Why Copper Was Impressive Today

Technical Outlook

BONDS (JUN) 03/16/04: The daily closing price reversal up is positive. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 115.14 and then again at 115.27, while swing support hits at 114.22 and below there at 114.11. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 115.27. The 9-day RSI over 70 indicates the market is approaching overbought levels.

T-NOTES(JUN) The daily stochastic’s gave a bearish indicator with a crossover down. 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 115.06. The market’s close below the pivot swing number is a mildly negative setup. 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 116.03 and then again at 116.14, while swing support hits at 115.15 and below there at 115.06. 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.

 

STOCK INDICES RECAP

3/15/2004

All things considered, the stock market managed to avoid what could have been an intense selloff in the action Monday. In fact, many in the trade expected stocks to fall aggressively but favorable US economic information early in the session managed to discourage some of the aggressive intentions of the bear camp. The weekend political change in Spain really served as a blow to the US battle on terrorism and that in turn creates doubt toward US investments. The fact that the Fed will be releasing a statement on Tuesday, might also be discouraging more intense selling in stocks, as the Fed has been very up beat on US payroll improvements.

Technical Outlook

S&P500 (JUN) 03/16/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Underlying support comes in at 1097.95 and 1092.78, with overhead resistance at 1112.05 and 1120.98. 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 1092.78. Daily studies pointing down suggests selling minor rallies.

S&P E-Mini (JUN): Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1090.44. The close below the 1st swing support could weigh on the market. Near-term resistance for the S&P Mini is at 1113.88 and then again at 1124.94, while swing support hits at 1096.63 and below there at 1090.44. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (JUN) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. The market should run into resistance at 1419.50 and above there at 1435.25 with support at 1395.50 and 1387.25. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1387.3.

MINI DOW (JUN) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market should run into resistance at 10163 and above there at 10248 with support at 10030 and 9982. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 9982. The swing indicator gave a moderately negative reading with the close below the 1st support number. The 9-day RSI under 30 indicates the market is approaching oversold levels.

 

CURRENCY MARKET RECAP

3/15/2004

The Dollar Index fell back slightly on the session, as the weekend election in Spain cost the US some political credibility. One would have expected the U.S. Dollar to rally off the better than expected U.S. Industrial Production readings but the countervailing force of the geopolitical headwinds could easily result in persistent selling of the Dollar. With the U.S. equity market much weaker on the session than was expected it’s understandable that the Dollar came under liquidation pressure. However, the Dollar could be supported in the near term off the expectations of favorable dialogue from the Federal Reserve Open Market Committee meeting that will be held Tuesday afternoon. The Japanese yen seemed to be the prime benefactor of the Dollar weakness in the trade Monday and with the Japanese fiscal year and coming up at the end of the month, it is possible that the yen continues to lead all currencies against the Dollar.

Technical Outlook

YEN (JUN): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 91.60 and above there at 92.39, with the yen finding support around 90.22 and below there at 89.63. The close under the 40-day moving average indicates the longer-term trend could be turning down. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 92.39. Short-term indicators suggest buying dips today.

EURO (JUN): 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 1.2333. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2131, with overhead resistance at 1.2333. The market’s short-term trend is negative as the close remains below 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

3/15/2004

The gold market came bounding back Monday morning but really didn’t add that much to the opening gains. However, with the US Dollar failing to benefit from a better than expected economic report slate, it is possible that the recent up trend in the Dollar is reversing and that could end up favoring the bull camp in gold. The trade also suggested that a slide below 88.74 could be a signal for even more gold longs to return to the fray, whereas a Dollar rise back above 89.89 could discourage recent buyers. It is certainly impressive that neither silver, nor copper is undermined by the apparent concern for the economy generated by the Madrid bombing and the recent election results in Spain. We do think that some fund players are playing silver for inflation purposes and that last weeks developments certainly seem to downgrade the chance of inflation.

Technical Outlook

SILVER (MAY): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 710.5 and below there at 706.5 with resistance likely at 714.2 and 717.5. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 714.2.

