Why Natural Gas Could Run Up For Another Few Weeks
BOND MARKET RECAP
10/8/2004
December Bonds closed down 0-10 at 110-27. This
was 0-06 up from the low and 0-13 off the high.
December 10 Yr Treasury Notes finished down 0-050
at 111-250, 0-070 off the high and 0-040 up from the low.
The Treasury market seemed to be trying to
factor in a slight upward adjustment in the unemployment report or the inflation
crowd could have been pressuring prices because of the new round of highs in
crude oil. The upward adjustment in non farm payroll expectations was probably
facilitated by the sharper than expected decline of 37,000 in the initial claims
report Thursday morning. Also pressuring Treasury prices Thursday were
suggestions from the Fed’s Pianalto that high energy prices were not derailing
the economy.
Technical Outlook
BONDS (DEC) 10/08/2004: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Momentum
studies are still bearish but are now at oversold levels and will tend to
support reversal action if it occurs. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next downside objective is 110-08. The next area of resistance is
around 111-03 and 111-17, while 1st support hits today at 110-15 and below there
at 110-08.
TNOTES (DEC) 10/08/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 9-day moving average is a negative
short-term indicator for trend. The market tilt is slightly negative with the
close under the pivot. The next downside objective is now at 111-135. The next
area of resistance is around 111-290 and 112-050, while 1st support hits today
at 111-175 and below there at 111-135.
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STOCK INDICES RECAP
10/8/2004
December S&P finished down 11.4 at 1131.4, 9.2
off the high and 0.7 up from the low.
December S&P E-Mini closed down 11.25 at 1131.5.
This was 1 up from the low and 11.5 off the high.
December Dow closed down 114 at 10123. This was 8
up from the low and 109 off the high.
December Dow E-Mini finished down 115 at 10122,
117 off the high and 6 up from the low.
The stock market came under the most significant
pressure in over a week as the trade seemed to migrate to the sidelines and in
the process bank profits from recent longs. Some investors wanted out of the
market ahead of the monthly payroll report while others decided that perpetual
gains in energy prices were too much to handle. Even in the face of a 2.4% gain
in Wal-Mart same store sales prices were weak and that is a distinct change in
pace. In fact overall US September chain store sales increased by 2.2% and that
should have been a positive. In the end one has to think that the move to $53 in
crude gave the sellers all the incentive they needed to attack the market.
Technical Outlook
S&P 500 (DEC) 10/08/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. The swing indicator
gave a moderately negative reading with the close below the 1st support number.
The next upside objective is 1143.42. The next area of resistance is around
1136.35 and 1143.42, while 1st support hits today at 1126.45 and below there at
1123.63.
SP EMINI (DEC) 10/08/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. 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 under the swing pivot. The near-term upside target is at 1132.18. The
next area of resistance is around 1131.62 and 1132.18, while 1st support hits
today at 1130.88 and below there at 1130.69.
NASDAQ (DEC) 10/08/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The next upside target is
1486.12. The next area of resistance is around 1472.75 and 1486.12, while 1st
support hits today at 1452.25 and below there at 1445.13.
MINIDOW (DEC) 10/08/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness. The next upside objective is 10272. The next area of resistance is
around 10182 and 10272, while 1st support hits today at 10060 and below there at
10027.
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CURRENCY MARKET RECAP
10/8/2004
December US Dollar finished down 14 at 8851, 10
off the high and 16 up from the low.
December Euro finished up 0.18 at 122.89, 0.18
off the high and 0.13 up from the low.
December Euro Dollar closed unchanged at 97.67.
This was 0.015 up from the low and 0.005 off the high.
December Canadian Dollar closed down 0.01 at
79.29. This was 0.05 up from the low and 0.28 off the high.
December British Pound finished up 0.75 at
177.33, 0.25 off the high and 0.34 up from the low.
December Swiss closed up 0.17 at 79.3. This was
0.05 up from the low and 0.17 off the high.
