Why The Dollar Didn’t Respond To Good News

Technical Outlook

#BONDS (JUN) 05/06/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 106.24 and then again at 107.19, while swing support
hits at 105.18 and below there at 105.07. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 105.07. The 9-day RSI under 30 indicates the market is
approaching oversold levels.

T-NOTES(JUN) The daily stochastic’s gave a
bearish indicator with a crossover down. The next downside objective is now at
109.09. The market’s close below the pivot swing number is a mildly negative
setup. Near-term resistance for the T-Notes is at 110.12 and then again at
110.30, while swing support hits at 109.17 and below there at 109.09. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 30, the 9-day RSI is approaching oversold
levels.

 

STOCK INDICES RECAP

5/5/2004

The stock market showed fleeting moments of
strength Wednesday as if the market was finally being forced to accept the
recovery progress. However, many longs remained on the sidelines because of the
excessive volatility potential off the numbers Friday. The Dollar slump seemed
to take away some of the optimism on Wall Street and the stock market is well
aware of the international backlash off the Iraqi prisoner abuse issue. Around
the highs Wednesday is seemed like the stock market was beginning to accept the
combination of more growth and higher interest rates.

Technical Outlook

#S&P500 (JUN) 05/06/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1118.20 and 1113.25, with overhead resistance at 1126.20 and
1129.25. 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 1113.25.

S&P E-Mini (JUN): A bullish signal was given with
an upside crossover of the daily stochastics. The next upside objective is
1132.38. The market has a slightly positive tilt with the close over the swing
pivot. Near-term resistance for the S&P Mini is at 1128.25 and then again at
1132.38, while swing support hits at 1116.25 and below there at 1108.38. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.

NASDAQ (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The market should run into resistance at 1442.00 and above there at
1449.50 with support at 1422.00 and 1409.50. Momentum studies are declining, but
have fallen to oversold levels. The next downside target is 1409.5.

MINI DOW (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10346 and above there at 10383 with support
at 10260 and 10211. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 10211. With the close higher than the pivot
swing number, the market is in a slightly bullish posture.

 

CURRENCY MARKET RECAP

5/5/2004

The Dollar started out sharply lower, tried to
rally and then slipped back toward the lows toward the close. Even after the US
posted a very sharp increase in the ISM Non-Manufacturing index report the
Dollar showed only minimal long interest. Early in the session European numbers
were very soft and that suggests the driving force in the currencies is being
derived from something other than economic or interest rate differential
analysis. Maybe the Iraqi prisoner of war issue is causing the Dollar to suffer
from geopolitical pressure!

Technical Outlook

#CURRENCIES 05/06/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The gap upmove on the day session chart is a bullish indicator for
trend. Since the close was above the 2nd swing resistance number, the market’s
posture is bullish and could see more upside follow-through early in the
session. Swing resistance is targeted at 92.32 and above there at 92.55, with
the yen finding support around 91.99 and below there at 91.89. The close under
the 40-day moving average indicates the longer-term trend could be turning down.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 92.55.

EURO (JUN): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.2206.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2086, with overhead resistance
at 1.2206. 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

5/5/2004

The gold market started out the session firm but
failed to hold the gains even though the Dollar slid back to the lows of the day
into the gold close. In other words, the gold market is apparently only getting
a limited lift from the Dollar action. In other words, even if the Dollar has
shifted its trend down we are not sure that the gold will get a direct lift. On
the session silver outperformed gold possibly because silver hadn’t short
covered as much as gold off the recent low. It also seemed like progressively
better macro economic information and a slightly higher US equity market gave
the industrial metals markets a little lift.

Technical Outlook

#P-METALS 05/06/04: SILVER (JUL): A positive
setup occurred with the close over the 1st swing resistance. Initial support for
silver is at 616.0 and below there at 616.0 with resistance likely at 616.0 and
616.0. The market’s close above the 9-day moving average suggests the short-term
trend remains positive. 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 616.0.

GOLD (JUN): Support for gold today comes in near
389.53, while resistance is pegged at 396.53. 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 396.53. 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
upside closing price reversal on the daily chart is somewhat bullish.

