Why The Dollar Is Under Attack

Technical Outlook

BONDS (DEC) 9/10/2003: The daily closing price
reversal up is a positive indicator that could support higher prices. The market
has a slightly positive tilt with the close over the swing pivot. Near-term
resistance for bonds is at 107.11 and then again at 107.23, while swing support
hits at 106.02 and below there at 105.05. A positive signal for trend short-term
was given on a close over the 9-bar moving average. The market now above the
40-day moving average suggests the longer-term trend is up. Stochastics are at
mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 107.23.

T-NOTES(DEC) The upside closing price reversal on
the daily chart is somewhat bullish. Momentum studies are trending higher, but
have entered overbought levels. The near-term upside objective is at 111.23.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. The major trend is down with the cross over back
below the 40-day moving average. Near-term resistance for the T-Notes is at
111.15 and then again at 111.23, while swing support hits at 110.21 and below
there at 110.03. The market’s short-term trend is positive on a close above the
9-day moving average.

 

STOCK INDICES RECAP

9/9/2003

Slack Nokia earnings and lackluster US economic
numbers that were released early in the session disappointed the stock market.
The trade tried to bend the Richmond Fed readings into a positive because they
improved over the prior month. However, since the Index failed to reach into
positive ground one can hardly feel the need to pay up for stocks. In fact, Wall
Street is apparently a little unnerved by the falling Dollar and rising gold
prices. We doubt that the Fed would actually talk about hiking rates because of
gold but with gold soaring and the Fed historically biased against inflation we
see them acting quicker to hike rates than many might expect.

Technical Outlook

S&P500 (SEP) 9/10/2003: The market setup is
somewhat negative with the close under the 1st swing support. Underlying support
comes in at 1020.45 and 1016.88, with overhead resistance at 1027.95 and
1031.88. The close above the 9-day moving average is a positive short-term
indicator for trend. Daily stochastics have risen into overbought territory
which will tend to support reversal action if it occurs. The near-term upside
objective is at 1031.88.

S&P E-Mini (SEP): 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 next downside target is
1017.25. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Near-term resistance for the S&P Mini is at 1036.25
and then again at 1040.25, while swing support hits at 1024.75 and below there
at 1017.25. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

NASDAQ (SEP) A positive signal for trend short-term was given
on a close over the 9-bar moving average. The close below the 1st swing support
could weigh on the market. The market should run into resistance at 1380.75 and
above there at 1391.13 with support at 1362.25 and 1354.13. A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 1354.13.

 

CURRENCY MARKET RECAP

9/9/2003

The Dollar finished the session down hard and
with the setup on the chart it would not look like the trend is close to running
its course. With the US stock market falling sharply and the Democratic hopefuls
bashing the President and reducing the confidence in the Administration we can
understand the attack of the Dollar. Also during the session the market was
slightly disappointed with the pace of US numbers and that simply cleared the
way for more selling.

Technical Outlook

YEN (DEC): A negative signal for trend short-term
was given on a close under the 9-bar moving average. 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. Swing resistance is targeted
at 86.19 and above there at 86.61, with the yen finding support around 85.56 and
below there at 85.35. Stochastics turning bearish at overbought levels will tend
to support lower prices if support levels are broken. The next downside
objective is 85.35.

EURO (DEC): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.1283. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.1067, with overhead resistance at 1.1283. The close above
the 9-day moving average is a positive short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.

 

PRECIOUS METALS RECAP

9/9/2003

Some in the Press suggested that gold prices were
rising ahead of the September 11th anniversary but we really doubt that is
anything more than headline fodder. On the other hand, a sagging Dollar and a
growing concern over US deficit spending is certainly part of the reason behind
the rally. Lastly, we have to think that a new high for the move in gold
probably sparked stop loss buying and probably more fresh buying by the funds.
The fact that silver rallied right alongside gold should give the gains even
more credence.

Technical Outlook

SILVER (DEC): The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Initial
support for silver is at 521.8 and below there at 516.6 with resistance likely
at 527.1 and 531.3. A positive signal for trend short-term was given on a close
over the 9-bar moving average. Rising stochastics at overbought levels warrant
some caution for bulls. The next upside objective is 527.1. The market made a
new contract high on the rally. If yesterday’s gap higher on the day session
chart holds, additional buying could develop this session.

