Will Oil Shipments Be Held Up?
BOND MARKET RECAP
7/28/2004
September Bonds closed up 0-03 at 106-26. This
was 0-21 up from the low and 0-01 off the high.
September 10 Yr Treasury Notes finished up 0-055
at 109-265, 0-010 off the high and 0-145 up from the low.
The Treasury market forged surprisingly
weak action Wednesday and did so in the face of reports that could have been
considered very supportive. Depending on how one fashions the durables it could
be considered bullish or bearish toward Treasuries. Since the Durables managed
the first rise in 3 months it would seem that the bears were willing to attack
the market. On the other hand, the report was much weaker than expected and with
transportation excluded the durables actually declined. With sharply rising
energy prices and a below expectations durables report the edge would seem to
sit with the bull camp. In conclusion, considering the action in equity and
energy markets it would seem like bonds will at least continue to enjoy solid
support on the charts.
Technical Outlook
#BONDS (SEP) 07/29/04: The daily closing price
reversal up is positive. It is a slightly negative indicator that the close was
lower than the pivot swing number. Near-term resistance for bonds is at 107.05
and then again at 107.12, while swing support hits at 106.14 and below there at
105.30. 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 105.30.
T-NOTES(SEP) The upside closing price reversal on
the daily chart is somewhat bullish. 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 109.07. The market’s close below the pivot
swing number is a mildly negative setup. Near-term resistance for the T-Notes is
at 110.02 and then again at 110.07, while swing support hits at 109.18 and below
there at 109.07. The market’s short-term trend is negative as the close remains
below the 9-day moving average.
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STOCK INDICES RECAP
7/28/2004
September S&P finished up 2.7 at 1095.2, 3.2 off
the high and 14.2 up from the low.
September S&P E-Mini closed up 3 at 1095.5. This
was 14.75 up from the low and 3 off the high.
September Dow closed up 48 at 10110. This was 135
up from the low and 23 off the high.
September Dow E-Mini finished up 48 at 10110, 24
off the high and 135 up from the low.
The stock market was tripped up by the slightly
disappointing durable goods release. However, some might suggest that the
Durable goods report wasn’t that negative as it was the first gain in the Index
in 3 months. In addition to the slightly disappointing macro economic look
Wednesday the stock market was also undermined by sharp gains in energy prices.
The most disappointing development for the bull camp Wednesday is that corporate
earnings remained positive and yet the market didn’t get a chance to benefit
from that news. It is also possible that the stock market was simply overbought
coming into the action Wednesday and the data gave the market a reason to
liquidate.
Technical Outlook
#S&P500 (SEP) 07/29/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. The upside closing
price reversal on the daily chart is somewhat bullish. Underlying support comes
in at 1086.80 and 1075.20, with overhead resistance at 1104.20 and 1110.00. The
market’s short-term trend is positive on a close above the 9-day moving average.
Daily momentum studies are on the rise from low levels and should accelerate a
move higher on a push through the 1st swing resistance. The near-term upside
objective is at 1110.00.
S&P E-Mini (SEP): The daily closing price
reversal up is a positive indicator that could support higher prices. Rising
from over sold levels, daily momentum studies would support higher prices
especially on a close above resistance. The next upside objective is 1110.31.
The market has a slightly positive tilt with the close over the swing pivot.
Near-term resistance for the S&P Mini is at 1104.38 and then again at 1110.31,
while swing support hits at 1086.63 and below there at 1074.81. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
NASDAQ (SEP) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The market should run into resistance at 1401.75 and above there at
1415.13 with support at 1368.25 and 1348.13. 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 1415.1.
MINI DOW (SEP) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10187 and above there at 10240 with support at 10028 and
9922. Positive momentum studies in the neutral zone will tend to reinforce
higher price action. The next upside target is 10240. With the close higher than
the pivot swing number, the market is in a slightly bullish posture.
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CURRENCY MARKET RECAP
7/28/2004
September US Dollar finished down 4 at 8994, 37
off the high and 16 up from the low.
September Euro finished up 0.17 at 120.5, 0.17
off the high and 0.6 up from the low.
September Euro Dollar closed up 0.005 at 98.02.
This was 0.015 up from the low and 0.01 off the high.
