Why Cattle Went Limit Up

Technical Outlook

BONDS (MAR) 01/22/04: The daily closing price reversal up is positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 112.20 and then again at 112.27, while swing support hits at 112.02 and below there at 111.23. 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 111.23.

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 113.26. 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 114.16 and then again at 114.21, while swing support hits at 114.03 and below there at 113.26. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/21/2004

Once again the tendency to take profits was rejected and the market managed to make new highs. The US housing starts numbers were much better than expected and it seemed as if the President was pushing China to do something about their undervalued currency. With Lucent Technologies managing to post a first quarter profit of 603 million Dollars it would seem that a bad chapter in the communications sector has been put to rest and that is helpful to the bull camp. In short the market continues to look to the good news and is discounting the prospect of bad news.

Technical Outlook

S&P500 (MAR) 01/22/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. Underlying support comes in at 1138.15 and 1127.83, with overhead resistance at 1153.65 and 1158.83. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 1158.83. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract high on the rally. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1148.50. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1148.00 and then again at 1148.50, while swing support hits at 1146.50 and below there at 1145.50. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) A new contract high was made on the rally. 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 1560.50 and above there at 1572.25 with support at 1533.50 and 1518.25. The 9-day RSI over 70 indicates the market is approaching overbought levels. 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 1518.3.

MINI DOW (MAR) A new contract high was made on the rally. 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 market should run into resistance at 10688 and above there at 10737 with support at 10531 and 10423. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 10737. A positive setup occurred with the close over the 1st swing resistance. Short-term indicators suggest buying dips today.

CURRENCY MARKET RECAP

1/21/2004

The US President called on the Chinese to do something about the unfair value of the Chinese currency but the market was sure what to do with the comments. It seems as if the White House is planning some action but we suspect that the Chinese will make some move to placate and that might tend to shore up the Dollar. The Yen continued to hover just below resistance on the charts but was showing enough strength that the BOJ must be intervening or is waiting in the wings to intervene.

Technical Outlook

YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 93.83 and above there at 94.06, with the yen finding support around 93.46 and below there at 93.32. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 93.32.

EURO (MAR): 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 1.2526. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2526, with overhead resistance at 1.2682. 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

1/21/2004

The bull camp has to be disappointed with the action Wednesday as the Dollar was moderately lower and yet gold was moderately weaker for most of the session. The silver market was even weaker than the gold market showing that something other than Dollar action was prompting long liquidation. Unless the Dollar resumes its aggressive slide we are wondering if the spec crowd in both silver and gold won’t decide to move to the sidelines. The fact that central bank sales talk surfaced Wednesday morning might also be something that sparks long liquidation in gold!

Technical Outlook

SILVER (MAR): The close below the 2nd swing support number puts the market on the defensive. Initial support for silver is at 610.6 and below there at 600.0 with resistance likely at 622.6 and 631.1. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 600.0.

GOLD (APR): Support for gold today comes in near 407.03, while resistance is pegged at 416.03. 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 407.03. 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

1/21/2004

The copper market finished mostly unchanged on the session as it appears to be technical exhausted. The market might be prepared for a let down off the coming Chinese holiday period but with another Canadian mine having a labor negotiation deadline at the end of the month we doubt that prices will so too much weakness. With copper concentrate shortages so severe cash buying would also expect to be seen on any upcoming Chinese holiday weakness. With US housing starts coming in positive and the US stock market running to new highs copper should have gotten a slight lift from the macro economic outlook.

ENERGY MARKET RECAP

1/21/2004

The energy complex saw mostly a mixed trade Wednesday with the crude weaker and heating oil higher for parts of the session. The weekly inventory readings due out Friday due to holiday are expected to show a minor decline in crude stocks and a moderate decline in heating oil stocks. The trade probably saw some support from crude prices off the news that the US was in fact, going to continue building the SPR until it was full at 700 million barrels. While filling the reserve is a near term, supportive issue that might also serve to temper price volatility of minor supply threats. The Saudi Oil Minister is so sure that inventories are tight he suggested it would be a miracle to see oil decline to $25 a barrel under current conditions.

Technical Outlook

CRUDE OIL (MAR): The rally brought the market to a new contract high. The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 34.23 and below there at 33.91, with resistance pegged at 34.93 and 35.31. 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 35.31. With a reading over 70, the 9-day RSI is approaching overbought levels.