 

COPPER MARKET RECAP

5/5/2004

Copper prices were lifted by the weakness in the
Dollar and because US numbers were stronger than expected. Seeing US equity
prices rise might also have given copper bulls a little confidence especially
since the Chinese holiday has come to an end and that might bring in some fresh
long interest. We did not see any new stories off the Chilean labor issues as
that seemed to provide the copper market with support early in the week.

 

ENERGY MARKET RECAP

5/5/2004

The energy complex initially faded off a
surprisingly large weekly gasoline stock build posted by the EIA. Because the
API didn’t confirm the gasoline stock build at the DOE the market seemed to
recover toward mid session. The fact that an OPEC delegate indicated that they
were very concerned about prices makes it possible that OPEC would at least
consider raising production in the May meeting. The market really isn’t poised
to factor in a production hike, as very few players would actually buy into such
a theme. OPEC did suggest that they would increase production if an actual
shortage were to be seen and that does temper some of the concerns of terrorism
directed at Saudi Arabia. However, OPEC would be hard pressed to replace even a
moderate loss of Saudi production!

Technical Outlook

#ENERGIES 05/06/04: CRUDE OIL (JUL): The rally
brought the market to a new contract high. With the close over the 1st swing
resistance number, the market is in a moderately positive position. Support for
crude is keyed on 38.76 and below there at 37.93, with resistance pegged at
39.96 and 40.33. 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 40.33. With a reading
over 70, the 9-day RSI is approaching overbought levels.

UNLEADED GAS (JUL): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 129.70. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. Resistance today is at 129.70,
while support should be found around 123.50. 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.

HEATING OIL (JUL): With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Heating oil should encounter support around 96.33, with resistance is at 101.73.
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 101.73. With a reading over 70, the
9-day RSI is approaching overbought levels. The outside day up is a positive
signal. The rally brought the market to a new contract high. The upside closing
price reversal on the daily chart is somewhat bullish.

 

CORN MARKET RECAP

5/5/2004

Long liquidation from fund traders leaned on both
old and new crop futures as the market continues to dodge potential tightness
ahead through perfect weather. The fast plantings pace of the past week and the
outlook for perfect weather for the fast pace to continue for the week ahead
helped to trigger long liquidation selling from speculators and then fund
traders today. Ideas that the weather could cause a further increase in the
planted acreage base for corn this season and the idea that early planted corn
has a tendency to yield higher than late planted corn helped to add to the
bearish short-term psychology on the floor. In addition, a slowdown in export
news and the outlook for some rain early next week which would help the freshly
planted corn seed germinate added to the negative tone. Cash basis levels were
higher at the gulf on a lack of producer selling. Taiwan is tendering for 56,000
tons of US corn. Weekly export sales, released before the opening, are expected
to come in near 800,000-1.0 million tons as compared with 1.07 million tons last
week. Support levels for December corn include 313 and 310 with 317 and 318 as
resistance.

Technical Outlook

#CORN (JUL) 05/06/04: 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 325 3/4. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. Market resistance comes in at 325 3/4 today, with support at
313 1/4. The market’s short-term trend is positive on a close above the 9-day
moving average.

 

SOY COMPLEX RECAP

5/5/2004

The new crop futures continue to find support
from the perceived need for a more significant weather premium for the new crop
season due to tight US ending stocks forecasts and smaller crops in South
America. July futures have consolidated inside of Monday’s range. The smaller
South American crop would suggest that world end users will turn back to the US
quicker than first believed in the new crop season which begins in the fall. In
addition, the weather seems ideal for producers to plant more corn which could
eat into the planted acreage base for soybeans. If the Brazil crop is near 50
million tons (not 56 as the last USDA forecast) and the Argentina crop is near
31 million tons (not 35), world ending stocks for the 2003/2004 season could be
adjusted lower to near 23 million tons as compared with 33 million in last
months report, 39.29 million tons last year and 32.19 and 30.64 million tons the
previous two years. This of course assumes that usage data is left unchanged
from last month. If so, the world stocks/usage ratio would drop to 11.5% as
compared with 20.6% last year and the previous low of 10.7% which occurred in
the 1996/97 season. The USDA announced a sale of 110,000 tons of US soybeans to
unknown destination for the 2004/2005 season. Weekly export sales, released
before the opening, are expected to come in near 100,000-200,000 tons for
soybeans (57,300 tons last week), 0-50,000 tons for meal (70,200 tons last week)
and 0-2000 tons for oil (300). So far, this is a second inside day in a row for
July soybeans with near-term support at 1017 and 1009 and resistance at 1029 1/2
and 1037 1/4. Support for November soybeans comes in at 775 1/4 and 766 3/4 with
786 1/4 and 794 1/2 as resistance.

