Why You Shouldn’t Be Surprised To See The Dollar Follow Through

Technical Outlook

BONDS (MAR) 02/19/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 113.10 and then again at 113.23, while swing support hits at 112.19 and below there at 112.09. 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 113.23.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.13. 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 115.02 and then again at 115.13, while swing support hits at 114.18 and below there at 114.12. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/18/2004

The stock market saw typical profit-taking as the Dow moved lower in a quiet trading session. The fact that US economic numbers were disappointing fostered the slide but one would not expect to see a sustained anxiety driven washout off the current fundamental mix. The break in the S&P was a little more significant than the market has recently being seeing and that could foster a little downside follow through in the coming sessions. The stock market seemed to lack the usual beneficial corporate news flow and that could have allowed prices to sag Thursday.

Technical Outlook

S&P500 (MAR) 02/19/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Underlying support comes in at 1146.65 and 1143.13, with overhead resistance at 1155.35 and 1160.53. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1160.53.

S&P E-Mini (MAR): The market made a new contract high on the rally. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1162.75. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1156.25 and then again at 1162.75, while swing support hits at 1145.75 and below there at 1141.75. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market should run into resistance at 1518.25 and above there at 1524.38 with support at 1503.75 and 1495.38. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1524.4.

MINI DOW (MAR) The downside closing price reversal on the daily chart is somewhat negative. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market should run into resistance at 10715 and above there at 10764 with support at 10631 and 10596. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 10764. It is a slightly negative indicator that the close was lower than the pivot swing number.

CURRENCY MARKET RECAP

2/18/2004

After falling to a new low, the Dollar recoiled aggressively off the lows as the President of France hinted at ECB intervention. Recently ECB officials seemed to discount the potential for intervention, which makes the French comments all the more surprising. The reversal action in the currencies was quite significant and considering the technical damage, one should not be surprised to see some additional follow through on Thursday. In order to solidify the bottom in the Dollar it might take additional ECB comments in the coming sessions.

Technical Outlook

YEN (MAR): 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. Swing resistance is targeted at 94.41 and above there at 95.21, with the yen finding support around 93.08 and below there at 92.55. The close under the 40-day moving average indicates the longer-term trend could be turning down. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 92.55.

EURO (MAR): 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 1.2550. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2550, with overhead resistance at 1.2912. 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

2/18/2004

The gold market had the rug pulled out from under it by the significant reversal action in the Dollar. Not only did the Dollar classically reject the new lows posted early in the session but the Euro made quite a show of rising sharply and completely falling apart. In the end the gold market can’t discount the change in the Dollar because the gold and silver have been singularly focused on the Dollar decline! The silver market has seen very aggressive fund buying and probably a massive record spec long position around the highs Wednesday morning. Therefore, one can’t rule out excessive technical stop loss buying in silver.

Technical Outlook

SILVER (MAY): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 660.8 and below there at 651.4 with resistance likely at 675.6 and 682.8. 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 675.6. A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative.

GOLD (APR): Support for gold today comes in near 408.45, while resistance is pegged at 418.45. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 418.45. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average.

COPPER MARKET RECAP

2/18/2004

The copper market made what appears to be a massive blow off top with a massive run to new contract highs and a slide into low of 800 points. The Press is suggesting that profit taking was behind the slide and it is certainly possible that speculative interest was carried away around the highs Wednesday. As of late Wednesday afternoon there didn’t appear to be a major negative fundamental development to suggest that the trend in copper was breaking up. One might see the sharper than expected decline in the housing starts as a cause for the break but that issue should derail the bull market because extreme cold might have caused the setback in housing as opposed to poor economics.

ENERGY MARKET RECAP

2/18/2004

The energy complex seemed to fade off profit taking and off the prospect of a discussion on the April 1st production cuts. The market was also faced with evidence that US imports were up aggressively in December and up significantly for the whole of 2004. Therefore, the trade might logically concur that stocks could be set to build. OPEC officials continue to suggest that the second quarter stock rebuilding looks to be much greater than normal and that is concerning OPEC. If imports are soaring and demand does contract there is certainly the chance of stock rebuilding. The weekly inventory reports were delayed due to the holiday and the expectations are for more declines in stock levels.

