What’s Interesting About The Rally Off The Lows Today…

Technical Outlook

#BONDS (SEP) 7/9/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 108.07 and then again at 108.18, while swing support hits at 107.16
and below there at 107.04. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Stochastics turning bearish at overbought
levels will tend to support lower prices if support levels are broken. The next
downside objective is 107.04. The market is approaching overbought levels with
an RSI over 70.

T-NOTES(SEP) The upside closing price reversal on
the daily chart is somewhat bullish. Momentum studies are trending lower from
high levels which should accelerate a move lower on a break below the 1st swing
support. The next downside objective is now at 109.30. It is a mildly bullish
indicator that the market closed over the pivot swing number. Near-term
resistance for the T-Notes is at 110.24 and then again at 110.31, while swing
support hits at 110.07 and below there at 109.30. The market’s short-term trend
is positive on a close above the 9-day moving average. With a reading over 70,
the 9-day RSI is approaching overbought levels.

 

STOCK INDICES RECAP

7/8/2004

The stock market opened weak and then managed to
get a surprisingly favorable reading from the weekly initial claims report.
While the market was mostly weak for the session it did so the ability to rally
sharply off the lows into mid day and did so in the face of new terrorism
threats. For stocks not to have come under heavy pressure off the Homeland
Security comments suggests that the bears are not in great number or that the
stock market is already oversold because that is a new bearish wrinkle.

Technical Outlook

#S&P500 (SEP) 7/9/2004: The market setup is
somewhat negative with the close under the 1st swing support. Underlying support
comes in at 1105.00 and 1101.00, with overhead resistance at 1116.00 and
1123.00. 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
objective is now at 1101.00. Short-term indicators on the defensive. Consider
selling an intraday bounce.

S&P E-Mini (SEP): Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 1101.06. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. Near-term resistance for the S&P Mini is at 1116.63 and then
again at 1123.56, while swing support hits at 1105.38 and below there at
1101.06. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

NASDAQ (SEP) A negative signal for trend
short-term was given on a close under the 9-bar moving average. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The market should run into resistance at 1449.75 and
above there at 1464.13 with support at 1427.25 and 1419.13. Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 1419.13.

MINI DOW (MAR) The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10226 and above there at 10291 with support at 10125 and 10089.
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
10089. The close below the 40-day moving average is an indication the
longer-term trend is down. The market setup is somewhat negative with the close
under the 1st swing support. Short-term indicators on the defensive. Consider
selling an intraday bounce.

 

CURRENCY MARKET RECAP

7/8/2004

The Dollar Index fell to a new low for the move
and took out the April low and then pretty much hovered at that level. The
Dollar could have been boosted by the stronger than expected initial claims
report and could also have been driven sharply lower by the new terrorist
threats. In short, it would not seem like the market is willing to embrace a
staunchly bullish view toward the US economy and that leaves sentiment squarely
bearish toward the Dollar. Anticipation of an election in Japan and concern for
the US economy seems to leave the Yen in a liquidation position with the US
Dollar.

Technical Outlook

#CURRENCIES 7/9/2004: YEN (SEP): 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 92.37 and above there at 92.52, with the yen finding
support around 92.00 and below there at 91.78. Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. The
next downside objective is 91.78. Bearish daily studies indicate selling minor
rallies this session.

EURO (SEP): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2434. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2306, with overhead resistance at 1.2434. 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

7/8/2004

The gold market flashed higher and managed to run
through several critical chart levels. One might suggest that the weaker Dollar
drive gold, that new terrorism threats drove gold or that the technical breakout
drove gold and one might be right on all accounts. The fact is that silver
managed such a large run that one can hardly lay the blame exclusively on the
technicals. With gold, silver and platinum all rising in tandem it would seem
like the rally has the ability to extend. The metals might be short term
overbought but not long term overbought and out of additional buying capacity.

Technical Outlook

#P-METALS 7/9/2004: SILVER (SEP): 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 628.3 and below there at 607.1 with
resistance likely at 640.7 and 658.8. 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 640.7. The
market is approaching overbought levels with an RSI over 70. If yesterday’s gap
higher on the day session chart holds, additional buying could develop this
session.