Technical Outlook

#SOYBEANS (JUL) 05/06/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 1026 1/2 and 1033, while 1st support hits
today at 1013 and below there at 1006. 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 1033.

MEAL (JUL): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 327.5.
First resistance comes in at 326.4, with support at 322.5. The market’s
short-term trend is positive on a close above the 9-day moving average. It is a
mildly bullish indicator that the market closed over the pivot swing number.
Consider buying pull-backs since daily studies are bullish.

BEAN OIL (JUL): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 34.20. The swing indicator
gave a moderately negative reading with the close below the 1st support number.
The downside closing price reversal on the daily chart is somewhat negative.
Daily swing resistance is found at 33.68 and above there at 34.20. Support
should be encountered at 32.83 and 32.50.

 

WHEAT MARKET RECAP

5/5/2004

Opening at the highest level since April 12th
before closing lower on the session might be considered bearish short-term
technical action. Commercial selling and profit-taking emerged to pull wheat
lower on the session as there is still a lack of any confirmation of buying from
China. Traders are much more reluctant to believe a rumor of China buying 3
million tons of wheat from US, Australia and Canada if commercial traders are
active sellers. Hot and dry weather this week in the central and northern plains
region helped to provide support. The winter wheat crop is in the heading and
flowering stages and moisture is preferable to avoid stress during this more
delicate phase of growth. The spring wheat crop plantings are well ahead of a
normal pace but the region needs moisture to see good germination. Deliveries
this morning totaled 383 contracts as compared with 562 contracts and the trade
views this as light when compared with deliverable stocks. In addition, a
commercial stopper took 232 contracts of the deliveries. Iraq officials
announced that the 200,000 tons wheat tender announcement will be released on
Thursday with traders fearful that the bulk or all of the business may go to
Australia; similar to the last big tender. Weakness was seen in London on wheat
as European drought fears are easing. Weekly export sales, released before the
opening, are expected to come in near 200,000-350,000 tons as compared with
874,400 tons last week. July wheat support comes in at 402 3/4 and 400 1/2 with
resistance at 414 and 419 1/2.

Technical Outlook

#WHEAT (JUL) 05/06/04: 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. Look for
near-term support at 402 1/2 and below there at 398 3/4, with resistance levels
at 413 and 419 3/4. 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 419
3/4.

 

LIVE CATTLE RECAP

5/5/2004

June cattle closed moderately higher on the
session after the discount of futures to cash, a jump to near 3-week highs in
beef prices and active trade in the cash market helped support the early move to
new contract highs. Sales volume numbers for the Texas Panhandle and Kansas were
seen as hefty this week with cash at $90-$91 and traders believe that near-term
supply should remain relatively tight going into next week after the active
movement this week. August cattle made contract highs for the 8th session in a
row before closing lower on the day. The US has agreed to stop imports of ground
beef and bone-in beef from Canada which appears to be a legal victory from the
private group who is apposed to imports.

Technical Outlook

#CATTLE (JUN) 05/06/04: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 86.92. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. Support should be
encountered at 84.75 and below there at 84.12. Market resistance is at 86.15 and
then again at 86.92. 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’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

5/5/2004

The hog market pushed moderately higher on the
session finding support from a move to new 3 year highs for pork values, strong
cattle prices and a bullish weekly cold storage report which triggered a near
limit-up advance in bellies. Ideas that slaughter may be cut-back due to weak
profit margins was seen as a slightly supportive factor after the hefty
slaughter pace of the recent past. In addition, packer demand is expected to
improve after the surge in pork values early this week. Weekly average weights
for the week ending May 1st for Iowa/Minn came in at 263.6 pounds, down .7
pounds from the previous week and down .3 pounds from last year. This helped
support the idea that producers are current with marketings.

