What’s Driving Copper–Anxiety Or Reality?

Technical Outlook

BONDS (MAR) 2/18/2004: The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for bonds is at 113.07 and then again at 113.15, while swing support hits at 112.18 and below there at 112.05. 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 113.15.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.08. The market’s close below the pivot swing number is a mildly negative setup. 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 115.02 and then again at 115.08, while swing support hits at 114.22 and below there at 114.16. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/17/2004

The stock market started out strong and remained strong. Investors didn’t seem to get too carried away with the bullish tilt as prices rose nominally and were in most part justified by the scheduled numbers and the corporate news flow of the day. Certainly ongoing merger and buyout sentiment added to the bullish sentiment present in the action Tuesday and looks to continue to add to the bullish mentality in the near term. However, the jobs issue could still be a factor that restrains the market from pounding away on the upside.

Technical Outlook

S&P500 (MAR) 2/18/2004: Market positioning is positive with the close over the 1st swing resistance. Underlying support comes in at 1153.40 and 1149.65, with overhead resistance at 1159.80 and 1162.45. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside objective is at 1162.45. Short-term indicators suggest buying pullbacks today.

S&P E-Mini (MAR): A new contract high was made on the rally. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1167.75. A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1163.25 and then again at 1167.75, while swing support hits at 1149.75 and below there at 1140.75. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (MAR) A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The market should run into resistance at 1515.50 and above there at 1522.75 with support at 1499.50 and 1490.75. Daily studies suggest buying dips today. 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 1522.75. The market now above the 40-day moving average suggests the longer-term trend is up.

MINI DOW (MAR) The close above the 9-day moving average is a positive short-term indicator for trend. The market should run into resistance at 10751 and above there at 10781 with support at 10664 and 10607. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 10781. Market positioning is positive with the close over the 1st swing resistance. Short-term indicators suggest buying pullbacks today.

CURRENCY MARKET RECAP

2/17/2004

The Dollar lingered near contract lows but showed some hesitancy to move down fully into new contract low ground. The Euro however, managed to stay within close proximity to the recent highs but did so without much in the way of overly impressive economic readings. In fact, the trade remains a little concerned about the ongoing pace of recovery in the Euro zone. Even with Treasury Secretary Snow suggesting that a strong Dollar is good for America there would appear to be only slight lingering support for the Dollar. The Dollar doesn’t even seem to get any credit for economic numbers that are stronger than most other economic zones.

Technical Outlook

YEN (MAR): A negative signal for trend short-term was given on a close under the 9-bar moving average. The close below the 1st swing support could weigh on the market. Swing resistance is targeted at 94.91 and above there at 95.08, with the yen finding support around 94.51 and below there at 94.28. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 94.28. Bearish daily studies indicate selling minor rallies this session.

EURO (MAR): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.2901. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2757, with overhead resistance at 1.2901. 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

2/17/2004

The gold market reacted to the lower Dollar action Tuesday but because the Dollar showed some hesitancy to move into new contract low ground some buying was kept in check. However, it would seem that the Dollar is favoring the downside and that should keep gold and silver bulls confident. The fact that all metals rallied aggressively lends significant support to the market, especially since the trade was noting Chinese bank buying of gold! The silver market seemed to get direct support from the weaker Dollar, which is a deviation from the recent action.

Technical Outlook

SILVER (MAY): The market setup is supportive for early gains with the close over the 1st swing resistance. Initial support for silver is at 671.3 and below there at 659.2 with resistance likely at 677.9 and 688.3. 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 677.9. The market is approaching overbought levels with an RSI over 70.

GOLD (APR): Support for gold today comes in near 412.08, while resistance is pegged at 419.48. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 419.48. Short-term indicators suggest buying pullbacks today. Market positioning is positive with the close over the 1st swing resistance. The upside crossover of the 9 & 18 bar moving average is a positive signal. The cross over and close above the 40-day moving average is an indication the longer-term trend is up.

COPPER MARKET RECAP

2/17/2004

A forecast released during the session Tuesday by Bloomsbury suggested that copper supplies could be exhausted by the third quarter as the world appears to be burning through 100,000 tons a month. Considering the threat of widespread shortages, users and speculators rushed into the long side of the market and now the trade might be driven by anxiety rather than reality. However, reality would certainly seem to provide ongoing support for prices even if the market is getting a little out of control. In short, prices might continue to rise sharply until physical supplies show some sign of leveling out.

ENERGY MARKET RECAP

2/17/2004

Severe cold in Europe dovetails with the cold that was in the US in late January and early February to keep the energy complex firm. The fact that OPEC indicated that production could still be cut in the March OPEC meeting reminds the market that there is another OPEC meeting prior to the April 1 date. Apparently trading action was thin and that allowed minor buying action to boost prices more aggressively. A large Russian Oil company targeted Brent crude pricing at $27 a barrel and that is a significant up grade in the targeting from the initial $22 prediction. Overbought technical status is discounted by the ongoing favorable fundamental situation.