UNLEADED GAS (MAR): The daily stochastics have crossed over up which is a bullish indication. The next upside target is 102.93. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 102.93, while support should be found around 99.53. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 98.09, with resistance is at 101.69. 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 101.69. The rally brought the market to a new contract high.

CORN MARKET RECAP

1/21/2004

The corn market rejected early weakness and managed quite an impressive close. It would seem that a Chinese wheat purchase managed to partially offset a negative export shipment switch in soybeans but the main item of the day in corn was news from Argentina. Not only did Argentina officially reduce the planted area in corn but the trade is also finding support from the weather in that country. Argentine corn area supposedly declined by 6.9% with output pegged at 12 to 12.5 million metric tons. Corn export sales are delayed until Friday morning but with export inspections showing a favorable tilt the trade might have high expectations for the numbers Friday morning.

Technical Outlook

CORN (MAR) 01/22/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 282 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 282 today, with support at 270 1/2. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels. The rally brought the market to a new contract high.

SOY COMPLEX RECAP

1/21/2004

Soybeans opened near 6 cents lower on the session due to China demand fears but managed to close 13 3/4 higher on the session finding support from hopes of increased meal usage ahead. From a radio station interview, the USDA Agriculture Secretary was quoted as saying that the FDA would make an announcement “very shortly” on possible new restrictions on the use of cattle parts in US animal feed. Traders believe that the FDA may extend the ban on feeding meat and bonemeal to both pork and poultry operators as the ban is already in place for cattle. Dry and warm weather in the forecast for Argentina added to the positive tone. The early weakness was triggered by a USDA announcement that China had switched 628,000 tons of US soybean purchases from the 2003/2004 season to the 2004/2005 season. Since January 14th, China has now switched a total of 1.32 million tons to new crop.

Technical Outlook

SOYBEANS (MAR) 01/22/04: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 854 and 861 1/2, while 1st support hits today at 830 and below there at 813 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 813 1/2.

MEAL (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 267.8. The rally brought the market to a new contract high. First resistance comes in at 266.1, with support at 260.1. 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 (MAR): 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 28.73. A positive setup occurred with the close over the 1st swing resistance. The daily closing price reversal up is positive. Daily swing resistance is found at 29.91 and above there at 30.15. Support should be encountered at 29.20 and 28.73.

WHEAT MARKET RECAP

1/21/2004

March wheat closed 3 1/4 lower on the session as the long liquidation selling from Tuesday was seen for the second day with heavy speculative long liquidation selling emerging in spite of bullish demand news and increasing weather concerns from the cold forecast. Before the opening, the USDA announced that exporters had sold 105,000 tons of soft red winter US wheat to China. With all of the rumors of China buying last week, the announcement was seen as a non-event and failed to support. Morocco is also tendering for 140,000 tons of soft wheat. Kansas Agronomists warn that bitter cold next week (zero and below) might be enough to kill off or damage some western Kansas fields which have dry soils.

Technical Outlook

WHEAT (MAR) 01/22/04: It is a slightly negative indicator that the close was lower than the pivot swing number. Look for near-term support at 387 1/2 and below there at 382 1/2, with resistance levels at 396 1/2 and 400 1/2. 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. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 382 1/2.

LIVE CATTLE RECAP

1/21/2004

February cattle ended up the limit for the second day in a row which should cause the limit to expand to 300 points for Thursday. Further sharp gains in the boxed-beef market and soaring cash markets this week have supported the jump in the February contract with cash markets trading as high as $87.00 in the panhandle this week. Boxed-beef cut-out values were up $1.51 to $145.10 as compared with $137.24 one week ago. April cattle opened at the highest level since December 26th before closing slightly lower on the session. Fears that cattle supplies will gradually rise in the weeks and months ahead and talk that the pipeline will fill-up quickly if there are still no exports ahead added to the bearish tone. The USDA Secretary of Agriculture indicated that reopening the markets to US beef is the administrations top priority but this news failed to support. The monthly cold storage report showed frozen beef stocks jumped to 395.9 million pounds by the end of December, up 22 million from last year. Traders were looking for a 2-10 million pound increase.

Technical Outlook

CATTLE (APR) 01/22/04: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 78.17. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 76.52 and below there at 76.07. Market resistance is at 77.57 and then again at 78.17. The downside closing price reversal on the daily chart is somewhat negative. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend.

