Why Tomorrow’s Numbers Are Important For The Dollar

Technical Outlook

BONDS (DEC) 11/25/03: The close below the 2nd swing support number puts the market on the defensive. Near-term resistance for bonds is at 110.24 and then again at 111.17, while swing support hits at 109.19 and below there at 109.07. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 111.17.

T-NOTES(DEC) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.00. 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 113.16 and then again at 114.00, while swing support hits at 112.26 and below there at 112.19. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

11/24/2003

Stock prices soared in the action Monday even though the economic reports slate was empty. However the trade did see expectations of some very strong numbers due out Tuesday morning. The combination of a good start to the week, the expectation of favorable numbers and the pre-holiday atmosphere should be a bullish set up. Traders continue to point to a critical pivot point at 1050 basis the December S&P contract. Apparently some traders were cheered on by the stronger Dollar action, as that might be a sign of improved international interest in U.S. equities. We suspect that Tuesday and Wednesday will bring heavy volume sessions and with the bias pointing upward the bull camp could continue to dominate

Technical Outlook

S&P500 (DEC) 11/25/03: The market’s close above the 2nd swing resistance number is a bullish indication. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. Underlying support comes in at 1043.45 and 1036.33, with overhead resistance at 1054.55 and 1058.53. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 1036.33.

S&P E-Mini (DEC): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1030.06. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1057.38 and then again at 1062.56, while swing support hits at 1041.13 and below there at 1030.06. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (DEC) The gap upmove on the day session chart is a bullish indicator for trend. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 market should run into resistance at 1431.25 and above there at 1440.63 with support at 1399.75 and 1377.63. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1440.6. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up.

CURRENCY MARKET RECAP

11/24/2003

The Dollar index started the session out strong and became even stronger. The extension of the U.S. equity market rally combined with the expectation for good numbers on Tuesday in the proximity of the holiday could keep the dollar firm. In fact, U.S. numbers due out Tuesday look to be much stronger than anything posted recently from the Euro zone. Therefore, the trend established in the trade Monday, could extend through Wednesday afternoon. It would also same as if world trade issues have temporarily discouraged further selling in the Dollar.

Technical Outlook

YEN (DEC): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The gap lower price action on the day session chart is a bearish indicator for trend. The close below the 2nd swing support number puts the market on the defensive. Swing resistance is targeted at 91.68 and above there at 92.01, with the yen finding support around 91.20 and below there at 91.05. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 91.05.

EURO (DEC): 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 1.1704. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1704, with overhead resistance at 1.1848. The market’s short-term trend is negative as the close remains below the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

11/24/2003

The gold market failed to hold critical support at 393. While the overall long position in gold leaves it vulnerable the main issue pressuring prices appears to be attractive alternative investments. It would seem that the upward bias will continue in equity prices and the U.S. dollar and that should keep the pressure on gold and silver. In fact, seeing the Dollar index above 92.00 (basis the December contract) could spark another long liquidation wave. The expectations for the U.S. reports Tuesday morning are for some very strong numbers and that also looks to leave pressure on gold and silver.

Technical Outlook

SILVER (MAR): The swing indicator gave a moderately negative reading with the close below the 1st support number. Initial support for silver is at 524.3 and below there at 520.4 with resistance likely at 526.4 and 529.8. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. 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 520.4. Short-term indicators on the defensive. Consider selling an intraday bounce.

GOLD (FEB): Support for gold today comes in near 389.00, while resistance is pegged at 397.40. 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 389.00. Daily studies pointing down suggests selling minor rallies. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The market’s short-term trend is negative as the close remains below the 9-day moving average.

COPPER MARKET RECAP

11/24/2003

Given the magnitude of the rally in copper on Monday it would appear that something more than simple short covering was taking place. Certainly the presence of Chinese buying into the opening gave the bull a distinct advantage. It would appear that the macro economic outlook for the coming 48 hours will be supportive of the upside in copper. While copper market hasn’t been in tight correlation with daily equity prices, the strong gains in equity market did aid the bull camp. However, in order to propagate the upside Chinese buyers will have to buy on a frequent basis as the trade is still concerned that prices above 93› are a little bit expensive.

