What Will The Energy Department’s Statements Do To The Stock Market?
BOND MARKET RECAP
5/3/2005
June Bonds finished down 0-01 at 114-27, 0-13 off
the high and 0-06 up from the low.
June 10 Yr Treasury Notes finished down 0-040 at
111-120, 0-110 off the high and 0-035 up from the low.
The Treasury market remained close to
unchanged throughout most of the session, despite the fact that US economic
numbers came in slightly better than expected. Surprisingly the layoff report
showed a significant decline and reached the lowest level in 4 1/2 years for
that measure and even that failed to foster much in the way of selling interest
in Treasuries. Certainly ideas that the Fed was going to keep the economy under
pressure with even higher interest rates underpins Treasuries and it should also
be supportive to Treasuries that the US is at least starting to pay down its
soaring deficit. As expected the US Fed raised interest rates 1/4% and
acknowledged the slowing in the economy but suggested that they could continue
to raise rates in the future at a measured pace.
Technical Outlook
BONDS (JUN) 05/04/2005: The crossover up in the
daily stochastics is a bullish signal. 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. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
upside target is 115-30. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 115-21 and 115-30, while 1st
support hits today at 114-28 and below there at 114-11.
TNOTES (JUN) 05/04/2005: 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 outside day up is somewhat
positive. It is a mildly bullish indicator that the market closed over the pivot
swing number. The near-term upside objective is at 112-015. The next area of
resistance is around 111-285 and 112-015, while 1st support hits today at
111-135 and below there at 111-030.
STOCK INDICES RECAP
5/3/2005
June S&P finished up 2.5 at 1166.1, 2.4 off the
high and 8.6 up from the low.
June S&P E-Mini closed up 2.5 at 1166. This was
8.75 up from the low and 2.75 off the high.
June Dow closed up 28 at 10283. This was 78 up
from the low and 25 off the high.
While the stock market didn’t show much in the
way of initial upside action on Tuesday, the markets ability to discount some
partially slack GM and Ford April auto sales readings was somewhat impressive.
Some bulls might have been disappointed the market failed reaction to better
than expected US economic readings and to another steep slide in US energy
prices. While equity prices haven’t paid too much attention to the recent
weakness in energy prices, statements from the DOE regarding softer summer
gasoline prices and the potential for another bearish build in US crude stocks
could result in a favorable reaction in equity prices in the coming sessions.
Technical Outlook
S&P 500 (JUN) 05/04/2005: 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 market has a slightly positive
tilt with the close over the swing pivot. The near-term upside objective is at
1175.50. The next area of resistance is around 1171.50 and 1175.50, while 1st
support hits today at 1160.50 and below there at 1153.50.
SP EMINI (JUN) 05/04/2005: 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. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside objective is 1176.00.
The next area of resistance is around 1171.75 and 1176.00, while 1st support
hits today at 1160.25 and below there at 1153.00.
NASDAQ (JUN) 05/04/2005: 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. Market positioning is positive
with the close over the 1st swing resistance. The near-term upside objective is
at 1451.75. The next area of resistance is around 1446.50 and 1451.75, while 1st
support hits today at 1430.50 and below there at 1419.75.
CURRENCY MARKET RECAP
5/3/2005
June US Dollar finished up 1 at 8446, 14 off the
high and 20 up from the low.
June Euro finished up 0.02 at 128.79, 0.45 off
the high and 0.18 up from the low.
June Euro Dollar closed down 0.005 at 96.57. This
was 0.005 up from the low and 0.015 off the high.
June Canadian Dollar closed down 0.01 at 79.72.
This was 0.13 up from the low and 0.13 off the high.
June British Pound finished down 0.5 at 188.59,
0.59 off the high and 0.09 up from the low.
June Swiss closed down 0.15 at 83.59. This was
0.15 up from the low and 0.31 off the high.
June Japanese Yen closed down 0.09 at 95.49. This
was 0.19 up from the low and 0.08 off the high.
