What Is Oil Saying About The U.S. Economy?
BOND MARKET RECAP
4/29/2005
June Bonds finished down 0-06 at 114-27, 0-22 off
the high and 0-05 up from the low.
June 10 Yr Treasury Notes finished down 0-080 at
111-135, 0-135 off the high and 0-025 up from the low.
Treasury prices were able to discount some
sloppy early trade and in the process manage to rise in the face of initial
stock market gains and declines in energy prices. However, the Treasuries were
certainly supported by the flow of economic information on Friday morning as the
Employment Cost Index rise wasn’t as concerning as initial expectations expected
and that served to countervail the strong Consumer Spending and Income figures.
However, later in the session the scheduled economic information softened and
that shifted sentiment toward bonds and notes back into the bull camp. Both the
Michigan sentiment readings and the Chicago Purchasing Managers readings were
soft and that facilitates more talk about the soft spot!
Technical Outlook
BONDS (JUN) 05/02/2005: 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 daily
closing price reversal down is a negative indicator for prices. The market tilt
is slightly negative with the close under the pivot. The next upside target is
115-27. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 115-10 and 115-27, while 1st support hits
today at 114-16 and below there at 114-06.
TNOTES (JUN) 05/02/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The market’s close below the pivot swing number
is a mildly negative setup. The next upside objective is 112-010. The next area
of resistance is around 111-220 and 112-010, while 1st support hits today at
111-060 and below there at 111-005.
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STOCK INDICES RECAP
4/29/2005
June S&P finished up 15.4 at 1158.5, 0.9 off the
high and 18 up from the low.
June S&P E-Mini closed up 15.25 at 1158.25. This
was 18 up from the low and 1.25 off the high.
June Dow closed up 133 at 10197. This was 150 up
from the low and 3 off the high.
Fortunately for the stock market bulls, the
equity market was supported by a flurry of earnings reports or the market might
have been discouraged by the combination of US economic readings on Friday
morning. While the inflation index came in a little softer than expected it
didn’t seem like many in the trade were willing to buy stocks off the potential
that the Fed would hold off on interest rate hikes next week. We do think that
generally lower energy prices were responsible for some the buying on Friday as
nearby crude oil ended the week significantly below the levels were they started
the week.
Technical Outlook
S&P 500 (JUN) 05/02/2005: The daily stochastics
have crossed over up which is a bullish indication. Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The major trend has
turned down with the cross over back below the 18-day moving average. A positive
signal was given by the outside day up. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
upside target is 1173.12. The next area of resistance is around 1167.94 and
1173.12, while 1st support hits today at 1149.05 and below there at 1135.33.
SP EMINI (JUN) 05/02/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The upside closing price reversal on the
daily chart is somewhat bullish. The market setup is supportive for early gains
with the close over the 1st swing resistance. The near-term upside target is at
1173.31. The next area of resistance is around 1167.87 and 1173.31, while 1st
support hits today at 1148.63 and below there at 1134.82.
NASDAQ (JUN) 05/02/2005: The daily stochastics
gave a bullish indicator with a crossover up. The stochastics indicators are
rising from oversold levels, which is bullish and should support higher prices.
The close below the 18-day moving average is an indication the longer-term trend
has turned down. The daily closing price reversal up on the daily chart is
somewhat positive. Market positioning is positive with the close over the 1st
swing resistance. The near-term upside objective is at 1448.75. The next area of
resistance is around 1440.50 and 1448.75, while 1st support hits today at
1410.50 and below there at 1388.75.
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CURRENCY MARKET RECAP
4/29/2005
June US Dollar finished up 6 at 8442, 7 off the
high and 58 up from the low.
June Euro finished down 0.3 at 128.79, 0.95 off
the high and 0.11 up from the low.
June Euro Dollar closed down 0.02 at 96.575. This
was equal to the low and 0.025 off the high.
June Canadian Dollar closed down 0.42 at 79.48.
This was 0.21 up from the low and 0.59 off the high.
June British Pound finished down 0.08 at 190.3,
0.64 off the high and 0.13 up from the low.
June Swiss closed down 0.17 at 83.85. This was
0.15 up from the low and 0.74 off the high.
