Will The BOJ Intervene Again Tomorrow?

Technical Outlook

BONDS (MAR) 01/08/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 109.31 and then again at 110.13, while swing support hits at 108.27 and below there at 108.05. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 108.05.

T-NOTES(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 111.20. It is a mildly bullish indicator that the market closed over the pivot swing number. 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 112.28 and then again at 113.05, while swing support hits at 112.03 and below there at 111.20. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/7/2004

The stock market continues to reject aggressive profit taking and maintain a rather tight consolidation. Even after the US Secretary of State confirmed that the US is doing radiological testing the market didn’t show much concern. Therefore, the market remains on firm fundamental footing and the recent back and fill action is probably leveling the slightly overbought technical condition present following the last months rally. More and more traders are pointing to the January affect and that would seem to leave the bias up until next week.

Technical Outlook

S&P500 (MAR) 01/08/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. Underlying support comes in at 1119.75 and 1111.63, with overhead resistance at 1131.25 and 1134.63. 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 1134.63. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The outside day up is somewhat positive. The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1135.38. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1132.00 and then again at 1135.38, while swing support hits at 1120.00 and below there at 1111.38. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) A new contract high was made on the rally. The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. The market should run into resistance at 1529.00 and above there at 1535.25 with support at 1505.00 and 1487.25. The 9-day RSI over 70 indicates the market is approaching overbought levels. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1535.3.

CURRENCY MARKET RECAP

1/7/2004

The Dollar opened moderately higher, possibly off ideas that the BOJ was in buying Greenbacks. We have to think that more intervention fears will be see in the action Thursday because the Yen continues to hover right at an upside breakout point. Since the foreign exchange markets haven’t been tracking off economic reports we suspect that the near term focus will be almost exclusively determined by the BOJ!

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A new contract high was made on the rally. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 94.58 and above there at 94.79, with the yen finding support around 94.21 and below there at 94.05. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 94.79.

EURO (MAR): 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 1.2564. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2564, with overhead resistance at 1.2704. The market’s short-term trend is positive on a close above the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/7/2004

Gold posted more corrective action Wednesday and with the recent overbought status and that Dollar remaining strong the bears maintain a slight edge. The Dollar has not seen many instances where it has rallied for more than a couple sessions and therefore until the trade begins to doubt a continuation of the Dollar downtrend one can hardly abandon the bull trend in gold. More importantly silver platinum and copper all showed corrective action, which suggests a slight break from recent psychology.

Technical Outlook

SILVER (MAR): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 621.8 and below there at 617.9 with resistance likely at 627.8 and 630.8. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 617.9. The 9-day RSI over 70 indicates the market is approaching overbought levels.

GOLD (FEB): Support for gold today comes in near 417.73, while resistance is pegged at 427.53. 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 417.73. The market’s close below the pivot swing number is a mildly negative setup. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels.

COPPER MARKET RECAP

1/7/2004

The copper market finished lower but managed to regain some of the major losses seen early in the session. Apparently a copper smelter run by Codelco was running at half capacity but was thought to be in a position to continue shipping copper concentrates after a problem at the facility. Therefore, it would seem like the shortage issue continues to underpin prices even if prices remains significantly overbought technically. The US session was also influenced by aggressive profit taking in the Chinese copper market and no direction from US economic numbers.

ENERGY MARKET RECAP

1/7/2004

The weekly API report was a surprise to the market with the product stocks rising sharply and the crude stocks mostly holding steady. It would seem that recent crude stock declines resulted in a build up of distillate and that should mitigate the near term anxiety off the weather. Concern that Nigeria might see an escalation of labor and political tensions should have provided support but the market was simply put off by the inventory readings. It would seem that temperatures looking forward are more normal and that could also have robbed the market of speculative buying interest.

Technical Outlook

CRUDE OIL (MAR): The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 33.07 and below there at 32.66, with resistance pegged at 33.73 and 33.98. 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 33.98.

UNLEADED GAS (MAR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 98.77. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 98.77, while support should be found around 93.77. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 92.13, with resistance is at 97.33. 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 97.33.

