Who’s Afraid Of An Upbeat Greenspan?
BOND MARKET RECAP
2/10/2004
The Treasury market faded ahead of the Congressional testimony slated for Wednesday morning. Headline readings from the Richmond Fed Manufacturing Index showed continued growth in manufacturing but weakness in the jobs area but the Treasuries faded as a result. Therefore, the Treasury market did not have a clear-cut fundamental track in the action Tuesday but decided to bank some long profits. We do suspect profit-taking was a primary motive behind the weakness in prices but we also wonder if the coming Japanese national holiday was serving to reduce the prospect of foreign bank buying of U.S. Treasuries, which in turn pushed speculative longs to the sidelines.
Technical Outlook
BONDS (MAR) 2/11/2004: The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. The close below the 1st swing support could weigh on the market. Near-term resistance for bonds is at 112.13 and then again at 113.02, while swing support hits at 111.15 and below there at 111.06. A positive signal for trend short-term was given on a close over the 9-bar moving average. 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 113.02.
T-NOTES(MAR) The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 114.18. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 114.06 and then again at 114.18, while swing support hits at 113.20 and below there at 113.14. The market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
2/10/2004
The U.S. stock-market remained in positive ground for most of the session Tuesday, despite a highly varied corporate earnings flow. Bolstering stock prices during the session were favorable manufacturing readings from the Richmond Fed and the hope that the upcoming Fed testimony would be optimistic. So far, the US stock market has paid little attention to the bird flew incidents within the U.S., but that issue could be an undermine in the near future if the situation isn’t contained. In the end, the market would seem to generally expect the Chairman of the Federal Reserve to provide support to equity prices during the session on Wednesday.
Technical Outlook
S&P500 (MAR) 2/11/2004: Market positioning is positive with the close over the 1st swing resistance. The upside daily closing price reversal gives the market a bullish tilt. Underlying support comes in at 1138.95 and 1133.83, with overhead resistance at 1147.85 and 1151.63. 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 objective is at 1151.63. Short-term indicators suggest buying pullbacks today.
S&P E-Mini (MAR): A new contract high was made on the rally. The daily closing price reversal up is positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1152.06. A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1148.13 and then again at 1152.06, while swing support hits at 1138.88 and below there at 1133.56. The market’s close above the 9-day moving average suggests the short-term trend remains positive.
NASDAQ (MAR) 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. The market has a slightly positive tilt with the close over the swing pivot. The market should run into resistance at 1504.50 and above there at 1512.50 with support at 1489.50 and 1482.50. Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. The next upside objective is 1512.50.
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 10622 and above there at 10656 with support at 10548 and 10508. 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 10656. The close over the pivot swing is a somewhat positive setup.
CURRENCY MARKET RECAP
2/10/2004
Like the gold market, the currency trade showed some concern for what the Federal Reserve Chairman might say in the scheduled Wednesday testimony to Congress. In other words, the trade feared an upbeat presentation by the Federal Reserve Chairman, which in turn would provide additional short covering interest in the U.S. dollar. The British pound continued to show the most significant gains against the Dollar, with many traders expecting the UK economy to heat up. In fact many suspect the Bank of England might be primed to hike interest rates again, which in turn would attract even more capital to the British currency.
Technical Outlook
YEN (MAR): 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. Swing resistance is targeted at 94.99 and above there at 95.17, with the yen finding support around 94.67 and below there at 94.53. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 94.53.
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 1.2786. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2622, with overhead resistance at 1.2786. Stochastics are rising from over sold levels which is bullish and should support higher prices. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.
PRECIOUS METALS RECAP
2/10/2004
The gold market finished the session lower after making a higher high for the move for early in the day. The fact of the Dollar rebounded sharply off its low the session, seemed to promote profit-taking in gold. However, many gold traders are also fearful of what the chairman of the Federal Reserve might say in his testimony Wednesday morning, as that could lend even more support to the U.S. Dollar. In short, the ebb and flow the Dollar continues to dominate the ebb and flow of gold pricing. It should be noted that silver prices failed to make a higher high for the move and therefore the market certainly showed less upside momentum than gold, in the action Tuesday.
Technical Outlook
SILVER (MAY): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 635.4 and below there at 632.7 with resistance likely at 643.7 and 645.4. A positive signal for trend short-term was given on a close over the 9-bar moving average. 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 643.7. The market could take on a defensive posture with the daily closing price reversal down.
GOLD (APR): Support for gold today comes in near 403.68, while resistance is pegged at 412.28. 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 412.28. It is a slightly negative indicator that the close was under the swing pivot. The close above the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal down is a negative indicator for prices.
COPPER MARKET RECAP
2/10/2004
At times during the session Tuesday, the copper market showed that more than simple profit-taking. Certainly the recent severe overbought status in the copper market lends itself to aggressive profit-taking but all things considered the market held together well considering the nearly straight up pattern of prices over the last three weeks. However in the end the copper market did manage to respect critical chart support levels. In copper prices did manage to derive some support off the idea that copper concentrate supply could be reduced rather significantly in 2004, because of basic copper production problems. In fact, a private forecast pegged the copper concentrate loss to be 475,000 metric tons in 2004.
