What This Market Needs Now
BOND MARKET RECAP
1/13/2005
March Bonds closed up 0-21 at 113-21. This was
0-21 up from the low and 0-07 off the high.
March 10 Yr Treasury Notes finished up 0-115 at
112-000, 0-030 off the high and 0-120 up from the low.
The Bond market was only temporarily fooled
by the headline gain of 1.2% in the US retail sales report. In retrospect the
trade seemed to focus on the significantly less impressive excluding auto’s
aspect of the report and in the process pushed Treasury prices upward. We also
think that early expectations for week ending inflation number fostered some
Treasury buying as some economists expect the PPI to actually show a contraction
of 0.2%. Countervailing the upside tilt in the Treasury market is the
expectation for a moderate rise in the Industrial production and Capacity
Utilization report on Friday morning.
Technical Outlook
BONDS (MAR) 01/14/2005: 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. 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 114-24. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 114-14 and 114-24, while 1st support hits today at 113-12
and below there at 112-19.
TNOTES (MAR) 01/14/2005: The cross over and close
above the 60-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are trending higher from mid-range, which
should support a move higher if resistance levels are penetrated. The major
trend could be turning up with the close back above the 18-day moving average.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. The near-term upside target is at 112-175. The next area
of resistance is around 112-125 and 112-175, while 1st support hits today at
111-265 and below there at 111-130.
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STOCK INDICES RECAP
1/13/2005
March S&P finished down 9.6 at 1177.9, 10.9 off
the high and 1.4 up from the low.
March S&P E-Mini closed down 9.5 at 1178. This
was 1.75 up from the low and 12.25 off the high.
March Dow closed down 103 at 10502. This was 17
up from the low and 112 off the high.
The stock market is still mostly discounting
positive news stories as the headline reading on the retail sales could have
been cause to send stock prices soaring, especially after the market saw such
favorable news from Apple. However, the glass on Wall Street is half empty and
investors are simply not being enticed into the market on weakness. Therefore,
the stock market needs a macro economic kick or might have to see prices fall
far enough to inspire value hunting buying. Some traders think that a soft PPI
report on Friday morning might result in a lower of interest rate fears and that
in turn might spark a week ending short covering move.
Technical Outlook
S&P 500 (MAR) 01/14/2005: Daily stochastics are
trending lower but have declined into oversold territory. 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 target is 1167.98. The next area of resistance
is around 1184.05 and 1192.57, while 1st support hits today at 1171.75 and below
there at 1167.98.
SP EMINI (MAR) 01/14/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. The daily closing price reversal down puts the market on the
defensive. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside objective is now at
1166.63. The next area of resistance is around 1185.00 and 1194.62, while 1st
support hits today at 1171.00 and below there at 1166.63.
NASDAQ (MAR) 01/14/2005: 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 downside closing price reversal on
the daily chart is somewhat negative. The market setup is somewhat negative with
the close under the 1st swing support. The next downside target is now at
1529.25. The market is approaching oversold levels on an RSI reading under 30.
The next area of resistance is around 1563.00 and 1581.25, while 1st support
hits today at 1537.00 and below there at 1529.25.
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CURRENCY MARKET RECAP
1/13/2005
March US Dollar finished up 39 at 8257, 2 off the
high and 31 up from the low.
March Euro finished down 0.65 at 132.1, 0.48 off
the high and 0.08 up from the low.
March Euro Dollar closed unchanged at 97.04. This
was 0.005 up from the low and 0.01 off the high.
March Canadian Dollar closed down 0.14 at 83.18.
This was 0.26 up from the low and 0.2 off the high.
March British Pound finished down 1.11 at 187.34,
0.5 off the high and 0.04 up from the low.
March Swiss closed down 0.52 at 85.43. This was
0.05 up from the low and 0.4 off the high.
March Japanese Yen closed down 0.19 at 97.93.
This was 0.19 up from the low and 0.23 off the high.
We suspect that the Dollar rally on Thursday was
mostly a short covering technical response to the prior day’s massive decline.