CORN MARKET RECAP

1/7/2004

Since the soybeans were weighing on prices the corn hardly had a chance to benefit from news that South African 2003-2004 corn plantings were expected to decline by 20% due to drought during planting. The trade is also expecting to see an upward revision in corn acres in the coming USDA report but that should be offset by another increase in corn demand. Many traders think that economics favor soybean acres in 2004 but currently December corn doesn’t appear to be buying any acres. Weekly corn exports call for 600,000 to 800,0000 metric tons.

Technical Outlook

CORN (MAR) 01/08/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 251 3/4. The market’s close below the pivot swing number is a mildly negative setup. Market resistance comes in at 251 3/4 today, with support at 247 3/4. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. The gap down on the day session chart is bearish with more selling pressure possible today.

SOY COMPLEX RECAP

1/7/2004

Apparently fund players decided to dump positions ahead of the coming USDA report probably because of the significant overbought status of the latest COT report and possible because violations of chart support Wednesday forced some players to the sidelines. A report of the “SARS case” in China was a fresh bearish element for soybeans, even though the story has been developing over the last several sessions. Other traders suggested that a strong bounce in the Dollar contributed to a correction in the soybeans because that supposedly makes US beans less attractive to foreign buyers. Weekly export sales in soybeans are expected to be 250,000 to 400,000 metric tons.

Technical Outlook

SOYBEANS (MAR) 01/08/04: The swing indicator gave a moderately negative reading with the close below the 1st support number. The next area of resistance is around 799 1/2 and 804 , while 1st support hits today at 788 and below there at 781 . 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 804 .

MEAL (MAR): 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 238.5. The gap down on the day session chart is bearish with more selling pressure possible today. First resistance comes in at 242.7, with support at 240.0. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market is in a bearish position with the close below the 2nd swing support number.

BEAN OIL (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 28.48. The close below the 2nd swing support number puts the market on the defensive. The gap lower price action on the day session chart is a bearish indicator for trend. Daily swing resistance is found at 28.17 and above there at 28.48. Support should be encountered at 27.62 and 27.38.

WHEAT MARKET RECAP

1/7/2004

While old crop wheat barely managed to close positive, new crop contracts ran right up to fresh contract highs. The trade reported early fund selling but the market managed to plow through that pressure later in the session. The weekly export sales projections call for a range of expectations 250,000 to 450,000 metric tons in wheat and the market continues to be supported by ideas that the Chinese will continue to populate the export news. New crop traders are also expecting the new year to bring about a little more action cash trade and that might lead to even further improvements in export expectations from the US.

Technical Outlook

WHEAT (MAR) 01/08/04: The daily closing price reversal up is positive. It is a slightly negative indicator that the close was lower than the pivot swing number. Look for near-term support at 389 1/2 and below there at 382 1/2, with resistance levels at 401 and 405 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 405 1/2.

LIVE CATTLE RECAP

1/7/2004

The cattle market closed limit-up in active trade as there was growing optimism that key beef importers might be willing to resume some imports much sooner than traders had believed possible. DNA results showed that the infected cow was born and likely fed for a few years in Canada before moving to the US. In addition, Agriculture officials coming from Mexico were optimistic that Mexico may be quick to re-open the border to some beef products, similar to the US/Canadian proposals where there are restrictions on age or types of beef. In addition, there were reports from Japanese newspapers that the Ag Minister is weighing proposals to lift the ban on US beef imports on the condition that the beef be inspected by private-sector organizations approved by the government. Boxed-beef cut-out values were down $2.11 to $130.44 as compared with $147.58 last week. Cash markets in Texas traded at $75.00 which was up $1.00 and added to the positive tone.

Technical Outlook

CATTLE (FEB) 01/08/04: 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 76.30. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 74.80 and below there at 73.90. Market resistance is at 76.00 and then again at 76.30. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The 9-day RSI under 30 indicates the market is approaching oversold levels.

