Why The US Economy Is At Greater Risk Of Severe Slowing
BOND MARKET RECAP
10/5/2004
December Bonds closed up 0-01 at 111-23. This was
0-07 up from the low and 0-06 off the high.
December 10 Yr Treasury Notes finished up 0-020
at 112-105, 0-025 off the high and 0-055 up from the low.
The Treasury market never seemed to get in
a positive stance on Tuesday, despite the fact that US economic reports were
soft. Both the ISM non manufacturing reading and the Challenger layoff report
were both weak enough to push bonds into positive ground but it seems like the
dialogue from the Fed served to countervail the potential support from the
scheduled reports. Some traders also suggested that the Fed’s forecast of
mundane inflation is being seriously challenged by the ongoing rise in energy
prices. In other words, the Treasury market is torn between economic and
inflation expectations.
Technical Outlook
BONDS (DEC) 10/06/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close below the 9-day moving average is a negative short-term indicator for
trend. The close over the pivot swing is a somewhat positive setup. The next
downside objective is 111-09. The next area of resistance is around 111-30 and
112-06, while 1st support hits today at 111-16 and below there at 111-09.
TNOTES (DEC) 10/06/2004: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Negative momentum studies in the neutral zone will tend to reinforce
lower price action. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
objective is 112-020. The next area of resistance is around 112-140 and 112-175,
while 1st support hits today at 112-065 and below there at 112-020.
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STOCK INDICES RECAP
10/5/2004
December S&P finished up 0.9 at 1136.4, 2.1 off
the high and 4.1 up from the low.
December S&P E-Mini closed down 0.75 at 1135.75.
This was 0.25 up from the low and 0.5 off the high.
December Dow closed down 29 at 10178. This was 26
up from the low and 47 off the high.
December Dow E-Mini finished down 33 at 10174, 67
off the high and 24 up from the low.
The stock market really didn’t show much in the
way of weakness despite the fact that US economic readings remained soft. The
Challenger layoff report was weak enough that some investors might become
concerned about the week ending monthly payroll report. We also see the risk to
longs rising significantly in the face of rising US energy prices but even that
didn’t seem to undermine a generally positive view toward the stock market. Even
more impressive is the fact that stock prices managed to remain firm in the face
of a HP downgrade. On the other hand, upside momentum was almost non existent
Tuesday and that might give the bear camp a little more confidence heading into
the monthly payroll report.
Technical Outlook
S&P 500 (DEC) 10/06/2004: Momentum studies are
trending higher but have entered overbought levels. The close above the 9-day
moving average is a positive short-term indicator for trend. The upside closing
price reversal on the daily chart is somewhat bullish. It is a slightly negative
indicator that the close was under the swing pivot. The next upside target is
1142.10. The next area of resistance is around 1139.50 and 1142.10, while 1st
support hits today at 1133.30 and below there at 1129.70.
SP EMINI (DEC) 10/06/2004: Momentum studies are
trending higher but have entered overbought levels. The close above the 9-day
moving average is a positive short-term indicator for trend. The market’s close
below the pivot swing number is a mildly negative setup. The next upside target
is 1137.12. The next area of resistance is around 1136.75 and 1137.12, while 1st
support hits today at 1135.75 and below there at 1135.13.
NASDAQ (DEC) 10/06/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. The upside daily closing price reversal gives the market a
bullish tilt. The market has a slightly positive tilt with the close over the
swing pivot. The next upside objective is 1481.37. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 1475.25 and 1481.37, while 1st support hits today at
1460.75 and below there at 1452.38.
MINIDOW (DEC) 10/06/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. It is a slightly negative
indicator that the close was lower than the pivot swing number. The near-term
upside objective is at 10277. The next area of resistance is around 10223 and
10277, while 1st support hits today at 10133 and below there at 10096.
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CURRENCY MARKET RECAP
10/5/2004
December US Dollar finished down 25 at 8829, 35
off the high and 1 up from the low.
