Why The Market Didn’t Rally On The OPEC News

Technical Outlook

#BONDS (JUN) 6/4/2004: The daily closing price
reversal up is a positive indicator that could support higher prices. The market
setup is supportive for early gains with the close over the 1st swing
resistance. Near-term resistance for bonds is at 106.08 and then again at
106.14, while swing support hits at 105.17 and below there at 104.32. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
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 106.14.

T-NOTES(JUN) The upside closing price reversal on
the daily chart is somewhat bullish. 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 109.31. With the close over the
1st swing resistance number, the market is in a moderately positive position.
Near-term resistance for the T-Notes is at 109.28 and then again at 109.31,
while swing support hits at 109.13 and below there at 109.01. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

6/3/2004

The stock market started out weak, attempted to
recover around mid session but simply couldn’t present a solid bull case. We do
think that falling energy prices are helping the outlook for the economy but the
stock market needs to see proof that lower prices are going to stay in place. In
other words, until lower energy prices are found at the pump the actual macro
economic benefit of lower futures prices might not be accepted. The US stock
market might have been slightly discouraged by the talk that China might still
have to move to hike interest rates.

Technical Outlook

#S&P500 (JUN) 6/4/2004: The market setup is
somewhat negative with the close under the 1st swing support. Underlying support
comes in at 1109.45 and 1106.73, with overhead resistance at 1119.95 and
1127.73. The close above the 9-day moving average is a positive short-term
indicator for trend. The close below the 40-day moving average is an indication
the longer-term trend is down. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The near-term
upside objective is at 1127.73.

S&P E-Mini (JUN): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1129.00. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Near-term resistance for
the S&P Mini is at 1120.50 and then again at 1129.00, while swing support hits
at 1109.00 and below there at 1106.00. The market’s close above the 9-day moving
average suggests the short-term trend remains positive.

NASDAQ (JUN) A negative signal for trend
short-term was given on a close under the 9-bar moving average. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The market should run into resistance at 1454.00 and
above there at 1469.00 with support at 1433.00 and 1427.00. Rising stochastics
at overbought levels warrant some caution for bulls. The next upside objective
is 1469.00.

MINI DOW (MAR) The close above the 9-day moving
average is a positive short-term indicator for trend. The market should run into
resistance at 10252 and above there at 10319 with support at 10148 and 10111.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The near-term upside target is at 10319.
The close below the 40-day moving average is an indication the longer-term trend
is down. The market setup is somewhat negative with the close under the 1st
swing support.

 

CURRENCY MARKET RECAP

6/3/2004

The Dollar managed a fleeting rally despite a
fairly disappointing set of US economic numbers. Many traders think that the US
economy is more vulnerable to high energy prices than other economies and
therefore the significant decline in energy prices could be seen as a supportive
issue to the Dollar. However, from the action recently it would seem that the
Pound and the Canadian could be the odds on favorite to take on the US Dollar.
Many traders are waiting for the Friday morning payroll report before looking to
get short the Dollar!

Technical Outlook

#CURRENCIES 6/4/2004: YEN (JUN): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The gap lower on the day session chart is bearish and puts the market on the
defensive. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. Swing resistance is targeted
at 90.50 and above there at 90.68, with the yen finding support around 89.94 and
below there at 89.56. The market back below the 40-day moving average suggests
the longer-term trend could be turning down. Rising stochastics at overbought
levels warrant some caution for bulls. The next upside objective is 90.68.

EURO (JUN): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2279. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2153, with overhead resistance at 1.2279. 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

6/3/2004

The metals saw a higher Dollar and more concerns
about Chinese tightening and that is all it took to invoke another long
liquidation binge. The fact that energy prices fell sharply might also have
removed some anxiety toward the global economy and that in turn pushed out some
flight to quality longs. Some traders noted aggressive fund sales in silver and
we have to think that is mostly attributed to the fear of higher Chinese
interest rates. Maybe some metals players were banking on high energy prices
causing inflation and the two day break in crude simply forced those players out
of the equation.

