What’s Behind Today’s Copper Rally

Technical Outlook

BONDS (DEC) 9/12/2003: The market tilt is
slightly negative with the close under the pivot. Near-term resistance for bonds
is at 107.20 and then again at 108.10, while swing support hits at 106.15 and
below there at 106.00. 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 108.10.

T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
112.04. It is a mildly bullish indicator that the market closed over the pivot
swing number. 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 111.25 and then again
at 112.04, while swing support hits at 111.03 and below there at 110.25. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

9/11/2003

The stock market was impressive Thursday but it
is possible that patriotism fueled most of the gains. However, traders on the
floor of the NYSE seemed to suggest that buying interest was diversified among
players and seemed to be long term in nature. We also saw signs that the stock
market was looking forward to the passing of another 9/11 without incident. The
trade is also looking forward to a strong retail sales reading Friday and
possibly to a rate cut from the Fed next week. All in all the market is
discounting the negatives and playing up the positives.

Technical Outlook

S&P500 (SEP) 9/12/2003: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1012.70 and
1007.85, with overhead resistance at 1021.70 and 1025.85. The close below the
9-day moving average is a negative short-term indicator for trend. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The next downside objective is now at
1007.85.

S&P E-Mini (SEP): Daily stochastics turning lower
from overbought levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside target is
1000.13. It is a slightly negative indicator that the close was lower than the
pivot swing number. Near-term resistance for the S&P Mini is at 1021.00 and then
again at 1030.13, while swing support hits at 1006.00 and below there at
1000.13. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

NASDAQ (SEP) The daily closing price reversal up is a positive
indicator that could support higher prices. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market has a
slightly positive tilt with the close over the swing pivot. The market should
run into resistance at 1367.00 and above there at 1377.50 with support at
1337.00 and 1317.50. Stochastics turning bearish at overbought levels will tend
to support lower prices if support levels are broken. The next downside
objective is 1317.50.

 

CURRENCY MARKET RECAP

9/11/2003

A big range with a close in the middle of the
range takes some of the downside momentum out of the marketplace. Some traders
think that the Dollar fell for most of this week off fears of an impending
terrorist attack. It would also seem like tensions are about to heat up in the
Middle East especially if Arafat is expelled and that promises to drive some
money toward the Dollar. Lastly many in the trade were expecting US retail sales
readings to be strong on Friday morning. It should also be noted that the
Canadian Dollar posted very poor performance Thursday and appears to be on the
cusp of a downside thrust.

Technical Outlook

YEN (DEC): A negative signal for trend short-term
was given on a close under the 9-bar moving average. The market tilt is slightly
negative with the close under the pivot. Swing resistance is targeted at 85.99
and above there at 86.37, with the yen finding support around 85.38 and below
there at 85.15. Momentum studies trending lower at mid-range could accelerate a
price break if support levels are broken. The next downside objective is 85.15.

EURO (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 1.1274. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.1072, with overhead resistance at 1.1274. 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.

 

PRECIOUS METALS RECAP

9/11/2003

Another big range with a recovery means that the
bear camp can’t seem to keep gold down. However, it was very clear that gold
under performed silver during the session and that suggests that funds are
deciding to move some money into silver instead of gold. The US Dollar really
didn’t make a clear-cut move Thursday and that could have discouraged gold
players. We also have to think that the silver market is in a better position
than the gold market to pick up strength off a higher US equity market. News
that Arafat might be expelled from Israel is certainly to kick off a firestorm
of issues in the Middle East and that could certainly fuel precious metals
buying.

Technical Outlook

SILVER (DEC): The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Initial
support for silver is at 528.5 and below there at 520.8 with resistance likely
at 534.0 and 540.5. 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 534.0. The market is
approaching overbought levels with an RSI over 70. The market made a new
contract high on the rally.

GOLD (DEC): Support for gold today comes in near
373.38, while resistance is pegged at 386.38. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 386.38. It is a slightly negative indicator
that the close was under the swing pivot. The close above the 9-day moving
average is a positive short-term indicator for trend.

 

COPPER MARKET RECAP

9/11/2003

The copper market managed more than a simple
short covering bounce as one reporter labeled the rally Thursday. In fact, the
Press was pretty wild in its explanation of the rally as they also suggested
that no terrorist’s attacks and a rise in stock prices allowed copper to run up.
We have to think that there was some technical short covering but that something
more significant is in the works, possibly stronger Chinese buying interest or
the potential for a labor problem. We are not sure how the market took stories
of a 45% decline in July US copper exports as that would seem to suggest worse
demand and higher potential US supplies.

 

ENERGY MARKET RECAP

9/11/2003

With the energy complex sliding aggressively
Thursday and Israel talking about expelling Arafat we can expect politic
fireworks and potentially higher threats against Middle East supply. It is
possible that the energy complex was anticipating some progress in finding
Saddam especially since US troops engaged in firefights and captured up to 80
foreign fighters in Iraq within the session Thursday. Negatively impacting
natural gas prices was a surprise 97 bcf injection, which is a little larger
than the trade anticipated.