LEAN HOGS RECAP

1/7/2004

February hogs closed 27 higher on the session and up 100 points from the lows as strength in the cattle helped provide for some short-covering support. Bellies closed lower under pressure from the bearish cold storage report. The premium of February hogs to the cash market is a limiting factor and there is still no sign of lower beef and higher pork demand from the mad cow case. In addition, pork production in the weeks just ahead looks hefty and could weigh on cash. Cash hogs are expected to come in .50 lower on Thursday. Weekly average weights for Iowa/Minnesota for the week ending January 3rd came in at 267.5 pounds as compared with 264.8 the previous week and 265.3 pounds last year. Weights normally peak in mid to late December and fall into early February. The record weight data hit on December 13th in 2003 and the jump back to near record highs suggests that producers are backing up hogs in the country. This, combined with weaker packer profit margins and declining packer demand is a bearish set-up and would indicate hefty pork production in the next few weeks. Pork cut-out values were down 77 cents to $56.22 as compared with $56.77 last week at this time.

Technical Outlook

HOGS (FEB) 01/08/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 55.45 and 55.70 today, while support is around 54.42 and then 53.65. The upside closing price reversal on the daily chart is somewhat bullish. 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 55.70.

COCOA MARKET RECAP

1/7/2004

Cocoa prices continued the surprise rise but with the market picking up signs that violence was slowing the cocoa harvest a whole new twist is seen. In fact, the commercial buyers took the threat of violence serious and now the small spec and funds are playing catch up with buy orders. The market might also have found some strength off the idea that the German 4th quarter cocoa grind increased by 12.3%. In other words, supply is threatened and demand is growing right into the critical main crop harvest at the Ivory Coast.

Technical Outlook

COCOA (MAR)01/08/04 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 1703 and above there at 1737 with support at 1582 and 1495. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1736.75.

COFFEE MARKET RECAP

1/7/2004

The coffee market finished moderately lower after origin selling pressured prices. As prices weakened, the funds decided to sell after recently being seen as heavy buyers and that pushed prices down even more. In general the tone in the coffee market isn’t that negative it just seems like the recent rally left the market a little overdone! CSCE stocks dropped by 2,734 bags to 4.358 million bags. Brazilian coffee exports from the first 5 days of January came in at 101,719 bags, which is half the total produced in the same period in December.

Technical Outlook

COFFEE (MAR)1/8/04 The market tilt is slightly negative with the close under the pivot. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 70.80.The Coffee contract should run into resistance at 69.70 and above there at 70.80 with support at 68.05 and 67.50. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/7/2004

While the market seems to be correcting the oversold condition, the spread activity in both London and New York is bearish as March sugar has moved from a 14 point premium on December 9th to a 20 point discount. However, with pent-up demand from Middle East and other key producing countries, some jump in cash activity in the next few weeks combined with short-covering from speculators could support a recovery bounce over the near-term. Trade houses seem extremely bearish on prices and a short-term pop in demand may be a bit more intense than trade expectations. The hand-to-mouth buying pattern recently has left the sugar pipeline inventory very short and a move to re-stock inventory could even give the appearance of a jump in demand.

Technical Outlook

SUGAR (MAR) 01/08/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.00, with support found at 5.86. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 6.00.

COTTON MARKET RECAP

1/7/2004

March Cotton closed sharply lower after a slightly lower opening triggered active long liquidation selling. Ideas that the market is overbought after recent strong gains and a lack of new buying support in spite of optimistic price outlooks from participants at the Beltwide Cotton Conference in San Antonio, Texas. Weekly export sales, released before the opening, are expected to come in near 125,000-150,000 bales as compared with 89,300 bales last week. Traders are looking shipments to come in near 150,000-175,000 bales from 175,200 bales last week. A jump in the US dollar and weakness in soybeans added to the bearish tone.

Technical Outlook

COTTON (MAR) 01/08/04: The market’s close above the 9-day moving average suggests the short-term trend remains positive. The close below the 2nd swing support number puts the market on the defensive. Next resistance area comes in at 75.02 and then again at 76.21, while support is targeted at 73.07 and 72.31. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 76.21. ORANGE JUICE (MAR)1/8/04 The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 66.50 and above there at 67.25 with support at 65.35 and 64.95. 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 67.25.