When The Market Shrugs Off Good News…

Technical Outlook

BONDS (DEC) 11/26/2003: The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 111.16 and then again at 112.00, while swing support hits at 110.04 and below there at 109.08. 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 112.00. Daily studies suggest buying dips today.

T-NOTES(DEC) The upside closing price reversal on the daily chart is somewhat bullish. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.07. 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 113.30 and then again at 114.07, while swing support hits at 113.04 and below there at 112.20. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

11/25/2003

The stock market either didn’t see the economic reports as bullish or simply lacked the trade volume to extend the recent upside thrust. While the Confidence readings were very strong the trade still doesn’t appear to be poised to factor in soaring holiday sales activity. Some economists suggested that the confidence readings on the jobs sector were upbeat enough to facilitate a good kick off to the holiday retail season. The bias probably remains up because of holiday euphoria but ranges could become much tighter.

Technical Outlook

S&P500 (DEC) 11/26/2003: The close over the pivot swing is a somewhat positive setup. Underlying support comes in at 1048.75 and 1043.73, with overhead resistance at 1058.25 and 1062.73. The close above the 9-day moving average is a positive short-term indicator for trend. The crossover up in the daily stochastics is a bullish signal. The near-term upside objective is at 1062.73.

S&P E-Mini (DEC): A new contract high was made on the rally. A bullish signal was given with an upside crossover of the daily stochastics. The next upside target is 1063.31. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Near-term resistance for the S&P Mini is at 1058.63 and then again at 1063.31, while swing support hits at 1048.38 and below there at 1042.81. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (DEC) The market could take on a defensive posture with the daily closing price reversal down. A positive signal for trend short-term was given on a close over 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 1422.00 and above there at 1431.00 with support at 1408.00 and 1403.00. 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 1431.00.

CURRENCY MARKET RECAP

11/25/2003

The Dollar bulls have to be extremely disappointed with the action Tuesday as favorable US economic numbers failed to provide any bullish incentive to the Dollar. In fact, after the action in the Dollar Tuesday we would think that shorts are losing their fears of being short the Dollar. It would seem that economic reports for Wednesday will be mostly muted readings and that should given the bears in the Dollar an even bigger advantage. The Canadian Dollar made the biggest gains during the session Tuesday and might be considered the leadership currency.

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 91.68 and above there at 91.88, with the yen finding support around 91.10 and below there at 90.72. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 90.72.

EURO (DEC): 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 1.1716. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1716, with overhead resistance at 1.1844. The close below the 9-day moving average is a negative 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

11/25/2003

The gold market dodged a bullet in the early action Tuesday when home sales declined and countervailed readings from the Conference Board that could have sent the Dollar higher. Since the Dollar failed in the face of potentially supportive US economic information gold was able to avoid selling pressure. However, gold bulls should be concerned about the news from Gold Fields Mineral Services as they indicated a drop off in de-hedging. In other words, producers seem to be changing their opinion on hedging forward production and that could cap gold off on rallies in the future.

Technical Outlook

SILVER (MAR): 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 525.0 and below there at 515.8 with resistance likely at 532.3 and 540.0. 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 515.8. The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices.

GOLD (FEB): Support for gold today comes in near 388.53, while resistance is pegged at 396.33. 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 388.53. It is a slightly negative indicator that the close was under the swing pivot. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

11/25/2003

While copper tried to rally early in the session off favorable US economic numbers it would appear that the pre-holiday trade robbed the market of potential buying interest. It is also possible that the bull camp is still somewhat skeptical of the theme that the market has actually bottomed. If fact, with existing home sales dropping it would seem that the bullishness being thrown off by the early stock market rally was countervailed. In conclusion, the copper market needs persistent bullish leadership from Chinese buying in order to fully restart the uptrend.

ENERGY MARKET RECAP

11/25/2003

The energy complex seemed to think that the coming inventory reports were going to show another moderate build in crude stocks and with the fund longs already under intense pressure its not surprising that prices faded again Tuesday morning. However, countervailing the downside pressure in energy prices were reports from the EIA during the session that pointed to an increase in of 4/2% in September US oil use. It was also noted by the EIA that US gasoline and distillate use hit new records in September. Therefore, there would seem to be some bullish fundamentals at work but the short term technicals seem to have control over prices.