Technical Outlook

CRUDE OIL (NOV): The daily closing price reversal
down is a negative indicator for prices. The market setup is somewhat negative
with the close under the 1st swing support. Support for crude is keyed on 28.61
and below there at 28.38, with resistance pegged at 29.29 and 29.74. 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
28.38. Short-term indicators on the defensive. Consider selling an intraday
bounce.

UNLEADED GAS (NOV): A bearish signal was
triggered on a crossover down in the daily stochastics. The next downside
objective is 78.72. The close below the 1st swing support could weigh on the
market. Resistance today is at 82.72, while support should be found around
78.72. A negative signal for trend short-term was given on a close under the
9-bar moving average. Bearish daily studies indicate selling minor rallies this
session.

HEATING OIL (NOV): The market setup is somewhat
negative with the close under the 1st swing support. Heating oil should
encounter support around 75.41, with resistance is at 79.21. 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
75.41.

 

CORN MARKET RECAP

9/11/2003

December corn closed 9 1/4 cents as the market
decided to be disappointed with the production projection of 9.9 billion
bushels. We also have to think that the market is a little concerned about
taking down the second largest crop ever produced in the US. It should be noted
that demand is also running at an all time record level even if US exports
aren’t exactly what the bull camp expected them to be. The USDA pegged the yield
to be 138.5 and with that number didn’t take Iowa down as much as many in the
trade expected them to. Weekly export sales came in at 889,400 compared to
expectations of 600,000 to 900,000 and that should have been supportive. It
should be noted that corn didn’t have a large small spec and fund long position
coming into the session and that could suggest less downside than many would
expect in the coming sessions.

Technical Outlook

CORN (DEC) 9/12/2003: 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 225 1/2. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 244 1/2 today, with support at 225 1/2. The close below
the 9-day moving average is a negative short-term indicator for trend.

 

SOY COMPLEX RECAP

9/11/2003

Soybeans closed sharply higher with heavy volume
as the USDA forecast put production at 2.643 billion bushels off of a range of
expectations of 2.712 to 2.806. With ending stocks at 135 million the market
sees the lowest ending stocks reading in 8 years. Weekly export sales came in at
227,1000 versus expectations of 300,000 to 500,000 and that served to
countervail the bullishness. The stocks to use ratio fell to an extremely tight
level of 5.1% and the trade is now suggesting that the crop has actually
deteriorated some since the USDA did their survey. In other words, the bull camp
thinks they have the information to drive prices even higher.

Technical Outlook

SOYBEANS (NOV) 09/12/03 The market made a new
contract high on the rally. The gap upmove on the day session chart is a bullish
indicator for trend. The market has a bullish tilt coming into today’s trade
with the close above the 2nd swing resistance. The next area of resistance is
around 623 1/2 and 634 3/4, while 1st support hits today at 607 1/2 and below
there at 602 3/4. The market’s close on the 9-day moving average is neutral. A
bearish signal was triggered on a crossover down in the daily stochastics.
Stochastics turning bearish at overbought levels will tend to support lower
prices if support levels are broken. The next downside objective is 602 3/4. 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 198.0. The market rallied to a new contract
high. Follow through buying looks likely if the market can hold yesterday’s gap
on the day session chart. First resistance comes in at 193.6, with support at
187.2. 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. The market is becoming somewhat
overbought now that the RSI is over 70.

BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. A bullish signal
was given with an upside crossover of the daily stochastics. The next upside
objective is 21.95. 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. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. Daily swing resistance is found at
21.86 and above there at 21.95. Support should be encountered at 21.60 and
21.43. The market is approaching overbought levels with an RSI over 70.

 

WHEAT MARKET RECAP

9/11/2003

The wheat market took its cue from the corn
market instead of the soybean market as it finished the day down 6 cents. The
USDA report showed almost no change in the wheat situation and that could be why
the market was allowed to track corn instead of beans. Weekly export sales in
wheat came in at 658,000 compared to a range of expectations of 500,000 to
700,000. The USDA report posted a slight increase in the US stocks to use ratio
and a slight decrease in the world stocks to use ratio. Short-term technicals
and weather seem to point to even more losses for wheat in the near term.

Technical Outlook

WHEAT (DEC) 9/12/2003: Could see some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Expect near-term support around 347 and below there at 344 1/4,
with resistance levels at 356 and 362 1/4. A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 344 1/4. The market is approaching over
sold levels on an RSI reading under 30.

 

LIVE CATTLE RECAP

9/11/2003

December Cattle closed 112 higher and into new
contract highs as the cash market fundamentals continue to support the
discounted futures. Cash markets traded $89.00 in the panhandle this week and
with the surge in beef prices on the week, next weeks cash market is already
called higher. Boxed-beef prices closed up 79 cents to $157.84 as compared with
$148.46 last week at this time. The jump in beef keeps packer profit margins in
the black even if they need to pay higher next week for live inventory. In
addition, the supply of market-ready cattle is tight as producers have
constantly moved cattle which could have stayed on feed for several more weeks.

