Why Gold And Silver Were In Profit Taking Mode

Technical Outlook

#BONDS (JUN) 06/01/04: The swing indicator gave a
moderately negative reading with the close below the 1st support number.
Near-term resistance for bonds is at 106.31 and then again at 107.15, while
swing support hits at 106.05 and below there at 105.27. The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
close under the 40-day moving average indicates the longer-term trend could be
turning down. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 107.15.

T-NOTES(JUN) The daily closing price reversal
down puts the market on the defensive. Momentum studies are trending higher, but
have entered overbought levels. The near-term upside objective is at 110.21. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. Near-term resistance for the T-Notes is at 110.07 and then
again at 110.21, while swing support hits at 109.18 and below there at 109.11.
The market’s short-term trend is positive on a close above the 9-day moving
average.

STOCK INDICES RECAP

5/28/2004

The stock market wasn’t as strong as it was early
in the week and with the US economic information improved it is disappointing
that the bull camp couldn’t muster stronger gains. Even the presence of a
holiday failed to inspire long interest. Some traders suggested that being long
ahead of a holiday assumes unnecessary risk to terrorist actions and that is why
volume was muted Friday. The stock market also didn’t get as much downside
follow through in energy prices as it was hoping for. In the afternoon trade
energy prices actually moved back into higher ground making some longs fear a
return to the bull market in energies next week.

Technical Outlook

#S&P500 (JUN) 06/01/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1120.25 and 1116.13, with overhead resistance at 1125.75 and
1127.13. The upside crossover (9 above 18) of the moving averages suggests a
developing short-term uptrend. Momentum studies are trending higher, but have
entered overbought levels. The near-term upside objective is at 1127.13.

S&P E-Mini (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1128.19. The market has a slightly positive tilt with the close over the swing
pivot. The market now above the 40-day moving average suggests the longer-term
trend is up. Near-term resistance for the S&P Mini is at 1126.38 and then again
at 1128.19, while swing support hits at 1120.13 and below there at 1115.69. A
positive indicator was given with the upside crossover of the 9 & 18 bar moving
average.

NASDAQ (JUN) 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.
The market should run into resistance at 1478.00 and above there at 1481.50 with
support at 1464.00 and 1453.50. 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 1481.5.

MINI DOW (JUN) 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. The market
should run into resistance at 10231 and above there at 10256 with support at
10175 and 10144. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The next upside target is 10256. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.

CURRENCY MARKET RECAP

5/28/2004

The Dollar was simply oversold and with the US
numbers Friday showing a little improvement we can understand traders banking
some short profits. However, we are not sure that the US numbers Friday were
strong enough to alter the trend which seemed to be pretty entrenched. Economic
numbers from the Euro zone Friday morning were a little soft and that could have
prompted some longs to bank profits in the Euro. The Yen showed its dominant
status by remaining firm despite the need to balance overbought technicals and
that is probably because the Japanese economic readings were extremely
impressive.

Technical Outlook

#CURRENCIES 06/01/04: YEN (JUN): The moving
average crossover up (9 above 18) indicates a possible developing short-term
uptrend. A positive setup occurred with the close over the 1st swing resistance.
Swing resistance is targeted at 90.94 and above there at 91.25, with the yen
finding support around 90.29 and below there at 89.95. 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 91.25. Short-term indicators suggest
buying dips today.

EURO (JUN): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.2296.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2148, with overhead resistance
at 1.2296. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap down on the day session chart is bearish with more
selling pressure possible today.

PRECIOUS METALS RECAP

5/28/2004

The gold and silver markets were into a profit
taking mode Friday partly because of the gains on the week and partly because
the Dollar was a little stronger. We are surprised that traders allowed the
markets to close weaker considering the extended weekend and the prospect for
terrorist activity around the Holidays. Because the Dollar didn’t show
impressive upside action in the wake of slightly better US economic information
it would seem like the down trend in the Dollar is still in effect.

