What Lifted Treasuries Today

Technical Outlook

BONDS (DEC) 10/29/2003: The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 110.10 and then again at 110.22, while swing support hits at 108.27 and below there at 107.24. 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 110.22. Daily studies suggest buying dips today.

T-NOTES(DEC) The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. 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 114.06. The market’s close above the 2nd swing resistance number is a bullish indication. 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 113.26 and then again at 114.06, while swing support hits at 112.19 and below there at 111.24. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

10/28/2003

The stock market was mostly higher on the day early off favorable US economic reports. In fact, the Conference Board Consumer confidence readings showed quite impressive improvements in some measures and that should help to foster an improved forecast for the coming holiday period. Later in the session the FOMC meeting results suggested to the market that rates were going to remain steady for an extended period of time and that is a positive to equity prices. Countervailing the positive Fed comments that rates were on hold were suggestions that deflation remained a risk and that seemed to hold back the market from making even bigger gains.

Technical Outlook

S&P500 (DEC) 10/29/2003: There could be more upside follow through since the market closed above the 2nd swing resistance. Underlying support comes in at 1037.70 and 1028.65, with overhead resistance at 1050.90 and 1055.05. The downside crossover of the 9 & 18 bar moving average is a negative signal. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside objective is now at 1028.65.

S&P E-Mini (DEC): A new contract high was made on the rally. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1025.19. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1053.13 and then again at 1057.69, while swing support hits at 1036.88 and below there at 1025.19. The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend.

NASDAQ (DEC) A negative indicator was given with the downside crossover of the 9 & 18 bar moving average. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The market should run into resistance at 1445.50 and above there at 1456.25 with support at 1403.50 and 1372.25. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1372.25.

CURRENCY MARKET RECAP

10/28/2003

The Dollar started out moderately higher, slid back and then managed to return to the proximity of the highs into its close. However, the Canadian and Pound managed to recoil from significant lows suggesting that the bull trend is still alive in those two currencies. The BOE indicated during the session Tuesday that they think the UK economy could actually withstand a hike in interest rates and that has to give the Pound a leg up on the economic and interest rate differential. Seeing the Fed remain on hold seemed to deflate the Dollar but it could have been the Feds ongoing concern that deflation remains a bigger risk than inflation.

Technical Outlook

YEN (DEC): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market made a new contract high on the rally. The market setup is supportive for early gains with the close over the 1st swing resistance. Swing resistance is targeted at 92.65 and above there at 92.81, with the yen finding support around 92.27 and below there at 92.05. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 92.81. Daily studies suggest buying dips today.

EURO (DEC): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 1.1603. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1603, with overhead resistance at 1.1743. Stochastics are rising from over sold levels which is bullish and should support higher prices. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

10/28/2003

Both gold and silver ended moderately lower on the session and most traders assume that the strength in the Dollar was responsible for the liquidation. With a massive small spec and fund long in gold and silver even minor violations of chart support could reasonably result in stop loss selling. With favorable economic information also seen during the session from the US its understandable that the Dollar was strong and the metals were under pressure. Both gold and silver remain right on critical chart levels, hinting at significant volatility potential ahead.

Technical Outlook

SILVER (DEC): The market back below the 40-day moving average suggests the longer-term trend could be turning down. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Initial support for silver is at 505.7 and below there at 503.4 with resistance likely at 512.2 and 513.7. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 512.2.

GOLD (DEC): Support for gold today comes in near 380.80, while resistance is pegged at 387.20. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 387.20. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. 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.

COPPER MARKET RECAP

10/28/2003

The bull camp must be put off by the action Tuesday as macro economic information and equity market action was supportive but prices finished the session soft. Since copper finished the session 100 points off its high of the day it is clear that the bull camp lost its interest in the market at higher prices. The Press also noted in London and New York that the funds were persistent sellers and that seems to suggest that funds might be stepping out of long held bull positions.

ENERGY MARKET RECAP

10/28/2003

The energy complex lacked direction Tuesday despite signs that the US economy was improving and ongoing escalation of tension in Iraq. In other words, the old bullish forces aren’t providing as much support to prices as was seen off the September low. We would have to think that such aggressive sabotage efforts inside Iraq would be providing some support to prices but it is possible that the market simply isn’t counting on oil flow from Northern Iraq. Weather conditions continue to be mild and that certainly favors the bear camp in the near term.