GOLD (APR): Support for gold today comes in near 395.68, while resistance is pegged at 403.08. 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 403.08. Consider buying pull-backs since daily studies are bullish. With the close over the 1st swing resistance number, the market is in a moderately positive position. The market’s short-term trend is positive on a close above the 9-day moving average.

 

COPPER MARKET RECAP

3/15/2004

The copper market mounted a extremely impressive rally Monday and probably did so off the better than expected US Industrial Production reading. However, one doesn’t get a sense that the macro economic case is that supportive of sharply higher copper prices and certainly the market is progressing towards an overbought status technically. Since the Chinese did not appear to be aggressive buyers Monday morning, they may be forced to play catch-up in the evening trade tonight. In the end the divergence between the outlook for the equity market and the recent price action in copper should not be discounted, especially with copper prices within a relative proximity of historic record highs.

 

ENERGY MARKET RECAP

3/15/2004

Oil prices continued to rise as comments from OPEC are generally supporting the view that the April cut will take place. The former Saudi Oil Minister suggested that oil prices would fall to $25 a barrel this summer, if OPEC doesn’t act in the coming meeting and that sparked a fresh wave of buying. The Saudi Oil Minister also doubted whether OPEC could actually deliver a cut and that would have ordinarily deflated prices, but right now, the bull camp is willing to discount the negative stories. Also supporting prices Monday were reports that recent heating oil consumption was up sharply, providing a slight surprise and prompting fresh near term prompt buying. No new news on the status of the SPR debate, but that could have critical influence on prices later this week.

Technical Outlook

CRUDE OIL (MAY): The rally brought the market to a new contract high. With the close over the 1st swing resistance number, the market is in a moderately positive position. Support for crude is keyed on 36.20 and below there at 35.50, with resistance pegged at 37.20 and 37.50. 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 37.50. Consider buying pull-backs since daily studies are bullish.

UNLEADED GAS (MAY): The daily stochastics have crossed over up which is a bullish indication. The next upside target is 115.14. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 115.14, while support should be found around 107.74. The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend.

HEATING OIL (MAY):The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 87.08, with resistance is at 93.88. The market’s short-term trend is positive on a close above the 9-day moving average. 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 87.08.

 

CORN MARKET RECAP

3/15/2004

Corn prices continue to see the need to keep up with rising soybean values as the markets compete for planted acreage this spring. This supported solid gains for the market on the session and new contract highs for May, July and December corn. Traders believe that corn acreage should increase by 2-3 million acres above last year in order to keep up with rising demand and avoid a further tightening of stocks. Funds were noted buyers on the session of near 4100 contracts and the traders report on the weekend showed funds holding a record net long position from the speculator. Weekly export inspections came in at 32.7 million bushels as compared with trade expectations at 30-35 million. Cumulative shipments have reached 999.5 million bushels as compared with 791.8 million last year by this date. The crop year ends September 1st and the USDA has an export forecast of 2.0 billion bushels. Other export news is quiet over the weekend but in the weekly export inspections report, South Korea was a buyer of US corn which was seen as positive.

Technical Outlook

CORN (MAY) 03/16/04: The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 311 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 311 today, with support at 302 . The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

 