GOLD (DEC): Support for gold today comes in near
379.55, while resistance is pegged at 386.35. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 386.35. There could be more upside follow
through since the market closed above the 2nd swing resistance. The close above
the 9-day moving average is a positive short-term indicator for trend. Follow
through buying looks likely if the market can hold yesterday’s gap on the day
session chart.

 

COPPER MARKET RECAP

9/9/2003

Copper prices faded as the economic outlook faded
and the stock market took some profits. We also have to think that copper was
adversely impacted by slack US economic numbers released during the session. The
market was also projecting a restart of production at the BHP facility in Chile
and that certainly caused a portion of the record small spec and fund long in
copper to exit or pare back their positions. We also have to think that stock
market traders will probably take profits and send the stock market lower into
September 11th anniversary action and that could indirectly give the copper
market reason to slide over the coming two sessions.

 

ENERGY MARKET RECAP

9/9/2003

Energy prices firmed off expectations for a
tightening inventory set Wednesday morning. Also supporting prices were
statements from the Iranian Oil Minister that OPEC should not change its
production tally in the September 24th meeting. The trade largely disregarded a
story showing North Sea oil loadings to be increasing by 970,000 barrels for the
month of October over the month of September. Increased violence in the Middle
East might also have played a role in the upside action Tuesday. Late in the
session a survey showed expectations for crude oil stocks to show a build and
that would certainly take the edge off a gasoline stock decline.

Technical Outlook

CRUDE OIL (NOV): The close over the pivot swing
is a somewhat positive setup. Support for crude is keyed on 29.05 and below
there at 28.81, with resistance pegged at 29.41 and 29.53. The close below the
9-day moving average is a negative short-term indicator for trend. Momentum
studies are still bearish, but are now at oversold levels and will tend to
support reversal action if it occurs. The next downside target is now at 28.81.

UNLEADED GAS (NOV): A bullish signal was given
with an upside crossover of the daily stochastics. The next upside objective is
83.35. The market setup is supportive for early gains with the close over the
1st swing resistance. Resistance today is at 83.35, while support should be
found around 81.15. A positive signal for trend short-term was given on a close
over the 9-bar moving average.

HEATING OIL (NOV): The close over the pivot swing
is a somewhat positive setup. Heating oil should encounter support around 77.23,
with resistance is at 78.63. The close below the 9-day moving average is a
negative short-term indicator for trend. Momentum studies are still bearish, but
are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 77.23.

 

CORN MARKET RECAP

9/9/2003

December corn closed moderatly higher with an
inside trading session. The average trade estimate for the production forecast
on Thursday morning came is 9.800 billion bushels (range 9.491-10.01) as
compared with 10.064 billion in the August report. This would be down anywhere
from 54 to 573 million bushels from last month. In that report the USDA
projected ending stocks at just 1.184 billion bushels. Ending stocks for the
current production year are at a 6-year low of 1.009 billion bushels. The weekly
crop conditions report showed that crops rated in good to excellent condition
came in at only 44% versus 46% last week and 69% last month. Crops rated poor to
very poor jumped to 27% from 25% last week. As a result, the market may be in a
position to see ending stocks drop further. If the crop is 9.815 billion bushels
and demand numbers are left unchanged, ending stocks this year would drop to 934
million bushels, with a stocks/usage ratio of 9.4%. This would be the second
lowest in over 25 years, with 95/96 the only other “tighter” year. The average
trade estimate calls for a 136.6 yield vs. 139.9 projected last month and 130
last year. World ending stocks for the 2003/2004 season should come in near 70
million tons versus 98.1 million for 2002/2003, 129 million the previous year
and 153.9 million two years ago.

Technical Outlook

CORN (DEC) 9/10/2003: Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The next downside target is now at 239 3/4. There could be
more upside follow through since the market closed above the 2nd swing
resistance. Market resistance comes in at 244 3/4 today, with support at 239
3/4. The close above the 9-day moving average is a positive short-term indicator
for trend.