ENERGY MARKET RECAP

11/24/2003

Despite the presence of a moderate winter storm, energy prices continued to correct in the action Monday. Many traders think the crude-oil market continued to see long liquidation by the funds, which were excessively long 91,000 contracts as of last Tuesday. While the natural gas market saw some support off cold weather due in at the end of the week, the regular complex was not so inclined. In fact, while some cool weather is anticipated, many power markets in the east were seeing lower-prices due to the expectation of weak ongoing demand. Given the magnitude of the failure in crude oil, one might not expect support to be found until $29.80 basis the January contract. Even though the products were not nearly as long as crude oil coming into the action, they also suffered aggressive stop-loss selling.

Technical Outlook

CRUDE OIL (JAN): The major trend is down with the cross over back below the 40-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today. The market is in a bearish position with the close below the 2nd swing support number. Support for crude is keyed on 28.94 and below there at 28.50, with resistance pegged at 30.54 and 31.70. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 28.50.

UNLEADED GAS (JAN): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 79.16. The close below the 2nd swing support number puts the market on the defensive. Resistance today is at 88.16, while support should be found around 79.16. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close under the 40-day moving average indicates the longer-term trend could be turning down.

HEATING OIL (JAN): The market is in a bearish position with the close below the 2nd swing support number. Heating oil should encounter support around 79.33, with resistance is at 87.73. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. 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 79.33. The gap down on the day session chart is bearish with more selling pressure possible today.

CORN MARKET RECAP

11/24/2003

The corn market finished moderately lower despite seeing favorable export activity into the opening. The USDA posted grain inspections of 41.6 million bushels compared to 40.1 million bushels in the prior week, which is a lofty number but didn’t provide price support. Early in the session the USDA announced a 240,000 metric ton sale of corn to an unknown destination and that should have been supportive. Both corn and soybean markets continue to be put off by fears of a U.S./Chinese trade war. We suspect that corn prices were negatively impacted by weak soybean prices and by a weak soybean basis.

Technical Outlook

CORN (MAR) 11/25/03: 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 below the pivot swing number is a mildly negative setup. Market resistance comes in at 242 1/2 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

11/24/2003

Nearby beans led the complex lower in the action Monday. While the trade continues to discount the negative impact of the Chinese trade situation, the market can’t seem to shake the issue. Even with the USDA Undersecretary suggesting that Chinese textile problems would not affect the grain trade, many longs decided to liquidate. Weekly soybean export inspections came in at 34.59 million bushels compared to 37.2 million bushels in the prior week. The soybean trade was also undermined by a weak soybean basis. With soybeans making a one month low and recent positioning reports showing a moderately long fund and small spec position, it’s understandable that some stop-loss selling was encountered in the action Monday.

Technical Outlook

SOYBEANS (JAN) 11/25/03: The swing indicator gave a moderately negative reading with the close below the 1st support number. The next area of resistance is around 746 and 758 , while 1st support hits today at 728 1/2 and below there at 723 . The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close under the 40-day moving average indicates the longer-term trend could be turning down. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 723 . Short-term indicators on the defensive. Consider selling an intraday bounce.

MEAL (JAN): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 220.9. First resistance comes in at 227.7, with support at 222.5. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the 1st swing support number suggests a moderately negative setup for today. With a reading under 30, the 9-day RSI is approaching oversold levels. The major trend is down with the cross over back below the 40-day moving average.

BEAN OIL (JAN): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 25.73. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 26.48 and above there at 26.93. Support should be encountered at 25.88 and 25.73. Short-term indicators on the defensive. Consider selling an intraday bounce.

WHEAT MARKET RECAP

11/24/2003

Wheat prices failed to hold a stronger opening and closed moderately weaker on the session. Even after the European wheat market was strong both U.S. wheat markets exhibited weakness. Weekly U.S. export inspections showed 21.8 million bushels of wheat compared to 19.1 million bushels last week. The failure after the recent bounce highlights the lack of fresh bullish information. There was some light support off the idea of winter kill in the U.S. hard red winter wheat areas, but that proved to be short-lived. We suspect that wheat prices are seeing some support off the idea of an ongoing western Argentine drought, which is really a more direct influence on corn prices.

Technical Outlook

WHEAT (MAR) 11/25/03: The downside closing price reversal on the daily chart is somewhat negative. Short-term indicators on the defensive. Consider selling an intraday bounce. The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 382 1/2 and below there at 377 1/4, with resistance levels at 397 1/2 and 407 1/4. 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 377 1/4.

