Why Cattle Is Strong

Technical Outlook

BONDS (DEC) 09/08/03: Since the close was above the
2nd swing resistance number, the market’s posture is bullish and could see more
upside follow-through early in the session. Near-term resistance for bonds is at
108.03 and then again at 108.23, while swing support hits at 105.26 and below
there at 104.05. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The cross over and close above the 40-day
moving average indicates the longer-term trend has turned up. The daily
stochastics have crossed over up which is a bullish indication. The next upside
target is 108.23.

T-NOTES(DEC) 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 112.12. The market’s close
above the 2nd swing resistance number is a bullish indication. Near-term
resistance for the T-Notes is at 111.29 and then again at 112.12, while swing
support hits at 110.06 and below there at 108.30. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

9/5/2003

Despite the overbought status the stock market had to
contend with, the monthly non farm payroll loss was an even bigger burden.
However, we take the initial response to the setback in jobs as a sign that the
market isn’t as vulnerable as many would have expected. Certainly, seeing the US
Fed promise to cut interest rates is helpful but the trade is still pretty much
wanting to see a near term recovery not a recovery toward the end of the year.
Since most other economic reports released on the week were favorable, that
certainly mitigates the residual negative influence off the payroll loss, but in
the end the market will probably be a little more sensitive to other weak
economic numbers in the near future.

Technical Outlook

S&P500 (SEP) 09/08/03: The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
daily closing price reversal down puts the market on the defensive. Underlying
support comes in at 1016.40 and 1011.15, with overhead resistance at 1028.20 and
1034.75. 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 1034.75.

S&P E-Mini (SEP): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1035.06. The market has a slightly positive tilt with the close over the swing
pivot. Near-term resistance for the S&P Mini is at 1032.38 and then again at
1035.06, while swing support hits at 1024.13 and below there at 1018.56. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.

NASDAQ (SEP) A new contract high was made on
the rally. The downside closing price reversal on the daily chart is somewhat
negative. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. It is a slightly negative indicator that the
close was lower than the pivot swing number. The market should run into
resistance at 1380.25 and above there at 1394.63 with support at 1352.75 and
1339.63. 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 next upside target is 1394.6.

 

CURRENCY MARKET RECAP

9/5/2003

There were several potential bombshells floated in
the session Friday. With the US Administration attempting to solicit higher
exchange rates from China and other major exporting countries some in the trade
jumped to the conclusion that the US might intervene and force the Dollar
higher. With the monthly non farm payroll report showing a massive loss of jobs
(93,000) there will be plenty of political pressure to act against undervalued
currencies. In other words, cheap currency exchange rates give countries like
China, a significant advantage in the export markets. However, it could be very
difficult for the US to talk up the Dollar with US economic stats weak and the
Fed possibly poised to cut interest rates.

Technical Outlook

YEN (DEC): The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The downside closing
price reversal on the daily chart is somewhat negative. It is a slightly
negative indicator that the close was lower than the pivot swing number. Swing
resistance is targeted at 86.11 and above there at 86.34, with the yen finding
support around 85.64 and below there at 85.40. 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
85.40.

EURO (DEC): 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 1.1223. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.0829, with overhead resistance at 1.1223. The
market’s short-term trend is positive on a close above the 9-day moving average.
The major trend is down with the cross over back below the 40-day moving
average. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

PRECIOUS METALS RECAP

9/5/2003

The gold market should have been lifted by the slide
in the Dollar but we have to think that the fear of the COT report long position
muted the gains Friday morning. However, with gold and silver showing some
positive price action Friday it is clear that the overbought technical condition
is a major limiting force. Also in the news Friday were statements from the
German Finance Minister that hinted at slightly lower sales of gold. Many
traders debate the meaning of what the German Finance Minister talked about but
we have to think that Central Banks will only sell gold if it makes economic
sense and won’t be compelled by the Washington Agreement to sell gold! It should
also be noted that gold and silver managed to get buying interest Friday morning
off the idea that the Fed might have to cut interest rates again in order to
save US jobs and that could be considered inflationary.

Technical Outlook

SILVER (DEC): Since the close was above the 2nd swing
resistance number, the market’s posture is bullish and could see more upside
follow-through early in the session. Initial support for silver is at 508.3 and
below there at 499.9 with resistance likely at 514.7 and 521.8. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 514.7.

GOLD (DEC): Support for gold today comes in near
369.43, while resistance is pegged at 386.03. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at
386.03. The market’s close above the 2nd swing resistance number is a bullish
indication. The market’s short-term trend is positive on a close above the 9-day
moving average.

 

COPPER MARKET RECAP

9/5/2003

No matter how one looks at the action in copper
Friday you have to be impressed as prices rallied in the face of poor macro
economic numbers, a weak stock market and lower Chinese price action. Maybe the
trade was supported by the idea that a lower Dollar was making US copper
supplies more attractive and maybe the trade was supported by the idea that
Chinese copper stocks fell moderately on the week. The copper even managed the
gains despite stories of increased copper production from Norilsk in the January
through July time frame! Maybe copper was lifted by the hope for more US
interest rate cuts.