 

SOY COMPLEX RECAP

9/9/2003

Soybeans closed sharply higher and into new
contract highs ahead of the USDA Crop Production report for Thursday morning as
the weekly crop progress report showed a significant decline in conditions in
Iowa. The average trade estimate for the production forecast is 2.757 billion
bushels (range 2.712-2.806) as compared with 2.862 billion in the August report,
which would be down 105 million bushels. In that report the USDA projected
ending stocks at just 220 million bushels. Overall crop conditions declined to
just 43% of the crop rated in good to excellent condition from 45% the previous
week and 66% as of the last week in July. Poor to very poor ratings hit 26% as
compared with 24% the previous week and 9% as of the last week in July. Ending
stocks for the current production year are already at a 7-year low of 145
million bushels, and a lower crop production estimate on Thursday could force
the USDA to lower demand for exports (down 35 million from last month) and crush
(down 25 million from last month). Even with these adjustments, if crop
production comes in at 2.722 billion bushels, ending stocks would come in near
137 million bushels or a stocks/usage ratio of near 5%, which is slightly below
this year and even lower than the 96/97 crop season.

Technical Outlook

SOYBEANS (NOV) 09/10/03 The market made a new
contract high on the rally. The market has a bullish tilt coming into today’s
trade with the close above the 2nd swing resistance. The next area of resistance
is around 603 1/2 and 607 1/4, while 1st support hits today at 593 1/2 and below
there at 587 1/4. The market’s close on the 9-day moving average is neutral. A
bullish signal was given with an upside crossover of the daily stochastics. The
next upside objective is 607 1/4. The market is approaching overbought levels
with an RSI over 70.

MEAL (DEC): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside target is at 191.0. First
resistance comes in at 189.7, with support at 186.5. The close above the 9-day
moving average is a positive short-term indicator for trend. There could be more
upside follow through since the market closed above the 2nd swing resistance.
The market is becoming somewhat overbought now that the RSI is over 70.

BEAN OIL (DEC): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 20.41. It is a slightly negative
indicator that the close was lower than the pivot swing number. Daily swing
resistance is found at 20.70 and above there at 20.85. Support should be
encountered at 20.48 and 20.41.

 

WHEAT MARKET RECAP

9/9/2003

December wheat closed moderately lower with an
inside trading session. Ideas that another good rain event in the plains this
week will improve planting conditions for the winter wheat crop and a large
Australia wheat crop forecast helped trigger another round of long liquidation
selling ahead of Thursday mornings USDA Supply/demand report. The USDA
Supply/demand report is unlikely to show much in the way of changes, except we
could see a slight revision higher in the exports. This would leave 2003/2004
ending stocks at 634 million bushels, down 10 million from last month. World
production forecasts are uncertain as Australian forecasts have inched higher
but the former Soviet Union countries and the EU could see downward revisions.

Technical Outlook

WHEAT (DEC) 9/10/2003: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 355 3/4 and below there at 354 , with resistance levels at 360 3/4 and
364 . A negative signal for trend short-term was given on a close under the
9-bar moving average. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The next downside objective is 354 .

 

LIVE CATTLE RECAP

9/9/2003

The cattle market closed moderately higher in the
October futures but lower in December futures as the market ran out of new
buyers on the surge to new all-time highs in futures, cash and beef prices. The
gap higher opening into new highs for October and the close below the opening
leaves the market vulnerable to an island top formation if October opens below
86.65 tomorrow. The key reversal in December cattle (contract high, lower close
and close below the opening) is a potential sign of a near-term top. However,
December cattle normally trades at a 200-400 point premium to the cash market at
this time of the year and the close was nearly 500 points discount. Cash markets
traded actively at $89.00 in the panhandle. Boxed-beef prices at mid-session
were up $1.58 to a new all-time high at $153.80.

Technical Outlook

CATTLE (OCT) 9/10/2003: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
88.22. The market has a slightly positive tilt with the close over the swing
pivot. Support should be encountered at 86.47 and below there at 86.02. Market
resistance is at 87.57 and then again at 88.22. The market made a new contract
high on the rally. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market is
approaching overbought levels with an RSI over 70.

 

LEAN HOGS RECAP

9/9/2003

October hogs closed 27 lower on the session after
a sweeping downside reversal (165 pt range) as a slowdown in the cattle bull
trend and the stiff premium of futures to cash helped pressure. While cash
markets were up for the third session in a row and pork cut-out values have been
moderately higher over the past few days, the lower close after a contract high
and fears that the rally will attract more Canadian hogs helped pressure. The
CME 2-Day Lean index for the period ending September 5th was up 51 cents to
51.63 so the market experienced a correction when October hogs hit 60.05 on the
session.