Technical Outlook

#P-METALS 06/01/04: SILVER (JUL): The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Initial support for silver is at 603.0 and below there at 595.0
with resistance likely at 612.6 and 619.0. 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 612.6.

GOLD (AUG): Support for gold today comes in near
392.10, while resistance is pegged at 397.70. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
397.70. The market’s close below the pivot swing number is a mildly negative
setup. The market’s short-term trend is positive on a close above the 9-day
moving average.

COPPER MARKET RECAP

5/28/2004

Copper prices managed to close higher and
probably deserved to close higher off the US economic information released
Friday. We have to think that the US copper market was lifted by the news that
Shanghai copper stocks declined by over 16,000 tons in the last week as that
highlights ongoing Chinese demand. It should also be noted that LME copper stock
declines have begun to ramp up again and could be suggesting that the tightening
scenario is underway again. Supposedly copper prices encountered some profit
taking into the close or they might have closed even higher.

ENERGY MARKET RECAP

5/28/2004

The energy complex wasn’t really sure what
direction to take Friday as some buyers were moving into longs ahead of the long
weekend. On the other hand the DOE was out suggesting that more OPEC members
were pledging to provide more supply. Kuwait and the UAE both agreed to increase
production and the gives the bears a little edge. The mid day gains in prices
were probably spec accounts looking to be long ahead of the extended market
closure. The market also saw support from more OPEC talk about raising the
banding range and that simply hints that the market is willing to hold prices at
lofty levels.

Technical Outlook

#ENERGIES 06/01/04: CRUDE OIL (JUL): It is a
mildly bullish indicator that the market closed over the pivot swing number.
Support for crude is keyed on 39.54 and below there at 39.05, with resistance
pegged at 40.23 and 40.43. The market’s short-term trend is negative as the
close remains below 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 39.05.

UNLEADED GAS (JUL): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 125.73. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Resistance today is at 131.33, while support
should be found around 125.73. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative.

HEATING OIL (JUL): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 98.25, with resistance is at 101.85. The market’s
short-term trend is negative as the close remains below 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
98.25.

CORN MARKET RECAP

5/28/2004

July corn opened lower on the session at 297 had
an early range of 296 to 304 3/4 but then managed a smart rally. The market
shrugged off early pressure that may have come from the weaker soybean market
and from ideas that bird flu might be an issue in Texas. Heavy rains were
forecast for the weekend and the possibility of another wet pattern is also seen
developing in the first week of June and that has sparked a more bullish
outlook. The trade was expecting the first week of June to bring about perfect
warm and dry conditions and now the market is concerned that above normal
rainfall will be seen out to June 11th. Ideas that recent flooding has washed
out some Iowa fields and caused some switching to soybean acreage also sparked
talk that conditions are moving to reduce yields In short the trade was forced
to reexamine recent forecasts for record corn production. The threat of Avian
flu in Texas does not appear to have hurt corn demand to the extent that was
feared by some but we have to think that the story made some buyers anxious
Friday morning. The USDA reported 188,100 tons of US corn sold to Mexico, 69,300
tons for 2003/04 delivery. December corn support comes in at 289 1/2 and 287,
with resistance seen at 302 and 305. A 50% correction of the April to May break
leaves key resistance at 309 1/2.

Technical Outlook

#CORN (JUL) 06/01/04: 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 312 1/2. The
market’s close above the 2nd swing resistance number is a bullish indication.
Market resistance comes in at 312 1/2 today, with support at 292 1/2. The
market’s short-term trend is positive on a close above the 9-day moving average.
The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

5/28/2004

July soybeans opened 5 cents lower on the session
at 817 and established an early range of 813 to 830. The early rally off the low
was described as a technical short covering rally after yesterday’s sharp sell
off. The recent heavy rains in the Midwest have raised concerns about some corn
acreage being washed out, and that could encourage producers to switch some of
their bean acres from corn to soybeans and that probably explains the divergent
action between corn and soybeans during the session. Concerns about Chinese
demand continue to hover in the back ground, with more talk that Chinese
crushers are facing liquidity problems. The market was also bothered by concerns
about the cancellation of Brazilian cargoes. Short-term resistance for July
soybeans comes in at 824 and 832, with 800 and 792 1/2 as first key support
levels on the downside. November soybean support comes in at 672 and then again
at 668 3/4, with 653 1/2 and 694 as resistance.