June Japanese Yen closed up 1.02 at 95.69. This
was 0.27 up from the low and 0.24 off the high.
The Dollar started out weak and then managed to
bounce off the US personal spending and income readings, it seemed to be mostly
undermined throughout the session. While the employment Cost Index report was
softer than expected, we didn’t really get the sense that the trade was reading
to run the Dollar up off the idea of rising inflation, probably because the
market was also circulating talk that the Chinese were poised to re-peg their
currency. In other words, the rumor mill dominated the morning action in the
Dollar instead of the US economic reports. However, we are a little surprised
that the Dollar managed to rise into mid session in the wake of the softer than
expected Chicago Purchasing managers reading and the contraction in the
University of Michigan sentiment readings.
Technical Outlook
YEN (JUN) 05/02/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up.
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. 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 objective is at 96.19. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 95.94 and
96.19, while 1st support hits today at 95.44 and below there at 95.18.
EURO (JUN) 05/02/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The major trend
has turned down with the cross over back below the 18-day moving average. The
outside day down is somewhat negative. It is a slightly negative indicator that
the close was under the swing pivot. The next downside objective is now at
127.94. The next area of resistance is around 129.32 and 130.06, while 1st
support hits today at 128.26 and below there at 127.94.
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PRECIOUS METALS RECAP
4/29/2005
June Gold closed up 3.7 at 436.1. This was 2.9 up
from the low and 1.9 off the high.
July Silver finished down 0.008 at 6.94, 0.05 off
the high and 0.04 up from the low.
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The gold market was initially lifted by fund
short covering on Friday morning but apparently the market was also lifted by
rumors that China was preparing to re-peg their currency. While there was
nothing specific to justify the Chinese rumors that potential exists and might
be undertaken just too temporarily appease the world. The European gold market
supposedly closed firmer off concern for the US economy, which would seem to be
justified by the flow of US economic information this week. Because the gold was
up and the silver market was mostly lower on the session it would certainly seem
like the gold was focused on the Dollar and the silver was focused on the
economy.
Technical Outlook
SILVER (JUL) 05/02/2005: Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside target is now at 685.3. The next area of resistance is around
698.5 and 703.3, while 1st support hits today at 689.5 and below there at 685.3.
GOLD (JUN) 05/02/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up.
Momentum studies trending lower from overbought levels is a bearish indicator
and would tend to reinforce lower price action. 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 431.1. The next area of resistance is
around 438.5 and 440.6, while 1st support hits today at 433.7 and below there at
431.1.
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COPPER MARKET RECAP
4/29/2005
June Copper closed up 2.65 at 147.90. This was
1.90 up from the low and 0.10 off the high.
The copper market surprised many in the trade
with a sharp upward adjustment even through the macro economic outlook remained
mostly muted. Even more surprising is the fact that copper prices rose in the
wake of increased talk about a Chinese currency re-peg but some traders suggest
that a stronger Chinese currency could make foreign copper supplies even more
attractive. However, we would be concerned that any change in the Chinese
economic condition could derail stellar growth and in the end become a major
negative for copper. We do think that a large portion of the buying Friday was
simple short covering and not necessarily fresh spec or physical buying.
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ENERGY MARKET RECAP
4/29/2005
June Crude Oil closed down 2.05 at 49.72. This
was 0.22 up from the low and 1.88 off the high.
June Heating Oil closed down 6.24 at 142.59. This
was 1.09 up from the low and 5.41 off the high.
June Unleaded Gas finished down 5.58 at 149.61,
3.89 off the high and 0.61 up from the low.
June Natural Gas finished down 0.16 at 6.59, 0.14
off the high and 0.04 up from the low.
June Propane closed up 0.02 at 0.83. This was
equal to the low and equal to the high.
The energy complex was mostly weak on Friday and
seemed to sag off ideas that energy demand was in the process of falling off due
to the economy. In fact, as long as the economic readings and stock market
action is sloppy we suspect that the energy complex will be able to factor
slackening demand. However, in the end we seriously doubt that demand is
actually going to be down as much as the market is currently factoring. It is
also surprising that we haven’t had as many supply issues lately and that allows
the bears to control prices easier. While we are not sure that the macro
economic outlook can be improved that quickly, threats against supply can
surface without notice.