December Japanese Yen closed up 0.18 at 90.25.
This was 0.12 up from the low and 0.13 off the high.
The Dollar Index continued to track within the
consolidation even though the initial claims readings showed a much stronger
than expected reading on the US economy. We are actually surprised that the good
claims number didn’t serve to lift the Dollar ahead of the monthly payroll
report, especially since the average estimate for the size of the non farm
payroll gain appeared to inch higher during the action Thursday. The Pound
seemed to show signs of forging a bottom but it might be difficult to maintain
the gains in the Pound if the US payrolls are at or above expectations.
Technical Outlook
YEN (DEC) 10/08/2004: Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. 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. The next downside target is now at 90.01. The next area of
resistance is around 90.37 and 90.50, while 1st support hits today at 90.13 and
below there at 90.01.
EURO (DEC) 10/08/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market has a slightly positive tilt with
the close over the swing pivot. The next downside objective is now at 122.60.
The next area of resistance is around 123.04 and 123.21, while 1st support hits
today at 122.74 and below there at 122.60.
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PRECIOUS METALS RECAP
10/8/2004
December Gold closed down 0.5 at 419.5. This was
0.7 up from the low and 2.2 off the high.
December Silver finished down 0.028 at 7.217,
0.083 off the high and 0.052 up from the low.
October Platinum closed down 7.5 at 840.3. This
was equal to the low and equal to the high.
While gold and silver prices showed some
divergent activity on Thursday the market were mostly weak and appeared
vulnerable. With the stock market falling aggressively and energy price rising
to a new round of record highs it almost seemed like the macro economic concerns
were undermining silver and platinum. Some gold longs appeared to be moving to
the sidelines rather than face the potential of Dollar rally in the wake of a
strong US non farm payroll reading on Friday morning. There is little doubt that
silver is at least partially overbought and therefore due for a profit taking.
Technical Outlook
SILVER (DEC) 10/08/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s close above the
9-day moving average suggests the short-term trend remains positive. The market
could take on a defensive posture with the daily closing price reversal down.
The market tilt is slightly negative with the close under the pivot. The
near-term upside target is at 736.0. The market is becoming somewhat overbought
now that the RSI is over 70. The next area of resistance is around 728.5 and
736.0, while 1st support hits today at 715.0 and below there at 709.0.
GOLD (DEC) 10/08/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market’s short-term trend is positive on the close above the 9-day
moving average. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next upside target is 422.7. The next area of
resistance is around 420.9 and 422.7, while 1st support hits today at 418.1 and
below there at 417.0.
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COPPER MARKET RECAP
10/8/2004
December Copper finished up 0.45 at 142.75, 1.10
off the high and 0.80 up from the low.
Copper prices bucked weakness in gold and silver
and probably did so because of indications that January though August Russian
copper exports declined by 24%. We have to think that weak equity prices and
soaring energy prices robbed the copper market of fresh buying especially since
the copper market has become significantly overbought. Open interest probably
peaked out above 103,000 contracts and that is also a sign of the overbought
status. The Press tried to fan the bull flames by highlighting ongoing fund
interest in copper by the funds.
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ENERGY MARKET RECAP
10/8/2004
December Crude Oil closed up 0.71 at 52.24. This
was 0.44 up from the low and 0.26 off the high.
December Heating Oil closed up 1.18 at 143.56.
This was 1.31 up from the low and 0.64 off the high.
December Unleaded Gas finished up 1.79 at 139.26,
0.49 off the high and 1.16 up from the low.
December Natural Gas finished up 0.26 at 8.30,
0.12 off the high and 0.34 up from the low.
December Propane closed up 0.03 at 0.88. This was
0.01 up from the low and equal to the high.