It might have been possible for the Dollar to fall off the bearish
interpretation of the US retail sales report which excluding auto showed a rise
of only +0.3%. In other words, the 1.2% headline reading for the retail sales
report might have prompted short covering in the Dollar but we seriously doubt
that the information was actually pulling in fresh buyers of the Greenback. The
Pound on the other hand saw some additional negative macro economic information
and that currency could be in the midst of a more significant downside washout
as the trade is growing more concerned about the pace of the UK recovery.
Technical Outlook
YEN (MAR) 01/14/2005: 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’s close below the pivot swing number is a mildly negative
setup. The next upside target is 98.36. The next area of resistance is around
98.14 and 98.36, while 1st support hits today at 97.72 and below there at 97.52.
EURO (MAR) 01/14/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The market’s
close below the pivot swing number is a mildly negative setup. The next downside
target is 131.64. The next area of resistance is around 132.38 and 132.76, while
1st support hits today at 131.82 and below there at 131.64.
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PRECIOUS METALS RECAP
1/13/2005
February Gold closed down 1.5 at 425.1. This was
1.5 up from the low and 0.4 off the high.
March Silver finished up 0.002 at 6.745, 0.03 off
the high and 0.065 up from the low.
April Platinum closed up 1 at 861.5. This was 2.5
up from the low and 1.5 off the high.
Another disappointing day in the gold market with
the Dollar rising and a number of gold producers posting higher production it is
not surprising that gold slid. What is surprising is that while gold was down
for most of the early session, the silver market managed to rally. In our
opinion, divergence between the silver and gold is usually a sign that
speculative interest is divided. We also think that expectations for a
contraction in the upcoming US inflation report undermined gold. Given the
recent decline in the US Dollar we suspect that the upside move in the Dollar on
Thursday was simple short covering and not evidence of coming strength in the
Dollar.
Technical Outlook
SILVER (MAR) 01/14/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market now above the 18-day moving average suggests 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 683.1. The next area
of resistance is around 679.3 and 683.1, while 1st support hits today at 669.8
and below there at 664.2.
GOLD (FEB) 01/14/2005: The stochastic indicator
is rising from oversold levels, which is bullish and should support higher
prices. The major trend has turned down with the cross over back below the
18-day moving average. The market’s close below the pivot swing number is a
mildly negative setup. The near-term upside objective is at 426.7. The next area
of resistance is around 426.0 and 426.7, while 1st support hits today at 424.2
and below there at 423.0.
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COPPER MARKET RECAP
1/13/2005
March Copper finished down 2.30 at 138.10, 2.10
off the high and 0.50 up from the low.
The copper market gave ground Thursday and did it
in a rather aggressive fashion. Given recent major single day liquidations in
copper some traders are fearful that the selling might actually evolve into a
debacle washout similar to the declines seen in October and early January. A
number of technical traders are growing concerned with the disjointed trend
action in copper as the market is starting to show more and more volatility and
that might be a sign that the bull market is breaking down.
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ENERGY MARKET RECAP
1/13/2005
February Crude Oil closed up 1.67 at 48.04. This
was 1.34 up from the low and 0.36 off the high.
February Heating Oil closed up 4.07 at 134.11.
This was 3.11 up from the low and 0.64 off the high.
February Unleaded Gas finished up 3.61 at 125.46,
1.54 off the high and 2.66 up from the low.
February Natural Gas finished up 0.50 at 6.45,
0.08 off the high and 0.42 up from the low.
February Propane closed up 0.03 at 0.74. This was
equal to the low and equal to the high.
The energy complex flashed higher off private
reports suggesting that OPEC exports in January would be 530,000 barrels per day
lower than the export pace seen in December. In other words, the market
acknowledged that OPEC production cuts were possibly having an effect. The
market also thinks that Saudi Arabia has been the primary reason for the
balancing or leveling of the world supply and Demand scenario. Also noted late
Wednesday were suggestions that Qatar had ignored recent commitments to reduce
supply flow by leaving cash commitments steady to its customers. We would also
have expected the news about Non OPEC production growth in 2005 to undermine
energy prices but apparently the market was only concerned with the bullish
developments on Thursday.
Technical Outlook
CRUDE OIL (FEB) 01/14/2005: The market now above
the 60-day moving average suggests the longer-term trend has turned up. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The major trend could be turning up with the close
back above the 18-day moving average. Follow through buying looks likely if the
market can hold yesterday’s gap on the day session chart. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The next upside target is 49.49. The next area of resistance is
around 48.89 and 49.49, while 1st support hits today at 47.19 and below there at
46.10.
