Why Gold Was Impressive Today

Technical Outlook

BONDS (DEC) 11/06/03: The downside closing price reversal on the daily chart is somewhat negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for bonds is at 108.20 and then again at 109.12, while swing support hits at 107.20 and below there at 107.12. 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. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 109.12.

T-NOTES(DEC) The daily closing price reversal down puts the market on the defensive. 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 111.09. 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 112.03 and then again at 112.18, while swing support hits at 111.14 and below there at 111.09. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

11/5/2003

The stock market would simply not throw off the bearish tilt Wednesday despite news that the US economy is still growing faster than many are giving it credit for. In fact, the ISM non-manufacturing employment Index showed an improvement and that should have went a long way in dispelling the concerns over the Challenger weakness on Tuesday. As it stands the market is apparently looking for negatives and is finding sellers to support that view. It would seem like more downside is expected until the monthly payroll report erases the fear of ongoing job weakness in the US. A Fed member suggested that conditions are in place to see an improvement in jobs and that might suggest that no improvement in expected in the upcoming numbers.

Technical Outlook

S&P500 (DEC) 11/06/03: It is a mildly bullish indicator that the market closed over the pivot swing number. The upside closing price reversal on the daily chart is somewhat bullish. Underlying support comes in at 1048.55 and 1040.68, with overhead resistance at 1059.05 and 1061.68. 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 1061.68.

S&P E-Mini (DEC): The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1062.31. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1058.88 and then again at 1062.31, while swing support hits at 1047.63 and below there at 1039.81. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (DEC) The daily closing price reversal up is positive. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. A positive setup occurred with the close over the 1st swing resistance. The market should run into resistance at 1456.75 and above there at 1465.13 with support at 1427.25 and 1406.13. Short-term indicators suggest buying dips today. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1465.1.

CURRENCY MARKET RECAP

11/5/2003

It took the Dollar most of the session to gather upside momentum but with the market failing to respond initially to the favorable US economic numbers some longs might be skeptical of further upside in the Dollar. However, the US numbers were strong enough to countervail the negative layoff report from Tuesday. In general the currencies seem to be marking time waiting for the ultimate trend decision off the US monthly payroll report Friday as that should be a watershed day.

Technical Outlook

YEN (DEC): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Swing resistance is targeted at 91.31 and above there at 91.58, with the yen finding support around 90.86 and below there at 90.68. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 90.68.

EURO (DEC): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.1353. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1353, with overhead resistance at 1.1517. 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

11/5/2003

The gold market showed some impressive action Wednesday with the capacity to rally in the face of a stronger Dollar and better than expected US economic numbers. In other words, there was apparently some other reason for buyers to enter the market than flight to quality or a falling Dollar. In fact it would appear that the bull camp in gold is actually beginning to broaden its focus away from an exclusive track off the Dollar. The fact that silver prices were so weak in the face of strong gold prices highlights a new buying interest in gold and not silver.

Technical Outlook

SILVER (DEC): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 496.0 and below there at 494.3 with resistance likely at 499.8 and 501.0. 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 494.3.

GOLD (DEC): Support for gold today comes in near 376.55, while resistance is pegged at 388.15. 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 376.55. With the close over the 1st swing resistance number, the market is in a moderately positive position. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average.

COPPER MARKET RECAP

11/5/2003

While prices were down early there appears to be long interest waiting on the sidelines to buy copper. The US economic information released Wednesday was very supportive to copper prices but the market seems to have a little issue with overbought technicals. We suspect that China will now begin to lead the market instead of following the New York market, as has been the case in the last two weeks. The bull case doesn’t seem to be deteriorating much at all in copper.

ENERGY MARKET RECAP

11/5/2003

The energy complex faulted higher Wednesday because the weekly inventory readings showed minor builds. Now seeing a minor build wouldn’t seem to be wildly bullish but when one considers we are in a prime rebuilding posture and that isn’t happening. In other words, increased Russian and Iraqi output combined with slack seasonal demand in the US isn’t allowing inventories to rise and that means tightness in the future under normal winter and an expanding economy. Crude stocks were down at the API by 1.3 million, gasoline stocks were down 1.8 at the API and down 2.5 million at the DOE. In other words inventories are tightening and remain at critical levels.

