outlook
COCOA (MAY) 03/16/2005: 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 cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The market has a slightly positive tilt with the close over the swing pivot. The
next downside objective is now at 1763. The next area of resistance is around
1796 and 1806, while 1st support hits today at 1774 and below there at 1763.
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COFFEE MARKET RECAP
3/15/2005
May Coffee closed up 2.20 at 136.90. This was
6.40 up from the low and 0.60 off the high.
In the old fashion bull markets of the 1970’s,
traders use to say buy a lower opening on the third day down from any contract
high. Opened lower on the third day down from the highs and found active new
buying support from fund traders when futures managed to move higher on the
session. The buying fueled a sharply higher close with a big range. Trade house
support came in on the lower opening and support at 130.90 managed to hold on a
closing basis. Rains in Parana and Sao Paulo Brazil helped to ease dryness
concerns but the dryness in Vietnam seems to be the key issue. The International
Coffee Organization pegged world coffee production for the 2005/2006 season at
106 million bags as compared with 113.1 million this year.
Technical Outlook
COFFEE (MAY) 03/16/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The upside closing price reversal on the daily
chart is somewhat bullish. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. The next upside target is 142.40.
The market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 140.35 and 142.40, while 1st support hits today at
133.40 and below there at 128.50.
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SUGAR MARKET RECAP
3/15/2005
May Sugar closed down 0.09 at 9.14. This was 0.02
up from the low and 0.09 off the high.
A lack of new export news and weakness in other
commodity markets along with the bounce in the dollar helped trigger selling in
sugar. Speculative long liquidation selling was offset by some trade house
buying on the break. Less inflationary fears for commodity markets added to the
bearish tone. News that China might consider releasing government stocks onto
the market to ease recent price advances failed to find much reaction in sugar.
Traders are also taking a wait-and-see attitude toward potential buying from
Russia. May support comes in at 909 and 902 with 927 as resistance.
Technical Outlook
SUGAR (MAY) 03/16/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down.
Stochastics are at mid-range but trending higher, which should reinforce a move
higher if resistance levels are taken out. The major trend could be turning up
with the close back above the 18-day moving average. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside objective is at 9.26. The next area of resistance is around
9.19 and 9.26, while 1st support hits today at 9.09 and below there at 9.05.
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COTTON MARKET RECAP
3/15/2005
May Cotton finished up 0.52 at 53.63, 0.07 off
the high and 1.13 up from the low.
May cotton managed to move higher on the session
after spending part of the day lower. The strength in the grain markets and the
need for cotton prices to stay strong to compete for planted acreage with the
grains helped support. In addition, fund buyers continue to jump into any market
which is developing an uptrend for the growing season ahead. Traders are
concerned that the sharp rally in futures might slow demand but textile exports
from Asia are on fire and polyester prices are extremely high so export
prospects remain favorable. The technical action remains bullish with the market
staying inside of a steep uptrend channel and the steady increase in open
interest remains as a bullish development.
Technical Outlook
COTTON (MAY) 03/16/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. It is a mildly bullish indicator that the market closed over the pivot
swing number. The near-term upside target is at 54.56. With a reading over 70,
the 9-day RSI is approaching overbought levels. The next area of resistance is
around 54.23 and 54.56, while 1st support hits today at 53.03 and below there at
52.17.