Technical Outlook

CRUDE OIL (JAN): The upside daily closing price reversal gives the market a bullish tilt. It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 29.47 and below there at 29.09, with resistance pegged at 30.07 and 30.29. 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 29.09.

UNLEADED GAS (JAN): Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 79.37. The market tilt is slightly negative with the close under the pivot. Resistance today is at 84.07, while support should be found around 79.37. A negative signal for trend short-term was given on a close under the 9-bar moving average.

HEATING OIL (JAN): It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 80.61, with resistance is at 84.21. 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 80.61.

CORN MARKET RECAP

11/25/2003

The corn market managed an impressive rejection of initial weak price action to close firm. While the market did encounter some light fund sales pressure it appeared that the buyers were in large enough number to control the market. We also have to think that a strong soybean basis and a reversal in beans gave the corn market a little lift. The trade did see some support cash market news early in the session but there is some debate as to where the corn will originate from in the Cargill sale to South Korea. Until the Chinese corn export situation is defined any sales in the Pacific Rim will take on an important status.

Technical Outlook

CORN (MAR) 11/26/2003: The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 250 1/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 250 1/4 today, with support at 235 1/4. The downside crossover of the 9 & 18 bar moving average is a negative signal. The outside day up gives the market a positive tilt. The upside daily closing price reversal gives the market a bullish tilt.

SOY COMPLEX RECAP

11/25/2003

After posting a new low for the move the January soybeans managed to close higher on the session. While some think that traders were simply balancing positions ahead of the holidays it is possible that a firming basis gave the market incentive to bounce. We also have to wonder if the lower prices didn’t prompt the Chinese to step back in with some buy orders. Apparently the Chinese Premier is coming to the US and that might tempered the negative attitudes off the Chinese trip that was cancelled last week. We do continue to see more and more products involved in the trade flap and that might suggest that the debate is far from being over. However, in order to overcome harvest flow and recent negative market opinions in a reduced holiday type trade the Chinese will have to be seen buying some beans.

Technical Outlook

SOYBEANS (JAN) 11/26/03 The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. The next area of resistance is around 754 1/2 and 759 , while 1st support hits today at 738 and below there at 726 . 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 726 .

MEAL (JAN): 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 221.1. The upside daily closing price reversal gives the market a bullish tilt. First resistance comes in at 227.5, with support at 223.7. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. Some caution in pressing the downside is warranted with the RSI under 30.

BEAN OIL (JAN): A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 25.78. A positive setup occurred with the close over the 1st swing resistance. The daily closing price reversal up is a positive indicator that could support higher prices. Daily swing resistance is found at 26.95 and above there at 27.14. Support should be encountered at 26.27 and 25.78.

WHEAT MARKET RECAP

11/25/2003

March wheat pushed sharply higher on the session after holding support at the 384 1/2 level. The market found solid commercial buying support on the break as speculative long liquidation slowed and the active export sales pace and mixed crop outlook helped provide support. News that Japan bought 81,000 tons of US wheat and news that Poland is going to open up 600,000 tons of duty-free grain imports helped provide support. After the USDA doubled their export credits to $200 million, rumors of Russian inquiries added to the positive tone. Trade activity is expected to slow for the shortened trading sessions on Wednesday and Friday for the rest of this week.

Technical Outlook

WHEAT (MAR) 11/26/2003: The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. Expect near-term support around 391 and below there at 380 , with resistance levels at 406 1/2 and 411 . A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 380 .

LIVE CATTLE RECAP

11/25/2003

February cattle closed slightly higher on the session in a wild 275 point range. December cattle closed moderately higher finding support from news that cash markets traded at $100, up $2.00 from last week. The news supported a mid-session surge to limit-up but ideas that the spurt in cash was just temporary and that increasing supplies into early next year should keep February at a large discount to cash helped pressure. With funds holding a hefty net long position, and a slower holiday trade ahead, there could be active long liquidation selling in the days ahead. Boxed-beef cut-out values were down $.71 to $163.34 as compared with $167.34 last week at this time. Slaughter was 131,000 head as compared with trade expectations at 124,000-128,000 head. With packer profit margins deep in the red, traders have underestimated packer demand and the larger than expected slaughter is a sign of strong packer demand. This could mean that packers need cattle to fill previously set-up orders.