ENERGY MARKET RECAP
2/10/2004
Once again OPEC surprised the trade with the promise of an April 1st production cut. After promising for two days not to cut production, OPEC decided to reduce output by 1 million barrels per day and also promised to remove an additional 50,000 barrels per day with increased compliance efforts. The fact that Saudi Arabia appears to be leading the way with compliance efforts, combined with the surprise timing of the new cuts to lend significant credibility to the bull case. In fact, given the recent correction in product markets, the sharp recovery burst Tuesday isn’t all that surprising especially when one considers the change in future supply fundamentals.
Technical Outlook
CRUDE OIL (APR): The cross over and close above the 40-day moving average is an indication the longer-term trend is up. 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. Support for crude is keyed on 31.96 and below there at 31.43, with resistance pegged at 32.86 and 33.23. 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 target is at 33.23.
UNLEADED GAS (APR): A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 107.73. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Resistance today is at 107.73, while support should be found around 101.43. If yesterday’s gap higher on the day session chart holds, additional buying could develop this session. A positive signal for trend short-term was given on a close over the 9-bar moving average.
HEATING OIL (APR):There could be more upside follow through since the market closed above the 2nd swing resistance. Heating oil should encounter support around 81.96, with resistance is at 85.56. The close above the 9-day moving average is a positive 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. The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 85.56. Follow through buying looks likely if the market can hold yesterday’s gap on the day session chart.
CORN MARKET RECAP
2/10/2004
The USDA report was bullish all the way around, but the fear of another bird flu incident countervailed the bullish USDA report. Ahead of the opening, reports surfaced that predicted Chinese corn exports for the first half of 2004 would come in at 1.6 million metric tons and that is less than what the market had been expecting. Furthermore, because the corn market is concerned about an overbought status and the ongoing bird flu situation, the sellers were able to control prices. In fact, if the bird flu situation isn’t contained, the bullish fundamentals from supply and demand are temporarily discounted altogether. Lower corn stocks and higher demand would seem to keep corn from falling aggressively off the current near term demand threats.
Technical Outlook
CORN (MAY) 2/11/2004: 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 . It is a slightly negative indicator that the close was under the swing pivot. Market resistance comes in at 294 today, with support at 281 1/2. The upside crossover of the 9 & 18 bar moving average is a positive signal. The market rallied to a new contract high. The daily closing price reversal down is a negative indicator for prices.
SOY COMPLEX RECAP
2/10/2004
May soybeans closed sharply lower on the session after an early surge to contract highs. The3 key reversal could attract additional technical selling given the extreme overbought condition. The USDA reports were neutral to slightly bearish. The USDA pegged ending stocks at 125 million bushels as compared with trade estimates at 116 million bushels (range 54-125) and 125 million bushels last month. Usage numbers were left unchanged but the USDA raised Brazil production by 1 million tons to 61 million tons and also raised beginning stocks in the world supply/demand report. As a result, ending stocks are now pegged at 37.47 million tons as compared with the revised 39.27 million for last year and 32.19 million tons for the 2001/2002 season. Reports of a second bird flu case in Delaware and concerns with China soybean and meal demand helped pressure the market late in the session.
Technical Outlook
SOYBEANS (MAY) 02/11/04 The market made a new contract high on the rally. The market could take on a defensive posture with the daily closing price reversal down. The market tilt is slightly negative with the close under the pivot. The next area of resistance is around 853 and 874 3/4, while 1st support hits today at 818 1/2 and below there at 805 3/4. The market’s close on the 9-day moving average is neutral. 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 874 3/4.
MEAL (MAY): A crossover down in the daily stochastics is a bearish signal. The next downside target is now at 238.1. The outside day down gives the market a bearish tilt. The daily closing price reversal down is a negative indicator for prices. First resistance comes in at 255.2, with support at 242.7. The close below the 9-day moving average is a negative short-term indicator for trend. 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.
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 32.17. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market made a new contract high on the rally. Daily swing resistance is found at 31.92 and above there at 32.17. Support should be encountered at 31.40 and 31.13. The market is approaching overbought levels with an RSI over 70.
WHEAT MARKET RECAP
2/10/2004
The market closed slightly higher on the session as some of the early gains were erased with weakness in the other grains. The USDA pegged ending stocks at 534 million bushels as compared with the average trade estimate of 559 million bushels (range 551-567) as compared with 559 million bushels as last months USDA forecast. World ending stocks are pegged at 125.95 million tons as compared with 127.26 last month and 165.57 million last year. The report news is bullish. China production was pegged at 86 million tons from 87 million last months forecast and 90.2 million tons last year.
Technical Outlook
WHEAT (MAY) 2/11/2004: The market has a slightly positive tilt with the close over the swing pivot. Expect near-term support around 389 and below there at 385 1/4, with resistance levels at 395 1/2 and 398 1/4. A positive signal for trend short-term was given on a close over the 9-bar moving average. 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 398 1/4.