The Dollar once again waffled around unchanged
throughout most of the session and in the process failed to get much support off
a better than expected string of US economic numbers. We also saw dialogue from
China suggesting that whatever they did they were planning to take great care
with respect to exchange rates. In other words, the Chinese are at least
considering some type of more and that seemed to sink the Dollar into mid
session. However, the FOMC meeting had the expected result with the exception
that the Fed dialogue acknowledged the soft spot and that seemed to weaken the
Dollar. However, US numbers have improved slightly this week while numbers
outside of the US have softened.
Technical Outlook
YEN (JUN) 05/04/2005: 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 is an
indication the longer-term trend has turned positive. The market tilt is
slightly negative with the close under the pivot. The near-term upside objective
is at 95.73. The next area of resistance is around 95.62 and 95.73, while 1st
support hits today at 95.36 and below there at 95.20.
EURO (JUN) 05/04/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. 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
market has a slightly positive tilt with the close over the swing pivot. The
next downside objective is 128.23. The next area of resistance is around 129.10
and 129.48, while 1st support hits today at 128.48 and below there at 128.23.
PRECIOUS METALS RECAP
5/3/2005
June Gold closed down 2.8 at 427.7. This was 0.4
up from the low and 2.7 off the high.
July Silver finished up 0.008 at 6.883, 0.032 off
the high and 0.063 up from the low.
The gold market seemed to be the weakest precious
metals market in the action Tuesday. In fact, gold stayed weak despite better
than expected US economic information and a mid day setback in the Dollar. In
other words, the silver market seemed to be short term oversold and capable of
respecting support, while the gold market was apparently poised to factor in
ongoing bearish fundamental developments. We have to think that reduced Asian
trade activity due to the holidays is contributing to the weakness in all
precious metals markets.
Technical Outlook
SILVER (JUL) 05/04/2005: Daily stochastics are
trending lower but have declined into oversold territory. 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 678.1. The next area of resistance is around 693.1 and
697.0, while 1st support hits today at 683.6 and below there at 678.1.
GOLD (JUN) 05/04/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend has turned down with the cross over back below the 18-day
moving average. It is a slightly negative indicator that the close was under the
swing pivot. The next downside objective is now at 425.2. The next area of
resistance is around 429.2 and 431.3, while 1st support hits today at 426.2 and
below there at 425.2.
COPPER MARKET RECAP
5/3/2005
June Copper closed down 1.25 at 146.25. This was
0.25 up from the low and 0.95 off the high.
The copper market remained weak despite better
than expected US economic reports, soft energy prices and slight weakness in the
US Dollar. However, we suspect that copper prices were pressured by a large wire
house forecast that base metals prices have already topped! While we see supply
rebuilding slightly and demand in question we are not willing to totally write
off 2005 demand as a sharp additional slide in energy prices, into the North
America driving season and renewed Chinese buying interest after the holidays
might serve to forge a temporary bottom in copper. We must note that China
recently changed some export rebate laws on some base metals and that would seem
to suggest that they are still trying to keep an adequate supply of raw
materials inside the country.
ENERGY MARKET RECAP
5/3/2005
June Crude Oil closed down 1.42 at 49.50. This
was 0.20 up from the low and 1.10 off the high.
June Heating Oil closed down 2.72 at 143.60. This
was 0.30 up from the low and 2.60 off the high.
June Unleaded Gas finished down 5.51 at 145.94,
3.96 off the high and 1.24 up from the low.
June Natural Gas finished down 0.18 at 6.52, 0.16
off the high and 0.02 up from the low.
June Propane closed up 0.00 at 0.81. This was
equal to the low and equal to the high.
Energy prices remained weak and seemed to rush to
factor in a rather bearish set of weekly inventory figures. Early in the session
the market almost totally ignored the statements from the US Department of
Energy Secretary that suggested the world is still at the effective end of
usable supply. However, later in the session, the DOE suggested that summer
gasoline prices would be less severe than originally forecast and that high
prices were going to reduce demand. We must note that the DOE came up with the
same demand contraction forecast last May and that resulted in a slide from 147
to 112.10 into the 3rd week of July 2004. Supporting prices somewhat were
suggestions from Venezuela that part of high oil prices are the result of
aggressive US international policies.
