Will Lower Oil Improve Economic Sentiment?
BOND MARKET RECAP
4/28/2005
June Bonds finished up 0-22 at 115-01, 0-03 off
the high and 0-22 up from the low.
June 10 Yr Treasury Notes finished up 0-150 at
111-215, 0-020 off the high and 0-155 up from the low.
The Treasury market deserved to rally off
the disappointingly soft GDP report but surprisingly the market couldn’t extend
the early action. Even more surprising is the fact that the Treasuries couldn’t
significantly gain upside momentum in the face of additional equity market
weakness. We suspect that follow through declines in energy prices dampened
interest in the long side of Treasuries. We also think that the expectations for
the economic information due out on Friday also discouraged buying around the
highs Thursday as some players were concerned about the Friday morning inflation
report.
Technical Outlook
BONDS (JUN) 04/29/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
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 next upside target is 116-04. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
115-26 and 116-04, while 1st support hits today at 114-25 and below there at
114-01.
TNOTES (JUN) 04/29/2005: The daily stochastics
gave a bullish indicator with a crossover up. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The near-term
upside target is at 112-120. With a reading over 70, the 9-day RSI is
approaching overbought levels. The next area of resistance is around 112-055 and
112-120, while 1st support hits today at 111-155 and below there at 110-315.
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STOCK INDICES RECAP
4/28/2005
June S&P finished down 14.1 at 1143.1, 14.2 off
the high and 0.5 up from the low.
June S&P E-Mini closed down 14.75 at 1142.5. This
was equal to the low and 16 off the high.
June Dow closed down 130 at 10064. This was 4 up
from the low and 126 off the high.
The stock market was pretty much fixated on the
weaker than expected “headline” 1st quarter GDP reading from the US right out of
the box on Thursday. In fact, even with the flurry of quasi favorable corporate
earnings reports, the market was unable to turn the negative tide around. Some
traders were suggesting that the slower US GDP reading prompted stock analysts
to push for lower earnings multiples and that resulted in fresh selling. Even
more surprising is that equity prices once again failed to benefit from
additional energy price declines. In fact, oil prices are beginning to get down
to levels that should allow forward looking economic sentiment to improve.
Technical Outlook
S&P 500 (JUN) 04/29/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The close below
the 1st swing support could weigh on the market. The next downside target is now
at 1131.58. The next area of resistance is around 1149.95 and 1160.97, while 1st
support hits today at 1135.25 and below there at 1131.58.
SP EMINI (JUN) 04/29/2005: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The major trend has turned down with the cross over back below the
18-day moving average. The close below the 1st swing support could weigh on the
market. The next downside objective is 1130.50. The next area of resistance is
around 1150.50 and 1162.50, while 1st support hits today at 1134.50 and below
there at 1130.50.
NASDAQ (JUN) 04/29/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The market setup is somewhat negative with the close under the 1st
swing support. The next downside target is 1398.13. The next area of resistance
is around 1421.25 and 1435.12, while 1st support hits today at 1402.75 and below
there at 1398.13.
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CURRENCY MARKET RECAP
4/28/2005
June US Dollar finished up 26 at 8436, 7 off the
high and 29 up from the low.
June Euro finished down 0.46 at 129.09, 0.51 off
the high and 0.13 up from the low.
June Euro Dollar closed up 0.015 at 96.595. This
was 0.01 up from the low and 0.015 off the high.
June Canadian Dollar closed down 0.19 at 79.9.
This was 0.1 up from the low and 0.2 off the high.
June British Pound finished up 0.18 at 190.38,
0.28 off the high and 0.4 up from the low.
June Swiss closed down 0.15 at 84.02. This was
0.15 up from the low and 0.34 off the high.
June Japanese Yen closed down 0.31 at 94.67. This
was 0.12 up from the low and 0.41 off the high.
The Dollar was pretty quiet during the action
Thursday despite some fairly disappointing US economic readings. However, a
number of traders suggested that sharply lower energy prices diffused the
negative tilt thrown off by the GDP disappointment. Later in the session the
Dollar returned to the vicinity of the highs and that would seem to leave the
mild up trend in the Dollar in place. Surprisingly the biggest loser to the
Dollar during the action Thursday was the euro which fell right down to critical
pivot point support at 128.93. It is important to note that the Euro fell
despite partially favorable German economic information released early in the
session.