December Euro finished up 0.37 at 123.24, 0.03
off the high and 0.34 up from the low.
December Euro Dollar closed unchanged at 97.68.
This was 0.005 up from the low and 0.01 off the high.
December Canadian Dollar closed up 0.7 at 79.23.
This was 0.55 up from the low and 0.06 off the high.
December British Pound finished down 0.07 at
177.38, 0.28 off the high and 0.3 up from the low.
December Swiss closed up 0.24 at 79.54. This was
0.28 up from the low and 0.03 off the high.
December Japanese Yen closed down 0.18 at 90.4.
This was 0.3 up from the low and 0.25 off the high.
We think that the Dollar is seeing a rising
threat against its recovery with the continued rise in energy prices. We also
think that the US economy is at greater risk of severe slowing than other
countries because of the hurricane damage suffered over the last two weeks. In
other words, the combination of slower than expected US economic numbers and
persistently strong gains in energy prices might leave the Dollar under more
pressure than other currencies. From the action Tuesday it is clear that the
Canadian has returned to its dominating position in the currency market with the
Euro also showing some surprising strength.
Technical Outlook
YEN (DEC) 10/06/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close below
the 9-day moving average is a negative short-term indicator for trend. The
market could take on a defensive posture with the daily closing price reversal
down. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The near-term upside objective is at 90.93. The
next area of resistance is around 90.67 and 90.93, while 1st support hits today
at 90.13 and below there at 89.84.
EURO (DEC) 10/06/2004: Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The close above the 9-day moving average is a positive
short-term indicator for trend. The market setup is supportive for early gains
with the close over the 1st swing resistance. The next downside objective is now
at 122.80. The next area of resistance is around 123.42 and 123.53, while 1st
support hits today at 123.06 and below there at 122.80.
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PRECIOUS METALS RECAP
10/5/2004
December Gold closed up 4.2 at 419.8. This was
3.1 up from the low and 1.7 off the high.
December Silver finished up 0.337 at 7.102, 0.033
off the high and 0.302 up from the low.
October Platinum closed up 10.2 at 841.2. This
was 6.2 up from the low and 3.8 off the high.
Both gold and silver seemed to get a major influx
of speculative buying and the buying might have come from the sharp rise in
energy prices and it might have come off the anticipation of coming Dollar
declines. In our opinion, the continued rise in energy prices is a US specific
situation off the idea that US supplies were markedly setback by hurricane
damage. In other words, the weekly inventory readings due out on Wednesday
morning could facilitate a more substantial decline in the Dollar and that could
in turn spark economic uncertainty buying in gold and silver. Given that both
gold and silver managed to climb above key chart point we also suspect that the
funds were in buying on Tuesday.
Technical Outlook
SILVER (DEC) 10/06/2004: Momentum studies are
trending higher but have entered overbought levels. A positive signal for trend
short-term was given on a close over the 9-bar moving average. 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 near-term upside
target is at 737.0. The 9-day RSI over 70 indicates the market is approaching
overbought levels. The next area of resistance is around 727.0 and 737.0, while
1st support hits today at 693.5 and below there at 670.0.
GOLD (DEC) 10/06/2004: The daily stochastics gave
a bullish indicator with a crossover up. Momentum studies are trending higher
but have entered overbought levels. The market’s short-term trend is positive on
the close above the 9-day moving average. There could be more upside follow
through since the market closed above the 2nd swing resistance. The near-term
upside objective is at 424.2. The next area of resistance is around 422.2 and
424.2, while 1st support hits today at 417.4 and below there at 414.7.
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COPPER MARKET RECAP
10/5/2004
December Copper finished up 0.45 at 140.15, 0.35
off the high and 1.25 up from the low.
Copper prices continued to hover just under the
recent highs and appear to be building a consolidation pattern. The lack of
Chinese activity seems to have robbed the market of upside momentum but we also
think that a delay in one of the strikes has pushed some buyers to the
sidelines. Some traders also think that the run to new highs in energy prices is
also undermining the copper market but with the stock market mostly positive we
don’t get the sense that a negative macro economic concern is tripping up
copper. In the near term profit taking would seem to continue, especially until
the Chinese New Year is officially ended.