LIVE CATTLE RECAP
2/10/2004
April cattle closed limit-down as reports of a second case of bird flu reported in Delaware helped to turn the outlook for a quick resumption of poultry exports less likely. With poultry exports representing 15% of the total production, an extended poultry export ban would mean that the beef market would have to compete with extra poultry supplies which will move on the domestic market. In addition, Mexico officials indicated that they would not lift the ban on US beef imports until the US proves it has control of the spread of mad cow. Packer bids emerged this week at $70-$72 as compared with last weeks cash trade at $75. Boxed-beef cut-out values were mostly higher but this failed to support.
Technical Outlook
CATTLE (APR) 2/11/2004: A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 70.85. The close below the 1st swing support could weigh on the market. Bearish daily studies indicate selling minor rallies this session. Support should be encountered at 71.25 and below there at 70.85. Market resistance is at 72.82 and then again at 74.00. A negative signal for trend short-term was given on a close under the 9-bar moving average.
LEAN HOGS RECAP
2/10/2004
April hogs closed limit-down with active long liquidation selling hitting the market late. Weakness in cattle, reports of another bird flu case in Delaware and lower cash hog prices helped trigger the sell-off. Ideas that the weather has turned favorable enough to see a surge in marketings in the next several days and higher than expected slaughter yesterday helped trigger the initial e profit-taking selling and then the aggressive long liquidation selling late in the day helped drive futures sharply lower. Slaughter came in at 385,000 head. The weekly cold storage report, released this afternoon, is expected to show an increase of up to 750,000 pounds with some estimate as low as a decrease in stocks of 300,000 pounds which compares with last weeks movement of an increase of 980,000 pounds.
Technical Outlook
HOGS (APR) 2/11/2004: The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Resistance levels comes in at 59.70 and 60.97 today, while support is around 58.00 and then 57.57. The close below the 9-day moving average is a negative 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 target is now at 57.57.
COCOA MARKET RECAP
2/10/2004
The cocoa market managed a slight rebound following two days of intense selling. Therefore, many traders think the rise Tuesday was simple technical short covering. Other traders suggested that spread roll-over action was a primary force behind the gains Tuesday. Recently the market had been acting as if the March contract would be in strong favor into its expiration, but with a roll into a May contract taking place Tuesday, some of the squeeze potential is removed. There were also some concerns that cocoa sales from Nigeria might be slowed due to a price disagreement there and that might also have contributed to the gains.
Technical Outlook
COCOA (MAY)02/11/04 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1554 and above there at 1565 with support at 1516 and 1489. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1489.00.
COFFEE MARKET RECAP
2/10/2004
A sharp upward extension in coffee would seem to end the liquidation tilt in the market. The fact that Roaster buying showed up really turned sentiment positive and in turn caused the short funds to reconsider their positions. With coffee prices nearing the August 2003 high it is clear that the January flare in prices had some fundamentals behind it. Recent heavy rains in coffee probably only add a minor supportive element to the equation.
Technical Outlook
COFFEE (MAY)2/11/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 74.00.The Coffee contract should run into resistance at 77.50 and above there at 78.00 with support at 75.5 and 74.00. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.
SUGAR MARKET RECAP
2/10/2004
The market bounced after several day of weak price action as the short-term oversold condition supported some light short-covering. While futures are oversold basis traditional technical indicators, the Commitment-of-Traders report with options showed that as of February 3rd, small speculators were still net long over 17,000 contracts. With only 12 trading days left in the March contract before last trading day, there is still nearly 117,651 contracts open which leaves the speculator vulnerable to more long liquidation selling ahead. While there seems to increased interest in new cash business, trade houses are having a difficult time in closing deals due to the volatile freight market and trade houses do not want to risk changes in the freight rates or availability when bidding on tenders.
Technical Outlook
SUGAR (MAY) 2/11/2004: Market positioning is positive with the close over the 1st swing resistance. Swing resistance comes in at 5.82, with support found at 5.64. 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 5.64.
COTTON MARKET RECAP
2/10/2004
A major downside probe in cotton comes despite what appeared to be a mostly unchanged USDA supply and demand report. The USDA increased production by 450,000 bales to 92.65 million bales but consumption was also increased by 130,000 bales. In short, the market must be disappointed that cotton isn’t seeing the type of dramatic demand expansion as some of the other grain markets. We also think that the market is concerned about bird flu type developments slowing the somewhat anemic economic recovery. One would have to think that comparative price levels for corn and soybeans would lead to the potential for lost cotton numbers in the coming crop but right now the cotton market is seeing little of the potential bull issues.
Technical Outlook
COTTON (MAY) 2/11/2004: 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 68.69 and then again at 70.81, while support is targeted at 65.86 and 65.15. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 65.15. The market is approaching over sold levels on an RSI reading under 30. ORANGE JUICE (MAR)2/11/04 There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Orange Juice should run into resistance at 62.40 and above there at 64.25 with support at 59.80 and 59.05. 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 64.25.