Technical Outlook
CRUDE OIL (JUN) 05/02/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The major trend has turned down with the cross over back
below the 18-day moving average. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The next downside objective
is now at 48.04. Some caution in pressing the downside is warranted with the RSI
under 30. The next area of resistance is around 50.77 and 52.23, while 1st
support hits today at 48.67 and below there at 48.04.
UNLEADED (JUN) 05/02/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down. A
bearish signal was triggered on a crossover down in the daily stochastics.
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 close below the 1st swing support could weigh
on the market. The next downside objective is 145.93. The next area of
resistance is around 151.86 and 154.93, while 1st support hits today at 147.36
and below there at 145.93.
HEATING OIL (JUN) 05/02/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down. The
upside crossover (9 above 18) of the moving averages suggests a developing
short-term uptrend. The daily stochastics have crossed over down which is a
bearish indication. Negative momentum studies in the neutral zone will tend to
reinforce lower price action. The close under the 18-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. The
next downside objective is now at 137.17. The next area of resistance is around
145.84 and 150.17, while 1st support hits today at 139.34 and below there at
137.17.
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CORN MARKET RECAP
4/29/2005
July Corn finished up 1/2 at 213 1/2, 1 1/2
off the high and 1 up from the low. December Corn closed up 1/2 at 230 3/4. This
was 1 up from the low and 1 1/2 off the high.
The late 11-cent sell-off in wheat helped limit
the buying support but the market still managed to experience a slight gain. The
market was down early from hefty deliveries and weakness in soybeans added to
the negative tone, however, a jump in wheat and a recovery in soybeans helped
support the rally into the mid-session. Talk of increased cash sales in the
eastern cornbelt yesterday due to rain delays which left producers out of the
field helped to pressure the market early. A lack of follow-through technical
selling (funds sold more than 9000 corn in the past two sessions) along with
strength in other commodity markets helped to support. Deliveries came in at
1176 contracts as compared with trade expectations of 500-1000 contracts. A dry
weather forecast for the northern and western cornbelt into next week helped to
limit the upside and so did weak export news yesterday. Taiwan bought 60,000
tonnes of US corn overnight in a tender to buy US or Argentina corn. Support for
July corn comes in at 212 3/4 with resistance at 216 3/4 and 218.
Technical Outlook
CORN (JUL) 05/02/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
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 211 1/4. The next area of
resistance is around 214 3/4 and 216, while 1st support hits today at 212 1/4
and below there at 211 1/4.
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SOY COMPLEX RECAP
4/29/2005
July Soybeans finished up 1 at 626 1/4, 7 3/4 off
the high and 3 1/4 up from the low. November Soybeans closed up 1 1/4 at 621.
This was 2 1/2 up from the low and 8 off the high.
July Soymeal closed down 0.3 at 193.5. This was
0.5 up from the low and 2.4 off the high.
July Soybean Oil finished up 0.31 at 22.66, 0.16
off the high and 0.38 up from the low.
Follow-through technical selling action along
with hefty deliveries helped pressure the market early in the session on Friday
but talk of a currency change which might support improved buying power from
China helped support a solid rally into the mid-session. A lack of selling
interest after opening at a new low for the week contributed to the bounce. A
late break in Wheat and a sell-off in meal helped trigger the late weakness off
of the highs for soybeans. July managed to close just 1 cent higher on the
session and down 14 1/4 cents on the week. The deliveries against the May
futures on first notice day came in at 1191 contracts as compared with trade
expectations of 0-500 contracts. There were no deliveries for oil or meal and a
turn higher in oil after hitting a 14-session low helped turn the trend up into
the mid-session. Traders expected oil deliveries of 0-500 contracts but there
were no deliveries and there were 609 oil registrations cancelled. The weakness
in the dollar and speculative buying in many markets along with strong gains in
wheat helped to support the bounce. July soybean support comes in at 623 1/2
with resistance at 635 3/4.
Technical Outlook
BEANS (JUL) 05/02/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially 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 daily closing price reversal up is a
positive indicator that could support higher prices. It is a slightly negative
indicator that the close was under the swing pivot. The next downside target is
616 1/2. The next area of resistance is around 631 3/4 and 638 1/4, while 1st
support hits today at 620 3/4 and below there at 616 1/2.