Technical Outlook

CRUDE OIL (DEC): The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 29.46 and below there at 28.24, with resistance pegged at 31.14 and 31.60. The market’s close on the 9-day moving average is neutral. .

UNLEADED GAS (DEC): The daily stochastics have crossed over up which is a bullish indication. The next upside target is 85.97. 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. Resistance today is at 85.97, while support should be found around 76.57. 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.

HEATING OIL (DEC): The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 76.43, with resistance is at 86.53. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 86.53.

CORN MARKET RECAP

11/5/2003

The corn market closed sharply higher on the session in a reversal from the action of the past 4 days. March corn closed 4 1/4 higher on the session and 6 1/2 off of the lows of the day as fund selling slowed in the morning after wheat markets began to work higher. With South Korea buying 52,500 tonnes of US corn overnight, traders seem more confident that China may be backing away from the export market. South Korea has been buying routinely from China in the past two years so the sale, while small, was still considered bullish. While both domestic and export demand appears to be on the rise, traders are still concerned that next weeks USDA crop production forecast will be revised significantly higher. Weekly export sales, released before the opening, are expected to come in near 1.2-1.5 million tonnes as compared with 1.48 million tonnes last week.

Technical Outlook

CORN (DEC) 11/06/03: 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 227 1/2. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 243 today, with support at 227 1/2. The market’s short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

11/5/2003

January soybeans closed 9 3/4 higher on the session and up 21 cents from the lows of the day after finding solid commercial and speculative support on the early break. The lack of evidence that the market is rationing demand continues to provide support. Broiler producers in the US placed 160 million chicks for meat production during the week ending November 1st, up 3% from last years pace. This is a supportive trend for meal consumption. Weekly export sales, released before the opening, are expected to come in near 1.3-1.5 million tonnes for soybeans, 600,000-800,000 tonnes for meal and 3,000-8,000 tonnes for oil.

Technical Outlook

SOYBEANS (JAN) 11/06/03: 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. The next area of resistance is around 784 and 790 , while 1st support hits today at 762 and below there at 746 . The market’s close below the 9-day moving average is an indication the short-term trend remains negative. 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 746 .

MEAL (DEC): 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 236.3. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 250.0, with support at 242.0. 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.

BEAN OIL (DEC): The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 24.96. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 25.90 and above there at 26.12. Support should be encountered at 25.32 and 24.96.

WHEAT MARKET RECAP

11/5/2003

News that Egypt bought 60,000 tons of US wheat for the second day in a row helped support solid gains in wheat and a 14 cent higher close for market wheat to the highs close since the contract high on August 18th. Funds were active buyers on the session and there is continued talk of China putting together an import program of 2-3 million tons for next year and the rumors have not gone away for the past 3-4 trading sessions. Ideas that there is more that “hope” to these rumors and renewed buying from Egypt and Taiwan helped support. While there is more rain in the forecast for the plains, the bulk of the precipitation is expected for the eastern plains which leave the driest areas of western Kansas in need of moisture. In addition, dry weather in Argentina is stressing the maturing winter wheat crop during reproductive period which could hurt yields. Weekly export sales, released before the opening, are expected to come in near 550,000-750,000 tonnes as compared with 16,700 tons last week.

Technical Outlook

WHEAT (DEC) 11/06/03: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. 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 1/2 and below there at 355 1/2, with resistance levels at 387 and 392 1/2. 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 392 1/2.

LIVE CATTLE RECAP

11/5/2003

December cattle closed limit-up in active trade as talk of possible higher cash trade for this week helped commercial buyers see December cattle as under-valued. Supplies of market-ready cattle are tight and look to stay tight for the next several weeks. Last week, the cash market traded at $100-$102 and if cash trades higher on the week, December futures will be at a huge discount to the cash. Boxed-beef cut-out values were up $1.37 to $171.38. Slaughter came in at 132,000 head as compared with 124,000-129,000 head expected. The higher than expected slaughter suggests better packer demand. Slaughter for the week is just 334,000 head as compared with 366,000 last week and 387,000 head last year. Cold and wet weather into the plains and a wet longer-term forecast for the plains was also seen as a positive factor.