Technical Outlook

CRUDE OIL (DEC): The market setup is somewhat negative with the close under the 1st swing support. Support for crude is keyed on 29.36 and below there at 29.24, with resistance pegged at 29.76 and 30.04. The market’s close on the 9-day moving average is neutral. . Some caution in pressing the downside is warranted with the RSI under 30.

UNLEADED GAS (DEC): Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 79.91. The market tilt is slightly negative with the close under the pivot. Resistance today is at 83.01, while support should be found around 79.91. A negative signal for trend short-term was given on a close under the 9-bar moving average.

HEATING OIL (DEC): The market setup is somewhat negative with the close under the 1st swing support. Heating oil should encounter support around 79.49, with resistance is at 81.89. 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. 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 79.49.

CORN MARKET RECAP

10/28/2003

The corn market traded on both sides of unchanged Tuesday but in the end managed to soar 5 cents on the session. Many traders suggested that the corn market was helped higher by the strength in the soybean market. It seemed that the shorts were simply afraid to sell into the rally even though the market saw evidence that the Ethanol dispute was still blocking the passage of the Energy Bill. We have to think that the majority of the strength in the corn market is coming from short covering and also from buyers thinking that the world protein situation is becoming a major issue and that corn will be replacing meal in some feed rations as meal prices become excessive.

Technical Outlook

CORN (DEC) 10/29/2003: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 247 . There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 247 today, with support at 230 . The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. The upside daily closing price reversal gives the market a bullish tilt.

SOY COMPLEX RECAP

10/28/2003

The soybean complex continues to lead the complex with another massive rally and a return to new contract highs. Early in the session the soybean market saw evidence of another moderate sale (170,000 tons) to China and that simply fosters the idea that price rationing isn’t serving to slow demand. There were also rumors that China had also bought some additional cargos but that hasn’t been confirmed yet. The trade continues to be in a counter seasonal rally, in the face of harvest and that is simply shocking a large portion of the trade. Seeing constant evidence of improving demand is resulting in a perpetual revision to ending stocks and that is making it difficult to find sellers.

Technical Outlook

SOYBEANS (JAN) 10/29/03 The outside day up is somewhat positive. The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. The next area of resistance is around 801 and 808 1/2, while 1st support hits today at 773 1/2 and below there at 753 1/2. The market’s close on the 9-day moving average is neutral. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 808 1/2. The market is approaching overbought levels with an RSI over 70.

MEAL (DEC): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 254.0. The outside day up gives the market a positive tilt. The market rallied to a new contract high. The upside daily closing price reversal gives the market a bullish tilt. First resistance comes in at 251.8, with support at 243.6. The close above the 9-day moving average is a positive short-term indicator for trend. There could be more upside follow through since the market closed above the 2nd swing resistance. Caution is warranted with the RSI over 90 as the market may be limited on further gains.

BEAN OIL (DEC): A positive signal for trend short-term was given on a close over the 9-bar moving average. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 25.89. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 27.10 and above there at 27.29. Support should be encountered at 26.40 and 25.89.

WHEAT MARKET RECAP

10/28/2003

The market opened lower and closed 10 cents higher on the session as the surge higher in soybeans and corn and rumors of China buying helped support. There is still no confirmation of major sales to China but the trade psychology is still improving as some sales to China is seen as better than no sales. In fact the USDA currently has China as a net exporter on the world supply/demand reports and the trade is now convinced that China will be an importer of a modest quantity of wheat this year. Uncertainty over the size of the imports and uncertainty over the extent of the problems with the winter wheat planting effort in China added to the positive tone. The rally in the face of bearish weather forecast for Kansas is impressive.

Technical Outlook

WHEAT (DEC) 10/29/2003: The market setup is supportive for early gains with the close over the 1st swing resistance. Expect near-term support around 370 1/2 and below there at 360 3/4, with resistance levels at 384 and 387 3/4. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 387 3/4. The market is approaching overbought levels with an RSI over 70.

LIVE CATTLE RECAP

10/28/2003

Cattle closed limit-down across the board as the focus of attention shifted to demand as compared with the supply-driven sharp rise in prices on Monday. While the news that feedlot showlists were tight and offers for cattle in Texas were as high as $105-$110 on Monday helped support active buying, news today that packer bids were only $90 and that the trend in beef prices was still down helped turn the market sharply lower. Slaughter was only 129,000 head which brought week to date slaughter to 241,000 head as compared with 248,000 last week and 261,000 last year. Boxed-beef cut-out values were down $1.88 at mid-session to $174.87. Profit-taking selling was active and the demand tone is negative with the downtrend in beef prices and a continued upward spiral in retail prices which is expected to reduce demand into the coming few weeks.

