What’s Sending Coffee Lower
BOND MARKET RECAP
10/17/2003
Despite seeing generally bearish economic
information the bonds managed to trade positively in the morning action. In
other words, the bears decided to bank some profits despite seeing support for
their positions. Maybe the trade sees the weekend developments between the US
and Japan as supportive to bonds. We are little surprised that the trade would
adopt such a view into the APEC summit as the US will be in a minority at the
meeting when it comes to requesting an appreciation in Pacific Rim currencies.
Technical Outlook
BONDS (DEC) 10/20/03: A positive setup occurred
with the close over the 1st swing resistance. Near-term resistance for bonds is
at 107.11 and then again at 107.23, while swing support hits at 106.06 and below
there at 105.13. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
105.13.
T-NOTES(DEC) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 110.08. With the close over the 1st swing resistance number, the market
is in a moderately positive position. Near-term resistance for the T-Notes is at
111.20 and then again at 111.28, while swing support hits at 110.26 and below
there at 110.08. The market’s short-term trend is negative as the close remains
below the 9-day moving average.
STOCK INDICES RECAP
10/17/2003
The stock market pretty much continued corrective
type action early in the session despite the fact that US economic reports were
better than expected. Even with the Fed suggesting that the US is returning to
sustainable growth Wall Street would appear to be full of doubts on the ability
to surprise the market with even better earnings in the quarters ahead. The
University of Michigan sentiment figures were positive but yet the market seemed
to want to worry over future prospects. Apparently the sweep of earnings from
EBAY, ADP and Sun Microsystems disappointed the market and prompted week ending
profit taking. The most damaging development of the day were revelations that
the FBI had ordered a complete search of all US planes after two suspicious
pieces of luggage were found to have box cutters and that note inside. The note
said those responsible for the bags were concerned for US security.
Technical Outlook
S&P500 (DEC) 10/20/03: The market is in a bearish
position with the close below the 2nd swing support number. Underlying support
comes in at 1029.50 and 1024.15, with overhead resistance at 1045.50 and
1056.15. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The daily stochastic’s gave a bearish indicator with a
crossover down. 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 1024.15.
S&P E-Mini (DEC): The key reversal down puts the
market on the defensive. The market made a new contract high on the rally. 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 1023.31. The
close below the 1st swing support could weigh on the market. Near-term
resistance for the S&P Mini is at 1046.38 and then again at 1057.81, while swing
support hits at 1029.13 and below there at 1023.31. A positive signal for trend
short-term was given on a close over the 9-bar moving average.
NASDAQ (DEC) The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
close below the 2nd swing support number puts the market on the defensive. The
market should run into resistance at 1412.00 and above there at 1438.50 with
support at 1376.00 and 1366.50. The daily stochastics have crossed over down
which is a bearish indication. 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 1366.5.
CURRENCY MARKET
RECAP
10/17/2003
Like the US stock market, the Dollar failed to
show favorable action following what should have been supportive economic
information. However, it was clear by mid session that the source of some
concern toward the Dollar came from terrorism concerns. Apparently the FBI
ordered a search of all US planes after two bags were found containing box
cutters and a note expressing concern over US security measures. The dollar
might also have been correcting ahead of the weekend meetings in Asia, as those
meetings might result in some currency policy development.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The daily closing
price reversal up is positive. A positive setup occurred with the close over the
1st swing resistance. Swing resistance is targeted at 91.87 and above there at
92.09, with the yen finding support around 91.24 and below there at 90.83. 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 90.83.
EURO (DEC): Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 1.1500. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.1500, with overhead resistance at 1.1720. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The gap
down on the day session chart is bearish with more selling pressure possible
today.
PRECIOUS METALS
RECAP
10/17/2003
A chart failure was seen early in the action and
with the Dollar generally leaning on the gold market. However, the Dollar
doesn’t appear to have significant long interest even in the face of favorable
US economic numbers and that keeps some of the selling pressure off the gold
market. With the lowest trade in nearly 2 months the gold market certainly
corrected more of the overbought condition that is documented in the COT report.
Gold would still seem to be vulnerable fundamentally but one has to think that
the technical condition is becoming a little more balanced.
Technical Outlook
SILVER (DEC): With the close higher than the
pivot swing number, the market is in a slightly bullish posture. Initial support
for silver is at 489.5 and below there at 484.8 with resistance likely at 494.7
and 498.5. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Positive momentum studies in the neutral zone
will tend to reinforce higher price action. The next upside target is 494.7.
GOLD (DEC): Support for gold today comes in near
364.93, while resistance is pegged at 376.73. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 364.93. The market’s close below the pivot swing number is a mildly
negative setup. The market’s short-term trend is negative as the close remains
below the 9-day moving average.
COPPER MARKET RECAP
10/17/2003
The copper market continued to show profit taking
incentive Friday as the Chinese trade was a little discouraged by higher prices.