Technical Outlook

CATTLE (DEC) 11/06/03: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.20. A positive setup occurred with the close over the 1st swing resistance. Consider buying pull-backs since daily studies are bullish. Support should be encountered at 93.37 and below there at 92.30. Market resistance is at 94.82 and then again at 95.20. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

11/5/2003

December hogs closed 30 lower on the session and down near 100 points off of the highs as the trade believes that part of the recent rally in the cash market is weather related and buying slowed on the rally due to the premium of December hogs to the cash market. While the lean index should rally sharply in the next few sessions, the Index through November 3rd came in at 48.47, up 7 on the session but down 445 points from the December futures close. This remains a limiting factor for the futures rally. For the week ending November 1st, weekly average weights for Iowa/Minnesota were reported today at 265.5 pounds, down .1 from the previous week but up from 263.3 pounds last year. The downtick is somewhat supportive with a seasonal tendency for weights to increase at this time of the year. This suggests that producers may be more current with marketings.

Technical Outlook

HOGS (DEC) 11/06/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 53.57 and 54.40 today, while support is around 52.30 and then 51.85. 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. Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The near-term upside objective is at 54.40.

COCOA MARKET RECAP

11/5/2003

A big rally in cocoa seems to suggest that the market is feeling the pressure of the Ivory Coast marketing slowdown and possible off the recent reports of violence in rebel held areas. Unfortunately the Press reported heavy spec buying which means that the rally might be built on a shaky foundation. However, the market also picked up on extensive fund buying and that is most certainly the result of technical chart violations. We also think that prices needed to move higher to pull out some supply.

Technical Outlook

COCOA (DEC)11/06/03 The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1499 and above there at 1527 with support at 1444 and 1417. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1526.75. Short-term indicators suggest buying dips today.

COFFEE MARKET RECAP

11/5/2003

March coffee closed slightly lower with a quiet session and an inside day. Roaster buying provided support and held the market up from even testing the lows from Tuesday. Uncertainty on the impact of drier than normal weather in Brazil this fall and the slower export trend in recent months has provided some support as well. Bears, however, warn that cash markets could begin to weaken when the Vietnam harvest picks up steam. CSCE Exchange stocks were up 6,476 bags to 4.47 million with 11,004 bags pending review. The amount of bags pending review has dropped sharply in the past week which suggests a decline in stocks in the weeks ahead.

Technical Outlook

COFFEE (DEC)11/6/03 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 58.65.The Coffee contract should run into resistance at 59.95 and above there at 60.55 with support at 59 and 58.65. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.

SUGAR MARKET RECAP

11/5/2003

The market is likely to find significant producer selling on rallies as Brazil producers face increasing supplies from competitors as an incentive to move sugar “sooner” than later. Futures opened higher and closed 2 lower on the session with more and more evidence that producers want to sell each technical bounce. The supply fundamentals continue to look weak and it may take a lower price level to find improved demand or to move to a low enough price to discourage production in the future. Thailand may hold a tender to sell near 800,000 tonnes of raw sugar for 2004 shipment. Thailand harvest begins later this month and traders and industry personal believe that cane crop could be near 75-80 million tons from a record high 74.07 million tons last year.

Technical Outlook

SUGAR (MAR) 11/06/03: The daily closing price reversal down puts the market on the defensive. It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.11, with support found at 5.87. 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 5.87.

COTTON MARKET RECAP

11/5/2003

Cotton moved slightly higher on the session but failed to add to the gains after the higher opening. The close below the opening could attract some technical selling especially if export sales numbers, released before the opening, are below expectations. Spreading and rolling of positions to March futures seemed to be the feature of the day as traders appear to be in a holding pattern and want to see if the recent surge to multi-year highs has slowed demand. Weekly export sales are expected to come in near 175,000-400,000 bales as compared with 1.457 million bales (record high) last week. Shipments are expected to come in near 100,000-125,000 bales as compared with 96,200 bales last week. While the trade expects China to back off the export market for a while after booking 2.1 million bales already, their import needs look to be double this amount or more.

Technical Outlook

COTTON (DEC) 11/06/03: 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 78.22 and then again at 78.61, while support is targeted at 77.42 and 77.01. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 77.01.