September Canadian Dollar closed up 0.28 at
75.22. This was 0.56 up from the low and 0.14 off the high.
September British Pound finished up 0.16 at
181.53, 0.29 off the high and 0.69 up from the low.
September Swiss closed up 0.02 at 78.47. This was
0.25 up from the low and 0.26 off the high.
September Japanese Yen closed down 0.55 at 89.68.
This was 0.16 up from the low and 0.45 off the high.
The Dollar started out firm but then fell back
sharply off the disappointing reading on Durable goods. We also have to wonder
if the Dollar wasn’t seeing some renewed selling pressure off the fact that
energy prices are on the rise again and the US is usually thought to be impacted
more by high prices than other economies. The fact that the Dollar managed to
hold in positive ground on the session shows that the overall attitude toward
the Dollar is still better than was seen in early July. The biggest loser in the
action Wednesday was the Yen and that would seem to be a function of
disappointing economic prospects in the US.
Technical Outlook
#CURRENCIES 07/29/04: YEN (SEP): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. It is a slightly negative indicator that the close was lower
than the pivot swing number. Swing resistance is targeted at 89.99 and above
there at 90.36, with the yen finding support around 89.38 and below there at
89.14. 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 89.14. The 9-day RSI under 30
indicates the market is approaching oversold levels.
EURO (SEP): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
1.1962. The market is in a bearish position with the close below the 2nd swing
support number. Swing support for the Euro comes in at 1.1962, with overhead
resistance at 1.2116. 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. The gap down on the day session chart
is bearish with more selling pressure possible today.
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PRECIOUS METALS RECAP
7/28/2004
October Gold closed up 2 at 390.4. This was 3.4
up from the low and 1.1 off the high.
September Silver finished up 0.126 at 6.373,
0.012 off the high and 0.263 up from the low.
October Platinum closed down 4.4 at 798.8. This
was 7.8 up from the low and 1.2 off the high.
The metals markets were fortunate in that the
Dollar fell back from the highs on the session otherwise the upside breakout in
the Dollar might have continued. If the uptrend in the Dollar continues many
suspect that another liquidation wave will be seen in the gold market. The gold
market might have been supported by news from Newmont mining that their second
quarter net income was set to decline significantly due to planned mine
closures. The fact that gold, silver and copper managed to rise would seem to
suggest that physical demand expectations for the metals might have improved
compared to expectations last week.
Technical Outlook
#P-METALS 07/29/04: SILVER (SEP): 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. Initial support for
silver is at 623.6 and below there at 603.5 with resistance likely at 633.8 and
651.1. 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 603.5.
The outside day up and close above the previous day’s high is a positive signal.
The daily closing price reversal up is positive.
GOLD (OCT): Support for gold today comes in near
385.33, while resistance is pegged at 394.33. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 385.33. It is a mildly bullish indicator that the market closed over the
pivot swing number. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The upside closing price reversal on the
daily chart is somewhat bullish.
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COPPER MARKET RECAP
7/28/2004
September Copper finished up 5.00 at 127.10, 0.90
off the high and 3.30 up from the low.
The reversal in the Dollar and renewed Chinese
interest gave the copper market the incentive to rally. However, reports during
the session showing June Chilean copper production to have risen by 5.3% should
have dampened sentiment. While the US durable goods report did manage to show
the first gain in 3 months the report did come in under expectations and that
served to derail the macro economic optimism that was present follow the much
better than expected Tuesday release of the Consumer Confidence report. The
copper market might also have been supported by comments from a Canadian mining
executive who suggested that the fear of Chinese metals demand slowing has been
drastically overstated.
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ENERGY MARKET RECAP
7/28/2004
September Crude Oil closed up 1.06 at 42.90. This
was 0.80 up from the low and 0.15 off the high.
September Heating Oil closed up 2.20 at 115.46.
This was 2.46 up from the low and 0.34 off the high.
September Unleaded Gas finished up 4.79 at
129.18, 0.32 off the high and 4.78 up from the low.
September Natural Gas finished up 0.12 at 6.14,
0.08 off the high and 0.22 up from the low.
September Propane closed up 1.05 at 78.30. This
was equal to the low and equal to the high.