Technical Outlook
YEN (JUN) 04/29/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. The
downside closing price reversal on the daily chart is somewhat negative. The
market’s close below the 1st swing support number suggests a moderately negative
setup for today. The next upside objective is 95.27. The next area of resistance
is around 94.93 and 95.27, while 1st support hits today at 94.41 and below there
at 94.22.
EURO (JUN) 04/29/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market back below the 18-day moving average suggests the longer-term trend
could be turning down. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside target is 128.55.
The next area of resistance is around 129.41 and 129.82, while 1st support hits
today at 128.77 and below there at 128.55.
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PRECIOUS METALS RECAP
4/28/2005
June Gold closed down 1.7 at 432.4. This was 0.2
up from the low and 2.9 off the high.
July Silver finished down 0.233 at 6.948, 0.217
off the high and 0.038 up from the low.
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The gold market initially seemed to diverge from
the overt weakness seen in the silver and platinum action but into the close,
the gold eventually weakened and in the afternoon action gold managed yet
another lower low. The funds seemed to be very aggressive sellers in both silver
and platinum and with the worse than expected US GDP reading it isn’t hard to
become a little concerned about deflation or softer physical demand for precious
metals. While the Dollar also contributed to the weakness in gold, we think the
real selling impetus is coming from the slumping macro economic outlook.
Technical Outlook
SILVER (JUL) 04/29/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The major trend has turned down with the cross over back below the
18-day moving average. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
downside target is now at 673.8. The next area of resistance is around 707.6 and
724.8, while 1st support hits today at 682.1 and below there at 673.8.
GOLD (JUN) 04/29/2005: The close under the 60-day
moving average indicates the longer-term trend could be turning down. A bearish
signal was triggered on a crossover down in the daily stochastics. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. The market tilt is
slightly negative with the close under the pivot. The next downside target is
now at 430.0. The next area of resistance is around 433.9 and 436.1, while 1st
support hits today at 430.9 and below there at 430.0.
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COPPER MARKET RECAP
4/28/2005
June Copper closed down 0.20 at 145.25. This was
1.25 up from the low and 0.25 off the high.
The copper market remained in a partially
undermine posture on Thursday and we suspect that the disappointing US GDP
reading contributed to the concern for forward copper demand. The market is
certainly aware of a series of higher copper production readings but early
Thursday, the market was presented with a slight decline in Codelco 1st quarter
copper production figures. While the Codelco shortfall (only 6,000 tons) hardly
offsets the prior production increases the market is at least seeing a debate on
supply. So far, the Chinese haven’t exactly shown strong interest in copper
despite the significant slide off the recent highs and that might be a function
of the coming holiday or it might be that copper is forward bought.
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ENERGY MARKET RECAP
4/28/2005
June Crude Oil closed up 0.16 at 51.77. This was
1.97 up from the low and 0.08 off the high.
June Heating Oil closed up 1.32 at 148.83. This
was 6.23 up from the low and 0.17 off the high.
June Unleaded Gas finished up 0.24 at 155.19,
0.31 off the high and 8.69 up from the low.
June Natural Gas finished down 0.05 at 6.75, 0.01
off the high and 0.13 up from the low.
June Propane closed down 0.03 at 0.82. This was
equal to the low and equal to the high.
The energy complex posted a rather wild trade on
Thursday, with early minor declines eventually translating into a rout. Even
though a private tanker movement service, suggested that current OPEC output
might have slipped by up to 160,000 barrels per day (in the most recent
monitoring period) energy prices initially showed almost bullish reaction.
However, as has been the case recently, the energy complex managed to recover
part of the lost ground in the afternoon action. Crude oil prices did manage to
touch even numbers down at $52.00 a barrel and June unleaded easily managed to
violate even numbers at 150.00 to mount a slide temporary slide down to 146.50.
Technical Outlook
CRUDE OIL (JUN) 04/29/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close under the 18-day moving average indicates the longer-term
trend could be turning down. The daily closing price reversal up is a positive
indicator that could support higher prices. It is a slightly negative indicator
that the close was under the swing pivot. The next downside objective is now at
49.25. The next area of resistance is around 52.79 and 53.34, while 1st support
hits today at 50.75 and below there at 49.25.