Technical Outlook
CRUDE OIL (JUN) 05/04/2005: 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 setup is somewhat
negative with the close under the 1st swing support. The next downside objective
is now at 48.43. The next area of resistance is around 50.15 and 51.02, while
1st support hits today at 48.85 and below there at 48.43.
UNLEADED (JUN) 05/04/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
setup is somewhat negative with the close under the 1st swing support. The next
downside objective is 141.42. The next area of resistance is around 148.54 and
151.82, while 1st support hits today at 143.34 and below there at 141.42.
HEATING OIL (JUN) 05/04/2005: The market back
below the 60-day moving average suggests the longer-term trend could be turning
down. Daily stochastics are trending lower but have declined into oversold
territory. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next downside
target is now at 141.28. The next area of resistance is around 145.05 and
147.07, while 1st support hits today at 142.15 and below there at 141.28.
CORN MARKET RECAP
5/3/2005
July Corn finished down 4 at 205, 3 3/4 off
the high and 1/2 up from the low. December Corn closed down 3 1/2 at 223. This
was 1/2 up from the low and 3 1/2 off the high.
Talk of potential mild damage to emerged crops
due to cold weather in the mid-west helped to limit the selling early in the day
but the market managed a new contract low from speculative selling based on
planting progress. The weekly crop progress report, released after the close,
showed that corn plantings had reached 52% complete as of May 1st as compared
with trade expectations of 40-45% complete. The 15-year average for this time of
the year is at 46% complete and 63% of the crop was planted last year at this
time. Freezing temperatures could have burned back some of the emerged corn crop
in the central mid-west but no permanent damage is expected. The frost could
slow development for emerged crops but it is so early in the growing season that
the market believes the impact will be nil. Deliveries were still hefty at 896
contracts which added to the bearish tone. Export news overnight included Taiwan
buying 60,000 tonnes of optional origin corn and South Korea buying 52,500
tonnes of optional origin corn. South Korea also bought 60,000 tonnes of corn
from China. Funds were noted sellers of near 8,000 contracts into the
mid-session. As a result, fund traders have been noted sellers of near 33,000
contracts since Wednesday. Support for July corn comes in at 202 and 197 3/4
with resistance at 208 1/4 and 209.
Technical Outlook
CORN (JUL) 05/04/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is 201 3/4. The 9-day RSI under 30 indicates
the market is approaching oversold levels. The next area of resistance is around
207 and 210, while 1st support hits today at 203 and below there at 201 3/4.
SOY COMPLEX RECAP
5/3/2005
July Soybeans finished down 1 3/4 at 625 1/2, 5
off the high and 5 1/2 up from the low. November Soybeans closed down 2 3/4 at
619 1/4. This was 5 1/4 up from the low and 5 1/2 off the high.
July Soymeal closed down 2.2 at 191.8. This was
1.0 up from the low and 3.7 off the high.
July Soybean Oil finished up 0.08 at 22.62, 0.04
off the high and 0.26 up from the low.
Some follow-through technical buying from the
strong close on Monday helped support the early rally but weakness in the CRB
index, another break in crude oil and ideas that weather looks ideal for the
planting season ahead helped to drive futures lower into the mid-session.
Weakness in corn and ideas that planting progress will accelerate this week
helped to provide overhead selling pressures. Traders were looking for the
weekly crop progress report to show planting progress as of May 1st reaching
4-8% complete. After the close, the USDA reported that 8% of the crop was
planted as compared with 11% as the 15-year average for this time of the year.
There were still no deliveries for oil or meal this morning with 771 soybean
contracts delivered against the May soybean contract. Strong commercial stoppers
took 442 lots and 221 lots which helped provide some support. July soybean
support comes in at 623 1/4 and 621 1/2 with 629 and 631 1/2 as resistance.
Technical Outlook
BEANS (JUL) 05/04/2005: 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 daily closing price reversal down is a negative
indicator for prices. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next downside objective is 615. The
next area of resistance is around 630 3/4 and 635 3/4, while 1st support hits
today at 620 1/4 and below there at 615.
MEAL (JUL) 05/04/2005: The major trend has turned
down with the cross over back below the 40-day moving average. 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 daily closing price reversal down puts
the market on the defensive. It is a slightly negative indicator that the close
was under the swing pivot. The next downside objective is 187.8. The next area
of resistance is around 194.1 and 197.1, while 1st support hits today at 189.5
and below there at 187.8.