Energy prices continued to rise in the face of
growing concern that future oil shipments from Yukos might be held up. The
weekly inventory readings showed both crude and gasoline stocks to have
declined. Therefore, the market was supported by tightening supplies and
concerns that a critical world producer might see output shut down. While the
DOE figures partially deflated the bullish tilt seem from the API readings the
inventory readings have to be considered supportive. Some might suggest that a
sharp rise in the refinery operating rate is a limiting force for the products
but with the sentiment solidly in the bull camp for crude oil the potentially
damaging refinery issue is discounted.
Technical Outlook
#ENERGIES 07/29/04: CRUDE OIL (SEP): The rally
brought the market to a new contract high. The market’s close above the 2nd
swing resistance number is a bullish indication. Support for crude is keyed on
42.43 and below there at 41.79, with resistance pegged at 43.38 and 43.69. 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 43.69. With a reading over 70, the 9-day RSI is
approaching overbought levels.
UNLEADED GAS (SEP): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 122.97. 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. Resistance today is at 133.17, while support should be found around
122.97. The moving average crossover down (9 below 18) indicates a possible
developing short-term downtrend.
HEATING OIL (SEP): The market’s close above the
2nd swing resistance number is a bullish indication. Heating oil should
encounter support around 112.13, with resistance is at 117.73. 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 117.73. The rally brought the market to a new contract
high.
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CORN MARKET RECAP
7/28/2004
September Corn finished down 3 3/4 at 218
1/2, 4 off the high and 1 up from the low. December Corn closed down 4 at 226
3/4. This was 1 1/4 up from the low and 4 off the high.
The weakness in the soybean complex along with
expectations for record yields continued to encourage fund selling and pressured
the market lower on the day to test Monday’s lows. Export news is quiet. Ethanol
production for the month of May was reported at 221,000 barrels per day which is
a new all-time record monthly higher and up 26% from last years pace. Even more
impressive was news that ethanol stocks fell to 5.17 million barrels from 6.52
million the previous month. Declining stocks in a period of record production
suggests the demand for ethanol is still out-pacing production. There are 78
ethanol plants with 10 plants under construction which will add 400 million
gallons of annual production capacity soon. Basis bids at the gulf were firm.
For the weekly export sales report, released before the opening, traders are
looking for sales near 500,000-800,000 tons as compared with 375,400 tons last
week. Failure to hold this week’s lows opens the door for increased fund selling
ahead with the new lows negating the July 26th reversal lows. New support for
December corn drops down to 220 1/2 with resistance at 229 3/4 and 231 1/2.
Technical Outlook
#CORN (DEC) 07/29/04: Daily momentum studies are
on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The near-term upside objective is at 232 1/2.
The market is in a bearish position with the close below the 2nd swing support
number. Market resistance comes in at 232 1/2 today, with support at 222. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 20, the 9-day RSI indicates the market is
extremely oversold. The market was pushed to a new contract low.
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SOY COMPLEX RECAP
7/28/2004
August Soybeans finished down 38 1/2 at 627, 31
off the high and 2 up from the low. November Soybeans closed down 21 1/4 at 575
3/4. This was 3/4 up from the low and 17 1/4 off the high.
August Soymeal closed down 13.9 at 198.8. This
was 1.3 up from the low and 12.2 off the high.
August Soybean Oil finished down 0.99 at 23.25,
0.9 off the high and 0.02 up from the low.
The move to new lows for the week leaves the
market vulnerable to more fund selling as sellers were more confident this
morning as the perception of good weather ahead has triggered increased selling.
Gulf basis levels were higher for August delivery this morning but weakness in
new crop helped turn old crop sharply lower as long liquidation turned active
with first notice day on Friday for the August contract. The longer-term weather
maps overnight did not confirm much of an extension of the hot weather and the
market is trading more rain and milder temperatures after a few days of heat
next week. In addition, the western cornbelt looks to receive more rains ahead
of the weekend. For the Census Crush report, released on Thursday morning,
trader’s looks for June crush at near 109.25 million bushels which would be down
from 117.5 million bushels in May. Oil stocks are thought to come in near 1.58
billion pounds, up slightly from last month and down from 1.64 billion pounds
last year. Traders are keying in on the mill stocks of soybeans for this report.