Technical Outlook

CATTLE (FEB) 11/26/2003: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 88.95. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 90.42 and below there at 88.95. Market resistance is at 93.17 and then again at 94.45. The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. A positive signal for trend short-term was given on a close over the 9-bar moving average.

LEAN HOGS RECAP

11/25/2003

The market found buying support after a test of the contract lows due to surging cattle prices and hopes that the holiday reduced slaughter might support firming pork values. In addition, the sharp drop in beef production (down 12-15% for the past several weeks) is expected to help support improved pork consumption and possible a firming of pork values over the near-term. Weakness in the cash market with packers needs already met for the week contributed to the early weakness and successful test of the contract lows. A surge in belly futures and the close which was above the opening provided support but there is still no sign of a low.

Technical Outlook

HOGS (FEB) 11/26/2003: It is a slightly negative indicator that the close was under the swing pivot. Resistance levels comes in at 53.65 and 54.32 today, while support is around 52.52 and then 52.07. 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 52.07. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

11/25/2003

The cocoa market saw aggressively long liquidation and possibly some fresh fund selling in the action Tuesday. Apparently the fear of rising supply simply scared the hedgers into action and commercial buyers sensing the increased supply flow simply backed away from purchases. While some traders expect hedge selling to dry up at lower price levels it is possible that the crush of supply is too great and prices slide all the way down to the October consolidation lows. Considering that the last COT report was mostly balanced the recent decline in prices this week probably leaves the cocoa market net spec short.

Technical Outlook

COCOA (MAR)11/26/03 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 1459 and above there at 1507 with support at 1393 and 1375. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1375.00.

COFFEE MARKET RECAP

11/25/2003

While the coffee market attempted an early rally it was basically rejected. It would seem that origin selling attempting to capitalize on the higher action but in the end defeated the market and puts coffee in a position to test new contract lows in the coming sessions. Brazilian exports for the November 1st to November 21st time frame were 700,561 bags which is a moderately below year ago levels. However, since the coffee market is in no way concerned about tight supply seeing exports lag behind is an unimportant development.

Technical Outlook

COFFEE (MAR)11/26/03 The market has a slightly positive tilt with the close over the swing pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 59.60.The Coffee contract should run into resistance at 60.60 and above there at 61.10 with support at 59.85 and 59.60. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/25/2003

The market closed unchanged in quiet trade. If there is active trade on Wednesday, it will likely be to the downside given the weaker technical set-up and the excess stocks of sugar in Brazil along with the start of a record cane harvest in Thailand. However, it will probably take some increase in selling from Brazil producers to expect further weakness over the near-term. At a sugar conference in Brazil, there is plenty of optimism that cane-based ethanol demand in Brazil will grow after 14 years of stagnation due to new technology in the auto sector and due to ideas that export demand for ethanol may also grow in the years just ahead. However, the current world production in sugar is expected to exceed consumption again for the coming year; especially if Brazil has another bumper crop and European beet production recovers from the drought-reduced crop of this past season.

Technical Outlook

SUGAR (MAR) 11/26/2003: It is a slightly negative indicator that the close was under the swing pivot. Swing resistance comes in at 6.20, with support found at 6.06. 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 6.06.

COTTON MARKET RECAP

11/25/2003

There would appear to be little downside support in cotton after the massive extension down Tuesday. Near term consolidation support is pegged at 66.35 but below that the market might have to fill the gap all the way down at 65.00. The Press suggested that option related selling was behind the wash but we have to think that the market is still reconsidering the Chinese situation and is finding little reason to halt the stop loss selling binge. One thing is for sure the small spec and fund positioning is quickly removing long players.

Technical Outlook

COTTON (MAR) 11/26/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Next resistance area comes in at 68.40 and then again at 70.35, while support is targeted at 65.79 and 65.13. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 65.13. More downside action may be limited by the RSI under 20 putting the market in extremely oversold territory. The gap lower on the day session chart is bearish and puts the market on the defensive.