GOLD (AUG): Support for gold today comes in near
400.40, while resistance is pegged at 414.00. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 414.00. There could be more upside follow
through since the market closed above the 2nd swing resistance. The close above
the 9-day moving average is a positive short-term indicator for trend.

 

COPPER MARKET RECAP

7/8/2004

While September copper managed to hold most of
the gains posted this week it closed weaker Thursday, while the precious metals
showed even more strength. In other words, the copper missed out on a
generalized rally in the metals and probably did so because of its industrial
background. We have to think that the Copper Study group forecast of a deficit
just above 510,000 metric tons is a negative for the market as many players were
expecting an even larger deficit early in the year. With new terrorism threats
against the US and equity prices remaining weak we have to think that copper is
seeing a cap on prices from a fundamental demand perspective. Into the close
short covering managed to lift copper and make the session appear to be
uneventful.

 

ENERGY MARKET RECAP

7/8/2004

The energy complex started out firm and then
built the rally into an impressive run before the close. The weekly inventory
stats were mostly insignificant with a minor decline in crude stocks and a
minimal build in gasoline stocks. Gasoline prices exploded supposedly off
terrorism warnings and that must mean that the market expect Al-Qaida threats to
push more flyers to driving or the market thinks that Al-Qaida might be planning
to attack refineries. It is also possible that the energy market was fueled
higher by the fact that the Democrats were calling for WTO sanctions against
OPEC and that could in turn cause OPEC to thumb its nose at the US and refuse to
implement the August production hike!

Technical Outlook

#ENERGIES 7/9/2004: CRUDE OIL (AUG): There could
be more upside follow through since the market closed above the 2nd swing
resistance. Support for crude is keyed on 39.56 and below there at 38.43, with
resistance pegged at 41.11 and 41.53. The upside crossover of the 9 & 18 bar
moving average is a positive signal. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 41.53.

UNLEADED GAS (AUG): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
138.33. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. Resistance today is at 138.33, while support
should be found around 123.83. 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.

HEATING OIL (AUG): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 104.18, with resistance is at 113.98. Short-term indicators
suggest buying pullbacks today. 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 113.98. The outside day up gives the market a
positive tilt. The upside daily closing price reversal gives the market a
bullish tilt.

 

CORN MARKET RECAP

7/8/2004

Talk of excellent weather for pollination and
weakness in the other grains contributed to the more aggressive selling from
speculators and funds and helped drive to market lower and to the lowest level
since early January. Funds were noted sellers of near 7500 contracts into the
mid-session. The National Corn Growers Association pegged the crop near a record
10.5 billion bushels. Bird flu problems in China and Thailand have exporters
nervous over Asia demand. For the weekly export sales report, released before
the opening tomorrow, traders are looking for wheat sales near 650,000-850,000
tons from 872,100 tons last week. Deliveries this morning were 123 lots.
December corn support comes in at 251 1/2 and 249 with 256 1/2 and 261 3/4 as
resistance.

Technical Outlook

#CORN (DEC) 7/9/2004: 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 250. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 258 today, with support at 250. The close below the 9-day
moving average is a negative short-term indicator for trend. Some caution in
pressing the downside is warranted with the RSI under 30. More selling pressure
is likely given yesterday’s gap lower price action on the day session chart.

 

SOY COMPLEX RECAP

7/8/2004

After a 94 cent break from Wednesday’s highs,
July soybeans found increased buying support late in the session to close
higher. Weakness in China overnight, a favorable weather forecast in the US and
rumors that South American meal barges are about ready to unload in Wilmington,
North Carolina and at the gulf of Mexico are all factors which contributed to
further losses in the soybean complex early in the session. Overnight weather
maps showed significant heat moving into the Midwest for the next week but also
significant rain. At present, traders assume that the greenhouse weather will
occur but there are still some weather traders who believe the heat will keep
the rains in the northern section of the cornbelt. Fears of declining demand due
to bird flu problems in China and fears of backlash from the court hearings
between China crushers and South American suppliers have added to the demand
fears. Funds and speculators are more active sellers across the board after a
reversal from all-time highs in July meal yesterday and from the sweeping
reversal in July soybeans. For the weekly export sales report, released before
the opening tomorrow, traders are looking for soybean sales near 0-75,000 tons,
0-50,000 tons for meal and 0-5000 tons for oil. November soybean support comes
in at 646 and 642 1/2 with resistance at 664 and 670 1/4.