Technical Outlook

#P-METALS 6/4/2004: SILVER (JUL): The market tilt
is slightly negative with the close under the pivot. Initial support for silver
is at 565.3 and below there at 560.1 with resistance likely at 578.3 and 581.8.
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 560.1.

GOLD (AUG): Support for gold today comes in near
384.55, while resistance is pegged at 395.35. 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 384.55. Short-term indicators on the
defensive. Consider selling an intraday bounce. The market setup is somewhat
negative with the close under the 1st swing support. The close below the 9-day
moving average is a negative short-term indicator for trend.

 

COPPER MARKET RECAP

6/3/2004

A big range down in copper was mostly rejected
but the downside action supposedly damaged some technical levels on the charts.
The rumors about China possibly moving to hike interest rates kept the copper
market off balance as did a series of weaker than expected US economic reports.
The China thing appears to be an on again off again story that won’t go away. We
do think that consistently lower energy prices will eventually be supportive to
copper but in the near term the market seems to be operating without a clear cut
theme.

 

ENERGY MARKET RECAP

6/3/2004

The energy complex anticipated that OPEC would
move to raise the quota level and prices certainly adjusted downward for the
potential for added supply. However, underpinning energy prices is a fear that
terrorist will continue to target Saudi Arabia. The weekly inventory stats
showed crude stocks to have increased minimally at the API and more
significantly at the DOE. Gasoline stocks on the week at the API increased by
2.8 million barrels and by 1.2 million at the DOE. Therefore, one has to
conclude that the weekly stats were slightly bearish but they didn’t reach the
level of curing the significantly tight situation in US supplies. The fact that
Iraqi May output declined by 13% was almost ignored by the market as technical
stop loss selling dominated.

Technical Outlook

#ENERGIES 6/4/2004: CRUDE OIL (AUG): It is a
slightly negative indicator that the close was under the swing pivot. Support
for crude is keyed on 38.04 and below there at 36.92, with resistance pegged at
40.43 and 41.70. The close below the 9-day moving average is a negative
short-term indicator for trend. Stochastics trending lower at midrange will tend
to reinforce a move lower especially if support levels are taken out. The next
downside target is now at 36.92.

UNLEADED GAS (AUG): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 112.43. There could be some early pressure today
given the market’s negative setup with the close below the 2nd swing support.
Resistance today is at 129.03, while support should be found around 112.43. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.

HEATING OIL (AUG): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 94.44, with resistance is at 106.04. The downside crossover of
the 9 & 18 bar moving average is a negative signal. Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 94.44.

 

CORN MARKET RECAP

6/3/2004

Drier than expected weather for late this week
and into early in the weekend has trigger significant long liquidation selling
from the weather bulls as the dry and sunny weather should give many producers a
chance to plant some 2.5 million acres which either have not been planted or
need to be replanted this week. Ideas that futures are overbought and weakness
in other grains and other commodities added to the bearish tone. Increased
margin requirements added to the bearish tone. Increased producer selling this
week has softened cash basis levels and export news was quiet overnight except
for news that South Korea passed on their tender for 105,000 tons of optional
origin corn. Weekly export sales, released before the opening, are expected to
come in near 900,000 to 1.2 million tons as compared with 1.377 million tons
last week. The EU awarded import licenses for near 161,000 tons for the weekly
tender. December corn support comes 305 1/2 and 299 3/4 with 314 and 316 1/2 as
next resistance.

Technical Outlook

#CORN (DEC) 6/4/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The near-term upside target is at 316 1/4. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 316 1/4 today, with support at 305 1/4. 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.

 

SOY COMPLEX RECAP

6/3/2004

The shift to a dry pattern before more rain hits
late in the weekend for the central mid-west leaves the door open for improving
crop conditions and good progress for planting. In addition, more weakness in
markets such as palm oil and copper overnight were based on concerns that China
credit-tightening measures are working to slow imports of many commodities added
to the bearish tone for soybeans. Meal margin requirements for old crop futures
were raised by the CBOT which added to the negative tone with ideas that long
liquidation from speculators could accelerate. The Census Bureau pegged end of
April oil stocks at 1.641 billion pounds as compared with 1.855 billion pounds
in March. Weekly export sales, released before the opening, are expected to come
in near 0-50,000 tons for soybeans, 20,000-50,000 tons for meal and 0-5,000 tons
for oil. July soybeans traded back below Friday’s lows with next support at 790
3/4. Resistance for November soybeans moves down to 693 and 699 with 673 3/4 and
659 1/2 as next support.