MEAL (JUL) 05/02/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. It is a slightly negative indicator that the
close was under the swing pivot. The next downside target is now at 191.1. The
next area of resistance is around 194.9 and 196.8, while 1st support hits today
at 192.1 and below there at 191.1.
BEANOIL (JUL) 05/02/2005: 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 daily closing price reversal up is a
positive indicator that could support higher prices. A positive setup occurred
with the close over the 1st swing resistance. The next downside objective is now
at 22.07. The next area of resistance is around 22.93 and 23.14, while 1st
support hits today at 22.39 and below there at 22.07.
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WHEAT MARKET RECAP
4/29/2005
July Wheat finished down 1 1/4 at 326, 10 1/2 off the high and
1/2 up from the low. December Wheat closed down 1 1/4 at 343 3/4. This was 3/4
up from the low and 10 3/4 off the high.
Weakness in the US dollar, cold weather concerns
and light deliveries supported the early gains in wheat. Funds were noted buyers
of near 2000 contracts into the mid-session and challenged Monday’s peak but
when the fund buying eased late in the session; futures dropped more than 10
cents off of the highs to close lower on the day. Deliveries against the May
contract on first notice day totaled 273 contracts as compared with trade
expectations for 500-1000 contracts. Weather watchers see freezing temperatures
into the southern plains but most of the crop is expected to be unharmed from
the cold unless fields have advanced in maturity past the jointing stage. If the
freeze gets down to Texas border and fields are flowering, some permanent yield
damage is possible. Fears of a continued dry weather trend in Australia has
traders are nervous that the new crop will not get planted on time to achieve
optimal yield. July wheat support comes in at 324 and 319 1/4 with resistance at
331 and 335 3/4.
Technical Outlook
WHEAT (JUL) 05/02/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The cross over
and close above the 18-day moving average indicates the longer-term trend has
turned up. 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 upside objective is 339 1/2. The next area of
resistance is around 331 1/2 and 339 1/2, while 1st support hits today at 320
1/2 and below there at 317 1/2.
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LIVE CATTLE RECAP
4/29/2005
June Live Cattle finished up 0.02 at 85.62, 0.35
off the high and 0.20 up from the low.
May Feeder Cattle closed up 0.27 at 108.67. This
was 0.77 up from the low and 0.27 off the high.
The cattle market consolidated in choppy,
two-sided trade for much of the session before a late surge to new highs for the
day late in the session. April cattle closed up 157 on the day in the last
trading session which had traders believing that cash cattle might trade steady
at $94. Boxed beef cutout values at mid session were up $0.43 to $163.53 as
compared with $158.74 one week ago. Slaughter came in at 123,000 head as
compared with trade expectations of 115,000-120,000 head. The higher than
expected slaughter is a supportive factor.
Technical Outlook
CATTLE (JUN) 05/02/2005: 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. The upside closing price
reversal on the daily chart is somewhat bullish. The market has a slightly
positive tilt with the close over the swing pivot. The next downside objective
is 85.120. The next area of resistance is around 85.870 and 86.200, while 1st
support hits today at 85.350 and below there at 85.120.
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LEAN HOGS RECAP
4/29/2005
June Lean Hogs finished up 0.75 at 77.45, 0.65
off the high and 0.45 up from the low.
May Pork Bellies closed up 1.52 at 83.12. This
was 0.92 up from the low and 0.97 off the high.
June hogs closed 60 higher on the session and up
140 on the week as cash market strength and tighter than expected supply helped
to support. Peoria hogs were up $1.00 on the day which helped support the higher
opening and talk of a dry weather trend for the western cornbelt for next week
led to an outlook for lower producer marketings and higher cash trade again for
next week. Slaughter came in at just 356,000 head as compared with trade
expectations of 365,000-385,000 head. Slaughter for the week came in at 1.918
million head as compared with 1.97 million last week and 1.911 million head last
year at this time. Higher pork cut-out values on the week added to the positive
tone.
Technical Outlook
HOGS (JUN) 05/02/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. A positive setup
occurred with the close over the 1st swing resistance. The next upside objective
is 78.600. The next area of resistance is around 78.000 and 78.600, while 1st
support hits today at 76.900 and below there at 76.400.