Technical Outlook

CRUDE OIL (APR): The market rallied to a new contract high. There could be more upside follow through since the market closed above the 2nd swing resistance. Support for crude is keyed on 34.37 and below there at 33.65, with resistance pegged at 35.35 and 35.61. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 35.61.

UNLEADED GAS (APR): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 113.14. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Resistance today is at 113.14, while support should be found around 108.44. 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.

HEATING OIL (APR):The close over the pivot swing is a somewhat positive setup. Heating oil should encounter support around 88.93, with resistance is at 92.73. The close above the 9-day moving average is a positive short-term indicator for trend. 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 92.73.

CORN MARKET RECAP

2/17/2004

Dry weather in Venezuela supported corn prices to higher levels but the market failed to hold the majority of the initial surge up. Dry weather is expected to continue into the coming weekend and that could begin to result in real crop stress. It would seem that the corn basis is remaining weak mostly because export figures are failing to live up to lofty expectations. Weekly Export inspections for corn came in at 24.92 million bushels, compared to expectations of 33-37 million bushels. The current numbers were below the prior week’s tally of 33.2 million bushels.

Technical Outlook

CORN (MAY) 2/18/2004: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 294 3/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 294 3/4 today, with support at 286 3/4. The close above the 9-day moving average is a positive short-term indicator for trend. The market rallied to a new contract high.

SOY COMPLEX RECAP

2/17/2004

Less bird flu concerns were noted, with the US not seeing any additional cases over the weekend and that resulted in a more positive tone. However, the presence of heavy rains in Brazil probably provided the aggressive buying interest Tuesday. Also contributing to the soybean rally were ongoing concerns of dry weather in Argentina and that means that some of the perfect South American crop is in question! With meal prices in China firming up slightly some traders think that the negative impact of bird flu on Chinese feed demand might be mitigating. Weekly Export inspections for soybeans came in at 24.9 million bushels, compared to expectations of 17-22 million bushels. The current numbers were above the prior week’s tally of 17.3 million bushels.

Technical Outlook

SOYBEANS (MAY) 02/18/04 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 859 and 864 1/2, while 1st support hits today at 842 and below there at 830 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 864 1/2.

MEAL (MAY): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside target is at 264.0. Follow through buying looks likely if the market can hold yesterday’s gap on the day session chart. First resistance comes in at 261.3, with support at 252.5. 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 cross over and close above the 40-day moving average is an indication the longer-term trend is up.

BEAN OIL (MAY): 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 32.35. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 32.06 and above there at 32.35. Support should be encountered at 31.57 and 31.37. The market is approaching overbought levels with an RSI over 70.

WHEAT MARKET RECAP

2/17/2004

Forecasts for improved weather in the plains prevented wheat from benefiting from the strength in corn and soybean prices. The demand news should have supported wheat because China indicated that they might buy more wheat than previously projected. China also suggested that they would not cancel wheat for the current year and push into in next year. In the end, the market seems more concerned about weather than most other issues. In short, there is a persistent concern of larger crops ahead, specifically from Australia. Weekly Export inspections for wheat came in at 23.09 million bushels, compared to expectations of 20-24 million bushels. The current numbers were above the prior week’s tally of 22.2 million bushels.

Technical Outlook

WHEAT (MAY) 2/18/2004: The market tilt is slightly negative with the close under the pivot. Expect near-term support around 376 1/2 and below there at 371 1/4, with resistance levels at 388 and 394 1/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 371 1/4.

LIVE CATTLE RECAP

2/17/2004

April cattle closed 25 lower on the session after the beef-led rally failed to cause any new buying support after mid-session. Boxed-beef cut-out values were up 83 cents at mid-session and were up on Monday which helped support the market. In addition, a slightly smaller showlist helped support the early gains as well. However, a lack of new news off of the Mexico import rumors and fears that all retail meat market could come under pressure in order to absorb a surge in domestic supply (lack of exports) helped trigger long liquidation selling. Talk of hefty supplies for the February 1st Cattle-on-Feed report (On-feed estimates at 104-107.2% from last year) helped pressure the market as well.