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ENERGY MARKET RECAP
10/5/2004
December Crude Oil closed up 1.13 at 50.64. This
was 0.59 up from the low and 0.21 off the high.
December Heating Oil closed up 2.04 at 140.89.
This was 1.59 up from the low and 0.41 off the high.
December Unleaded Gas finished up 3.17 at 135.14,
0.46 off the high and 1.39 up from the low.
December Natural Gas finished up 0.48 at 8.10,
0.04 off the high and 0.17 up from the low.
December Propane closed up 0.02 at 0.85. This was
equal to the low and equal to the high.
The energy complex managed to add to the
overnight weakness despite the lack of a fresh definitive bull item. Apparently
the energy complex is fueling prices upward off the anticipation of more
tightening from the Gulf of Mexico production losses. Therefore, the market
would seem to be banking on more confirmation of tighter stocks in the Wednesday
morning inventory readings. While the market didn’t make much out of the fact
that the US did loan some crude to a US refinery prices were impacted much by
OPEC comments Tuesday that expressed hope that the US would continue to release
even more SPR supplies. With all markets rising sharply Tuesday (including
natural gas) it is clear that the bull tilt is firmly embraced across all
markets.
Technical Outlook
CRUDE OIL (DEC) 10/06/2004: The rally brought the
market to a new contract high. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The gap upmove on the day session chart is a bullish indicator for trend. The
market’s close above the 2nd swing resistance number is a bullish indication.
The near-term upside objective is at 51.34. The 9-day RSI over 70 indicates the
market is approaching overbought levels. The next area of resistance is around
51.04 and 51.34, while 1st support hits today at 50.24 and below there at 49.75.
UNLEADED (DEC) 10/06/2004: The rally brought the
market to a new contract high. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
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. The next
upside target is 136.75. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 136.06 and 136.75, while 1st
support hits today at 134.22 and below there at 133.06.
HEATING OIL (DEC) 10/06/2004: A new contract high
was made on the rally. Momentum studies are trending higher but have entered
overbought levels. The market’s short-term trend is positive on the close above
the 9-day moving average. The gap upmove on the day session chart is a bullish
indicator for trend. There could be more upside follow through since the market
closed above the 2nd swing resistance. The near-term upside target is at 142.59.
The market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 141.89 and 142.59, while 1st support hits today at
139.89 and below there at 138.60.
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CORN MARKET RECAP
10/5/2004
December Corn finished up 1 3/4 at 204 1/2,
1 1/2 off the high and 2 up from the low. March Corn closed up 1 1/4 at 215.
This was 1 1/2 up from the low and 1 1/2 off the high.
The market matched the contract lows from Monday
before turning higher and finding active short-covering to support a surge over
Monday’s highs. A lack of new selling interest helped support active
short-covering with funds buying at least 2700 contracts into the mid-session.
Cash markets were steady to lower this morning due to active harvest. As of
Sunday, the corn harvest was 23% complete as compared with 16% last week.
Informa Economics (Sparks) pegged corn production at 11.375 billion bushels, up
414 million bushels from last months USDA estimate. A clearing firm pegged the
crop at 11.156 billion bushels. While crops in some of the northern areas were
still not matured in the weekly progress report (Minnesota 36% vs. 92% average;
South Dakota 52% vs. 87% average and Wisconsin at 28% vs. 70%) traders view the
harvest weather outlook as a bearish force and traders also expect a hefty
production revision higher from the USDA for next weeks release. The higher
close on the session after absorbing the enormous crop production estimates
could support more short-covering ahead if resistance levels are violated.
Support for December corn comes in at 203 1/4 and 202 1/4 with near-term
resistance at 205 1/2 and 209 1/2.