UNLEADED (JUN) 04/29/2005: A positive indicator
was given with the upside crossover of the 9 & 18 bar moving average. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The major trend has turned down with the cross
over back below the 18-day moving average. The daily closing price reversal up
is a positive indicator that could support higher prices. The market’s close
below the pivot swing number is a mildly negative setup. The near-term upside
target is at 162.09. The next area of resistance is around 159.69 and 162.09,
while 1st support hits today at 150.69 and below there at 144.10.
HEATING OIL (JUN) 04/29/2005: Momentum studies
are rising from mid-range, which could accelerate a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The daily closing price reversal up
on the daily chart is somewhat positive. The market has a slightly positive tilt
with the close over the swing pivot. The near-term upside objective is at
153.71. The next area of resistance is around 152.03 and 153.71, while 1st
support hits today at 145.63 and below there at 140.92.
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CORN MARKET RECAP
4/28/2005
July Corn finished down 4 at 213, 4 1/2 off
the high and 1/2 up from the low. December Corn closed down 4 at 230 1/4. This
was 1/2 up from the low and 4 off the high.
The market found some early support from strength
in soybeans, but a bearish weather outlook for the western Corn Belt and poor
weekly export sales helped to pressure the market into the close. The 10 cent
break off of Monday’s highs for December corn could be a sign that traders see
excellent planting progress over the near term. Weekly export sales for corn
came in at just 493,400 tonnes, which was below the low end of trade
expectations. Cumulative sales have reached 78.9% of the USDA forecast for the
season as compared with 76.2% on average for this time of the year. The
International Grain Council pegged world coarse grain production for the
2005/2006 season at 954 million tonnes, which is down from last year’s bumper
world crop of 1.011 billion tonnes. World demand is thought to be near 961
million tonnes. For deliveries for first notice day tomorrow, traders are
looking for 500-1000 contracts. Support for July corn comes in at 212 with
resistance at 216.
Technical Outlook
CORN (JUL) 04/29/2005: A crossover down in the
daily stochastics is a bearish signal. Momentum studies trending lower at
mid-range could accelerate a price break if support levels are broken. The close
below the 18-day moving average is an indication the longer-term trend has
turned down. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The next downside objective is now at 209.
The next area of resistance is around 215 1/2 and 219, while 1st support hits
today at 210 1/2 and below there at 209.
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SOY COMPLEX RECAP
4/28/2005
July Soybeans finished down 8 1/2 at 625 1/4, 12
3/4 off the high and 1/4 up from the low. November Soybeans closed down 3 3/4 at
619 3/4. This was 1 3/4 up from the low and 9 1/4 off the high.
July Soymeal closed down 1.7 at 193.8. This was
0.3 up from the low and 3.4 off the high.
July Soybean Oil finished down 0.32 at 22.35,
0.37 off the high and 0.04 up from the low.
News that Asia rust was spotted in Georgia and
fears that the disease will spread quickly once the crop begins growing helped
to give the market a psychological boost and supported the higher trade early.
However, a lack of follow-through buying and some selling based on the weak
technical action yesterday forced the market back down to near this week’s low.
The US Census Crush report this morning showed that processors crushed 149.7
million bushels in March as compared with trade expectations near 148.7 million
bushels, 137.7 million last month and 129.6 million bushels in March of 2004.
Oil stocks were pegged at 1.79 billion pounds from trade expectations near 1.779
billion pounds and meal stocks at 251,744 tonnes vs. expectations at 317,000
tonnes. Weekly export sales for soybeans came in at 273,900 tonnes, which was
within the range of expectations but towards the low end. Cumulative sales have
reached 94.9% of the USDA forecast for the season as compared with 93.6% on
average for this time of the year. Meal sales were 58,800 tonnes from
expectations, which was close to the low end of expectations, and oil sales were
6,400 tonnes, somewhat better than expected. For deliveries for first notice day
tomorrow, traders are looking for 0-500 deliveries for soybeans and for oil and
no meal deliveries. July soybean support comes in at 622 1/2 with resistance at
637.
