Where The Dollar May Be Headed…

Technical Outlook

BONDS (MAR) 1/28/2004: The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 112.08 and then again at 112.17, while swing support hits at 111.12 and below there at 110.25. 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 110.25.

T-NOTES(MAR) 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 113.11. With the close over the 1st swing resistance number, the market is in a moderately positive position. 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 114.11 and then again at 114.16, while swing support hits at 113.25 and below there at 113.11. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

1/27/2004

March S&P gave back most of Monday’s gains on heavy profit taking sparked by uninspiring earnings reports and concerns over growth in the jobs. The Consumer Confidence number for January was strong, but the jobs outlook component failed to show any significant improvement and got investors jittery over the economy’s strength. However, the up trend remains in tact and reports out later in the week could reverse the stock market’s course again.

Technical Outlook

S&P500 (MAR) 1/28/2004: The market setup is somewhat negative with the close under the 1st swing support. Underlying support comes in at 1136.60 and 1133.50, with overhead resistance at 1148.40 and 1157.10. The close above the 9-day moving average is a positive short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. 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 1133.50.

S&P E-Mini (MAR): A new contract high was made on the rally. 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 1132.81. 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 1149.13 and then again at 1158.31, while swing support hits at 1136.38 and below there at 1132.81. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (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. The market should run into resistance at 1537.75 and above there at 1564.13 with support at 1502.25 and 1493.13. Bearish daily studies indicate selling minor rallies this session. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1493.13.

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 10635 and above there at 10709 with support at 10536 and 10511. A crossover down in the daily stochastics is a bearish signal. 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 10511. The market setup is somewhat negative with the close under the 1st swing support.

CURRENCY MARKET RECAP

1/27/2004

The dollar got slammed on Tuesday on a complete reversal of Monday’s price action as the jobs outlook in the Consumer Confidence data failed to show any significant improvement raising doubts over the strength of the US recovery. March Yen made an upside break out on ideas that the BOJ may hold off on intervention efforts ahead of the G7 meeting especially since Euro-zone officials were pressuring Japan to let its currency appreciate. Euro-zone officials believe the Euro has taken on the brunt of the Dollar’s weakness. Given all the infighting over Euro rate policy, it looks increasingly doubtful that a currency stabilization pact will be agreed upon by all G7 members. Without some demonstration of unity from the G7, the Dollar is headed back toward contract lows.

Technical Outlook

YEN (MAR): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market made a new contract high on the rally. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Swing resistance is targeted at 95.09 and above there at 95.25, with the yen finding support around 94.64 and below there at 94.35. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 95.25.

EURO (MAR): The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 1.2729. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2451, with overhead resistance at 1.2729. 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

1/27/2004

A sharp rally in the Euro and Yen currencies drove speculators back to the gold market. Gold & silver are primarily being driven by currency movements so further gains in the Euro against the Dollar could drive April gold back above the $415 resistance level. March silver’s close near the day’s highs sets the market up for a test of the contract highs at 6.71.

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 640.3 and below there at 617.9 with resistance likely at 651.4 and 670.8. A positive signal for trend short-term was given on a close over 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 617.9. The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices.

GOLD (APR): Support for gold today comes in near 401.88, while resistance is pegged at 418.48. 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 401.88. Market positioning is positive with the close over the 1st swing resistance. The close below the 9-day moving average is a negative short-term indicator for trend. The outside day up gives the market a positive tilt. The upside daily closing price reversal gives the market a bullish tilt.

COPPER MARKET RECAP

1/27/2004

March copper closed lower Tuesday as a lack of participation from Asian buyers had prices drifting lower. The market failed to react to higher consumer sentiment number for January, a weaker dollar, a lowering for world mine capacity and a possible strike brewing at a Chile mine. However, when the Chinese return from the holiday next week, we would expect pent-up Asian buying to support prices. Until then, the market will be vulnerable to a pullback with support between 110.45 to 109.70.

ENERGY MARKET RECAP

1/27/2004

March crude oil once again failed to push through $35 resistance level as weakness in the product markets continue to drag crude lower. The huge buildup in the net long position of the speculative traders may mean crude could be bought out despite having relatively good fundamentals particularly tight supplies. Market focus will be on the API stocks report Wednesday with a sharp decline in distillates possibly sparking one of the last weather related rallies of the winter season. With weather conditions moderating in February, the outlook for the product markets is negative.