Technical Outlook

#SOYBEANS (NOV) 06/04/04 The gap lower on the day
session chart is bearish and puts the market on the defensive. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The next area of resistance is around 699 2/4 and 712
3/4, while 1st support hits today at 675 2/4 and below there at 664 3/4. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. 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 712 3/4.

MEAL (DEC): Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 223.4. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. First
resistance comes in at 220.8, with support at 213.8. The close below the 9-day
moving average is a negative short-term indicator for trend. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness.

BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. 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 25.53. The close
below the 2nd swing support number puts the market on the defensive. The gap
lower on the day session chart is bearish and puts the market on the defensive.
Daily swing resistance is found at 25.35 and above there at 25.53. Support
should be encountered at 24.87 and 24.57.

 

WHEAT MARKET RECAP

6/3/2004

The market continues to find selling pressures
from the outlook for increased commercial selling pressures ahead as the harvest
picks-up steam. Weakness in the other grains and a more bearish export
psychology seem to be the primary negative forces today as harvest was likely
delayed from overnight rains in the winter wheat belt. However, drier than
expected weather in the Midwest has added to the bearish tone. South Korea is
tendering for 6000 tons of US wheat. Algeria seeks 50,000 tonnes of optional
origin soft wheat. Speculators seem to be adding to net short positions. Morocco
has raised import duties on soft wheat to 100% from 55% due to expectations of a
bumper crop this year. The EU awarded export licenses for 60,000 tons. Weekly
export sales, released before the opening, are expected to come in near 300,000
to 400,000 tons as compared with 629,500 tons last week. July wheat support at
369 3/4 failed to hold with the late sell-off which leaves little in the way of
technical support except for 361 and then 343 1/2. Resistance is at 372 and 373
1/2.

Technical Outlook

#WHEAT (DEC) 6/4/2004: The gap lower on the day
session chart is bearish and puts the market on the defensive. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Expect near-term support around 381 2/4 and below there
at 379 1/4, with resistance levels at 390 and 396 1/4. A negative signal for
trend short-term was given on a close under the 9-bar moving average.
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 396 1/4.

 

LIVE CATTLE RECAP

6/3/2004

The market closed mixed with June up and August
slightly lower in choppy, two-sided trade. Early trade action showed contract
highs for June and August cattle but there seemed to be a lack of follow-through
buying. Traders are still trying absorb the surge in cash markets this week
which left nearby futures more in-line with cash markets. At noon, boxed beef
cutout values were up $34 cents to $150.81 as compared with $149.80 last week at
this time. The jump in beef prices this week helped to support the move to new
highs but there is a “wait-and-see” attitude over cash market demand for next
week. Slaughter came in at 131,000 head as compared with trade expectations at
128,000-130,000 head.

Technical Outlook

#CATTLE (AUG) 6/4/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
91.37. The market has a slightly positive tilt with the close over the swing
pivot. Support should be encountered at 89.27 and below there at 88.82. Market
resistance is at 90.55 and then again at 91.37. The market made a new contract
high on the rally. The market could take on a defensive posture with the daily
closing price reversal down. 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

6/3/2004

July hogs closed limit-up with June hogs also
hitting limit right into the close. Commercial and fund buyers were active and
helped drive futures to new contract highs. Pork bellies were also higher with
August at a contract high in spite of a disappointing weekly cold storage report
this week. Ideas that pork demand will remain strong in the US market and abroad
added to the positive tone with talk that weekend clearance was good. The sharp
jump in loin prices this week helped to support higher pork cut-out values and
improving packer margins. Cash markets were firm as a major packer has been
bidding up cash in order to secure inventory. The CME 2-day Lean Index for the
period ending June 1st was down $1.14 to $77.02 as compared with $81.41 last
week at this time and 78.37 for June futures. Slaughter was 394,000 head as
compared with 384,000-395,000 expected which is the third day in a row which
slaughter was above expectations. This indicates strong packer demand.