Certainly short term technicals became severely overbought on two occasions
during the week and both times the market fell back sharply from the 90 cent
vicinity. The market might have been pressured in addition to the profit taking
by news that the last 9 months of production from the Escondido mine was up 42%
over the same period the year before. In other words, the threat of increasing
supply added to the bear tilt.
ENERGY MARKET RECAP
10/17/2003
The energy complex threw in the bull towel
because of the two week pattern of gains in US crude stocks. However, the energy
markets were not significantly long coming into the week and the steep losses
this week probably leaves crude net short in the fund and small spec categories.
Even the natural gas suffered a capital liquidation swing with the small spec
weather longs being forced from position. Recently the small specs in natural
gas had a record long and that certain gave fuel for the liquidation binge
Friday morning in natural gas.
Technical Outlook
CRUDE OIL (DEC): The gap down on the day session
chart is bearish with more selling pressure possible today. The market is in a
bearish position with the close below the 2nd swing support number. Support for
crude is keyed on 30.11 and below there at 29.46, with resistance pegged at
31.30 and 31.84. The market’s close on the 9-day moving average is neutral. .
UNLEADED GAS (DEC): 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
79.88. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 85.28, while support should be found around
79.88. The gap lower price action on the day session chart is a bearish
indicator for trend. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.
HEATING OIL (DEC): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 79.74, with resistance is at 87.74. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. 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 79.74. The gap down on the day session chart is
bearish with more selling pressure possible today.
CORN MARKET RECAP
10/17/2003
After expectations for the weekly export sales
called for 700,000 to 900,000 tons, the 1.675 million tally is certainly
supportive of corn. The trade did note a surprising rally in the basis despite
the fact that the harvest pace should be leaving the basis weak. Given the
record harvest the strong basis is a shot across the bow of the bear camp. Even
with a story suggesting even higher yields might be seen for the US crop once
the harvest is finished the corn market managed to hold above the new low posted
on Thursday. The net spec and fund short in the corn is probably overstated by
10,000 contracts in the COT report considering that the market failed
consistently after the report was measured.
Technical Outlook
CORN (DEC) 10/20/03: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 211 3/4. The market’s close below the pivot swing number is
a mildly negative setup. Market resistance comes in at 217 3/4 today, with
support at 211 3/4. The market’s short-term trend is negative as the close
remains below the 9-day moving average. With a reading under 30, the 9-day RSI
is approaching oversold levels.
SOY COMPLEX RECAP
10/17/2003
After expectations for the weekly export sales
report called for 400,000 to 600,000 tons, the sales of 1.148 million were
certainly a bullish surprise. Furthermore, since cumulative export sales have
now almost reached 50% of the USDA projected sales target the market fosters
even more bullish expectations. Normally exports are roughly only 33% of the
USDA projection at this time of the year. Apparently Chinese sales in the weekly
tally were 391,000 and that shows good ongoing demand from China. The export
pace also shows that higher prices are not yet rationing supplies and that even
higher prices might be needed!
Technical Outlook
SOYBEANS (JAN) 10/20/03: With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
next area of resistance is around 737 1/2 and 748 1/2, while 1st support hits
today at 721 and below there at 715 1/2. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. 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 715 1/2. The 9-day RSI over 70 indicates the market is approaching
overbought levels.
MEAL (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 224.3.
The rally brought the market to a new contract high. First resistance comes in
at 221.6, with support at 217.4. The market’s short-term trend is positive on a
close above the 9-day moving average. With the close over the 1st swing
resistance number, the market is in a moderately positive position. With a
reading over 70, the 9-day RSI is approaching overbought levels.
BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. 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 26.07. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. Daily swing resistance is
found at 26.68 and above there at 26.93. Support should be encountered at 26.25
and 26.07. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
WHEAT MARKET RECAP
10/17/2003
After expectations for the weekly export sales
report called for 350,000 to 450,000 tons, the actual number of 423,600 was
somewhat disappointing. Since the market wanted to see increased export activity
to justify the recent bounce off the lows the market was simply discouraged and
a number of weak handed longs apparently liquidated ahead of the weekend.
European wheat market action was very quiet even though that market continues to
talk up favorable demand trends.
Technical Outlook
WHEAT (DEC) 10/20/03: 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. The close below the 2nd
swing support number puts the market on the defensive. Look for near-term
support at 323 and below there at 320 1/4, with resistance levels at 333 1/2 and
341 1/4. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Daily stochastics are showing positive
momentum from oversold levels which should reinforce a move higher if near-term
resistance is taken out. The next upside target is 341 1/4.