Technical Outlook

CRUDE OIL (MAR): The outside day down gives the market a bearish tilt. 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 33.58 and below there at 33.20, with resistance pegged at 34.66 and 35.36. 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 target is now at 33.20. Short-term indicators on the defensive. Consider selling an intraday bounce.

UNLEADED GAS (MAR): Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 95.66. The market tilt is slightly negative with the close under the pivot. Resistance today is at 101.66, while support should be found around 95.66. A negative signal for trend short-term was given on a close under the 9-bar moving average.

HEATING OIL (MAR):It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 94.43, with resistance is at 99.93. 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 target is now at 94.43.

CORN MARKET RECAP

1/27/2004

The corn market pushed sharply lower on the session led by weakness in soybeans, improved weather in forecast for Argentina and concerns for a slowdown in feed demand from Asia. The list of countries in Asia with the bird flu is growing and feed companies in Asia are seeing a sharp drop in new orders so meal and corn demand could drop until there is less uncertainty in the poultry industry. Taiwan bought 47,000 tons of US corn this week but other Asia buyers could move to the sidelines, at least temporarily. With a massive net long position from fund traders, the market is a bit vulnerable to a correction over the near-term.

Technical Outlook

CORN (MAR) 1/28/2004: The daily stochastic’s gave a bearish indicator with a crossover down. 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 271 3/4. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Market resistance comes in at 282 1/4 today, with support at 271 3/4. The close above the 9-day moving average is a positive short-term indicator for trend.

SOY COMPLEX RECAP

1/27/2004

May soybeans closed 12 1/2 lower on the session as improved weather in South America, weak demand from China, declining feed usage in Asia and a lack of bullish news from the FDA trigger speculative long liquidation selling. Funds were noted sellers of near 2000 contracts and with talk of a net long position of near 75,000 contracts, the market is thought to be vulnerable to end of the month long liquidation selling. March meal took the brunt of the selling as the bird flu situation in Asia combined with a lack of a ban for feeding meat and bone meal to pork or poultry could slow near-term usage. Tomorrow morning’s Census Bureau monthly crush report is expected to show crush near 143.3 million bushels for December with oil stocks near 1.616 billion pounds as compared with 2.4 billion pounds last year at this time.

Technical Outlook

SOYBEANS (MAR) 01/28/04 There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next area of resistance is around 841 1/2 and 849 3/4, while 1st support hits today at 829 and below there at 824 3/4. 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. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 824 3/4.

MEAL (MAR): A crossover down in the daily stochastics is a bearish signal. 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 256.2. First resistance comes in at 263.5, with support at 258.0. The close below the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the close under the 2nd swing support, could cause some early weakness.

BEAN OIL (MAR): A negative signal for trend short-term was given on a close under 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 29.29. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 29.67 and above there at 29.89. Support should be encountered at 29.37 and 29.29. Short-term indicators on the defensive. Consider selling an intraday bounce.

WHEAT MARKET RECAP

1/27/2004

March wheat inched lower with quiet trade and an inside trading session. The weather outlook was not as bearish as traders had expected with parts of northwest Kansas experiencing a turn to colder temperatures this week. Some business to Asia and a slowdown in the long liquidation trend of the past week helped provide some underlying support. However, the lowest close of the year combined with a hefty net long position in the past COT report leaves futures vulnerable to an end of the month sell-off. News that Egypt bought another 110,000 tons of wheat from Australia and weakness in the other grains helped pressure. The coldest areas of the plains this week are also the areas with insulating snow cover so the market assumes little or no winterkill damage this week.

Technical Outlook

WHEAT (MAR) 1/28/2004: The market tilt is slightly negative with the close under the pivot. Expect near-term support around 377 1/4 and below there at 375 1/2, with resistance levels at 382 1/2 and 386 . 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 375 1/2.

LIVE CATTLE RECAP

1/27/2004

April cattle closed moderately higher in a quiet, inside trading session. Ideas that the market is oversold and at a stiff discount to the cash market helped provide some support. With packer profit margins moving deep into the red this week, traders are not optimistic that cash will even be able to trade steady this week and there is more talk of lower trade this week. A storm on the east coast could negatively impact beef this week and beef prices continued lower. Boxed-beef cut-out values were down $1.18 to $143.51 as compared with $143.59 last week at this time. The lack news which would indicate some let-up in the export ban and an increase ahead in the supply of market-ready cattle to move off of feedlots are bearish fundamentals.