Technical Outlook

HOGS (OCT) 9/10/2003: It is a slightly negative
indicator that the close was under the swing pivot. Resistance levels comes in
at 59.37 and 60.55 today, while support is around 57.72 and then 57.25. The
market rallied to a new contract high. The daily closing price reversal down is
a negative indicator for prices. The close above the 9-day moving average is a
positive short-term indicator for trend. A crossover down in the daily
stochastics is a bearish signal. Momentum studies trending lower from overbought
levels is a bearish indicator and would tend to reinforce lower price action.
The next downside target is now at 57.25. With a reading over 70, the 9-day RSI
is approaching overbought levels.

 

COCOA MARKET RECAP

9/9/2003

A pattern of lower highs and a big probe down
Tuesday would seem to project lower action ahead in the cocoa market. The range
down came in a quiet trade, which means political and weather longs are slowly
exiting recent buys. The trade must have discounted talk that cash cocoa prices
(farm prices) in Cameroon soared, as the trade seems fixated on the direction of
futures prices.

Technical Outlook

COCOA (DEC)09/10/03 The close below the 1st swing
support could weigh on the market. Cocoa should run into resistance at 1689 and
above there at 1717 with support at 1644 and 1627. 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
1626.75. Short-term indicators on the defensive. Consider selling an intraday
bounce.

 

COFFEE MARKET RECAP

9/9/2003

Another round of aggressive buying pushed Dec
coffee higher and tothe highest price levels seen since May. Good technical
formation in theDecember contract and tight near-term coffee supplies seem to be
behind therally. Growers have been patient waiting for higher prices to sell
theircrop and have so far not been aggressive sellers allowing for higher
priceaction. This is now the time of year when roasters begin to buy for
winterneeds which should support futures on dips. On going concerns over
dryconditions in Brazil are also supportive. Dec coffee is now in a position
totest the May highs.

Technical Outlook

COFFEE (DEC)9/10/03 The market has a slightly
positive tilt with the close over the swing pivot. The 9-day RSI over 70
indicates the market is approaching overbought levels. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The near-term upside objective is at 74.20.The Coffee contract should
run into resistance at 72.60 and above there at 74.20 with support at 69.05 and
67.10. The market’s short-term trend is positive on a close above the 9-day
moving average.

 

SUGAR MARKET RECAP

9/9/2003

The speculative selling pressure slowed on the
move to the lowest level since November for the sugar market and with producer
sellers also moving to the sidelines, the market was able to recover some of the
losses. The lower close and weak cash market fundamentals, however, suggests the
overall trend will remain down even if there is an occasional technical bounce.
Belarus officials indicate that they will suspend raw sugar imports due to
current excess supplies in spite of a plan to buy 535,000 tons this season.
Imports through September 1st have been 435,000 tons. Ukraine’s Minister of
Agriculture indicated that the country will produce 1.6 million tons in 2003
from their harvest of 15 million tons of beets. Previous forecasts were to
produce 1.3 million tons this year from 1.42 million last year.

Technical Outlook

SUGAR (OCT) 9/10/2003: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
6.09, with support found at 5.79. The close below the 9-day moving average is a
negative short-term indicator for trend. Stochastics are rising from over sold
levels which is bullish and should support higher prices. The near-term upside
target is at 6.09. Some caution in pressing the downside is warranted with the
RSI under 30.

 

COTTON MARKET RECAP

9/9/2003

Dec cotton closed firmer as positioning ahead of
the USDA supply/demand report supported prices. There is a lot of uncertainty
going into this USDA report with some traders expecting a lower US production
number due to deteriorating crop conditions in Texas. The range of estimates for
US cotton production is between 16.7 & 17.4 million bales. China’s cotton crop
is also uncertain with poor weather there possibly eventually lowering
production by between 500,000 to 3 million bales. Since Dec cotton held several
tests of support at 59, look for a sideways to firmer trade ahead of the USDA
report on Thursday.

Technical Outlook

COTTON (DEC) 9/10/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
has a slightly positive tilt with the close over the swing pivot. Next
resistance area comes in at 60.23 and then again at 60.41, while support is
targeted at 59.59 and 59.13. Rising stochastics at overbought levels warrant
some caution for bulls. The next upside objective is 60.41.