If stocks come in near the expected 70 million bushels from 91.2 million last
month, mills will need to find more soybeans from producers to crush more than
70 million bushels in July and/or wait for delta soybeans to become available in
mid-August. For the weekly export sales report, released before the opening,
traders are looking for soybeans sales near 0-75,000 tons, meal at 20,000-40,000
tons and oil at 1,000-4,000 tons. November soybean support comes in at the
November 2003 lows at 570 1/2 with resistance at 588 and 599.
Technical Outlook
#SOYBEANS (NOV) 07/29/04: The close below the 2nd
swing support number puts the market on the defensive. The next area of
resistance is around 584 1/2 and 597 3/4, while 1st support hits today at 566
1/2 and below there at 561 3/4. 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
561 3/4. The 9-day RSI under 30 indicates the market is approaching oversold
levels.
MEAL (DEC): The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 172.6.
First resistance comes in at 181.2, with support at 174.7. 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.
BEAN OIL (DEC): 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 20.89. The close below the 2nd swing support number puts the
market on the defensive. Daily swing resistance is found at 21.86 and above
there at 22.37. Support should be encountered at 21.12 and 20.89. The 9-day RSI
under 30 indicates the market is approaching oversold levels.
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WHEAT MARKET RECAP
7/28/2004
September Wheat finished down 6 1/2 at 314 3/4, 7 1/4 off the
high and 3/4 up from the low. December Wheat closed down 7 1/2 at 327 1/2. This
was 1/2 up from the low and 8 1/2 off the high.
The collapse in soybeans along with a weak export
demand tone helped to pressure the market to new 12 month lows this morning as
funds continue to build a hefty net short long position and there seems to be a
lack of any significant weather threats to the world’s largest producers. In
fact, in the last Commitment-of-Traders report with options (as of July 20th)
funds were already net short over 23,000 contracts and given the price action
since this time, the fund trader net long could be close to the record near
28,000 contracts from early 2002. The export tenders in the market for US wheat
are routine with South Korea looking for 13,800 tons and Taiwan looking for
42,500 tons of US wheat. Crop scouts in North Dakota for a 3-day examination of
the crop see the wheat crop yield potential similar to last years bumper yields.
For the weekly export sales report, released before the opening, traders are
looking for sales near 350,000-450,000 tons as compared with 428,000 tons last
week. Support for September wheat comes in at 314 1/2 and 310 with 321 1/2 and
325 as short-term resistance.
Technical Outlook
#WHEAT (DEC) 07/29/04: The close below the 2nd
swing support number puts the market on the defensive. Look for near-term
support at 323 and below there at 320 1/2, with resistance levels at 332 and 338
1/2. 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 320 1/2. The 9-day RSI
under 30 indicates the market is approaching oversold levels.
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LIVE CATTLE RECAP
7/28/2004
October Live Cattle closed down 0.60 at 90.35.
This was 0.25 up from the low and 0.62 off the high.
October Feeder Cattle finished down 0.27 at
114.00, 0.45 off the high and 0.65 up from the low.
The market opened near unchanged but long
liquidation (profit-taking) selling emerged to pressure futures lower. The 5-day
surge of nearly 600 points for October cattle left the market in an overbought
condition. Boxed beef cutout values came in at $1.18 higher to $142.98 as
compared with $137.34 one week ago. Cattle slaughter came in at 120,000 head as
compared with trade expectations of 128,000-130,000 head. The lower than
expected slaughter is generally considered a bearish factor as packer demand to
move cattle swiftly through the pipeline might be less than expected.
Technical Outlook
#CATTLE (OCT) 07/29/04: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 91.32. It is a slightly negative indicator
that the close was lower than the pivot swing number. Support should be
encountered at 89.92 and below there at 89.57. Market resistance is at 90.80 and
then again at 91.32. The market’s close above the 9-day moving average suggests
the short-term trend remains positive.
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LEAN HOGS RECAP
7/28/2004
October Lean Hogs closed down 0.62 at 68.65. This
was 0.15 up from the low and 0.80 off the high.
February Pork Bellies finished down 0.80 at
92.50, 0.75 off the high and 1.00 up from the low.
The market experienced a downside correction
after recent sharp gains as the move to new contract highs for December hogs
lacked new follow-through buyers. The reversal after a contract high is a
technical sign of a near-term top. Hog slaughter came in at 378,000 head as
compared with trade expectations of 378,000-388,000 head. The CME 2-day lean
index for the period ending July 26th came in at 78.76, down 0.22 from the
previous session and down from 79.28 one week ago.