Technical Outlook

CATTLE (APR) 1/28/2004: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 73.62. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 74.12 and below there at 73.62. Market resistance is at 75.02 and then again at 75.45. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

1/27/2004

April hogs closed moderately higher and retraced all of Monday’s losses as an improved cash market outlook helped support. The surge in pork cut-out values, released Monday afternoon, helped support ideas of improving packer profit margins and better demand into the weekend. We would think that the pork export market could see a burst of activity over the near-term. There is plenty of talk that the bird flu problems in Asia could boost poultry export to Asia, however, while the supply is falling fast in Asia, the demand for chicken is also dropping like a rock. In Japan, consumers may shy away from poultry and might avoid US beef but with the US dollar cheap and meat demand shifting to pork, we would not be surprised to see a jump in exports of US pork to Japan and other Asia customers. The CME 2-day lean index for the period ending January 23rd came in at $55.97, up $1.23 on the day and up from $51.74 on January 16th.

Technical Outlook

HOGS (APR) 1/28/2004: Market positioning is positive with the close over the 1st swing resistance. Resistance levels comes in at 57.67 and 58.37 today, while support is around 56.32 and then 55.67. The close below the 9-day moving average is a negative short-term indicator for trend. The cross over and close above the 40-day moving average is an indication the longer-term trend is up. 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 55.67.

COCOA MARKET RECAP

1/27/2004

March cocoa closed lower pressured by news that buyers have been traveling to the rebel stronghold in the western region of the Ivory Coast and been purchasing beans without incident. The area produces around 18,000 metric tons with about 8,000 tons marketed as of last week. Even though the Ivory Coast crop may be slightly smaller this year, the flow of beans is getting to the marketplace as harvest progresses which means cocoa futures should continue to be weighed down by supply. A break under 1571 in the March cocoa would put next support at 1529.

Technical Outlook

COCOA (MAR)01/28/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1603 and above there at 1617 with support at 1575 and 1561. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1561.00.

COFFEE MARKET RECAP

1/27/2004

Coffee help support on the initial break before finding active new buying from fund traders to drive the market to the highest level since October of 2000 for the nearby futures. May coffee managed a one-year high as funds were active buyers. Slow exports from key producers and reports of tighter stocks helped drive the market higher recently. Green coffee shipments from Brazil through January 23rd are just 778,083 bags which is down 46% from last months pace and with January 2003 exports at 2.11 million bags, this years January total is likely to end up down sharply. CSCE exchange stocks were up 7625 bags to 4.401 with 57,631 bags pending review.

Technical Outlook

COFFEE (MAR)1/28/04 The market has a slightly positive tilt with the close over the swing pivot. 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 81.40.The Coffee contract should run into resistance at 80.30 and above there at 81.40 with support at 77 and 74.80. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/27/2004

The March sugar fell to the lowest level since August of 2002 before closing just 2 lower on the session and up 17 points from the lows. The selling dried up on the downside break-out and trade house buying helped support. A short-term jump in cash market activity could provide some temporary support but without a major change in the supply outlook, rallies should be temporary. Middle East buyers are becoming more active in the cash market with Egypt tendering for 60,000 tons, Iran expected to import up to 600,000 tons in the next year and recent interest from Iraq, Syria and others. In addition, traders still await possible import activity from China and for Indonesia to grant import permits which should be any day now.

Technical Outlook

SUGAR (MAR) 1/28/2004: It is a slightly negative indicator that the close was under the swing pivot. Swing resistance comes in at 5.90, with support found at 5.52. The close below the 9-day moving average is a negative 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 5.90.

COTTON MARKET RECAP

1/27/2004

May cotton closed sharply lower and at an 8 session low as long liquidation selling emerged with little commercial support below. The trade will look to digest report on Thursday for weekly export sales and monthly cotton consumption from the Census Bureau and also the annual survey of prospective plantings by the National Cotton Council on Friday. The technical failure this week combined with the hefty net long position of the speculator leaves the market vulnerable to an end-of-the month long liquidation break unless the reports help support the bull case.

Technical Outlook

COTTON (MAR) 1/28/2004: 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. Next resistance area comes in at 74.68 and then again at 75.89, while support is targeted at 72.84 and 72.21. 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 72.21. ORANGE JUICE (MAR)1/28/04 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Orange Juice should run into resistance at 63.10 and above there at 63.55 with support at 61.40 and 60.15. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 60.15.