LEAN HOGS RECAP

1/21/2004

February hogs closed 50 higher on the session due to sharply higher cash markets (up .50-$1.50), surging pork cut-out values and stronger packer profit margins. In addition, the bitter cold weather in the forecast is expected to temporarily reduce producer marketings. April hogs closed 40 lower on the session after hitting the highest level since December 3rd on the opening. The reversal was triggered by talk that hogs numbers continue to exceed expectations from the recent Hogs and Pigs report and fears that the slaughter levels will remain high in the weeks ahead. The monthly cold storage report, released after the close, showed frozen belly stocks at 49.017 million pounds as compared with the average trade estimate of 47.6 million pounds (range 45.9-49.5). The news is bearish with stocks near the high end of expectations and up sharply from 28.3 million pounds last year. This is the highest December stocks since 1998.

Technical Outlook

HOGS (APR) 01/22/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Resistance levels comes in at 58.32 and 58.97 today, while support is around 57.17 and then 56.67. The daily closing price reversal down puts the market on the defensive. 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 58.97.

COCOA MARKET RECAP

1/21/2004

The cocoa market evidently found enough buying interest around the lows Wednesday to put a positive spin on sentiment. In fact, if industry buying is interested in March cocoa on declines below 1,600 that might firmly underpin prices in the coming sessions. Lower Dollar action is probably making US cocoa prices look a little more attractive relative to London cocoa prices. There is talk of a 10% increase in the US cocoa grind and that should have given the market a measure of prices support.

Technical Outlook

COCOA (MAR)01/22/04 The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1652 and above there at 1664 with support at 1612 and 1584. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1663.50. Short-term indicators suggest buying dips today.

COFFEE MARKET RECAP

1/21/2004

After nearby futures hit the highest level since November of 2000, the lower close on the session and the close which was 200 points off of the highs is a bearish technical signal. A lack of new news to rationalize the recent surge in prices and the reversal in London helped trigger aggressive long liquidation selling late in the session. A slowdown in Brazil exports and a tighter cash situation in Brazil has been the primary bullish force of the recent price strength. The rally may have brought out some commercial selling and the overbought condition helped slow the speculative buying binge of the past week.
CSCE exchange stocks were up 3,075 bags to 4.379 million with 82,510 bags pending review. With all the talk of tightness, exchange stocks have jumped significantly in the past two weeks.

Technical Outlook

COFFEE (MAR)1/22/04 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. 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 76.80.The Coffee contract should run into resistance at 75.20 and above there at 76.80 with support at 72.7 and 71.80. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/21/2004

March sugar closed 1 lower on the session with only a 5 point range. The trend is down but the market is oversold and trading under the positive influence of Friday’s reversal. The cash trade has been very slow but there is plenty of pent-up demand for end users to extend coverage if they feel that prices are cheap enough. While China could be a good importer this season for the first time in several years, there appears to be plenty of exportable sugar excess in the world and Brazil is expected to carry hefty ending stocks ahead of what appears to be another bumper crop in 2004. The slow activity on the floor is reflective of the lack of market-moving news on the fundamental front.

Technical Outlook

SUGAR (MAR) 01/22/04: The swing indicator gave a neutral reading since the market’s close was equal to the pivot number. Swing resistance comes in at 5.84, with support found at 5.74. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 5.84.

COTTON MARKET RECAP

1/21/2004

May cotton closed 50 higher on the session as a steady flow of speculative buying supported the run to the highest level since January 6th. The more bullish technical pattern this week, expectations for solid export sales and shipment numbers (Friday morning release) this week and a firm tone in the cash markets helped support. The Cotlook A Index was up 20 points to 76.70 after gaining 50 points last week. Weakness in the dollar and strength in the soybean market added to the positive tone. Trader house buying was also seen as a supportive factor on the session. The China State Statistical Bureau this week indicated a 2003 harvest of 4.87 million tonnes, down .9% from last year in spite of a jump in plantings of near 20%. This comes in at 22.3 million bales which is in-line with the USDA forecast of 22 million bales.

Technical Outlook

COTTON (MAR) 01/22/04: 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 76.01 and then again at 76.26, while support is targeted at 75.31 and 74.86. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 76.26. ORANGE JUICE (MAR)1/22/04 The sell-off took the market to a new contract low. The gap lower price action on the day session chart is a bearish indicator for trend. 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 63.90 and above there at 67.15 with support at 59.00 and 57.35. The 9-day RSI under 30 indicates the market is approaching oversold levels. 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 67.15.