UNLEADED (FEB) 01/14/2005: The cross over and
close above the 60-day moving average is an indication the longer-term trend has
turned positive. 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. The gap upmove on the day
session chart is a bullish indicator for trend. The market’s close above the 2nd
swing resistance number is a bullish indication. The next upside objective is
129.38. The next area of resistance is around 127.56 and 129.38, while 1st
support hits today at 123.36 and below there at 120.98.
HEATING OIL (FEB) 01/14/2005: The market now
above the 40-day moving average suggests the longer-term trend has turned up.
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. The gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session. A positive setup occurred with the
close over the 1st swing resistance. The next upside objective is 137.24. The
next area of resistance is around 135.98 and 137.24, while 1st support hits
today at 132.24 and below there at 129.75.
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CORN MARKET RECAP
1/13/2005
March Corn finished down 1/2 at 200, equal
to the high and 1 3/4 up from the low. May Corn closed down 3/4 at 207 1/2. This
was 1 1/4 up from the low and 1/4 off the high.
The jump in open interest on the move to new
contract lows is a bearish development and the market seems to be lack news
which might spark a bounce. Funds were noted sellers of near 5000 contracts into
the mid-session. The new contract low on the opening was triggered by a steady
flow of new selling from the bearish news from yesterday’s USDA reports and
fears of increased producer selling over the near-term. While a larger crop size
was not unexpected, news of lower demand in the USDA supply/demand report in
spite of the recent low price added to the bearishness of the report. Traders
expect to see a higher usage trend in years of cheap prices but increased
competition for export is a signal to traders that prices may need to move even
lower to compete on the world market. With China and Argentina expected to be
more aggressive exporters over the near-term, US exports might decline. Weekly
export sales came in at 658,300 tons as compared with trade expectations at
600,000-800,000 tons. Cumulative sales have reached 48.6% of the (new) USDA
forecast for the entire season as compared with 48.8% on average for this time
of the year. South Korea bought 110,000 tons of optional origin corn overnight.
Resistance for March corn comes in at 200 1/2 and 202 1/2 with 198 and 196 3/4
as next support.
Technical Outlook
CORN (MAR) 01/14/2005: The market broke to a new
contract low. 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. It is a slightly negative
indicator that the close was under the swing pivot. The next downside objective
is 198. The next area of resistance is around 200 3/4 and 201 1/4, while 1st
support hits today at 199 1/4 and below there at 198.
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SOY COMPLEX RECAP
1/13/2005
March Soybeans finished up 2 3/4 at 536 1/2, 1
1/2 off the high and 9 3/4 up from the low. May Soybeans closed up 2 3/4 at 539.
This was 8 3/4 up from the low and 1 off the high.
March Soymeal closed down 0.3 at 161.6. This was
2.5 up from the low and 0.9 off the high.
March Soybean Oil finished up 0.39 at 20.08, 0.02
off the high and 0.55 up from the low.
The new contract low, outside trading session and
higher close for March oil is a technical warning flag of a possible near-term
low. Very strong export sales news supported the soybean market early in the
session but weakness in the other grain markets and ideas that China demand will
eventual slow or switch to Brazil helped trigger the selling. Weekly export
sales came in at 1.098 million tons as compared with trade expectations at
500,000-700,000 tons. Cumulative sales have reached 77.1% of the USDA forecast
for the entire season as compared with 74.4% on average for this time of the
year. China was the largest buyer at 503,000 tons. Meal sales came in at 70,800
tons as compared with trade expectations at 50,000-125,000 tons. Cumulative
sales have reached 63% of the USDA forecast for the entire season as compared
with 58% on average for this time of the year. Oil sales were 10,000 tons as
compared with trade expectations at 5,000-10,000 tons. On top of the weekly
sales, the USDA announced a sale of 110,000 tons of US soybeans to China. The
surge in world soybean supply with record high ending stock forecasts along with
excess world oilseed supplies helped trigger the sell-off as strong buying of
soybeans from China at this time of the year is not a major surprise for the
market. There were deliveries of 315 oil and 150 meal against the January
contracts this morning. Funds were noted sellers of near 3000 soybeans and 3000
oil into the mid-session Resistance for March soybeans comes in at 539 and 542
3/4 with support at 526 and 519.
