Why The Bear View On The Dollar May Be Shifting

Technical Outlook

BONDS (MAR) 12/02/03: It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 107.31 and then again at 108.16, while swing support hits at 106.22 and below there at 105.30. 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. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 105.30.

T-NOTES(MAR) Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 109.10. The market’s close below the pivot swing number is a mildly negative setup. Near-term resistance for the T-Notes is at 110.28 and then again at 111.12, while swing support hits at 109.27 and below there at 109.10. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

12/1/2003

Finally the stock market managed to get a conclusive reaction to the recent sweep of strong macro economic information. We suspected that the holiday shopping season kick-off might be the main thrust behind the rally but in retrospect it would seem that the comments on the holiday season kick-off were only moderately favorable. In the end it would seem like the high tech sector and the scheduled US economic numbers were the main catalyst behind the rally. In fact, the scheduled information released Monday ended up being much stronger than expected creating the idea that the strong 3rd quarter growth posted in the GDP might extend into the 4th quarter.

Technical Outlook

S&P500 (DEC) 12/02/03: The market’s close above the 2nd swing resistance number is a bullish indication. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. Underlying support comes in at 1064.80 and 1058.65, with overhead resistance at 1073.80 and 1076.65. 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 1076.65.

S&P E-Mini (DEC): The market made a new contract high on the rally. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1080.94. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1076.63 and then again at 1080.94, while swing support hits at 1061.88 and below there at 1051.44. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (DEC) The market’s close above the 9-day moving average suggests the short-term trend remains 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. The market should run into resistance at 1454.25 and above there at 1461.38 with support at 1433.75 and 1420.38. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1461.4.

CURRENCY MARKET RECAP

12/1/2003

The economic information released from the US Monday was so strong that the Dollar was pulled up away from the overnight low. It would also appear that the strength in the US equity market provided the Dollar with some additional short covering impetus, as some players are concerned that US growth might kick up enough to alter the opinion toward the Dollar. So far, the trade really hasn’t picked up on the idea that the US might be moving closer to hiking interest rates and that might be something that serves to shift the existing bear view toward the Dollar.

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 91.53 and above there at 91.72, with the yen finding support around 91.16 and below there at 90.98. The close under the 40-day moving average indicates the longer-term trend could be turning down. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 90.98.

EURO (DEC): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.2058. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1886, with overhead resistance at 1.2058. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s key reversal down is a bearish signal. The rally brought the market to a new contract high. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

12/1/2003

The gold market started off the session seeing support from a weak Dollar and partially supported by strong gains in the stock market. However, as the session unfolded the Dollar managed to bounce possibly because euphoria toward the US economy reached a fever pitch. It would seem that gold and silver prices are in a position to benefit from the generally favorable economic conditions and are only slightly threatened by the prospect that the Dollar could end up finding favor in the event that the US economy becomes ultra strong.

Technical Outlook

SILVER (MAR): 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. Initial support for silver is at 537.8 and below there at 528.9 with resistance likely at 549.2 and 556.3. 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 549.2. A new contract high was made on the rally.

GOLD (FEB): Support for gold today comes in near 396.15, while resistance is pegged at 408.55. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 408.55. 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. The rally brought the market to a new contract high.

COPPER MARKET RECAP

12/1/2003

The copper market wasted no time in responding to the return of the Chinese buyers. In fact, the copper market exploded overnight and managed an early 405-point gain. With some of the strongest monthly manufacturing sector gains since 1983 in the ISM report it is clear that the trade is expecting copper demand to rise. It should also be noted that copper supplies at the exchanges continue to contract making stronger demand forecasts an even more important situation. Unless the copper market gets tripped up by an extensive overbought technical condition, there would seem to be little to stop the market from posting more gains.

ENERGY MARKET RECAP

12/1/2003

Sharply lower energy prices surprised some in the trade because the market saw such significant declines in crude oil inventories last week. However, it would appear that a number of OPEC producers are opposed to a December production cut and that apparently undermined the bull camp. The Kuwaiti Oil Minister suggested that political conditions are holding prices up in the range bit fundamental considerations. The natural gas market was up aggressively as private forecasters are apparently refuting the mild weather forecast recently made by the NWS.