 

ENERGY MARKET RECAP

9/5/2003

The gasoline market showed strength but the crude
seemed to begrudgingly follow the rest of the complex higher. With the recent
inventory builds and OPEC showing signs of slightly higher output it’s
understandable that products show a little more strength than crude oil. It
should be noted that the US appears to be getting involved in efforts to protect
Nigerian oil assets and that should be a supportive issue as another shutdown of
Nigerian production would certainly serve to jolt the bulls back into action.
There are also concerns of a labor strike in Nigeria and word that the exiled
Liberian leader met with the Nigerian President and that seem to foster concern
over that supply flow.

Technical Outlook

CRUDE OIL (NOV): The market’s close below the pivot
swing number is a mildly negative setup. Support for crude is keyed on 28.67 and
below there at 28.47, with resistance pegged at 29.05 and 29.23. 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 28.47. With a reading under 30,
the 9-day RSI is approaching oversold levels.

UNLEADED GAS (NOV): Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 79.09. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. Resistance today is at 82.09, while support should be found around
79.09. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

HEATING OIL (NOV): The market’s close below the pivot
swing number is a mildly negative setup. Heating oil should encounter support
around 76.11, with resistance is at 78.61. 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 76.11. With a reading under 30, the 9-day RSI is approaching
oversold levels.

 

CORN MARKET RECAP

9/5/2003

Weekly export sales for corn came in at 849,000, off
an estimated range of 800,000 to 1,000,000. Considering the generally bullish
bias of price action over the week, the export sales were disappointing. The
corn market will now begin to look ahead to the coming USDA report and might
begin to question just how much damage the market has already factored. Most of
the action Friday appeared to be profit taking but with volume and open interest
remaining pretty low it would not seem like corn is overextended technically. We
might add that the EU wheat markets were watching the corn harvest in Europe and
that is important because the US market really hasn’t given much consideration
to the potential decline in world ending stocks of corn.

Technical Outlook

CORN (DEC) 09/08/03: Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
248 . The market’s close below the 1st swing support number suggests a
moderately negative setup for today. Market resistance comes in at 248 today,
with support at 239 1/2. The market’s short-term trend is positive on a close
above the 9-day moving average.

 

SOY COMPLEX RECAP

9/5/2003

The soybean market found early support from talk of
continued deterioration in crop conditions but weakness in the other grains and
long liquidation selling helped pressure the market late in the session. The
market managed an early test of the August 26th reversal top before and failure
to more to new highs triggered some of the technical long liquidation selling.
Weekly export sales for soybeans came in at only 85,100 tons as compared with
trade expectations at 500,000-700,000 tons. New crop sales were 257,000 tons as
compared with 375,700 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 27.2% of the USDA projection for the year as
compared with 15.5% on average for this time of the year.

Technical Outlook

SOYBEANS (NOV) 09/08/03: The downside closing price
reversal on the daily chart is somewhat negative. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The next area
of resistance is around 593 and 600 1/2, while 1st support hits today at 581 1/2
and below there at 577 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 577
1/2.

MEAL (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 180.9. First resistance comes in at 185.3,
with support at 182.2. The market’s short-term trend is positive on a close
above the 9-day moving average. It is a mildly bullish indicator that the market
closed over the pivot swing number.

BEAN OIL (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. 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 20.32. The close below the 2nd swing support number puts
the market on the defensive. Daily swing resistance is found at 20.88 and above
there at 21.16. Support should be encountered at 20.46 and 20.32.

 

WHEAT MARKET RECAP

9/5/2003

The market collapsed led by another round of
aggressive selling from speculators as the gap lower opening, routine export
sales and deliveries helped to keep sellers active. Weekly export sales came in
at only 588,800 tons as compared with trade expectations at 500,000-700,000 tons
and 433,100 tons necessary each week to reach the USDA projection. Cumulative
sales have reached 40% of the USDA projection for the year as compared with
36.2% on average for this time of the year.

Technical Outlook

WHEAT (DEC) 09/08/03: The gap lower price action on
the day session chart is a bearish indicator for trend. The close below the 2nd
swing support number puts the market on the defensive. Look for near-term
support at 355 1/2 and below there at 353 1/4, with resistance levels at 362 1/2
and 367 1/4. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. The close under the 40-day moving average
indicates the longer-term trend could be turning down. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 353
1/4.

 

LIVE CATTLE RECAP

9/5/2003

October cattle closed 5 points higher on the session
but 210 higher on the week. The early long liquidation break was triggered by
news of an agreement with Canadian officials which will allow Canadian beef to
flow into the US beginning next week and from ideas that the market was
overbought. However, surging boxed-beef prices on the week suggests that cash
cattle may be in strong demand with a tightening supply for next week and
further gains in the cash market are now expected. Boxed-beef prices were up
$1.49 to $149.95 which is within a few cents of the June and all-time highs.
Slaughter for the week came in at 641,000 head as compared with 731,000 last
week and 630,000 head last year.