Once again energy prices rose to new all time
highs and did so off follow through speculative interest and because of concerns
of a strike in Norway. The Press suggested that a Norway strike could idle as
much as 55,000 barrels per day of production. The natural gas market came under
temporary pressure following an 81 bcf injection in the weekly report. In the
end the speculative fervor carried the day and natural gas prices exploded into
a sharp upward pulse. Since natural gas hasn’t been in the full blown
speculative position as long as crude oil it might be possible to see natural
gas run for another couple weeks.
Technical Outlook
CRUDE OIL (DEC) 10/08/2004: The market rallied to
a new contract high. Rising stochastics at overbought levels warrant some
caution for bulls. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The gap up on the day session chart gave
a bullish indicator and more follow through could be seen this session. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The next upside objective is 52.89. With a reading over 70, the
9-day RSI is approaching overbought levels. The next area of resistance is
around 52.59 and 52.89, while 1st support hits today at 51.89 and below there at
51.50.
UNLEADED (DEC) 10/08/2004: A new contract high
was made on the rally. Daily stochastics have risen into overbought territory
which will tend to support reversal action if it occurs. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
The gap up on the day session chart gave a bullish indicator and more follow
through could be seen this session. A positive setup occurred with the close
over the 1st swing resistance. The next upside target is 140.74. With a reading
over 70, the 9-day RSI is approaching overbought levels. The next area of
resistance is around 140.08 and 140.74, while 1st support hits today at 138.44
and below there at 137.45.
HEATING OIL (DEC) 10/08/2004: A new contract high
was made on the rally. Rising stochastics at overbought levels warrant some
caution for bulls. The market’s short-term trend is positive on the close above
the 9-day moving average. It is a mildly bullish indicator that the market
closed over the pivot swing number. The next upside target is 145.34. The market
is becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 144.53 and 145.34, while 1st support hits today at 142.59
and below there at 141.45.
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CORN MARKET RECAP
10/8/2004
December Corn finished down 1 1/4 at 206, 3
1/2 off the high and 1/4 up from the low. March Corn closed down 1 at 217. This
was 1/4 up from the low and 3 off the high.
Strength in the other grains and follow-through
technical buying (thought to be short-covering) helped to support the early
gains but the lower close is a negative short-term technical development. The
average trade estimate (Reuters survey) for corn production for Tuesday
morning’s USDA Crop Production report came in at a record high 11.217 billion
bushels (range 11.059-11.375) as compared with the September estimate of 10.961
billion bushels. The average trade estimate for ending stocks came in at 1.468
billion bushels (range 1.310-1.623) as compared with the September estimate of
1.209 billion bushels. Weekly export sales for corn came in at 779,200 tons as
compared with trade expectations at 850,000-1.15 million tons and 880,200 tons
necessary each week to reach the USDA projection. Cumulative sales have now
reached 21% of the USDA forecast for the entire marketing year as compared with
24.7% on average for this time of the year. South Korea (119,100 tons) and
Taiwan (117,000 tons) were the most active buyers. While the sales numbers were
slower than expected, shipments were reported at a marketing year high at 1.18
million tons. In addition, the USDA announced a sale of 115,000 tons of US corn
to unknown destination. A .382 retracement of the Sept 1 to October 5th break
leaves key resistance overhead at 218 1/2 and it will take a move above this
level to see a minor shift in the trend. Support for December corn comes in at
206 and 203 1/4 with 210 3/4 and 213 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/08/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
downside closing price reversal on the daily chart is somewhat negative. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next upside objective is 210 1/2. The next area of resistance is
around 207 3/4 and 210 1/2, while 1st support hits today at 204 1/4 and below
there at 203 1/4.
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SOY COMPLEX RECAP
10/8/2004
November Soybeans finished down 1/2 at 525 3/4, 6
1/4 off the high and 1 3/4 up from the low. January Soybeans closed up 1 1/4 at
535 1/4. This was 3 1/4 up from the low and 4 1/4 off the high.
December Soymeal closed up 1.7 at 158.4. This was
1.4 up from the low and 0.4 off the high.