Technical Outlook

#HOGS (JUN) 05/06/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 74.95 and 75.80 today, while support is around 73.75 and then 73.40.
The upside crossover (9 above 18) of the moving averages suggests a developing
short-term uptrend. 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 75.80.

 

COCOA MARKET RECAP

5/5/2004

The argument that a lower Dollar would provide
some support to cocoa is apparently misplaced as the cocoa fell sharply despite
the fact that a lower Dollar made US cocoa cheaper on the arbitrage market. The
trade reported fund sales early but once again saw some industry buying around
the lows. Therefore, the market is seeing the physical trade interested in cocoa
on weakness. The funds have persistently sold into the market and are probably
seeing their short position reach a slightly oversold condition with the losses
Wednesday.

Technical Outlook

COCOA (JUL) 05/06/04 The close below the 1st
swing support could weigh on the market. Cocoa should run into resistance at
1381 and above there at 1405 with support at 1343 and 1329. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 1328.50. Short-term indicators on the defensive. Consider
selling an intraday bounce.

 

COFFEE MARKET RECAP

5/5/2004

July coffee closed unchanged after trading in a
105 point range as speculative sales limited gains while commercial buying
limited losses. The market held on to a 245 point rally Tuesday as traders are
apparently pricing in a weather premium already although Brazil’s freeze season
does not officially start until mid-June. The country’s winter is forecasted to
be colder than normal which appear to be attracting speculative buyers to the
market. Less producer selling ahead of harvest (which begins in earnest in June)
creates less overhead resistance. Brazil’s coffee crop is expected to be the
second highest in history near 42 to 44 million bags. CSCE coffee stocks stood
at 4,830,284 bags with 189,788 bags pending grading.

Technical Outlook

COFFEE (JUN) 5/6/04 The market has a slightly
positive tilt with the close over the swing pivot. 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 73.25.
The Coffee contract should run into resistance at 72.75 and above there at 73.25
with support at 71.7 and 71.15. The market’s short-term trend is positive on a
close above the 9-day moving average.

 

SUGAR MARKET RECAP

5/5/2004

July sugar closed sharply lower and moved to the
lowest level since early April as light trade house buying near the low end of
the recent trading ranged failed to offset increased speculative selling.
Commercial selling helped push the market under yesterday’s lows and then
sell-stops were activated to push the market below 670 support. Traders are
still hopeful that the longer-term potential for a world production deficit for
the coming year will help support a bull trend into the summer. However, with
ample stocks and a record Brazil crop harvest ahead, the market may find plenty
of near-term resistance. In addition, speculators were holding a net long
position of near 122,000 contracts in the last COT report.

Technical Outlook

#SUGAR (JUL) 05/06/04: The market is in a bearish
position with the close below the 2nd swing support number. Swing resistance
comes in at 6.93, with support found at 6.45. 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. Daily stochastics
are trending lower, but have declined into oversold territory. The next downside
objective is now at 6.45.

 

COTTON MARKET RECAP

5/5/2004

July cotton closed 52 higher and December cotton
closed 15 higher in a lackluster trade ahead of Thursday’s export sales numbers.
July cotton has been coiling in a tight range between 59 and 60.75 since the
market made a dramatic reversal day on April 29th. The market could be trying to
form a base given the sideways chart pattern, but prices would need a close back
over 62 to feel confident the market has bottomed. The weaker US dollar is
supportive, but not enough of a factor to lift prices above the 60.75
resistance. Weather conditions remain good for planting progress and there is
speculation that farmers will shift acres to soybeans given the high price of
beans this year. Export sales estimates range between 75,000 and 110,000 bales
with shipment estimates ranging between 275,000 and 300,000 bales. The CotLook A
Index was 69.50, down -.15.

Technical Outlook

#COTTON (JUL) 05/06/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 61.17 and then again at 61.51, while support is
targeted at 59.92 and 59.01. The daily stochastics have crossed over up which is
a bullish indication. The next upside target is 61.51.