Technical Outlook

#SOYBEANS (JUL) 06/01/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 823 and 835 1/2, while 1st support hits today
at 805 and below there at 799 1/2. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. Momentum studies
are declining, but have fallen to oversold levels. The next downside target is
799 1/2. The 9-day RSI under 30 indicates the market is approaching oversold
levels.

MEAL (JUL): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
248.4. First resistance comes in at 258.5, with support at 251.2. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market’s close below the pivot swing number is a mildly negative
setup. With a reading under 30, the 9-day RSI is approaching oversold levels.

BEAN OIL (JUL): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 27.23. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Daily swing resistance is found at
28.45 and above there at 28.81. Support should be encountered at 27.66 and
27.23.

WHEAT MARKET RECAP

5/28/2004

Despite ongoing threats to the US winter wheat
crop, July wheat closed lower today to its lowest level since May 14th. July
wheat opened 1 1/4 cent lower on the session at 338 and established an early
range of 366 1/2 to 370 3/4 with some minor short covering reported. There
market was disappointed early in the session after it was reported that Egypt
had cancelled a tender for the second time in a week, citing “unsuitable”
prices. Traders are still looking for Jordan to tender for 150,000 bushels of
hard wheat on June 3rd. The past week saw the market make some gains on concerns
over the condition of the US crop but then give up those gains and then some
over the last two days. Recent heavy moisture in the southern corn belt and
calls for more heavy rains this weekend have raised concerns about fungus in the
soft winter wheat crop, and dry conditions in western Kansas are threatening the
hard winter wheat crop. The trade is anticipating that Tuesday’s crop conditions
report may show deterioration in those areas. In spite of that, harvest pressure
and expectations for a strong world crop are weighing on the market. Pakistan
revised its estimate for 2003/04 production to 19.7 million metric tons from its
target of 20 million. The recent USDA report had Pakistan’s production at 19.19
million for 2003/04 and 19 million for 2004/05. July wheat support levels come
in at 356 3/4 and 351 with resistance at 365 1/2 and 369.

Technical Outlook

#WHEAT (JUL) 06/01/04: The swing indicator gave a
moderately negative reading with the close below the 1st support number. Look
for near-term support at 357 1/2 and below there at 354 1/2, with resistance
levels at 367 and 373 1/2. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next upside
target is 373 1/2.

LIVE CATTLE RECAP

5/28/2004

The cattle surged to new contract highs for the
second day in a row after there were reports of avian flu in Texas. An outbreak
in Asia earlier this year sparked a sharp increase in pork consumption there and
probably would have done the same for beef consumption if mad cow disease had
not intervened. The cattle market has found strength this week despite a sharply
lower boxed beef market. Cash cattle traded $86 on Thursday, which was $2.00
higher than expected and there is talk of even higher prices next week. The
market is also coming to the realization that there will likely be no Canadian
cattle coming into the US until at least September, while traders remain hopeful
that Japan imports might resume by the summer. The boxed beef market continues
to decline. There had been some hope that retailers would come in next week to
replenish stocks after the holiday weekend, but there are concerns that heavy
rains this weekend could eat into grilling demand. At noon, boxed beef cutout
values were 1.07 lower to $147.00 as compared with $151.90 last week at this
time. The next technical objective on the upside for August cattle comes in at
89.67.