December Soybean Oil finished down 0.36 at 20.73,
0.54 off the high and 0.08 up from the low.
The inside trading session and lack of
follow-through buying on the test of yesterdays highs leaves the bears with a
slight edge and the close below the opening is a slight negative. A move under
521 1/2 for November soybeans could now trigger a resumption of the selling
trend from fund traders who have been covering shorts for most of the week.
While demand looks to have improved for exporters and domestic crushers are also
trying to build inventory in order to increase the crush pace into the late fall
time frame as more and more of the new crop is becoming avalible. The outlook
for a hefty crop and active harvest selling pressures are factors which have
limited the buying support. The strong export sales news for soybeans and the
products combined with the oversold condition of the market helped spark active
short-covering and new buying from speculators early in the session but
prospects for a big crop estimate for Tuesday’s USDA Crop Production report
helped to slow the buying. The average trade estimate (Reuters survey) for
soybean production came in at 3.026 billion bushels (range 2.941-3.21) as
compared with the September estimate of 2.836 billion bushels. The average trade
estimate for ending stocks came in at 342 million bushels (range 205-450) as
compared with the September estimate of 190 million bushels. Weekly export sales
for soybeans came in at 1.02 million tons as compared with 750,000-950,000 tons
expected. For the 04/05 season, sales totaled 960,500 tons as compared with
372,500 tons necessary each week to reach the USDA projection. Cumulative sales
have now reached 34.5% of the USDA forecast for the entire marketing year as
compared with 31.7% on average for this time of the year. China (270,700 tons)
and unknown destination (167,500 tons) were the most active buyers. Weekly sales
for meal came in at 345,300 tons as compared with 75,000-175,000 tons expected.
Weekly sales for oil came in at 24,300 tons as compared with 5,000-10,000 tons
expected. Support for November soybeans comes in at 522 1/2 and 520 with 539 1/2
and 547 1/2 as resistance.
Technical Outlook
BEANS (NOV) 10/08/2004: 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 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. The next upside objective is 534
3/4. The next area of resistance is around 529 3/4 and 534 3/4, while 1st
support hits today at 521 3/4 and below there at 519.
MEAL (DEC) 10/08/2004: The crossover up in the
daily stochastics is a bullish signal. 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 close below the 9-day moving average is a negative
short-term indicator for trend. A positive setup occurred with the close over
the 1st swing resistance. The next upside target is 159.9. The next area of
resistance is around 159.3 and 159.9, while 1st support hits today at 157.5 and
below there at 156.4.
BEANOIL (DEC) 10/08/2004: The stochastic
indicator is rising from oversold levels, which is bullish and should support
higher prices. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The close below the 1st swing
support could weigh on the market. The next upside objective is 21.46. The next
area of resistance is around 21.03 and 21.46, while 1st support hits today at
20.42 and below there at 20.23.
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WHEAT MARKET RECAP
10/8/2004
December Wheat finished up 3/4 at 302 3/4, 3 3/4 off the high
and 1/4 up from the low. March Wheat closed up 1 at 315. This was 1 up from the
low and 3 1/2 off the high.
The solid export news and positive technical
action helped support the early gains. However, the inside day is a neutral
technical development as the market failed to confirm the reversal low this week
and also held support. Weekly export sales for wheat came in at 803,700 tons as
compared with 450,000-600,000 tons expected and 315,800 tons necessary each week
to reach the USDA projection. Cumulative sales have now reached 57.4% of the
USDA forecast for the entire marketing year as compared with 44.7% on average
for this time of the year. Japan (139,600 tons) and Egypt (126,400 tons) were
the most active buyers. In addition, Egypt bought 110,000 tons of US wheat at
their optional origin tender when traders thought that Argentina and Russian
wheat might be lower priced. This added to the positive tone and helped ease
some of the pain associated with news that Australia sold 1 million tons to
Iraq. Japan bought 125,000 tons of wheat at their weekly tender with 80,000 of
the total from the US. South Korea announced tenders to buy 18,000 and 20,000
tons of US wheat. The market is still operating under the positive influence of
the October 5th key reversal as long as support holds at 299 but December
futures need a decisive move over 307 1/2 to confirm the low. The average trade
estimate for ending stocks for Tuesday mornings USDA Supply/Demand report came
in at 593 million bushels (range 549-620) as compared with the September
estimate of 578 million bushels. December wheat support comes in at 301 1/4 and
299 with 307 1/2 and 315 1/4 as next resistance.