Technical Outlook
#HOGS (OCT) 07/29/04: The market’s close below
the pivot swing number is a mildly negative setup. Resistance levels comes in at
69.12 and 69.77 today, while support is around 68.17 and then 67.87. 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 69.77.
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COCOA MARKET RECAP
7/28/2004
September Cocoa finished up 54 at 1658, 4 off the
high and 33 up from the low.
The cocoa market seemed like it was poised to
fall back into the opening but as the session wore on the bulls garnered more
and more control over prices. Seeing the cocoa market rise to the highest level
since January 13th suggests that something significant is developing with the
fundamentals. Apparently Central Ivory Coast growing regions are not getting the
necessary rains and the funds and small specs are rushing to build their long
positions. With lower rainfall amounts the trade expects less flowering and
fewer eventual pods and that means lower production. If one combines the recent
concerns of poor quality supply from the last production cycle that would seem
to tighten the equation even further.
Technical Outlook
COCOA (SEP) 07/29/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Cocoa
should run into resistance at 1677 and above there at 1688 with support at 1640
and 1614. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 1687.75.
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COFFEE MARKET RECAP
7/28/2004
September Coffee closed unchanged at 67.95. This
was 0.05 up from the low and 0.95 off the high.
The coffee market continues to exhibit signs of
weakness. In fact, after a minor short covering attempt it was clear that the
market simply couldn’t garner fresh buying interest and prices sagged into the
close. Ecuador’s June coffee exports were reported to be down 24% but the market
showed almost no interest in that development, possibly because the 6 month
export total was down only 2%. The market also didn’t get any support from news
that Colombia the Coffee Federation might seek to “re-import†150,000 bags
because of tight domestic supplies. It would seem that the only theme capable of
turning prices higher is a threat against the remainder of the Brazilian crop.
Technical Outlook
COFFEE (SEP) 7/29/04 The market tilt is slightly
negative with the close under the pivot. The 9-day RSI under 30 indicates the
market is approaching oversold levels. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 67.20. The
Coffee contract should run into resistance at 68.50 and above there at 69.20
with support at 67.5 and 67.20. The market’s short-term trend is negative as the
close remains below the 9-day moving average.
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SUGAR MARKET RECAP
7/28/2004
October Sugar closed up 0.03 at 8.23. This was
0.18 up from the low and 0.01 off the high.
The sugar market rejected an early slide but
failed to send a real positive message with the closing price. However, with
energy prices soaring to historically high levels and US ethanol production
exploding to a new high level it is pretty clear that energy market fundamentals
are going to remain a key component of sugar pricing. The London sugar market
saw some early selling because of the anticipation of an EU tender and that
could be why the US market opened lower and then recovered. Some might consider
the US Congressional Bill designed to limit ethanol imports into the US as a
negative as that seems to put corn in line for more demand that sugar. The spec
and fund long continues to grow but until there is something to discourage the
bull camp the trend looks to remain up.
Technical Outlook
#SUGAR (OCT) 07/29/04: 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. Swing resistance
comes in at 8.38, with support found at 8.00. The downside crossover (9 below
18) of the moving averages suggests a developing short-term downtrend. The daily
stochastics gave a bullish indicator with a crossover up. The near-term upside
objective is at 8.38.
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COTTON MARKET RECAP
7/28/2004
October Cotton finished up 0.51 at 44.45, 0.35
off the high and 0.85 up from the low.
While cotton prices remain under pressure off
mostly perfect weather in the US the market saw added selling Wednesday off the
fact that the Chinese were “reneging†on past purchases. The market didn’t get
much support from ideas that the Indian crop might have been hurt, but the
market also didn’t seem to get any support from the idea that some Chinese
cotton might have been destroyed by flooding. In short, the market just isn’t
receptive to threats against supply because of what the trade thinks about the
US crop. Given the extension on the downside the cotton market remains
extensively oversold technically. Cotton exports sales expectations for Thursday
call for 250,000 to 325,000 bales.
Technical Outlook
#COTTON (OCT) 07/29/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 45.05 and then again at 45.53, while support is
targeted at 43.85 and 43.13. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 43.13. The 9-day RSI under 30
indicates the market is approaching oversold levels.