Technical Outlook

CATTLE (OCT) 9/12/2003: A bullish signal was
given with an upside crossover of the daily stochastics. The next upside
objective is 89.20. The market has a bullish tilt coming into today’s trade with
the close above the 2nd swing resistance. Support should be encountered at 87.40
and below there at 86.50. Market resistance is at 88.75 and then again at 89.20.
The market made a new contract high on the rally. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market is
approaching overbought levels with an RSI over 70.

 

LEAN HOGS RECAP

9/11/2003

October Hogs hit new contract highs for the third
session in a row but unlike the last two sessions when prices collapsed into the
close, October hogs closed 115 higher on the session to 60.37. While the CME
2-Day Lean index for the period ending September 9th was up $1.32 to 53.59 which
leaves futures at a stiff premium to the cash market. However, the surge in cash
markets for the past few days suggests another $1.50-$3.00 rally in the cash is
likely into the end of the week. Another surge in loin prices today sent pork
cut-out values up another $1.92 higher to $65.60 as compared with $60.10 last
week at this time. The market is looking at a large kill on the week so the
ability of the market to forge higher in spite of the increasing production is
impressive.

Technical Outlook

HOGS (OCT) 9/12/2003: Market positioning is
positive with the close over the 1st swing resistance. Resistance levels comes
in at 61.40 and 62.32 today, while support is around 59.35 and then 58.22. The
market rallied to a new contract high. The close above the 9-day moving average
is a positive short-term indicator for trend. Momentum studies trending lower
from overbought levels is a bearish indicator and would tend to reinforce lower
price action. The next downside target is now at 58.22. With a reading over 70,
the 9-day RSI is approaching overbought levels.

 

COCOA MARKET RECAP

9/11/2003

A massive range down supposedly resulted from
spec selling. Other sources suggested that local selling fueled the slide but it
is clear that the weakness was started by the acknowledgment that physical
supply was now on the way to market. Even though cocoa farmers were complaining
about a lack of financing it would not seem like their warnings on the quality
of the crop is going to be a near term impact on prices. We have to assume that
the fund camp has now moved into a net short position with the magnitude of the
selling Thursday morning.

Technical Outlook

COCOA (DEC)09/12/03 The gap lower price action on
the day session chart is a bearish indicator for trend. Could see some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Cocoa should run into resistance at 1576 and above there at 1644
with support at 1481 and 1454. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 1453.75.

 

COFFEE MARKET RECAP

9/11/2003

A moderate range up trade in coffee would seem to
put the market into a moderately overbought technical condition. However, with
the coffee seeing a wave of fund buying (like so many other commodity markets)
it is possible that prices temporarily ignore short-term technical
considerations. With a 4 month high in coffee the trade is now suggesting the
next resistance point is the May highs of 74.25. It should be noted that the
market made the gains Thursday despite the presence of origin selling. In other
words, physical selling was no match for fund buying.

Technical Outlook

COFFEE (DEC)9/12/03 The market setup is
supportive for early gains with the close over the 1st swing resistance. The
9-day RSI over 70 indicates the market is approaching overbought levels. Studies
are showing positive momentum, but are now in overbought territory so some
caution is warranted. The near-term upside objective is at 74.30.The Coffee
contract should run into resistance at 73.30 and above there at 74.30 with
support at 70.8 and 69.30. The market’s short-term trend is positive on a close
above the 9-day moving average.

 

SUGAR MARKET RECAP

9/11/2003

The sugar market failed on the early bounce.
Producer selling emerged to push the market lower after some light buying early
in the session. The market seems to lack aggressive commercial pricing on the
recent break which is sending a signal that world prices may need to move to a
lower price level to encourage increased usage. On the recent break to an
oversold condition, a slow-down in producer selling from Brazil was seen as the
reason for the lack of follow-through to the downside. The USDA Supply/Demand
report showed a slight decline in production to 8.812 million tons as compared
with 8.386 million tons last year and 7.907 million in 2001. In spite of the
adjustment lower in production, ending stocks were revised higher to 2.012
million tons from 1.858 million projected last month and 1.691 million last
year.

Technical Outlook

SUGAR (OCT) 9/12/2003: The daily closing price
reversal down is a negative indicator for prices. The market setup is somewhat
negative with the close under the 1st swing support. Swing resistance comes in
at 6.23, with support found at 5.85. The close below the 9-day moving average is
a negative short-term indicator for trend. Stochastics are rising from over sold
levels which is bullish and should support higher prices. The near-term upside
target is at 6.23.

 

COTTON MARKET RECAP

9/11/2003

The cotton market gapped higher and closed limit
up for the session. The USDA report was bullish because the report confirmed the
lower Chinese crop and indicated that Chinese imports would rise. The USDA also
lowered the US cotton crop to 16.94 million bales and that in total results in a
sharp drop in world and US ending stocks. The USDA figures now put the ending
stocks total at 3.8 million bales, which compares to 4.3 million in the August
report.

Technical Outlook

COTTON (DEC) 9/12/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Next resistance area comes in at 65.91 and then again at 66.10,
while support is targeted at 65.14 and 64.56. Rising stochastics at overbought
levels warrant some caution for bulls. The next upside objective is 66.10. The
market is approaching overbought levels with an RSI over 70. The market made a
new contract high on the rally. If yesterday’s gap higher on the day session
chart holds, additional buying could develop this session.