Technical Outlook

#CATTLE (AUG) 06/01/04: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 90.47. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. Support should be
encountered at 87.70 and below there at 86.77. Market resistance is at 89.55 and
then again at 90.47. 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. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

LEAN HOGS RECAP

5/28/2004

July hogs traded sharply higher for the second
day in a row as the market pushed aside concerns about sharply lower pork
product values and ideas that yesterday’s rally had left the market overdone.
Fund buying was reported early in the session, and strength in cattle and the
futures discount to the cash were seen as supportive elements. There was also a
report of Avian flu in Texas, but it did not seem to get much play and the
threat is would pose to US poultry litters was for the most part disregarded as
inconsequential. An outbreak in Asia earlier this year sparked a sharp increase
in pork consumption. Peoria hogs traded $0.50 lower with a top of $51/cwt. July
bellies also turned firmer after finding support at yesterday’s low of 112.40.
The 2-day lean index for the period ending May 26th was practically unchanged at
80.60 (down 0.01) after being down for the previous 4 sessions. July hog support
is at 74.72 and 73.80, while resistance is at 76.20 and 77.25.

Technical Outlook

#HOGS (JUL) 06/01/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 76.27 and 77.25 today, while support is around 74.27 and then 73.25.
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 77.25.

COCOA MARKET RECAP

5/28/2004

The cocoa market remained strong despite talk
that weather was promoting favorable flowering for the main crop. However, it
seemed like the funds were interested buyers of cocoa as were the specs. The
breakout up on the charts might have been facilitated by the technicals but one
might also suggest that arrivals are still tagging behind year ago levels and
there is the chance for political problems. The market was also aware of the
lingering concern that Nigerian growers were going to hoard supplies until
prices improved.

Technical Outlook

COCOA (JUL) 06/01/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1490 and above there at 1508 with support at 1440
and 1408. 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 1508.00.

COFFEE MARKET RECAP

5/28/2004

July coffee gapped higher to news contract highs
as funds were aggressive buyers of coffee ahead of the long holiday weekend.
With temperatures dipping below 40 degrees recently in Brazil, there is concern
of a possible early frost. Weather forecasters are predicting the next cold
front to hit June 2nd – 3rd and traders do not want to be caught short on the
chance that temperatures could turn colder than expected on a revised forecast
next week. Brazil’s National Meteorological Institute predicted the country’s
coffee region will experience periods of frost this winter, which heightened
anxiety over weather concerns. The coffee market looks to be setting up for a
potentially sharp break on profit taking if a frost fails to develop next week.

Technical Outlook

COFFEE (JUN) 06/01/04 A new contract high was
made on the rally. 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. 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 89.05. The Coffee contract should run into
resistance at 87.60 and above there at 89.05 with support at 83.6 and 81.05. The
market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

5/28/2004

Fund buying pushed July sugar prices higher after
with the market found solid buying interest on the lower open, making for good
technical chart action Friday. Rain delays to Brazil’s centre south sugar
harvest is the key factor supporting sugar prices as fears of huge sugar
supplies are being tempered. High energy prices are also providing underlying
support in that ethanol demand could be on the rise. Closing over 7 cents puts
July sugar in a position to test the April highs. An official from India’s
Indian Sugar Mills Association said that while sugar output could fall by 30%
this crop year, the country does not expect to import any sugar due to high
stocks. This news had little impact because it was already well known.

Technical Outlook

#SUGAR (JUL) 06/01/04: The outside day up is a
positive signal. The upside closing price reversal on the daily chart is
somewhat bullish. With the close over the 1st swing resistance number, the
market is in a moderately positive position. Swing resistance comes in at 7.22,
with support found at 6.80. 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 7.22. Consider
buying pull-backs since daily studies are bullish.

COTTON MARKET RECAP

5/28/2004

Early gains in July cotton slipped away as
Friday’s session wore on. The market failed to see follow through buying after
lows down at 59.35 were solidly rejected during Thursday’s trade. Resistance
held at 62.50 this session which keeps the chart structure negative with July
likely retesting 59.35 next week. A return to dry weather in Texas and strong
export sales the past week failed to provide much support. A lack of fresh
fundamental news will give technical indicators prominence.

Technical Outlook

#COTTON (JUL) 06/01/04: 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. Next resistance area comes in at 62.07 and then again at 63.21,
while support is targeted at 60.32 and 59.71. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 59.71.