Technical Outlook

CRUDE OIL (JAN): The major trend is down with the cross over back below the 40-day moving average. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Support for crude is keyed on 29.77 and below there at 29.55, with resistance pegged at 30.13 and 30.27. 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 29.55. Daily studies pointing down suggests selling minor rallies.

UNLEADED GAS (JAN): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 80.66. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 83.66, while support should be found around 80.66. 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.

HEATING OIL (JAN): The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 82.13, with resistance is at 84.33. 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 82.13.

CORN MARKET RECAP

12/1/2003

Corn prices did manage to forge a new high for the move but didn’t seem real interested in holding all of the gains into the close. The trade is probably seeing some cash movement and is generally not seeing much in the way of fresh fundamental information! Weekly export inspections in corn came in at 37.6 million bushels compared to 42.289 million bushels. It should be noted that trade expectations for the inspections were for 40 to 45 million bushels and that could have undermine the bull camp early in the trade Monday. There continues to be rumors that Asian buyers are looking for more corn and that have kept the cash market firm in the face of physical movement.

Technical Outlook

CORN (MAR) 12/02/03: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 252 1/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 252 1/4 today, with support at 246 1/4. The market’s short-term trend is positive on a close above the 9-day moving average.

SOY COMPLEX RECAP

12/1/2003

Weekly export inspections in soybeans came in at 37.1 million bushels compared to 34.9 million bushels last week. The trade was expecting 35 to 40 million bushels and that means that the sale data was slightly supportive. Countervailing the US export sales data were Dow Jones news service stories that Brazilian soybean exports for November were going to come in 11% above year ago levels at 524,300 metric tons. A Wall Street Journal article on rust disease in South America might have prompted some small spec buys and as a result March beans managed the highest trade since November 19th. The Taiwan Association is also expected to tender for 56,000 metric tons of beans on Tuesday but that is a minimal order.

Technical Outlook

SOYBEANS (JAN) 12/02/03: With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 766 1/2 and 770 1/4, while 1st support hits today at 755 1/2 and below there at 747 3/4. 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 770 1/4.

MEAL (JAN): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 232.1. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 230.5, with support at 226.4. The market’s short-term trend is negative as the close remains below the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (JAN): 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 27.96. With the close higher than the pivot swing number, the market is in a slightly bullish posture. A new contract high was made on the rally. Daily swing resistance is found at 27.81 and above there at 27.96. Support should be encountered at 27.41 and 27.16.

WHEAT MARKET RECAP

12/1/2003

Wheat prices rose in Europe after the UK released evidence that planting figures were being reduced. In fact, the downward revision might mean that too much wheat was sold forward. During the session Monday weekly export inspections came in at 13.76 million bushels compared to 22.12 million bushels in the prior weak and that might have been disappointing. The Russian grain crop is expected to be 68 to 70 million tons compared to 86.6 million tons and therefore the wheat market found another issue to provide general support to prices. In conclusion, long-term fundamentals showed a little tightening in wheat and that simply gave the bull camp fresh resolve.

Technical Outlook

WHEAT (MAR) 12/02/03: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Look for near-term support at 406 and below there at 403 , with resistance levels at 411 1/2 and 414 . The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 414 .

LIVE CATTLE RECAP

12/1/2003

February cattle closed 45 higher on the session and moved to a new contract high led by a steady flow of new buying and from rolling of longs from the December contract. Ideas that cash markets could trade higher again this week, from $100 last week, helped to support. Boxed-beef cut-out values were up 37 cents to $161.02 and ideas that there could be a seasonal surge in demand for beef in the next several weeks added to the positive tone. With no bids or offers in the cash market, the December contract experienced long liquidation selling with talk that cash markets may not trade until later this week. Slaughter came in at 122,000 head as compared with trade estimates at 120,000-129,000 head. With beef production last week down 15.5% from last year, traders remain optimistic that cash cattle will remain firm but this does no mean that February futures need to follow the cash market up.