Technical Outlook

#SOYBEANS (NOV) 07/09/04 The market tilt is
slightly negative with the close under the pivot. The next area of resistance is
around 660 2/4 and 667 1/4, while 1st support hits today at 647 and below there
at 640 1/4. A negative indicator was given with the downside crossover of the 9
& 18 bar moving average. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The next downside objective is 640
1/4.

MEAL (DEC): 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 203.9. First resistance comes in at
209.8, with support at 205.8. The downside crossover of the 9 & 18 bar moving
average is a negative signal. It is a slightly negative indicator that the close
was under the swing pivot.

BEAN OIL (DEC): A negative indicator was given
with the downside crossover of the 9 & 18 bar moving average. Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 22.40. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Daily swing resistance is
found at 23.24 and above there at 23.72. Support should be encountered at 22.58
and 22.40. The market is approaching over sold levels on an RSI reading under
30.

 

WHEAT MARKET RECAP

7/8/2004

The lower trade in the other grains, a lack of
new export news and higher deliveries contributed to some significant
speculative selling entering the market shortly after the lower opening. Funds
were noted sellers of near 3000 contracts by mid-session. Talk of increasing
levels of vomitoxin in new crop wheat at Toledo was seen as a mixed-bag. The
tighter supply of higher quality wheat is a supportive factor but the increased
supply of lower quality wheat may discourage commercials from wanting to hold
deliverable receipts. Traders are hopeful that upcoming tenders from Jordon and
Pakistan might see some increased business to the US. For the weekly export
sales report, released before the opening tomorrow, traders are looking for
wheat sales near 400,000-600,000 tons from 496,200 tons last week. Deliveries
this morning jumped to 499 lots from only 3 contracts yesterday which added to
the bearish tone. Traders are likely to focus on the prospects for changes in
the USDA production forecast for release on Monday for the session tomorrow.
Support for September wheat comes in at 339 1/2 and 337 with 346 1/2 and 349 as
resistance.

Technical Outlook

#WHEAT (DEC) 7/9/2004: The close below the 1st
swing support could weigh on the market. Expect near-term support around 352 and
below there at 350, with resistance levels at 358 and 362. A negative signal for
trend short-term was given on a close under the 9-bar moving average. Rising
from over sold levels, daily momentum studies would support higher prices
especially on a close above resistance. The next upside objective is 362.

 

LIVE CATTLE RECAP

7/8/2004

August cattle opened higher but closed sharply
lower as fund and commercial based traders were active sellers for the second
day in a row. The lowest close since mid-May along with a hefty net position of
the fund trader leaves the market vulnerable to long liquidation selling on
weakness. Talk that cash cattle traded at $86.50 in Nebraska helped to pressure
the market. A weak tone for cash markets, talk of reduced slaughter due to poor
packer profit margins and continued weakness in the beef market added to the
bearish tone. Boxed-beef cut-out values were down .20 to $141.38 as compared
with $144.51 last week at this time.

Technical Outlook

#CATTLE (AUG) 7/9/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 82.95. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. Support
should be encountered at 83.55 and below there at 82.95. Market resistance is at
85.65 and then again at 87.15. A negative indicator was given with the downside
crossover of the 9 & 18 bar moving average.

 

LEAN HOGS RECAP

7/8/2004

The hog market started off strong from support
from a bullish weekly cold storage report, strength in the pork product trade on
Wednesday afternoon and talk of a firm tone in the cash market. However, the
market turned lower into mid-session when there was little in the way of new
buying support on the higher trade early as cattle futures were weak and cash
markets were coming in steady at best with many locations down .50 cents. This
disappointed the bulls and contributed to some long liquidation selling. The
discount of futures to the cash market and belly strength supported the late
bounce. The 2-day lean index for the period ending July 6th was down 6 cents to
79.35 as compared with 81.64 one week previous.