Technical Outlook
CORN (DEC) 10/06/2004: The crossover up in the
daily stochastics is a bullish signal. Daily stochastics are showing positive
momentum from oversold levels, which should reinforce a move higher if near-term
resistance is taken out. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The market setup is supportive for early
gains with the close over the 1st swing resistance. The near-term upside
objective is at 207 3/4. The market is approaching oversold levels on an RSI
reading under 30. The next area of resistance is around 206 1/4 and 207 3/4,
while 1st support hits today at 202 3/4 and below there at 201.
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SOY COMPLEX RECAP
10/5/2004
November Soybeans finished down 1 1/4 at 524, 6
1/2 off the high and 5 up from the low. January Soybeans closed down 1/2 at 532
1/2. This was 5 1/2 up from the low and 4 3/4 off the high.
December Soymeal closed down 3.1 at 156.3. This
was 0.3 up from the low and 2.6 off the high.
December Soybean Oil finished up 0.35 at 21.16,
0.18 off the high and 0.61 up from the low.
The market moved to the lowest level since July
21st, 2003 for November futures and to new contract lows for March soybeans
before a solid recovery to 5 cents higher on the day into the mid-session. The
corn market led futures higher and strength in corn slowed the speculative
selling in soybeans. However, the short-covering bounce could not even hold the
market higher on the day into the close. Cash meal basis levels were mixed in
spite of the recent increase in supply with talk of good interest in meal from
exporters. While there is some concerns for crop losses from the hard freeze in
the northern cornbelt, the percentage of the crop in Minnesota dropping leaves
as of Sunday was reported at 84% which helped ease the fears of major losses. In
addition, private forecasts are beginning to hit the market for next week’s crop
production and supply/demand report. Informa Economics (Sparks) pegged soybean
production at 3.107 billion bushels, up 271 million bushels from last months
USDA estimate. A clearing firm pegged the crop at 3.057 billion bushels. Talk of
good yields as the harvest moves farther north has kept the bearish tone in tact
and the perfect weather for harvest has helped keep the trend down and
speculators in a sell mode. In fact, the net short position of the speculator
from the weekend Commitment-of-Traders report with options showed a record net
short position of near 47,000 contracts which leaves the market in an oversold
condition. The crop is now 36% harvested from 18% last week and the weather
looks mostly favorable for active harvest this week. Taiwan is tendering to buy
56,000 tons of US soybeans and South Korea bought 52,000 tons overnight. Iran
bought 35,000 tons of soyoil from Brazil. Resistance for November soybeans comes
in at 529 1/4 and 539 with 520 and 514 1/2 as support.
Technical Outlook
BEANS (NOV) 10/06/2004: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The market’s close below the pivot swing
number is a mildly negative setup. The near-term upside objective is at 535 3/4.
With a reading under 30, the 9-day RSI is approaching oversold levels. The next
area of resistance is around 529 3/4 and 535 3/4, while 1st support hits today
at 518 1/4 and below there at 513.
MEAL (DEC) 10/06/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The gap lower price action on the day session chart is a bearish
indicator for trend. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The next downside target is now at
154.0. With a reading under 30, the 9-day RSI is approaching oversold levels.
The next area of resistance is around 157.7 and 159.7, while 1st support hits
today at 154.9 and below there at 154.0.
BEANOIL (DEC) 10/06/2004: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close above the 9-day moving average is a positive
short-term indicator for trend. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The near-term upside
objective is at 21.84. Short-term indicators suggest buying pullbacks today. The
next area of resistance is around 21.55 and 21.84, while 1st support hits today
at 20.77 and below there at 20.27.
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WHEAT MARKET RECAP
10/5/2004
December Wheat finished up 3 3/4 at 306 1/4, 1 off the high
and 7 1/4 up from the low. March Wheat closed up 3 3/4 at 318 1/2. This was 7
1/2 up from the low and 1/2 off the high.
The market was called higher with talk of
interest in US wheat from Iraq and due to the oversold condition of the market.