Technical Outlook

CATTLE (DEC) 10/29/2003: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 88.85. The close below the 1st swing support could weigh on the market. Support should be encountered at 89.20 and below there at 88.85. Market resistance is at 90.65 and then again at 91.70. A positive signal for trend short-term was given on a close over the 9-bar moving average.

LEAN HOGS RECAP

10/28/2003

December hogs closed 110 lower on the session led by the limit down trade in the cattle market, weaker cash markets and concerns that the oversupply trend of the past several weeks will continue. Peoria hogs were down $.50 with some locations down $1.00 on the session and with a sharp drop in pork values of the past two weeks, traders are not optimistic that packers will bid up for cash hogs. Slaughter last week was up 2.6% from last year as compared with trade expectations near 1-2% below last years pace. Slaughter for the day was 394,000 head which brought cumulative slaughter this week to 788,000 head, the same as last week.

Technical Outlook

HOGS (DEC) 10/29/2003: The market setup is somewhat negative with the close under the 1st swing support. Resistance levels comes in at 51.87 and 52.32 today, while support is around 51.07 and then 50.72. The close below the 9-day moving average is a negative short-term indicator for trend. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 50.72. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

10/28/2003

Moderately lower price action seems to have signaled an end to the recent wave of higher pricing. Once again origin selling seemed to mitigate the upside potential in cocoa and that could be a consistent theme as the brunt of the harvest moves toward the market. The fact that Ivory Coast farm prices declined another 2% in the last week could serve to push the farmers back into a hold back stance where they refuse to market physical supply because prices are unacceptable.

Technical Outlook

COCOA (DEC)10/29/03 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1428 and above there at 1449 with support at 1395 and 1383. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1448.75.

COFFEE MARKET RECAP

10/28/2003

December coffee opened nearly 100 points higher but closed unchanged on the session as there was a lack of new news to help support the technical breakout. The move to the highest level since early October in London helped provide some underlying support especially with the rally just ahead of the Vietnam harvest. After a rally of over 500 points off of the October lows, the market is in a short-term overbought condition; however, the close back under the initial retracement resistance at 65.10 is a caution flag. Brazil export shipments in October are thought to be near 1.16 million bags as compared with 2.85 million last October as the tighter supply from Brazil and a lack of producer selling (which has kept Brazil less competitive) has kept exports slow.

Technical Outlook

COFFEE (DEC)10/29/03 The market has a slightly positive tilt with the close over the swing pivot. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 65.75.The Coffee contract should run into resistance at 65.05 and above there at 65.75 with support at 64.1 and 63.85. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend.

SUGAR MARKET RECAP

10/28/2003

The market pushed slightly lower with a quiet inside trading session as the market consolidated recent gains. Failure to move higher was led by demand fears with traders concerned with the lack of import demand from Russia and the slow pace of import activity from routine customers as well. With two record crops in a row, China is not importing this year and the India crop is likely to recovery this year from last years poor production. India is still expected to expand exports in the year ahead in an attempt to reduce very burdensome stocks which were built up over the years.

Technical Outlook

SUGAR (MAR) 10/29/2003: It is a slightly negative indicator that the close was under the swing pivot. Swing resistance comes in at 6.30, with support found at 6.04. The close above the 9-day moving average is a positive short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. 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 6.30.

COTTON MARKET RECAP

10/28/2003

December cotton closed slightly lower in choppy, two-sided trade with a similar range in prices to Monday. The market lacked new news from China and with the focus on the China crop size and the extent of import activity, a light long liquidation trend helped pressure. The market is attempting to consolidate the recent gains and correct the overbought condition with a sideways to choppy trade and corrective breaks have been shallow for this bull market. Trade house buying in the options pit helped provide some underlying support.

Technical Outlook

COTTON (DEC) 10/29/2003: A positive signal for trend short-term was given on a close over the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. Next resistance area comes in at 82.56 and then again at 83.20, while support is targeted at 81.41 and 80.90. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 83.20. The market is approaching overbought levels with an RSI over 70.