BEANOIL (JUL) 05/04/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
below the 18-day moving average is an indication the longer-term trend has
turned down. The outside day up is a positive signal. With the close higher than
the pivot swing number, the market is in a slightly bullish posture. The next
downside objective is now at 22.27. The next area of resistance is around 22.76
and 22.86, while 1st support hits today at 22.47 and below there at 22.27.
WHEAT MARKET RECAP
5/3/2005
July Wheat finished down 5 1/2 at 317 3/4, 7 1/4 off the high
and 2 1/4 up from the low. December Wheat closed down 5 1/4 at 335 1/4. This was
1 1/4 up from the low and 8 off the high.
Declining crop conditions in the weekly crop
progress report along with cold weather in the plains and mid-west helped to
provide underlying support and an early bounce. However, weakness in soybeans
and other commodity markets turned the tone bearish and sellers turned more
active to drive the market to the lowest level since April 19th. Deliveries came
in smaller this morning at 381 contracts but registrations at the CBOT increased
to 1,004 lots from 856 previous. The weekly crop progress report showed winter
wheat crop conditions at 63% in good to excellent condition from 68% last week
and 48% last year. Crops in poor to very poor condition jumped 2% to 9% from 22%
last year and 17% as the 15-year average for this time of the year. The spring
wheat crop is now 61% planted as compared with 68% last year and 53% as the
15-year average for this time of the year. Traders believe the cold weather into
southwest Kansas may have done some light damage. Dryness could return as a
potential concern for the southern plains with a warm and dry 6-10 day forecast.
July wheat support comes in at 315 1/4 with 324 and 325 1/2 as resistance.
Technical Outlook
WHEAT (JUL) 05/04/2005: The daily stochastics
gave a bearish indicator with a crossover down. 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 market is in a
bearish position with the close below the 2nd swing support number. The next
downside objective is 309 1/2. The next area of resistance is around 322 1/2 and
328 1/2, while 1st support hits today at 313 and below there at 309 1/2.
LIVE CATTLE RECAP
5/3/2005
June Live Cattle finished up 0.45 at 85.40, 0.20
off the high and 0.50 up from the low.
May Feeder Cattle closed up 1.52 at 110.05. This
was 1.75 up from the low and 0.05 off the high.
The cattle market pushed moderately higher on the
session supported by fund buying and small speculator short-covering. In spite
of the steep discount of futures to the cash market, commercial traders were
noted sellers. Ideas that the cash and beef markets have reached near-term peaks
and that wholesale demand will decline once Memorial Day bookings are complete
helped to provide overhead resistance. Boxed beef cutout values at mid session
were up $0.01 to $163.90 as compared with $161.79 one week ago. Slaughter came
in at 126,000 head as compared with trade expectations of 118,000-122,000 head.
The higher than expected slaughter could be a sign of firm packer demand.
Technical Outlook
CATTLE (JUN) 05/04/2005: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. 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. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The next downside objective is 84.650. The next area of resistance is
around 85.750 and 86.020, while 1st support hits today at 85.070 and below there
at 84.650.
LEAN HOGS RECAP
5/3/2005
June Lean Hogs finished down 0.85 at 76.57, 0.97
off the high and 0.47 up from the low.
May Pork Bellies closed up 1.77 at 83.92. This
was 1.37 up from the low and 0.02 off the high.
June hogs pushed sharply lower on the day led by
concerns that packer profit margins are down enough to cause packers to back
away from the cash market which could trigger a slowdown in the cash market
uptrend. With June attempting to hold a premium to the cash market, a steady or
weaker tone for the cash market could quickly cause a sell-off in June futures.
Cash hogs were $.50 higher at Peoria which provided some early support. For the
weekly cold storage report, released this afternoon, traders are looking for
pork belly stocks to increase by 1.0-1.6 million pounds. The CME 2-Day lean
Index for the period ending April 29th came in at 72.34 which was up 89 cents
from the previous session and up from 70.27 the previous week. Slaughter came in
at 373,000 head as compared with trade expectations of 380,000-390,000 head.