Technical Outlook

CATTLE (OCT) 09/08/03: Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 86.05. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. Support should be encountered at
84.40 and below there at 83.50. Market resistance is at 85.67 and then again at
86.05. The daily closing price reversal up is positive. The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
9-day RSI over 70 indicates the market is approaching overbought levels.

 

LEAN HOGS RECAP

9/5/2003

October hogs closed sharply higher due to a surge in
cash markets and solid gains in pork values on the week. Liquidation of
cattle/hog spreads and lighter slaughter weights reported for the week added to
the positive tone. Packers needed to bid as much as $3.00 higher in the cash
market to get enough hogs for a hefty Saturday slaughter. The technical action
remains very bullish and the market has recovered nearly all of the losses from
the July break. Slaughter for the week came in at 1.741 million head as compared
with 1.908 million last week and 1.846 million last year.

Technical Outlook

HOGS (OCT) 09/08/03: The market’s close above the 2nd
swing resistance number is a bullish indication. Resistance levels comes in at
58.70 and 59.22 today, while support is around 56.90 and then 55.62. The gap up
on the day session chart gave a bullish indicator and more follow through could
be seen this session. 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 59.22. With a reading
over 70, the 9-day RSI is approaching overbought levels.

 

COCOA MARKET RECAP

9/5/2003

After an initial early run cocoa prices lost momentum
and seem to be without a strong opinion. However, the trade suggested that the
market will need some fresh fundamental news to avoid near term weakness. The
trade detected some small spec selling in the early action Friday and that would
seem to verify the need for some fresh news. Even the COT report showed the need
for fresh information in cocoa as neither the funds nor the small specs hold a
significant position.

Technical Outlook

COCOA (DEC)09/08/03 The downside closing price
reversal on the daily chart is somewhat negative. The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1717 and above there at 1735 with support at 1683 and 1667. 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 1667.00.

 

COFFEE MARKET RECAP

9/5/2003

The gap higher opening attracted aggressive new
short-covering from fund traders which drove coffee futures sharply higher. A
dry weather trend is developing in Brazil and the market is beginning the first
year in a long time to absorb a world production deficit. The close over 66.10
for December coffee leaves 70.90 as next upside objective. The last traders
report showed that funds were net short over 11,000 contracts so traders will be
monitoring the report closely.

Technical Outlook

COFFEE (DEC)9/8/03 The gap upmove on the day session
chart is a bullish indicator for trend. The market has a bullish tilt coming
into today’s trade with the close above the 2nd swing resistance. Studies are
showing positive momentum, but are now in overbought territory so some caution
is warranted. The near-term upside objective is at 67.20.The Coffee contract
should run into resistance at 66.90 and above there at 67.20 with support at
65.8 and 65.00. The market’s short-term trend is positive on a close above the
9-day moving average.

 

SUGAR MARKET RECAP

9/5/2003

The market looks poised for further losses over the
near-term as the cash market break in the past several weeks does not appear to
have reached a level yet where demand is expected to flourish. The Brazil
production is coming in heavier than expected and Russian demand is flat at
best. The long liquidation trend and new selling spree is likely to continue
until speculators build a net short position of near 40,000 contracts. The
market found support from some light fears of potential crop damage in China
from the typhoon this past week and talk of a slightly smaller EU crop forecast
due to the drought problems in Europe, especially Italy.

Technical Outlook

SUGAR (OCT) 09/08/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.15, with support found at 5.89. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The daily
stochastics gave a bullish indicator with a crossover up. The near-term upside
objective is at 6.15. With a reading under 30, the 9-day RSI is approaching
oversold levels.

 

COTTON MARKET RECAP

9/5/2003

December cotton closed 22 higher on the session and
near the high of the day which was an inside trading session. Early weakness was
triggered by higher than expected crop production forecasts and ideas that the
market was overbought after recent sharp gains. Sparks pegged the cotton
production for next weeks report at 17.561 million bales as compared with the
USDA forecast last month at 17.1 million. The Cotlook A Index was up 25 cents to
61.25. Weekly export sales came in at 77,400 bales for old crop and 34,700 bales
for the 2004/2005 crop year as compared with trade expectations at 80,000 to
120,000 bales. Cumulative sales have reached just 29.5% of the USDA forecast for
the year as compared with 45.7% on average for this time of the year.

Technical Outlook

COTTON (DEC) 09/08/03: The market’s close above the
9-day moving average suggests the short-term trend remains positive. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. Next resistance area comes in at 60.30 and then again at 60.44, while
support is targeted at 59.71 and 59.26. Studies are showing positive momentum,
but are now in overbought territory so some caution is warranted. The next
upside target is 60.44. The 9-day RSI over 70 indicates the market is
approaching overbought levels.