Why The Dollar Is Under Pressure

Technical Outlook

BONDS (DEC) 11/24/03: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 111.13 and then again at 111.29, while swing support hits at 110.20 and below there at 110.11. 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 111.29.

T-NOTES(DEC) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.07. The market’s close below the pivot swing number is a mildly negative setup. 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 113.30 and then again at 114.07, while swing support hits at 113.17 and below there at 113.13. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

11/21/2003

The stock market posted a pretty impressive performance Friday, especially after the market violated some critical chart support early in the session. Apparently the market is concerned about how far the Chinese/US trade battle will progress and what the ramifications on the recovery will be. The reason the stock market is concerned about the trade battle is that the Fed continues to warn about protectionism by the US Administration. It would seem like the gains Friday were mostly short covering but that few buyers are willing to buy into market ahead of the weekend because of terrorism fears.

Technical Outlook

S&P500 (DEC) 11/24/03: It is a mildly bullish indicator that the market closed over the pivot swing number. The upside closing price reversal on the daily chart is somewhat bullish. Underlying support comes in at 1033.20 and 1028.50, with overhead resistance at 1039.80 and 1041.70. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1028.50.

S&P E-Mini (DEC): The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1028.44. The market has a slightly positive tilt with the close over the swing pivot. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Near-term resistance for the S&P Mini is at 1040.13 and then again at 1041.94, while swing support hits at 1033.38 and below there at 1028.44. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (DEC) The daily closing price reversal up is positive. 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 1389.50 and above there at 1395.25 with support at 1367.50 and 1351.25. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1351.3.

CURRENCY MARKET RECAP

11/21/2003

The Dollar seemed to be locked between opposing forces Friday as the trend is still thought to be down but there were enough complaints against the decline in the Dollar that some short players might have been scared to the sidelines. The EU voiced significant concern about the falling Dollar, while Fed members were suggesting that the US wants to avoid trade barriers and that could hurt the economy. In other words, the Dollar was being pulled in both directions by policy issues and that probably caused the tight trading range on the session.

Technical Outlook

YEN (DEC): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close equal to the pivot swing number is a neutral directional indicator. Swing resistance is targeted at 92.05 and above there at 92.16, with the yen finding support around 91.84 and below there at 91.74. 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 91.74.

EURO (DEC): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.1954. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1868, with overhead resistance at 1.1954. 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

11/21/2003

The gold market managed a surprise rally Friday and probably forged most of the gains off the news that a major gold producer officially suggested that they would not hedge their production. Apparently Barrick suggested that they would not hedge their production for 10 years forward and that seems rather reckless. After the market saw recommendations from an Australian Bank for producers to hedge the statements from Barrick are certainly very supportive for gold prices.

Technical Outlook

SILVER (MAR): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 527.3 and below there at 522.2 with resistance likely at 532.1 and 536.3. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 522.2.

GOLD (FEB): Support for gold today comes in near 391.70, while resistance is pegged at 402.10. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 402.10. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is positive on a close above the 9-day moving average.

COPPER MARKET RECAP

11/21/2003

We certainly think that the gains in copper were short covering profit taking but it is always possible that the Chinese stepped in to snap up some value. However, until one can confirm the Chinese as return buyers we have to think that the market remains vulnerable. It is also possible that more Canadian Labor concerns sparked some fresh spec buying and certainly some short covering interest. However, with the market still concerned about US/Chinese relations it would seem premature to expect a firm bottom in copper prices.

ENERGY MARKET RECAP

11/21/2003

The energy complex showed an early push higher and then set back on light profit taking. We are not sure if the Energy Bill wrangling is a direct influence on daily prices but it would seem like passage of the Bill has supported gasoline prices while talk of delays in the Bill resulted in weaker prices. Since the closure of Mexican critical crude oil facilities (because of weather) early this week didn’t boost prices significantly we doubt that the re-opening of the ports will have that dramatic of an influence on prices. Forecasts of significant snow in the plains might create the illusion of increased heating use but temps are not really expected to be that cold in the near term.

Technical Outlook

CRUDE OIL (JAN): The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 31.25 and below there at 30.97, with resistance pegged at 31.98 and 32.43. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 30.97.

UNLEADED GAS (JAN): 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 85.78. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 88.78, while support should be found around 85.78. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (JAN): The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 86.58, with resistance is at 88.98. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 86.58.

CORN MARKET RECAP

11/21/2003

March corn closed unchanged on the session but 5 cents lower on the week. The sharp break in the soybean market helped pressure futures early but a surge in wheat prices helped corn futures recover 2 1/2 cents off of the lows into the close. The first snow-storm for the season and big placements in the cattle on feed report are factors which could support increasing feed usage. In addition, high corn offers from China have left the trade looking for higher export sales to the US from Taiwan, South Korea and others. The slowdown in harvest added the more positive tone and commercial bull spreading and light producer selling added to the positive tone.

Technical Outlook

CORN (MAR) 11/24/03: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 237 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 244 today, with support at 237 . The market’s short-term trend is negative as the close remains below the 9-day moving average.

SOY COMPLEX RECAP

11/21/2003

January soybeans closed near 7 cents lower on the session but down near 25 cents on the week. However, futures recovered near 13 cents off of the lows of the day into the close which might be seen as a successful test of the November 10th lows and also a close back above the 40-day moving average after the intra-day dip below the key technical number. Uncertainty over the impact on soybeans if the trade dispute continues with China and long liquidation from fund traders was the primary bearish force. Talk that China may be in a position to switch some of their US purchases to China kept the market in a long liquidation mode for much of the session.