Technical Outlook
WHEAT (DEC) 10/08/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 9-day moving average is a negative short-term indicator for
trend. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside target is 299 3/4. The next area of
resistance is around 304 3/4 and 307 1/2, while 1st support hits today at 300
3/4 and below there at 299 3/4.
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LIVE CATTLE RECAP
10/8/2004
December Live Cattle closed down 0.67 at 88.20.
This was 0.10 up from the low and 1.00 off the high.
November Feeder Cattle finished down 0.17 at
111.65, 0.85 off the high and 0.10 up from the low.
December cattle matched a 15-session high before
moving lower on the session and the test of the highs with a failure might
trigger some increase speculative selling with December at a stiff premium to
the cash. The weak close leaves the market vulnerable to more selling;
especially if cash markets trade steady or lower on the week. Traders are
hopeful that cash markets will trade $85.00 or better this week but with the
recent weakness in the beef market and packer margins moving deeper in the red,
there is some talk of a weaker tone after $84.00-$84.50 trades last week.
Boxed-beef cutout values (600-750 choice) were down $.91 on the day at
mid-session to $131.56 as compared with $135.78 last week at this time. The
premium of futures to the cash market could leave feedlots an incentive to
over-feed cattle to higher weights in anticipation of higher cash markets ahead.
Slaughter came in at 126,000 head as compared with trade estimates at
124,000-127,000 head and 125,000 head last week.
Technical Outlook
CATTLE (DEC) 10/08/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market’s short-term trend is positive on the close above the 9-day moving
average. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. The next upside objective is
89.520. The next area of resistance is around 88.750 and 89.520, while 1st
support hits today at 87.670 and below there at 87.350.
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LEAN HOGS RECAP
10/8/2004
December Lean Hogs closed down 0.72 at 66.07.
This was 0.12 up from the low and 1.27 off the high.
February Pork Bellies finished down 1.35 at
96.62, 1.35 off the high and 0.12 up from the low.
The close near the lows keeps the technical
action bearish but the stiff discount of futures to cash might provide
underlying support. With the cash markets mostly $1.50 lower, the market
struggled to move much above Wednesdays highs before more active selling pushed
futures moderately lower on the day. Support at Wednesday’s lows managed to hold
and the trade is still trying to determine if cash markets are going to see a
sharp downtrend during the rest of October or if futures can rally some to
narrow the cash basis spread which is historically high. The CME 2-Day Lean
Index for the period ending October 5th was reported at 78.68 which was down 64
cents from the previous session. Slaughter came in at 388,000 head as compared
with trade estimates at 391,000-395,000 head and 400,000 head last week.
Technical Outlook
HOGS (DEC) 10/08/2004: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The downside closing price reversal on the daily chart is
somewhat negative. The close below the 1st swing support could weigh on the
market. The next downside target is 64.970. The next area of resistance is
around 66.770 and 67.750, while 1st support hits today at 65.400 and below there
at 64.970.
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COCOA MARKET RECAP
10/8/2004
December Cocoa finished down 15 at 1391, 17 off
the high and 1 up from the low.
The cocoa market fell to another new low for the
move is showing signs of extending the downside probe. Apparently arguments
between the Ivory Coast government and farmers regarding farm gate prices has
delayed the opening of the 2004-2005 cocoa season and that could end up
supporting prices if the delay is sustained. Given that prices have fallen to
the lowest level since early July could mean that farmers are extremely unhappy
with what the government thinks is a fair price.