Technical Outlook

#HOGS (AUG) 6/4/2004: There could be more upside
follow through since the market closed above the 2nd swing resistance.
Resistance levels comes in at 77.95 and 78.30 today, while support is around
76.62 and then 75.65. The market rallied to a new contract high. 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 target is at 78.30. With a
reading over 70, the 9-day RSI is approaching overbought levels.

 

COCOA MARKET RECAP

6/3/2004

Cocoa prices can’t seem to fixate on a consistent
direction as the sellers seem to dominate but yet prices manage to respect
support after a major technical washout. The trade reported light spec buying
but we really don’t see why the funds would be instantly inclined to take
profits under current conditions, especially since the funds are still thought
to be selling into minor gains. A number of technical systems are suggesting
that the $1,325 level in the July contract is extremely critical support.

Technical Outlook

COCOA (SEP) 06/04/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1373 and above there at 1393 with support at 1343 and 1333. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1332.50.

 

COFFEE MARKET RECAP

6/3/2004

September coffee inched lower in choppy trade as
the market attempted to consolidate recent strong gains. The lack of cold
weather has triggered some profit-taking selling from the weather bulls but
continued harvest delays have helped provide support. Brazil harvest of the
2004/2005 crop reached just 16% as of May 31st as compared with 26% by this date
last year. Rain has slowed the harvest. Brazil exports in May came in at 1.741
million bags as compared with 1.748 million last year. Roaster buyers are
beginning to concentrate on needs for the fall and winter but spot business is
slow after recent sharp gains. Some talk of a possible drier trend ahead helped
to provide some selling pressure.

Technical Outlook

COFFEE (SEP) 6/4/04 The market tilt is slightly
negative with the close under the pivot. 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 objective is
now at 83.00. The Coffee contract should run into resistance at 86.50 and above
there at 87.80 with support at 84.1 and 83.00. The market’s short-term trend is
positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

6/3/2004

July sugar closed slightly higher on the session
after the gap lower opening below yesterday’s reversal low failed to generate
fresh speculative selling. The USDA reported that India exports for the
2003/2004 season (ending September) should drop to near 300,000 tons from 1.8
million tons last year. In addition, India is expected to be a significant
importer for the 2004/2005 season. Indonesia is expected to tender for more
sugar next week using part of the import permits of 270,000 tons. The EU sold
34,500 tons of white sugar at their weekly export tender as compared with trade
expectations of 20,000-90,000 tons. October sugar resistance comes in at 746 and
750 with 726 and 715 as support.

Technical Outlook

#SUGAR (OCT) 6/4/2004: The upside daily closing
price reversal gives the market a bullish tilt. It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
7.51, with support found at 7.21. 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 target is at 7.51.

 

COTTON MARKET RECAP

6/3/2004

December cotton pushed into new lows again after
overnight scattered rains in West Texas and more rains in the forecast for the
near-term forecast models helped keep the market in a long liquidation mode with
more talk of a bumper world crop this season. China demand concerns in other key
imported markets such as soybeans and copper added to the bearish tone. Weekly
export sales, released before the opening, are expected to come in near 150,000
to 250,000 bales as compared with 243,400 bales last week. Shipments are
expected to come in near 300,000-350,000 bales. China has bought 4.816 million
bales so far this season as compared with 1.708 million bales last year at this
time. Pakistan prices have remained firm in the past week and declining internal
prices and the recent weakness in world prices could attract imports. Traders
expect Pakistan to produce 10.72 million bales for the 2004/2005 season as
compared with 10 million this year.

Technical Outlook

#COTTON (OCT) 6/4/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 57.93 and then again at 58.61, while support is targeted at 56.58
and 55.91. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 55.91. The market
is approaching over sold levels on an RSI reading under 30. The market made a
new contract low on the break.