Technical Outlook
BEANS (JUL) 04/29/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close under the 18-day moving average indicates the longer-term trend
could be turning down. The close below the 1st swing support could weigh on the
market. The next downside objective is 615 1/2. The next area of resistance is
around 631 3/4 and 641 1/4, while 1st support hits today at 618 3/4 and below
there at 615 1/2.
MEAL (JUL) 04/29/2005: A crossover down in the
daily stochastics is a bearish signal. Stochastics trending lower at midrange
will tend to reinforce a move lower especially if support levels are taken out.
The cross over and close above the 18-day moving average is an indication the
longer-term trend has turned positive. The market’s close below the pivot swing
number is a mildly negative setup. The next downside objective is now at 190.9.
The next area of resistance is around 195.6 and 198.2, while 1st support hits
today at 192.0 and below there at 190.9.
BEANOIL (JUL) 04/29/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The major
trend has turned down with the cross over back below the 18-day moving average.
The market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is now at 22.03. The next area of resistance
is around 22.55 and 22.84, while 1st support hits today at 22.15 and below there
at 22.03.
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WHEAT MARKET RECAP
4/28/2005
July Wheat finished down 2 at 327 1/4, 3 3/4 off the high and
2 1/2 up from the low. December Wheat closed down 1 1/2 at 345. This was 1 1/2
up from the low and 3 off the high.
Talk that rain chances have improved for the
southern and western parts of the winter wheat belt for next week along with
weakness in the other grains helped to pressure the market today. Weekly export
sales for wheat came in at 467,400 tonnes as compared, which was towards the
upper end of trade expectations. Cumulative sales have reached 95.2% of the USDA
forecast for the season as compared with 90% on average for this time of the
year. In addition to the weekly sales, Japan bought 141,000 tonnes of wheat at
their weekly tender with 100,000 tonnes of the total from the US. The
International Grain Council pegged world wheat production for the 2005/2006
season at 602 million tonnes, down 22 million tonnes from this season. World
demand is thought to be near 605 million tonnes as compared with 611 million
this year. World ending stocks were revised lower by 1 million tonnes from last
month to 133 million tonnes as compared with 137 million tonnes this year. For
deliveries for first notice day tomorrow, traders are looking for 500-1000
contracts. July wheat support comes in at 324 and 322 with 329 1/2 as
resistance.
Technical Outlook
WHEAT (JUL) 04/29/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Momentum
studies are trending higher from mid-range, which should support a move higher
if resistance levels are penetrated. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
market tilt is slightly negative with the close under the pivot. The near-term
upside target is at 333 3/4. The next area of resistance is around 330 1/4 and
333 3/4, while 1st support hits today at 324 1/4 and below there at 321 1/2.
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LIVE CATTLE RECAP
4/28/2005
June Live Cattle finished down 0.02 at 85.60,
0.22 off the high and 0.15 up from the low.
May Feeder Cattle closed up 0.40 at 108.40. This
was 0.72 up from the low and 0.10 off the high.
The cattle market consolidated recent losses with
choppy and quiet two-sided trade. Ideas that the cash and beef market will top
out soon helped trigger the sell-off but the big discount of June to the cash
market helped support. Boxed beef cutout values at mid session were up $0.29 to
$163.19 as compared with $158.46 one week ago. Slaughter came in at 121,000 head
versus 119,000 a week ago and 130,000 a year ago.
Technical Outlook
CATTLE (JUN) 04/29/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The cross over and close above the 18-day moving average is an indication the
longer-term trend has turned positive. It is a slightly negative indicator that
the close was under the swing pivot. The next downside objective is now at
85.250. The next area of resistance is around 85.770 and 85.970, while 1st
support hits today at 85.420 and below there at 85.250.
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LEAN HOGS RECAP
4/28/2005
June Lean Hogs finished down 0.22 at 76.70, 1.00
off the high and 0.20 up from the low.
May Pork Bellies closed down 0.35 at 81.60. This
was 0.10 up from the low and 0.75 off the high.