Technical Outlook

CATTLE (APR) 2/18/2004: Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. The next upside objective is 73.55. The market tilt is slightly negative with the close under the pivot. Support should be encountered at 71.87 and below there at 71.55. Market resistance is at 72.87 and then again at 73.55. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

2/17/2004

April hogs closed slightly lower in choppy, two-sided trade. Weakness in the cash market and in pork product markets for the past two days helped pressure while the large discount of futures to the cash helped provide underlying support. Late weakness in the cattle market and fears that the pork markets will come under more and more pressure if the domestic market needs to absorb 15% more poultry and 9% more beef kept the buying light and attracted new sellers on the bounce. Cash markets were steady to $2.00 lower. The CME 2-day Lean Index was up 26 cents to $64.04 as compared with $57.96 at the end of January. Slaughter came in at 385,000 head. Cash markets are expected to trade $1.00 lower tomorrow.

Technical Outlook

HOGS (APR) 2/18/2004: The close over the pivot swing is a somewhat positive setup. Resistance levels comes in at 59.32 and 60.10 today, while support is around 57.87 and then 57.20. The daily closing price reversal down is a negative indicator for prices. The close below the 9-day moving average is a negative short-term indicator for trend. 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 57.20.

COCOA MARKET RECAP

2/17/2004

We are surprised that the cocoa market didn’t fade slightly Tuesday as the market became aware of an arrival forecast that might put total arrivals up around 1 million tons. The potential to see arrivals within close proximity to last year would mean that the main crop harvest was pretty good when one adds in the additional cocoa that might have been smuggled out through Ghana. However, the trade thinks that arrivals are soon to tail off significantly and that might put some support under prices. Since the trade continues to see industry buying that would seem to suggest that physical buyers are aware of the potential to see arrivals slow, which means they are seeking forward coverage before there is less supply available.

Technical Outlook

COCOA (MAY)02/18/04 The downside closing price reversal on the daily chart is somewhat negative. The market has a slightly positive tilt with the close over the swing pivot. Cocoa should run into resistance at 1571 and above there at 1602 with support at 1513 and 1486. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1601.50.

COFFEE MARKET RECAP

2/17/2004

July coffee closed 35 higher on the session after the lower opening failed to attract new selling interest and speculative buying emerged to pull the market higher late in the session. For the monthly green Coffee Association stocks report, released after the close, stocks were pegged at 5.624 million bags, up 133,672 bags from the end of December. This may be seen as a bearish factor for the opening as traders were looking for stocks to come in anywhere from down 200,000 bags to up 168,000 bags as compared with 5.490 million bags posted at the end of December. Daily exchange stocks were up 4,808 bags to 4.454 million bags with 75,596 bags pending review. Brazil cash differentials were seen as steady from last week in quiet trade.

Technical Outlook

COFFEE (MAY)2/18/04 The daily closing price reversal up is positive. The market tilt is slightly negative with the close under the 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 78.40.The Coffee contract should run into resistance at 77.65 and above there at 78.40 with support at 75.9 and 74.90. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

2/17/2004

The gap higher opening on a Monday is a bullish technical development and follows a daily and weekly closing price reversal last week. The longer-term fundamental outlook remains bearish but with so much hand-to-mouth buying in the past several month, we would not be surprised to see active cash buying in the next few weeks. Funds and trade houses bought the market early in the session but Brazil producer selling emerged as May sugar approached the 6 cent level. Open interest was up 4694 contracts to yet another 1-year high as of Friday and the gap higher opening today leaves the funds (who are already net short near 39,000 contracts) vulnerable to significant short-covering this week on the positive technical developments. The weekly reversal and move to the highest level since early February may attract some end user buyers in the cash market who have been waiting for a sign of a low or a better freight price in order to book sugar.

Technical Outlook

SUGAR (MAY) 2/18/2004: Follow through buying looks likely if the market can hold yesterday’s gap on the day session chart. There could be more upside follow through since the market closed above the 2nd swing resistance. Swing resistance comes in at 6.05, with support found at 5.65. The close above the 9-day moving average is a positive short-term indicator for trend. 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 6.05.

COTTON MARKET RECAP

2/17/2004

May cotton closed 83 higher on the session and was the highest close in 5 sessions as renewed hopes for active export sales, buying from fund traders and a surge in the US stock market helped support. Ideas that the market is quite oversold and a steady flow of trade house buying added to the positive tone. World prices never really pulled-back to the extent of US prices last week so the move to near 6-month lows could have attracted active new export sales. The Cotlook A Index was unchanged on the session at 74.00 which is also unchanged from last week and down just 15 points from two weeks ago. Uzbekistan, the world’s second largest exporter, produced 945,971 tonnes of cotton fiber in 2003 which was down 6% from the previous year.

Technical Outlook

COTTON (MAY) 2/18/2004: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Next resistance area comes in at 69.48 and then again at 69.76, while support is targeted at 68.54 and 67.88. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 69.76. ORANGE JUICE (MAR)2/18/04 The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 61.70 and above there at 61.90 with support at 61.00 and 60.50. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 61.9.