Technical Outlook
BEANS (MAR) 01/14/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside target
is at 545 1/2. The next area of resistance is around 542 and 545 1/2, while 1st
support hits today at 531 and below there at 523 1/4.
MEAL (MAR) 01/14/2005: 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 tilt is slightly negative with the close under the pivot.
The next upside objective is 164.6. The next area of resistance is around 163.3
and 164.6, while 1st support hits today at 159.9 and below there at 157.8.
BEANOIL (MAR) 01/14/2005: The market made a new
contract low on the break. 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 outside day up is a positive signal. The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next downside objective is 19.38. The next area of resistance is around 20.36
and 20.51, while 1st support hits today at 19.80 and below there at 19.38.
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WHEAT MARKET RECAP
1/13/2005
March Wheat finished up 1/4 at 307 1/2, 1/4 off the high and 4
up from the low. May Wheat closed up 1 at 315 1/4. This was 4 1/4 up from the
low and 1/4 off the high.
While the USDA reports yesterday left the door
open for some tightness in the 2005/2006 season, the market is finding a steady
flow of selling interest from talk of the massive world crop and from the
increasing ending stock forecasts for both the world and US Supply/demand
scenarios. Some support was seen from flooding conditions in the soft red wheat
areas. Weekly export sales came in at 412,100 tons as compared with trade
expectations at 300,000-400,000 tons. Cumulative sales have reached 76.6% of the
USDA forecast for the entire season as compared with 68.4% on average for this
time of the year. Japan bought 142,000 tons of wheat at their weekly tender with
40,000 of the total going to the US. Funds were noted sellers of near 2000
contracts into the mid-session but the selling slowed and speculative buyers
turned a little more active when the market managed to hold above yesterday’s
lows. March wheat resistance comes in at 308 1/2 and 311 1/2 with support at 302
and 299 3/4.
Technical Outlook
WHEAT (MAR) 01/14/2005: The downside crossover of
the 9 & 18 bar moving average is a negative 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. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside objective is at 310 3/4. The next area of resistance is
around 309 1/2 and 310 3/4, while 1st support hits today at 305 1/2 and below
there at 302 1/2.
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LIVE CATTLE RECAP
1/13/2005
February Live Cattle finished down 0.87 at 91.17,
0.82 off the high and 0.17 up from the low.
January Feeder Cattle closed up 0.40 at 106.15.
This was 0.90 up from the low and 0.02 off the high.
Cattle pushed lower on the session with talk of
the overbought condition and some long liquidation selling on ideas that a
near-term top is in place for the cash market helping to pressure. In addition,
there was less confidence that the USDA would cancel plans to open the border to
Canada cattle on March 7th due to comments from the Ag Secretary. Slaughter came
in at 122,000 head as compared with trade expectations of 116,000-120,000 head.
After running below expectations over the past week, the higher than expected
slaughter will be seen as a sign of improving demand from packers. Packer profit
margins have pushed sharply higher in the past week led by surging beef prices.
Boxed-beef cut-out values were up $.95 to $154.20 at mid-session as compared
with $140.56 one week ago.
Technical Outlook
CATTLE (FEB) 01/14/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. The market’s close below the 1st swing support number suggests
a moderately negative setup for today. The near-term upside target is at 92.320.
The next area of resistance is around 91.670 and 92.320, while 1st support hits
today at 90.700 and below there at 90.350.
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LEAN HOGS RECAP
1/13/2005
February Lean Hogs finished up 0.40 at 76.20,
0.37 off the high and 0.87 up from the low.
February Pork Bellies closed down 0.10 at 95.42.
This was 0.37 up from the low and 0.37 off the high.
February hogs held support on the early break to
close higher on the session and above the opening and the positive trade after
the steep reversal yesterday helped to stabilize the market. Cash markets were
slightly lower but the market found support from higher pork trade late
Wednesday and expectations of solid demand ahead; especially in the export
sector. The 2-Day Lean index for the period ending January 11th was up.29 to
72.09 as compared with 68.05 one week previous. Slaughter came in at 397,000
head as compared with trade expectations of 392,000-400,000 head.