However, there was a lack of speculative buying to offset the weakness in the
other grains which helped push futures lower early. The sweeping reversal from a
contract low and from an oversold condition could attract significant technical
buying from fund traders who were holding a hefty net short position in the last
Commitment-of-Traders report. The turn higher in corn helped support the market.
Soft red basis was stronger at the gulf with talk of export demand and a lack of
producer selling due to concentration on other markets. The spring wheat harvest
has reached 94% complete and the winter wheat planting progress reached 58%
complete from 42% last week and 52% on average for this time of the year. The
market is in an oversold condition with key retracement resistance points when
measuring the break off of the September 17th peak at 315, 320 1/4 (50%) and 325
1/4. Support for December wheat comes in at 304 1/2 and 301 1/2.
Technical Outlook
WHEAT (DEC) 10/06/2004: The market broke to a new
contract low. Daily stochastics are trending lower but have declined into
oversold territory. A negative signal for trend short-term was given on a close
under the 9-bar moving average. A positive signal was given by the outside day
up. Market positioning is positive with the close over the 1st swing resistance.
The next downside objective is 296 1/2. The next area of resistance is around
310 1/4 and 312 3/4, while 1st support hits today at 302 1/4 and below there at
296 1/2.
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LIVE CATTLE RECAP
10/5/2004
December Live Cattle closed up 0.55 at 88.82.
This was 1.05 up from the low and 0.15 off the high.
November Feeder Cattle finished up 0.72 at
111.75, 0.15 off the high and 1.15 up from the low.
December cattle moved moderately lower on the
session led by increased demand concerns and deliveries against the October
contract (25 lots) but the selling slowed into mid-session and futures recovered
as traders do not want to get caught short if there is some announcement out of
the 2-day talks in Colorado over ending the export ban to Japan. Boxed-beef
cutout values (600-750 choice) were down $.31 on the day at mid-session to
$134.41 as compared with $138.03 last week at this time. The premium of futures
to the cash market and weak packer margins seem to be limiting factors for the
bulls.
Technical Outlook
CATTLE (DEC) 10/06/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market’s short-term trend is positive on
the close above the 9-day moving average. The outside day up is somewhat
positive. With the close over the 1st swing resistance number, the market is in
a moderately positive position. The near-term upside objective is at 89.770. The
next area of resistance is around 89.400 and 89.770, while 1st support hits
today at 88.220 and below there at 87.400.
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LEAN HOGS RECAP
10/5/2004
December Lean Hogs closed down 1.00 at 65.75.
This was 0.25 up from the low and 1.05 off the high.
February Pork Bellies finished down 0.57 at
96.60, 0.30 off the high and 0.80 up from the low.
December hogs pushed sharply lower on the session
led by active fund trader long liquidation selling before finding support near
66.10 and bouncing into the close. This support represents a 50% correction of
the August low to September high and if this support fails to hold, 64.77
becomes next target. However, with the cash Index near 80.00, it will take a
steep downtrend in the cash to hold the December at the stiff discount. A weak
cash market contributed to the early selling with live hogs down $1.00-$1.50 at
most locations. The CME 2-Day Lean index for the period ending October 1st came
in at 79.71 which was down $.48 from the previous session.
Technical Outlook
HOGS (DEC) 10/06/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close below the 9-day moving average is a negative short-term indicator for
trend. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside target is 64.670. The next area of
resistance is around 66.400 and 67.250, while 1st support hits today at 65.120
and below there at 64.670.
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COCOA MARKET RECAP
10/5/2004
December Cocoa finished unchanged at 1424, 13 off
the high and 14 up from the low.
The cocoa market slipped to yet another new low
for the move and then managed to recover into positive ground and that would at
least suggest a lessening of downside momentum. However, because the market
managed a lower probe we have to think that ongoing physical supply flow is
weighing on prices. It also seems like the Ivory Coast continues to good rains
and that might in a sense be discouraging the dryness buyers from moving back
into the market on the long side. With Ivory Coast export arrivals being posted
at 1.33 million tons up to September 22nd one would think that the buyers are
effectively discouraged from being in a hurry to buy in a down market.