Technical Outlook

CRUDE OIL (APR): The rally brought the market to a new contract high. The daily closing price reversal down puts the market on the defensive. The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 34.13 and below there at 33.87, with resistance pegged at 34.83 and 35.27. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 35.27.

UNLEADED GAS (APR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 112.19. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 112.19, while support should be found around 108.79. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (APR):The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 88.71, with resistance is at 92.71. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 92.71. The daily closing price reversal down puts the market on the defensive.

CORN MARKET RECAP

2/18/2004

After a higher opening, the corn market pushed sharply lower on the session and to the lowest close since February 6th. Initially, some light long liquidation selling from weakness in the wheat market and ideas that futures are overbought helped pull futures lower. May corn managed a new contract high yesterday but the lack of follow-through buying and some increase noted in producer selling has led to the minor pull-back. The need for higher planted acreage and the competition for those acres with uptrending soybeans have provided underlying support. The lack of feedwheat this year on the world market and the possibility of a jump in feedwheat supplies on a return to normal European weather this coming season is another factor which helped limit gains.

Technical Outlook

CORN (MAY) 02/19/04: 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 282 1/4. The market is in a bearish position with the close below the 2nd swing support number. Market resistance comes in at 292 1/4 today, with support at 282 1/4. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SOY COMPLEX RECAP

2/18/2004

The market surged higher on the opening with March soybeans opening 9 cents higher due to the higher than expected monthly crush report and a dry weather forecast for southern Brazil and Argentina. The NOPA crush report this morning showed January crush at 138.05 million bushels as compared with expectations at 132-134 million bushels and 138.4 million in December and 138.5 million bushels last year. If the crush was at the average estimate, this would have been down 3.6% from last year as compared with a drop of almost 10% for the crush this season by the USDA. The export and crush pace remains well ahead of the pace to hold ending stocks up at 125 million bushels, already a 27-year low. The market is still operating under the negative influence of the February 10th downside reversal and from the weekly reversal that same week. Higher than expected oil yields and stocks in the NOPA crush reported triggered a sharp sell-off in oil.

Technical Outlook

SOYBEANS (MAY) 02/19/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 859 1/2 and 866 3/4, while 1st support hits today at 844 1/2 and below there at 836 3/4. 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 866 3/4.

MEAL (MAY): 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 265.0. First resistance comes in at 261.9, with support at 255.9. The market’s short-term trend is positive on a close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (MAY): 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. 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 30.71. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 31.74 and above there at 32.13. Support should be encountered at 31.03 and 30.71. Short-term indicators on the defensive. Consider selling an intraday bounce.

WHEAT MARKET RECAP

2/18/2004

May wheat closed 10 1/4 lower on the session to 372. News that Egypt bought 300,000 tons of wheat from Australia this morning in their optional origin tender helped to trigger aggressive long liquidation selling and a move to the lowest level of the year for May wheat. In addition, traders feel that the longer-range weather maps are pointing toward a moist period ahead in late February into early March which would be considered ideal for the crop coming out of dormancy. A lack of concrete news regarding the amount of wheat which China may be interested in buying and the prospects for a large crop from Europe and Eastern Europe this year has added to the negative tone. As of February 10th, the Commitment-of-Traders report with options showed that large traders (funds) were net long over 33,000 contracts which leaves the market vulnerable to long liquidation selling.

Technical Outlook

WHEAT (MAY) 02/19/04: 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 366 1/2 and below there at 363 1/4, with resistance levels at 377 1/2 and 385 1/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 363 1/4.

LIVE CATTLE RECAP

2/18/2004

April cattle closed 45 higher on the session led by strong gains in the February contract and a firm tone for the cash and boxed-beef markets. Talk of $79.00 cash markets this week and the discount of futures to cash helped support and so did news that Mexico officials were in Washington and hoping to relax beef import rules soon. The Cattle-on-Feed report for Friday is expected to show on-feed supplies at 105% of last year (range 104-107.2%) with placements during January at 83.9% (78.9-95.2) and Marketings at 89.2% (86-8-92.1). The Monthly cold storage report is also released Friday and is expected to show a bulge in frozen supplies due to the lack of exports for late December and all of January. Boxed-beef cut-out values were up $1.20 to $129.23 as compared with $126.61 last week at this time.