Technical Outlook

SOYBEANS (JAN) 11/24/03: 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 area of resistance is around 764 and 772 3/4, while 1st support hits today at 743 and below there at 730 3/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 730 3/4.

MEAL (JAN): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 223.8. First resistance comes in at 232.5, with support at 227.1. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (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 27.58. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The downside closing price reversal on the daily chart is somewhat negative. Daily swing resistance is found at 27.21 and above there at 27.58. Support should be encountered at 26.43 and 26.02.

WHEAT MARKET RECAP

11/21/2003

A plethora of export business drove March wheat sharply higher with the latest big purchases coming from Tunisia and Morocco. The combination of the price break off the recent highs and the dollar near recent low has brought foreign buyers back to the US market. The Ukraine is in talks with the US to negotiate for a loan to buy US grain. In other supportive news, Kansas State University said bug infestation (worms) is causing some damage which could continue until the first frost. If tender business for US wheat continues next week, March wheat should easily fill the gap left on the chart and re-test recent highs.

Technical Outlook

WHEAT (MAR) 11/24/03: 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. Look for near-term support at 391 1/2 and below there at 384 3/4, with resistance levels at 401 and 403 3/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 384 3/4.

LIVE CATTLE RECAP

11/21/2003

February Cattle closed 10 higher on the session and up 122 points on the week as the futures discount to the cash market and news of steady cash and higher beef was enough to support. Boxed-beef cut-out values at mid-session were up 47 cents to $166.79. Cash cattle traded $98 in the southern plains which helped support solid gains in the December futures and with the snow coming in the northern plains, cash market attitudes were improving. Positioning ahead of the cattle-on-Feed report added to the positive tone. Beef production for the week was 446.7 million pounds, down 14.1% from last year.

Technical Outlook

CATTLE (FEB) 11/24/03: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 89.52. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 90.17 and below there at 89.52. Market resistance is at 91.37 and then again at 91.92. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

11/21/2003

February hogs closed slightly lower in choppy, two-sided trade as the market consolidated some of the week’s losses. The market was down near 225 points on the week with uncertainty on the future supply as the key bearish force. Slaughter for the week came in at 2.141 million head which is up 2.1% from last week and up 4.4% over last years pace. The September USDA Hog report suggested that slaughter should be running near 1-2% under last year. Pork production came in at 427 million pounds, up 4.9% from last years pace. Talk that cold and snow could slow marketings in northern Iowa/Minnesota helped provide some support. Cash was $1.00 lower at Peoria but the 2-day lean index was up 29 cents to 49.22.

Technical Outlook

HOGS (FEB) 11/24/03: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 54.67 and 55.40 today, while support is around 53.47 and then 53.00. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 53.00. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

11/21/2003

March cocoa broke hard under the weight of origin and fund selling. With March cocoa rallying nearly $250 from the October low, producers from the Ivory Coast and Ghana were tempted to hedge sales. While the market has been concerned about the amount of cocoa arriving at ports, the amount that is reaching the port is being hedged. The break and close below support around $1,500 suggest a deeper correction could be seen next week. Reuters reported that rains in the Ivory Coast between Nov 11-20th were good enough to help the next mid-crop. There was little interest in end-user demand, particularly from Germany, for cocoa up at these price levels.

Technical Outlook

COCOA (MAR)11/24/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1519 and above there at 1560 with support at 1463 and 1448. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1447.50.

COFFEE MARKET RECAP

11/21/2003

March coffee closed 85 lower on the session and down 265 points on the week as funds seemed to be adding to their net short positions and small speculators slow at exiting their net long position. A Brazil official pegged the 2004 coffee crop at near 40 million bags with many estimates coming in near 40-47 million bags which is down from two years ago as the trade tries to assess the “less than perfect” weather in August-October but more importantly the impact of a decline in fertilizer and other inputs due to lower prices.

Technical Outlook

COFFEE (MAR)11/24/03 The market tilt is slightly negative with the close under the pivot. The 9-day RSI under 30 indicates the market is approaching oversold levels. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 58.60.The Coffee contract should run into resistance at 60.45 and above there at 61.50 with support at 59 and 58.60. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/21/2003

The technical set-up for the market looks to be more bearish this coming week and if producer selling intensifies, new buying support may be difficult to find. Trade action turned more negative today showing a follow-through to the downside after a higher opening. The quick 22 point break after the opening helped turn the psychology more bearish but trade houses came in to provide support on the break. After a test of the 2 1/2 month highs, the lower close on the week (down 12) turns the technical action more negative. Traders expect some increase in demand from Middle East countries soon as buyers are likely to be a bit more active after the Ramadan holiday period ends.

Technical Outlook

SUGAR (MAR) 11/24/03: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 6.50, with support found at 6.06. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 6.06. Daily studies pointing down suggests selling minor rallies.

COTTON MARKET RECAP

11/21/2003

The negative chart pattern in March cotton attracted more fund selling as this group as of Nov 11th still held a very large net long position in cotton. The trade war brewing between the US and China have traders spooked and wanting to book profits before any further developments occur. Technically, a retracement of the Aug low to the Oct high range would put key support levels around 72 then 68.70 for the March contract. However, China continues to be a big buyer of US cotton and drop in price may bring them back for more.

Technical Outlook

COTTON (MAR) 11/24/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. Next resistance area comes in at 74.62 and then again at 76.66, while support is targeted at 71.57 and 70.56. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 70.56. The 9-day RSI under 30 indicates the market is approaching oversold levels.