Technical Outlook
HOGS (FEB) 01/14/2005: 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 upside daily closing price reversal gives
the market a bullish tilt. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. The next downside target is 74.850.
The next area of resistance is around 76.820 and 77.320, while 1st support hits
today at 75.600 and below there at 74.850.
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COCOA MARKET RECAP
1/13/2005
March Cocoa finished up 19 at 1505, 10 off the
high and 22 up from the low.
The cocoa market extended the short covering
bounce action Thursday but as of yet the commercial and trade interests don’t
seem to be overly bullish toward near term prospects. With the March cocoa
market managing to climb above a series of critical technical points on the
charts it is not surprising that some stop loss buying is taking place. The
rally Thursday was a little surprising from a fundamental perspective,
especially with the trade downplaying a recent physical supply threat in
Nigeria.
Technical Outlook
COCOA (MAR) 01/14/2005: 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 close under the 18-day moving average
indicates the longer-term trend could be turning down. The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next upside target is 1534. Short-term indicators suggest buying pullbacks
today. The next area of resistance is around 1521 and 1534, while 1st support
hits today at 1489 and below there at 1470.
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COFFEE MARKET RECAP
1/13/2005
March Coffee closed up 2.25 at 101.10. This was
1.85 up from the low and 1.10 off the high.
The coffee market gapped up and did manage to
hold most of the gains on Thursday and that should leave the bull camp in
control. With both the trade and funds buying the market certainly has the
capacity to follow through on the upside. In fact, it didn’t seem like the small
spec crowd was a major force behind the rally and that could mean spec buying
ends up chasing coffee higher on Friday. Hopes of higher demand and speculative
buying interest seems to be more than enough to inspire coffee prices to run
toward the December highs up around 110.00.
Technical Outlook
COFFEE (MAR) 01/14/2005: 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 close below the 18-day moving average is an indication
the longer-term trend has turned down. The market setup is supportive for early
gains with the close over the 1st swing resistance. The near-term upside target
is at 103.85. Short-term indicators suggest buying pullbacks today. The next
area of resistance is around 102.55 and 103.85, while 1st support hits today at
99.65 and below there at 98.00.
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SUGAR MARKET RECAP
1/13/2005
March Sugar closed up 0.10 at 8.72. This was 0.04
up from the low and 0.09 off the high.
May sugar closed 9 higher on the session but 7
points off of the highs of the day as trade house and speculative buying eased
and there was talk of some producer selling late in the session. Talk of
increased buying from India, Pakistan and Bangladesh helped provide support.
Open interest declined by 2,757 contracts with the rally on January 12th which
is not a good sign for the bulls. The market is still operating under the
negative influence of the January 4th key reversal and the weekly reversal from
a contract high for the week ending January 7th. Key resistance points on the
recovery bounce this week comes in at 907, 913 and 920.
Technical Outlook
SUGAR (MAR) 01/14/2005: 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. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next downside
target is now at 8.61. The next area of resistance is around 8.78 and 8.86,
while 1st support hits today at 8.66 and below there at 8.61.
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COTTON MARKET RECAP
1/13/2005
March Cotton finished down 0.31 at 46.28, 0.17
off the high and 0.66 up from the low.
The market pushed lower on the session in spite
of solid news on the export front as a lack of new buying interest from index
fund buyers who have been active over the past week helped trigger moderate long
liquidation selling. China buying seems to be picking up and export shipments
for the week hit a marketing year high at 287,200 bales. Weekly export sales
came in at 263,200 bales as compared with trade expectations at 130,000-180,000
bales. Cumulative sales have reached 69.9% of the USDA forecast for the entire
season as compared with 75.6% on average for this time of the year. There is
some concern that producer selling may pick up on the rally to fill the pipeline
which helped trigger the weakness.
Technical Outlook
COTTON (MAR) 01/14/2005: A crossover down in the
daily stochastics is a bearish signal. 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’s close below the pivot swing number is a mildly
negative setup. The next downside target is 45.33. The next area of resistance
is around 46.69 and 46.98, while 1st support hits today at 45.87 and below there
at 45.33.
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