Technical Outlook

CATTLE (APR) 02/19/04: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 73.45. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 72.50 and below there at 72.15. Market resistance is at 73.15 and then again at 73.45. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

2/18/2004

April hogs closed slightly lower in choppy, two-sided trade with an inside trading day. The market found support from ideas that the futures were at a hefty discount to the cash market, strength in cattle futures and continued hopes that the meat export bans in the US will be just temporary. News that loins were down $4.00 on the mid-day wire and fears that the recent trend in cash markets will continue to move lower helped to pressure the market late. The CME 2-day Lean Index was down 3 cents to $64.01 as compared with $57.96 at the end of January. The weekly average weights from Iowa/Minnesota for the week ending February 14th came in at 264.5 pounds as compared with 264.3 the previous week and 262.5 pounds last year at this time. Traders are looking for Friday’s cold storage report to show belly stocks near 60.7 million pounds which would be the highest end of January stocks in 5 years. For the weekly report, traders were looking for a slight out-movement.

Technical Outlook

HOGS (APR) 02/19/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 59.07 and 59.77 today, while support is around 57.97 and then 57.55. 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 57.55.

COCOA MARKET RECAP

2/18/2004

The cocoa market continues to waffle around in a range with the trade selling and industry players becoming less interested buyers. In short the market would seem to lack clear-cut sentiment and might be expected to languish in the February range until something significant surfaces. Supply from the main crop harvest is expected to slow but so far the trade hasn’t actually seen much tapering off. Export figures for the second half of January at the Ivory Coast showed exports rising over the first half of January and that could be a force that is keeping a lid on cocoa prices.

Technical Outlook

COCOA (MAY)02/19/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1544 and above there at 1560 with support at 1518 and 1508. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1559.50.

COFFEE MARKET RECAP

2/18/2004

July coffee fell sharply, taking out the low seen earlier in the month as fund and speculators liquidated ahead of the March contract’s first notice day. Both large and small traders had built up an extremely large net long position making the market vulnerable to a sell off. There was also widespread concern of very heavy deliveries against the March contract which seemed to be the catalyst for Wednesday’s break. In addition, roasters have backed away from the market and with quiet cash activity there was little support under the market. Brazilian cooperatives reported Jan 31st stocks at 4.5 million bags, about a 35% drop from year ago.

Technical Outlook

COFFEE (MAY)2/19/04 There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 69.30.The Coffee contract should run into resistance at 74.60 and above there at 77.30 with support at 70.6 and 69.30. 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.

SUGAR MARKET RECAP

2/18/2004

The inside day with an unchanged close and a tight range would indicate dull trade ahead but the surge in open interest would argue to opposite. Large speculators continue to build a net short position while small speculators seem to be building a larger net long position. Commercial buyers need coverage for the future but have yet to contract in the world cash market and have left their needs in futures. Slow cash market developments and weak prices internally in Brazil may have also led to increased selling of futures and a larger position due to the lack of open cash contracts. As a result, the open interest has been building and reached another new high (looks like a record high) on the rally on Tuesday to 280,947 contracts, up 2629 contracts on the session.

Technical Outlook

SUGAR (MAY) 02/19/04: The market’s close below the pivot swing number is a mildly negative setup. Swing resistance comes in at 5.94, with support found at 5.76. The market’s short-term trend is positive on a close above the 9-day moving average. 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 5.94.

COTTON MARKET RECAP

2/18/2004

May cotton continues to trade in a tight range with spread trading the featured activity as traders adjust positions ahead of first notice day. The weekly spec/hedge report was considered somewhat negative since it showed specs were still net long. The market may continue to consolidate ahead of Friday’s export sales report (delayed due to the holiday). Trade estimates for cotton weekly export sales range between 400,000 and 500,000 bales. The Cotlook A Index rose +.35 to 74.20.

Technical Outlook

COTTON (MAY) 02/19/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. Next resistance area comes in at 68.88 and then again at 69.57, while support is targeted at 67.88 and 67.57. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 69.57. The downside closing price reversal on the daily chart is somewhat negative. ORANGE JUICE (MAR)2/19/04 The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 61.65 and above there at 61.95 with support at 61.00 and 60.65. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 61.95.