LIVE CATTLE RECAP
10/17/2003
The volatility continues in the cattle market,
with noted divergence between the October and the back month contracts. December
cattle closed 92 higher on the session but down 220 on the week. The weekly
closing price reversal from a contract high is a potential technical sign of a
top. Cattle slaughter for the week was 620,000 head, down 2.5% from last week
and down 12.8% from last year. Due to the sharp drop in weights, beef production
was down 16.8% from last year this week. Boxed-beef prices at mid-session were
down 34 cents to $200.84 as compared with $173.69 last week at this time. This
afternoon’s cattle-on-Feed report is expected to show October 1st on-feed
supplies at 98% (range 97-100), September placements at 111.6% (106-118.9) and
September marketings at 108.7% (103-113.7).
Technical Outlook
CATTLE (DEC) 10/20/03: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 88.07. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Support should be encountered at 89.17 and
below there at 88.07. Market resistance is at 90.92 and then again at 91.57. The
daily closing price reversal up is positive. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative.
LEAN HOGS RECAP
10/17/2003
December hogs managed a moderate rally today as
the market closed 55 higher on the session, 112 higher from the lows and 127
higher on the week. Expectations for solid pork demand due to high beef prices
has helped support. Strong packer profit margins supported a large Saturday
slaughter bringing the weekly total to 2.024 million head, up 1.8% from last
week and up 4.6% from last year. Estimated pork production (using what appears
to be low weight data) from the USDA came in showing a 5.1% increase over last
year. December hogs were closer to 40.00 than 60.00 last year at this time but
the futures continue to hold a stiff premium to cash markets in anticipation of
higher pork demand due to declining beef demand.
Technical Outlook
HOGS (DEC) 10/20/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 60.25 and 60.70 today, while support is around 58.90 and then 58.00.
The upside closing price reversal on the daily chart is somewhat bullish. The
market’s short-term trend is positive on a close above the 9-day moving average.
Momentum studies are trending higher, but have entered overbought levels. The
near-term upside objective is at 60.70.
COCOA MARKET RECAP
10/17/2003
The cocoa market failed significantly possibly
because the US grind was disappointing but probably because the trade simply
fears the coming supply window. Seeing the US grind come in marginally above
unchanged at +1.54% when the trade expected a 5-10% increase is disappointing
but the big picture look in cocoa simply favors the bear camp. Until cocoa sees
arrivals rates begin to taper off (they really haven’t even picked up yet) we
assume that the bear camp controls the trade. The small specs were certainly a
major portion of the selling interest Friday morning.
Technical Outlook
COCOA (DEC)10/20/03 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 1424 and above there at 1506 with
support at 1310 and 1278. 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 target is 1278.00.
COFFEE MARKET RECAP
10/17/2003
More rain than expected was forecast in Brazil
for Monday and Tuesday and that apparently undermined the market and sent prices
back to the vicinity of the lows. Despite stories that Latin American exports
for the October through September time were down slightly the market managed to
slide lower. It would seem like small specs were stopping out of positions and
the roasters were only inclined to make very light buys. The roasters really
have little incentive to prop up prices as long as the weather is keeping the
pressure on prices.
Technical Outlook
COFFEE (DEC)10/20/03 The close below the 1st
swing support could weigh on the market. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 59.65.The
Coffee contract should run into resistance at 61.05 and above there at 61.75
with support at 60 and 59.65. The market’s short-term trend is negative as the
close remains below the 9-day moving average. Daily studies pointing down
suggests selling minor rallies.
SUGAR MARKET RECAP
10/17/2003
A minor new low for the move would seem to leave
the bias down in sugar. Significant weakness in other exotic commodities like
coffee and cocoa would seem to add to the woes in sugar. We think that outside
market impact actually prompted small spec longs to liquidate. Short term
technicals are not excessively oversold and even the COT readings don’t seem to
scream for a bottom. In other words, the market remains entrenched in a
downtrend.
Technical Outlook
SUGAR (MAR) 10/20/03: The market’s close below
the pivot swing number is a mildly negative setup. Swing resistance comes in at
6.02, with support found at 5.88. The market’s short-term trend is negative as
the close remains below the 9-day moving average. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 5.88.
COTTON MARKET RECAP
10/17/2003
Another gap up trade seemed to foster the bull
tilt but the market couldn’t hold most of the rally that unfolded Friday
morning. The ideas that China continues to take down supplies were given
credence by the export sales figures Friday morning. According to the USDA,
China is pulling significant supplies from the US. With the Chinese National
Stat Bureau lowering the Chinese crop 3 million bales below where the USDA
forecast the crop to be there seemed to be plenty of justification for higher
prices. The trade was so hyped up on the Chinese news that cotton options
apparently broke an open interest record.
Technical Outlook
COTTON (DEC) 10/20/03: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. A
positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 76.40 and then again at 77.55, while support is
targeted at 74.65 and 74.05. The daily stochastics have crossed over down which
is a bearish indication. 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 74.05. The 9-day RSI over 70
indicates the market is approaching overbought levels. A new contract high was
made on the rally.