June hogs managed to move to a 4-session high
before pulling back off of the highs and moving lower on the day with talk of an
overbought condition contributing to light long liquidation selling. Cash hogs
were higher, which supported the early gains. The 2-day lean index for the
period ending April 26th came in at 70.56, up 11 cents for the day and up from
69.98 last week. Slaughter came in at 382,000 head versus 387,000 a week ago and
383,000 a year ago.
Technical Outlook
HOGS (JUN) 04/29/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal down puts
the market on the defensive. The market tilt is slightly negative with the close
under the pivot. The near-term upside target is at 78.100. The next area of
resistance is around 77.300 and 78.100, while 1st support hits today at 76.120
and below there at 75.720.
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COCOA MARKET RECAP
4/28/2005
July Cocoa finished down 12 at 1488, 17 off the
high and 4 up from the low.
The cocoa failed to extend the gains posted on
Wednesday in the action Thursday and that would seem to confirm that short
covering was indeed responsible for the temporary bounce. We continue to see
very little uncertainty in the cocoa market and that would seem to favor the
bear camp. We also suspect that the perpetual gains in the Dollar (even if the
gains have been minimal) are serving to keep a lid on cocoa prices. With a
number of unrelated markets showing weakness in the face of weak energy prices
some traders are suggesting that broad based fund liquidation is being seen and
that takes some of the wind out of the cocoa market.
Technical Outlook
COCOA (JUL) 04/29/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was under the swing pivot. The next downside target is 1471. The
next area of resistance is around 1498 and 1512, while 1st support hits today at
1478 and below there at 1471.
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COFFEE MARKET RECAP
4/28/2005
July Coffee closed down 2.45 at 130.90. This was
0.40 up from the low and 2.80 off the high.
July coffee closed weaker on speculative profit
taking as the recent rally off expectations for tightening supplies may have run
its course for now. Roasters appear to be well covered which mean a lack of cash
business could lead to a pullback to retracement support levels at 129.50 and
below there at 126.50. However, a break under 126.50 is not likely given the
favorable supply/demand setup and with the approach of Brazil’s freeze season.
Technical Outlook
COFFEE (JUL) 04/29/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day moving average. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The near-term upside target is
at 134.65. The next area of resistance is around 132.50 and 134.65, while 1st
support hits today at 129.35 and below there at 128.35.
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SUGAR MARKET RECAP
4/28/2005
July Sugar closed down 0.06 at 8.54. This was
0.05 up from the low and 0.04 off the high.
After three strong days, the sugar market closed
lower today on commercial selling and some spec long liquidation out of the
expiring May contract, which goes off the board tomorrow. The market did not
appear to react to the WTO’s ruling today that the EU’s quota C sugar exports
are illegal. While this might force the EU to dispose of the sugar internally,
the effect is not expected to be immediate because the they would have 15 months
to comply. In the long run, fewer EU exports and/or lower production might leave
a bullish tilt to the ruling.
Technical Outlook
SUGAR (JUL) 04/29/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend could be turning up with the close back
above the 18-day moving average. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The near-term upside
target is at 8.62. The next area of resistance is around 8.58 and 8.62, while
1st support hits today at 8.50 and below there at 8.45.
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COTTON MARKET RECAP
4/28/2005
July Cotton finished up 0.61 at 57.02, 0.43 off
the high and 1.52 up from the low.
July cotton opened lower this morning on a
disappointing export sales report, but after touching 55.50 early in the
session, the market managed to recover throughout the session to close higher on
the day. Weekly export sales for cotton released this morning before the opening
came in at 208,300 metric tons for the current crop year and 18,700 for the new
crop, for a total of 227,000. This was below the low end of trade expectations
and was lower last week’s 269,000. So far this marketing year, sales have
reached 96.7% of the USDA’s forecast for the year versus an average of 102% for
this point in the season. The market has been rallying on expectations of
greater export demand for cotton due to the weaker US dollar making US cotton
more competitive globally and also USDA expectations for greater cotton demand
from China.
Technical Outlook
COTTON (JUL) 04/29/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. The upside closing price reversal on the daily chart is
somewhat bullish. It is a mildly bullish indicator that the market closed over
the pivot swing number. The near-term upside target is at 58.69. The next area
of resistance is around 57.99 and 58.69, while 1st support hits today at 56.05
and below there at 54.80.