Technical Outlook

CATTLE (FEB) 12/02/03: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.25. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 92.82 and below there at 92.05. Market resistance is at 94.42 and then again at 95.25. 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.

LEAN HOGS RECAP

12/1/2003

Hog futures traded sharply higher for the second session in a row on Monday as higher cash market trade and hopes that a seasonal low in prices and a peak in production may have come in last week helped trigger active new buying. Slaughter came in at 387,000 head as compared with 394,000 last week and 381,000 head last year. Fund buying was active and given the oversold condition last week, traders believe there is an active surge in short-covering in the past few sessions. Cash hogs were $1.00 higher and the 2-day CME Lean Index was unchanged at 49.08. While the trade expects to see a seasonal rise in cash markets in the weeks ahead, the stiff premium of futures to cash was seen as a limiting factor and may have contributed to floor reports that commercials were selling.

Technical Outlook

HOGS (FEB) 12/02/03: The market’s close above the 2nd swing resistance number is a bullish indication. Resistance levels comes in at 57.45 and 58.02 today, while support is around 55.85 and then 54.82. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 58.02.

COCOA MARKET RECAP

12/1/2003

As we have been suggesting, the most incendiary development that could unfold with respect to cocoa prices would be a resurgence of violence at the Ivory Coast and that appears to have happened. Apparently protests at a French army barracks in the Ivory Coast resulted in a backlash against the protestors and with an anti-white movement being pushed by a core of 300 “Young Patriots” it would not seem like the situation is going to go away any time soon. The Ivory Coast is attempting to isolate the violence and that could in effect cause even more violence ahead.

Technical Outlook

COCOA (MAR)12/02/03 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 1581 and above there at 1599 with support at 1524 and 1485. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1484.75.

COFFEE MARKET RECAP

12/1/2003

Massive short covering skyrocketed March coffee futures sharply higher as fund traders began to short cover. The COT with options as of Nov 18th showed large traders were net short 13,444 contracts. March coffee held a test of support at 60 early which attracted roaster buying, and the push through resistance at 61 caused some weak shorts to exit. With the next major report due Dec 10th when Brazil releases its first estimate of the 2004/05 coffee crop, the market may continue to trade off technical signals. Next resistance for Mar coffee is at 63.

Technical Outlook

COFFEE (MAR)12/2/03 The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 64.35.The Coffee contract should run into resistance at 63.70 and above there at 64.35 with support at 61.2 and 59.35. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

12/1/2003

Speculative buying supported solid gains in Sugar early on Monday but as the buying slowed, the producer selling increased enough for the market to give back part of the early strength. Ideas that China, Russia and Middle East buyers could get more active in the weeks just ahead helped support. China may have bought up to 100,000 tons of raw sugar in November and could be back in the market soon. Traders are still not certain if China is buying sugar for internal consumption or if the imports of raw sugar will be processed and re-exported onto the world market. The market found support from news from the Agriculture Ministry in Iran that the country will need to import near 400,000-500,000 tons of sugar to meet demand for the next 3-4 months.

Technical Outlook

SUGAR (MAR) 12/02/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.38, with support found at 6.22. 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 6.22.

COTTON MARKET RECAP

12/1/2003

March cotton locked limit up from a continuation of Wednesday’s strong gains as the market continues to react to strong world demand for US cotton, particularly from China. A potential trade riff between the US and China over textiles has yet to impact China’s purchases of US cotton which is very competitively priced on the world market. The market is expecting even higher cotton sales for this past week since doth cotton prices & the Dollar were down. In other news Egypt lowered its 2003/04 crop to 190,000 metric tons from 225,000 metric tons previously.

Technical Outlook

COTTON (MAR) 12/02/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. 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. Next resistance area comes in at 73.44 and then again at 73.61, while support is targeted at 72.75 and 72.23. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 73.61. The gap upmove on the day session chart is a bullish indicator for trend.