Technical Outlook
HOGS (JUN) 05/04/2005: 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. The
market is in a bearish position with the close below the 2nd swing support
number. The next upside objective is 78.120. The next area of resistance is
around 77.270 and 78.120, while 1st support hits today at 75.870 and below there
at 75.270.
COCOA MARKET RECAP
5/3/2005
July Cocoa finished down 13 at 1490, 26 off the
high and 2 up from the low.
The cocoa market attempted to rally but had to
disappoint the bull camp by finishing moderately lower in the face of lower
Ivory Coast cocoa production. With the trade factoring in a decline of 11% in
the 2004-2005 Ivory Coast crop we suspect that the ending stocks situation
tightened up but apparently the demand function is strong enough to see cocoa
prices adjust for the reduced output. In other words, the market could have seen
the lower production as a potential bottoming force but with Peace efforts
thought to be progressing the market apparently isn’t concerned about a minor
reduction in world ending stocks.
Technical Outlook
COCOA (JUL) 05/04/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The major trend has turned down with the cross over back
below the 18-day moving average. The market tilt is slightly negative with the
close under the pivot. The next upside target is 1524. The next area of
resistance is around 1504 and 1524, while 1st support hits today at 1476 and
below there at 1468.
COFFEE MARKET RECAP
5/3/2005
July Coffee closed down 1.65 at 121.90. This was
0.30 up from the low and 3.10 off the high.
Fund selling emerged late in the day to pull
coffee futures, and many other commodity markets lower on the session. July
pushed to the lowest level since April 22nd. The 4-day break has corrected the
short-term overbought condition of the market but traders still wait for
increased commercial buying support on the break. Brazil coffee shipments for
the April 1-29th time frame have reached just 1.46 million bags which is down
32% from last months pace. Supplies are thought to be tight for higher quality
Brazil coffee. For the first 7 months of the marketing year ending April, coffee
exports from Guatemala, Honduras and Costa Rica combined reached 4.396 million
bags, down 2.5% from last year.
Technical Outlook
COFFEE (JUL) 05/04/2005: 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 tilt is slightly negative with the close
under the pivot. The next downside target is 119.25. The next area of resistance
is around 123.60 and 126.00, while 1st support hits today at 120.25 and below
there at 119.25.
SUGAR MARKET RECAP
5/3/2005
July Sugar closed down 0.12 at 8.56. This was
0.02 up from the low and 0.12 off the high.
July sugar closed moderately lower on the session
finding selling pressures from weakness in a wide spectrum of commodity markets
and from a lack of trade in the cash market. Cash business has slowed
significantly on the recent recovery bounce in the sugar futures and traders are
now in search of a price level which might trigger increased cash market
business. Cuba reportedly bought 35,000 tonnes of white sugar from Colombia as
the country has experienced extreme drought and poor production. UK beet
plantings have been completed with generally favorable weather conditions and on
a similar acreage base as last year.
Technical Outlook
SUGAR (JUL) 05/04/2005: 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. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness. The next upside objective is 8.72. The next area of resistance is
around 8.63 and 8.72, while 1st support hits today at 8.49 and below there at
8.45.
COTTON MARKET RECAP
5/3/2005
July Cotton finished down 2.57 at 54.01, 2.29 off
the high and 0.10 up from the low.
July cotton closed more than 250 points lower on
the session with aggressive long liquidation selling noted from fund traders. A
lack of new fundamental news, the overbought condition of the market and
weakness in the CRB index were seen as bearish forces. Follow-through technical
selling from the weak close on Monday along with good planting progress left the
market in a long liquidation mode. Sell stops were activated on the move under
the 5-day consolidation top just under the 57.50 level. Weakness in economically
sensitive markets along with a lack of news from China due to a week long
holiday in China added to the bearish tone.
Technical Outlook
COTTON (JUL) 05/04/2005: The close under the
40-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.
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 defensive setup, with the
close under the 2nd swing support, could cause some early weakness. The next
downside objective is 52.17. The next area of resistance is around 55.20 and
56.94, while 1st support hits today at 52.82 and below there at 52.17.