LIVE CATTLE RECAP

11/24/2003

Cattle closed firmer Monday on follow through buying tied to a favorable Cattle on Feed report which showed a larger marketings number than the trade had expected. Traditionally, traders have attempted to sell bullish USDA On-Feed data but the stiff discount of futures to cash provided support. While cash cattle markets were described as quiet today, they traded at $98 per cwt Friday which is supportive with futures trading below this price. Although packer profit margins were improving they remain negative at around $20.00 per head which could be a factor limiting packer demand to pay up in the cash market this week. Boxed-beef cut-out values were down $1.82 to $164.18 as compared with $167.34 last week at this time. Slaughter was 123,000 head as compared with trade expectations at 114,000-126,000 head.

Technical Outlook

CATTLE (FEB) 11/25/03: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 90.62. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 91.10 and below there at 90.62. Market resistance is at 91.80 and then again at 92.02. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

11/24/2003

Fund selling pressured February hogs late in the session driving prices lower to match the August lows at 53.50. While technical indicators are at over sold levels, there is no technical sign of a bottom with 52.55, the contract low in February hogs, as next support. Cold temperatures and firmer cattle prices gave early support to hogs, but the market was over powered by fund selling near the close. Pork plants are thought to have most of their needs met through Wednesday while the Saturday kill is thought to be above year ago levels. Slaughter for the day was 394,000 head which is near the high end of expectations. Hams were $2.00-$4.00 lower at mid-session which added to the bearish tone.

Technical Outlook

HOGS (FEB) 11/25/03: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 54.10 and 54.90 today, while support is around 53.00 and then 52.70. 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 52.70. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

11/24/2003

The cocoa market made a new low for the move, which leaves the bear camp in charge. Apparently the trade is picking up evidence that physical beings are moving. In other words harvest flow is beginning to weigh on prices. The Dow Jones News Service suggested that in security and police racketeering or causing marketing’s to be slow. However, since the harvest flow has begun the inefficiencies of red tape hardly look to discourage additional selling. If the commercials become convinced of persistent supply flows they could hold back buying for even lower levels. Near term chart support basis the March contract is now seen at $1,436.

Technical Outlook

COCOA (MAR)11/25/03 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1492 and above there at 1507 with support at 1466 and 1455. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1455.00.

COFFEE MARKET RECAP

11/24/2003

The coffee market appeared to bounce off the recent lows in a pure technical fashion. With the market extensively oversold and trade expected to become sluggish at the end of the week, understandably some shorts decided to bank profits. The London market reported roaster buying around the lows and that could have inspired the technical short covering. It is also possible that the recent commitment of traders report prompted some short funds to exit. Many suspect the short fund position of 14,000 contracts was understated coming into this week’s trade and that alone gives the short covering argument more credence.

Technical Outlook

COFFEE (MAR)11/25/03 The market has a slightly positive tilt with the close over the swing pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 59.65.The Coffee contract should run into resistance at 60.40 and above there at 60.65 with support at 59.9 and 59.65. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/24/2003

The sugar market finished extremely weak at the lowest level since November 7th. Some traders are targeting a gap left down at 612 – 610. Fund selling interest seemed to prevail in the market Monday. Producer selling continues to pressure prices, but commercial buying wasn’t significantly countervailing the selling effort. The trade is also seeing some pressure from a Brazilian selling and ideas that the Thai crop is going to come in larger than last year. In fact, the Thai crop came in at 74.85 million tons compared to 74.07 million tons.

Technical Outlook

SUGAR (MAR) 11/25/03: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 6.29, with support found at 6.01. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. 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 6.01. Daily studies pointing down suggests selling minor rallies.

COTTON MARKET RECAP

11/24/2003

Cotton prices continued a swift downward track in the action Monday. Concerns over the Chinese trade issue combined with an indirect negative from the weakness in the grain markets simply leaves the bears with control. While the recent commitment of traders report certainly overstated the existing fund and small spec long, the market was still long 30,000 contracts as of last Tuesday. With March cotton giving up nearly 600 points since the last COT report, the market could be approaching a leveled technical positioning. However, the market would not appear to be bottoming from a fundamental perspective. The trade now expects March cotton to fall to the bottom of the early October consolidation down at 68.75.

Technical Outlook

COTTON (MAR) 11/25/03: 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 71.50 and then again at 73.60, while support is targeted at 68.69 and 67.98. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 67.98. The 9-day RSI under 30 indicates the market is approaching oversold levels.