SOY COMPLEX RECAP

3/15/2004

Continued concerns about the size of the South American crop and solid speculative buying helped support the strong close and move to new 15 1/2 year highs. Talk of Brazil production estimates down to near 54-55 million tons from 59.5 million in the last USDA report and Argentina production estimates near 32.5-34.5 million tons from 36.5 million from the USDA report helped to support. A lack of new bird flu problems in China, strong retail sales from China and talk of improving crush margins in China helped to support. Some contracts made new contract highs and nearby futures hit the highest level in 15 1/2 years. Weekly export inspections came in at 12.9 million bushels as compared with trade expectations at 10-15 million. Cumulative shipments have reached 730.6 million bushels as compared with 816.1 million last year by this date. The crop year ends September 1st and the USDA has an export forecast of 890 million bushels. May meal gapped into new high territory which is a bullish technical development on a Monday as futures gapped to the highest level since May of 1997 for the nearby futures. Soybean oil is also strong this morning in spite of weakness in overnight trade for palm oil. A strike by export inspectors in Brazil has added to the positive tone early but there were indications that the strike may be short-lived. The NOPA Monthly crush data was considered a supportive factor for the session as well with February crush pegged at 124.154 million bushels as compared with 138.05 million on January. Oil stocks were pegged at 1.507 billion pounds which was up from 1.445 billion at the end of January. Funds were noted buyers of near 2500 soybeans, 1500 meal and 1000 oil.

Technical Outlook

SOYBEANS (MAY) 03/16/04: A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. 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. The next area of resistance is around 984 1/2 and 989 1/4, while 1st support hits today at 971 1/2 and below there at 963 1/4. 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 989 1/4.

MEAL (MAY): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 301.0. The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. First resistance comes in at 299.5, with support at 296.2. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close above the 2nd swing resistance number is a bullish indication. With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (MAY): 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 34.30. 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. Daily swing resistance is found at 34.09 and above there at 34.30. Support should be encountered at 33.41 and 32.94.

 

WHEAT MARKET RECAP

3/15/2004

After the upside reversal from a new low for the move on Friday, follow-through technical buying helped support solid gains in futures. The market found support from strength in the other grains and from a relatively dry weather forecast for the central plains. In addition, ideas that futures are oversold after last weeks collapse helped to provide technical buying support. Export sales news was lacking over the weekend and traders are still looking for clues on whether or not China is proceeding to ship old crop US wheat. A warm and dry 6-10 day forecast and ideas that more rain is needed in the western half of Kansas has provided support to the market today as well. Weekly export inspections came in at 26.9 million bushels as compared with trade expectations at 18-22 million. Cumulative shipments have reached 886.3 million bushels as compared with 671.7 million last year by this date. The crop year ends June 1st and the USDA has an export forecast of 1.15 billion bushels. Weekend rain amounts were disappointing in the western areas of the central plains. Weekly state reports last Monday showed Kansas conditions deteriorating and traders will be anxious to see how much the crop may have improved due to moisture in early March. The UN World Food program is tendering for 450,000 tons of optional origin wheat for Iraq. Fund traders were noted buyers of near 3500 contracts.

Technical Outlook

WHEAT (MAY) 03/16/04: 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. Look for near-term support at 368 and below there at 361 1/4, with resistance levels at 378 and 381 1/4. 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 381 1/4.

 

LIVE CATTLE RECAP

3/15/2004

The April contract pushed moderately lower as traders continued to roll longs to the June contracts and there was some concerns with the overbought condition of the market and the weaker tone in the beef market late last week. However, boxed-beef cut-out values were up 71 cents to $143.54 as compared with $141.58 last week at this time. June closed slightly higher on the session but still below the opening. Traders await more definition on the cash market trade this week before making a bigger commitment and there is positioning ahead of the USDA Cattle-on-Feed report for release on Friday.

Technical Outlook

CATTLE (APR) 03/16/04: 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 79.77. The swing indicator gave a moderately negative reading with the close below the 1st support number. Support should be encountered at 80.27 and below there at 79.77. Market resistance is at 81.42 and then again at 82.05. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

 

LEAN HOGS RECAP

3/15/2004

The market opened into new contract highs and closed lower on the session for the nearby April futures. The reversal from a new high is considered a bearish technical development and could attract long liquidation selling early on Tuesday. Higher cash prices and hopes for continued strong exports helped support the early gains. Weakness in cattle and fears of a near-term top in pork product markets helped trigger the late sell-off in the market. Higher live prices on Friday and again today combined with the sharp drop in pork cut-out values on Friday helped to squeeze packer profit margins and may have added to the bearish trend. Weakness in bellies added to the bearish tone. The CME 2-Day Lean index was down for the third session in a row (down 27 cents to 64.82 as compared with 62.03 on March 1st).