Technical Outlook
COCOA (DEC) 10/06/2004: Momentum studies are
declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside target is now at 1397. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 1437 and
1450, while 1st support hits today at 1411 and below there at 1397.
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COFFEE MARKET RECAP
10/5/2004
December Coffee closed up 1.95 at 78.15. This was
2.05 up from the low and 0.35 off the high.
December coffee recovered part of the losses from
Monday with an active inside trading session with the market up 195 points into
the close. London futures recovered from new 2-year lows which helped support
the New York market. Ideas that the collapse on Monday was overdone and that the
good rain event on the week does not make or break the crop for next year helped
support. Talk of continued growth in the Russia coffee market and expanding
consumption of higher quality coffees helped to support the market as well.
Traders are concerned that too much rain in Nicaragua could cause production
losses of near 77,000 bags. In addition, Colombia officials believe that about
200,000 bags of exports from about 700,000 bags usually delivered in September
may have not reached destination due to the truck drivers strike. The impact is
expected to be more significant if the strike continues through October when
harvest of the 2004/2005 crop begins.
Technical Outlook
COFFEE (DEC) 10/06/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. A negative signal for trend short-term was given on a close under the
9-bar moving average. A positive setup occurred with the close over the 1st
swing resistance. The next downside objective is 75.35. The next area of
resistance is around 79.35 and 80.10, while 1st support hits today at 77.00 and
below there at 75.35.
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SUGAR MARKET RECAP
10/5/2004
March Sugar closed up 0.12 at 9.05. This was 0.13
up from the low and 0.02 off the high.
The sugar market managed to close back up near
the September highs as speculative buying emerged for the second session in a
row in spite of plenty of talk that the market is overbought. From a historical
perspective, the Commitment-of-Traders report readings have yet to reach a
historic extreme and with more and more money moving to managed futures funds,
the net long position for the current bull trend is likely to exceed the
previous record. India is starting to import sugar and demand from other end
users who have been waiting for cheaper prices might also improve if the market
does not break. As a result, end users could chase the market higher. India
production for the 2004/2005 season is expected to come in near 13.8 million
tons, down 51% than the 2002/2003 season and demand is thought to be near 18
million tons. Syria is tendering for 52,000 tons of sugar (26,000 raw and 26,000
white).
Technical Outlook
SUGAR (MAR) 10/06/2004: Momentum studies are
trending higher but have entered overbought levels. The market’s short-term
trend is positive on the close above the 9-day moving average. The market setup
is supportive for early gains with the close over the 1st swing resistance. The
near-term upside target is at 9.17. The next area of resistance is around 9.12
and 9.17, while 1st support hits today at 8.98 and below there at 8.88.
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COTTON MARKET RECAP
10/5/2004
October Cotton finished down 0.38 at 48.87, 1.13
off the high and equal to the low.
The cotton market pushed higher for the third
session in a row with short-covering and new speculative buying helping to
support a new 5-day high for December futures. Concerns with the Texas crop
helped provide underlying support as the cold and wet late summer and fall
weather has kept the maturity pace slow and the crop more vulnerable to late
season weather problems. The weekly crop progress report showed that only 56% of
the crops bolls are open in Texas as compared with 79% on average for this time
of the year. Some light concerns that the China crop may not be as high as
advertised added to the positive tone but the prospects for a large world crop
has helped to limit the buying.
Technical Outlook
COTTON (DEC) 10/06/2004: The crossover up in the
daily stochastics is a bullish signal. Rising from oversold levels, daily
momentum studies would support higher prices, especially on a close above
resistance. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The daily closing price reversal down is a negative
indicator for prices. The close over the pivot swing is a somewhat positive
setup. The near-term upside objective is at 49.05. The next area of resistance
is around 47.97 and 49.05, while 1st support hits today at 46.49 and below there
at 46.08.