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COCOA MARKET RECAP
4/29/2005
July Cocoa finished up 4 at 1492, 33 off the high
and 3 up from the low.
The cocoa market attempted to forge a sharp pulse
up on Friday but failed to hold those gains in the close. The bull camp would
suggest that the market managed to finish higher but without a moderately soft
Dollar during the session Friday, we doubt that cocoa would have even been able
to muster minimal gains. As we enter the month of May, we suspect that more
focus will be trained on the mid May disarmament and That could end up shoring
up support a little in the cocoa market.
Technical Outlook
COCOA (JUL) 05/02/2005: The daily stochastics
gave a bullish indicator with a crossover up. 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 market back below the 18-day moving average suggests
the longer-term trend could be turning down. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The near-term
upside target is at 1535. The next area of resistance is around 1510 and 1535,
while 1st support hits today at 1474 and below there at 1464.
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COFFEE MARKET RECAP
4/29/2005
July Coffee closed down 2.95 at 127.95. This was
0.75 up from the low and 4.15 off the high.
July coffee closed 295 lower on the session but
up 15 points for the week. Long liquidation selling at the end of the week and
end of the month helped to pressure the market with talk of the overbought
condition of the market and a lack of commercial trade activity helping to
pressure. Volume was light with a lack of trade buying under the market and
light fund selling. July coffee in London closed higher on the day after early
weakness failed to attract new sellers. A colder than normal weather forecast
trend in Brazil failed to provide much support with no damaging weather on the
horizon.
Technical Outlook
COFFEE (JUL) 05/02/2005: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
market is in a bearish position with the close below the 2nd swing support
number. The near-term upside target is at 133.65. The next area of resistance is
around 130.40 and 133.65, while 1st support hits today at 125.55 and below there
at 123.95.
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SUGAR MARKET RECAP
4/29/2005
July Sugar closed up 0.12 at 8.66. This was 0.14
up from the low and 0.01 off the high.
July sugar closed 12 higher on the session and up
29 points on the week. Active speculative buying in sugar and in other commodity
markets helped to support the solid gains as traders are optimistic that
European sugar exports and production will decline significantly in the years
ahead. The cash markets were quiet in Brazil and traders are hopeful that the
lower price trend due to active harvest in the center-south region (Cane
production 345 million tonnes, up 5% from last year’s record) could attract
increased business from Russia and China. Brazil cane production for the
2005/2006 season in the northeast region is expected to come in near 50-52
million tonnes as compared with 58 million last year due to drought in the
region this year, according to Brazil analysts Datagro. Harvest of the 04/05
season just ended last month with original forecast for 63 million tonnes but
drought dented yield. Russia has refined 959,600 tonnes of white sugar from
imported raw from January 1st to April 27th as compared with 962,300 tonnes last
year.
Technical Outlook
SUGAR (JUL) 05/02/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. There
could be more upside follow through since the market closed above the 2nd swing
resistance. The next upside target is 8.77. The next area of resistance is
around 8.73 and 8.77, while 1st support hits today at 8.59 and below there at
8.48.
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COTTON MARKET RECAP
4/29/2005
July Cotton finished up 0.03 at 57.05, 0.25 off
the high and 0.55 up from the low.
July cotton closed firmer Friday with the market
over coming some short-term negatives to close the week on a strong note. Cotton
exports sales are running behind the USDA forecast for this time of year with
this week’s sales report again disappointing. However, fund traders are still
expecting much stronger demand for cotton from China over the balance of the
year, given the USDA attaché’s recent assessment of China’s cotton situation,
that the market is willing to discount the current weak sales numbers. It is
impressive that the price break below 56 cents in the July contract seemed to be
rejected as cotton merchant Donavant was thought be a significant buyer on the
dip. However, with July cotton basically consolidating between 56 and 58 cents
for the last 4 sessions, it will be important to see an upside extension early
next week or the bullish momentum could fade.
Technical Outlook
COTTON (JUL) 05/02/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. 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 upside target is 57.77. The next
area of resistance is around 57.45 and 57.77, while 1st support hits today at
56.65 and below there at 56.18.