Technical Outlook

#HOGS (AUG) 7/9/2004: It is a slightly negative
indicator that the close was under the swing pivot. Resistance levels comes in
at 75.90 and 76.40 today, while support is around 74.75 and then 74.10. The
upside daily closing price reversal gives the market a bullish tilt. The upside
crossover of the 9 & 18 bar moving average is a positive signal. 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 74.10.

 

COCOA MARKET RECAP

7/8/2004

The cocoa market exploded in what appeared to be
an across the board fund short covering but given the size of the gains we have
to think that the small specs were also drawn in on the long side. The September
cocoa exploded to the highest level since the end of May but then could hardly
manage to hold above the prior days high. Supposedly origin and trade selling
came in around the highs and that should serve to weaken the buyers resolve.
Some traders suggest that drying conditions in Africa are supportive prices but
that is a little suspect as the dryness is a recent development and is anything
but severe.

Technical Outlook

COCOA (SEP) 07/09/04 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1458 and above there at 1499 with support at 1393 and 1369.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 1498.75.

 

COFFEE MARKET RECAP

7/8/2004

The market failed to find new buying support on
the higher opening and forecast for colder weather into next week. As a result,
speculative long liquidation intensified as the market moved lower on the
session and September coffee closed sharply lower on the session. The outside
day down and poor close could attract additional technical selling this week.
While the Brazil forecast calls for colder weather next week, there does not
appear to be cold enough weather to cause damage. Colombia officials cut their
forecast for 2004 production to 10.5 million bags from 11.00 million as the
previous forecast.

Technical Outlook

COFFEE (SEP) 7/9/04 The outside day down and
close below the previous day’s low is a negative signal. The downside closing
price reversal on the daily chart is somewhat negative. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. The 9-day RSI under 30 indicates the market is approaching
oversold levels. Momentum studies are declining, but have fallen to oversold
levels. The next downside objective is now at 68.20. The Coffee contract should
run into resistance at 71.20 and above there at 72.90 with support at 68.85 and
68.20. The market’s short-term trend is negative as the close remains below the
9-day moving average.

 

SUGAR MARKET RECAP

7/8/2004

October sugar gapped higher on the opening only
to find a slow-down in speculative buying and increased producer selling. The
rally to a new 16-month high reached a point where Brazil producers wanted to
move more inventory. The export pace seems to be picking up for the new crop
season with 49 vessels lined-up to load sugar in Brazil which is up from 43 last
week. Russian imports for 2004 for the January May time frame have reached 1.127
million tons from 1.75 million tons for the same time period last year. Pent-up
demand from Russia, declining estimates for Thailand production and the world
production deficit are factors which have supported recent strong gains.

Technical Outlook

#SUGAR (OCT) 7/9/2004: The market rallied to a
new contract high. The daily closing price reversal down is a negative indicator
for prices. It is a slightly negative indicator that the close was under the
swing pivot. Swing resistance comes in at 8.34, with support found at 8.00. 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 8.34.

 

COTTON MARKET RECAP

7/8/2004

The lack of new export news and light speculative
selling helped to push the market moderately lower on the day but the move to
new lows on the week failed to attract new selling interest. Hopes for some
increased export business after the recent sharp break in flat price and after
the recent weakness in the US dollar helped to support. Traders are looking for
export sales, released before the opening, to come in near 250,000-300,000 bales
as compared with last weeks sales of 273,200 bales. Because of the higher
planted acreage forecast in June, traders are looking for US production near
17.9-18.4 million bales as compared with last months USDA forecast of 17.6
million bales.

Technical Outlook

#COTTON (OCT) 7/9/2004: 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. Next resistance area
comes in at 48.40 and then again at 48.88, while support is targeted at 47.60
and 47.28. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 47.28. The market
is approaching over sold levels on an RSI reading under 30. The market made a
new contract low on the break. The gap lower on the day session chart is bearish
and puts the market on the defensive.