Technical Outlook

HOGS (APR) 03/16/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 64.67 and 65.32 today, while support is around 63.57 and then 63.12. The rally brought the market to a new contract high. 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 65.32.

 

COCOA MARKET RECAP

3/15/2004

Apparently a portion of the short fund position decided to exit positions, leaving cocoa prices moderately higher on the session. The London cocoa market apparently led the trade to the upside early in the day, but by the afternoon trade, the New York market was managing gains on its own. With a gap up trade the US market now has to be considered to be improving even if the improvement is only technical. However, some traders are suggesting that arrivals appear to be slowing at the Ivory Coast and that might give a fundamental cause to the talk of a major low. However, until it is proven that something other than fund short covering is driving the market, one can hardly abandon the bear case.

Technical Outlook

COCOA (MAY)03/16/04 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. Cocoa should run into resistance at 1456 and above there at 1465 with support at 1431 and 1415. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1415.25.

 

COFFEE MARKET RECAP

3/15/2004

The outside day higher and close above 78.60 for July coffee turns the technical action bullish and leaves 86.00 as the upside swing objective. Monthly US Green Coffee stocks, released after the close for the end of February came in at 5.828 million bags as compared with trade estimates at 5.324-5.954 million bags. The jump of 204,590 bags might be considered bearish with a range of estimates looking for a decline of 300,000 bags to an increase of 350,000 bags. Daily exchange stock movement is also considered a bearish development with daily stocks up 9.507 bags to 4.594 million bags with 58,219 bags pending review. Talk of tighter supplies in Brazil helped provide support.

Technical Outlook

COFFEE (MAY)3/16/04 The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st 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 79.60.The Coffee contract should run into resistance at 78.80 and above there at 79.60 with support at 76.2 and 74.40. The market’s short-term trend is positive on a close above the 9-day moving average. Consider buying pull-backs since daily studies are bullish.

 

SUGAR MARKET RECAP

3/15/2004

May sugar close 6 higher on the session at 674 and the highest close since August 26th, 2003. London closed slightly lower for the second session in a row but the range was inside of Thursday’s range for the 2nd session in a row as well. Traders remain concerned that the run up in prices and move to new contract highs in London could hurt demand. One look at a monthly chart and its tough to say that prices at 6.75 will hurt demand with a 10-year price range of 15.83 to 4.36. After early weakness on ideas that the market is overbought, fund buyers became more active to drive the market highs to close near the high end of an 18 point range. While high freight rates have slowed international demand, the hand-to-mouth buying also leaves plenty of pent-up demand from buyers who are now seeing prices in an uptrend.

Technical Outlook

SUGAR (MAY) 03/16/04: The upside closing price reversal on the daily chart is somewhat bullish. It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.89, with support found at 6.53. 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 6.89. With a reading over 70, the 9-day RSI is approaching overbought levels.

 

COTTON MARKET RECAP

3/15/2004

July cotton closed 72 higher on the session and at the high end of a 259 point range. The higher close after hitting the lowest level since September is considered bullish technical action and the reversal might attract some technical buying early Tuesday. The early break also filled a gap left on September 10th which could also been seen as a positive technical development. A steady flow of speculative long liquidation selling helped drive the market to the lows and speculators were also noted as active buyers into the close. Talk of the surging demand from China and ideas that sharply higher soybean values are helping to eat into cotton acreage for the coming year helped support.

Technical Outlook

COTTON (MAY) 03/16/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. A positive setup occurred with the close over the 1st swing resistance. Next resistance area comes in at 66.70 and then again at 67.36, while support is targeted at 64.17 and 62.30. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 62.30. The daily closing price reversal up is positive. ORANGE JUICE (MAY)3/16/04#NAME?#NAME?Orange Juice should run into resistance at 62.75 and above there at 63.30 with support at 61.55 and 60.90. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 60.9. #NAME?