Technical Outlook
COCOA (DEC) 10/08/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. There could be some early pressure today given the market’s
negative setup with the close below the 2nd swing support. The next downside
objective is now at 1377. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 1400 and 1413,
while 1st support hits today at 1382 and below there at 1377.
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COFFEE MARKET RECAP
10/8/2004
December Coffee closed up 0.50 at 78.15. This was
2.35 up from the low and 0.10 off the high.
The coffee market found early weakness from
supply concerns with continued long liquidation selling from speculators from
talk of increased supply soon from Vietnam as the harvest begins and from good
weather developments in Brazil. However, the market held support on a successful
test of Monday’s lows and this generated a bounce late in the day. Brazil
exported 2.06 million bags in September, down 9.7% from last year according to
the Council of Green Coffee Exporters of Brazil. More rains are not expected in
Brazil until October 12th and there are several more cold fronts in the forecast
for the rest of October so good flowering looks likely but there is a general
feeling that the 2005/2006 crop is off to a poor start and this helped support.
Technical Outlook
COFFEE (DEC) 10/08/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
upside daily closing price reversal gives the market a bullish tilt. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next downside target is 75.15. The next area of resistance is around 79.35 and
80.00, while 1st support hits today at 76.95 and below there at 75.15.
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SUGAR MARKET RECAP
10/8/2004
March Sugar closed down 0.05 at 8.90. This was
0.04 up from the low and 0.17 off the high.
The trade in the recent consolidation zone
continued but the close which was 17 points below the highs of the day could
attract some speculative long liquidation from the speculator. The EU weekly
export tender to sell 105,250 tonnes of white sugar was not as high as expected
and helped support some early weakness but increased activity from India and
speculative buying supported another test of the high end of the recent
consolidation. Traders were looking for the weekly tender to be near
100,000-180,000 tons but after two weeks of heavy exports, the total still above
100,000 tons leaves an impressive three-week total. India bought 150,000-200,000
tons of raw sugar from Brazil for October/November delivery even though there is
still no sign that the government will cut import duties. A move outside of the
883-910 range for March sugar should help set next short-term direction.
Consolidation patterns are generally continuation patterns of the recent trend.
Technical Outlook
SUGAR (MAR) 10/08/2004: 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 market’s short-term
trend is negative as the close remains below the 9-day moving average. The
outside day down and close below the previous day’s low is a negative signal.
The market tilt is slightly negative with the close under the pivot. The next
downside target is 8.73. The next area of resistance is around 9.00 and 9.14,
while 1st support hits today at 8.80 and below there at 8.73.
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COTTON MARKET RECAP
10/8/2004
October Cotton finished down 3.48 at 46.87, 3.63
off the high and equal to the low.
The cotton market failed to find additional
support after weak export news before the opening and the better than expected
weather in West Texas combined to drive the market lower into the close. There
was a heavy rain band through central Texas and Oklahoma but the Lubbock area
was clear and the crop was able to begin a dry out period. Weekly export sales
for cotton came in at just 131,900 bales as compared with 140,000 to 200,000
bales expected and 128,200 bales necessary each week to reach the USDA
projection. Cumulative sales have now reached 49.6% of the USDA forecast for the
entire marketing year as compared with 45.2% on average for this time of the
year. China (49,400 bales) and Turkey (18,700 bales) were the most active
buyers. Export shipments came in at 100,800 bales from 50,000-120,000 bales
expected. The news was not enough to signal that US prices were low enough to
attract increased export sales and traders believe that prices will need to move
to a low enough level to entice new business.
Technical Outlook
COTTON (DEC) 10/08/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s short-term trend is negative as the close remains
below the 9-day moving average. The market could take on a defensive posture
with the daily closing price reversal down. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside objective is at 49.08. The next area of resistance is around
48.07 and 49.08, while 1st support hits today at 46.67 and below there at 46.29.