Will Today’s Jobs Report Support The Market Next Week?
BOND MARKET RECAP
5/6/2005
June Bonds finished down 0-29 at 114-00, 0-29 off
the high and 0-09 up from the low.
June 10 Yr Treasury Notes finished down 0-260 at
111-005, 0-270 off the high and 0-030 up from the low.
Surprisingly, a patently bearish payroll
gain of 275,000 failed to put significant pressure on Treasuries. Even the work
week and wage information seemed to hint at inflation and the need to continue
hiking interest rates. Therefore, some in the trade think that the Fed is back
on the measured rate hike track. However, the dramatic improvement in the
economy has yet to be wholly accepted. Weakness in equity prices and strength in
energy prices as well as ongoing concern for the auto industry might have
discouraged some sellers.
Technical Outlook
BONDS (JUN) 05/09/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. 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
target is 112-30. The next area of resistance is around 114-22 and 115-15, while
1st support hits today at 113-14 and below there at 112-30.
TNOTES (JUN) 05/09/2005: 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 close below the 2nd swing support number puts
the market on the defensive. The next downside target is now at 110-080. The
next area of resistance is around 111-175 and 112-075, while 1st support hits
today at 110-180 and below there at 110-080.
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STOCK INDICES RECAP
5/6/2005
June S&P finished down 3.6 at 1171.3, 8.2 off the
high and 0.3 up from the low.
June S&P E-Mini closed down 3.75 at 1171.25. This
was 0.25 up from the low and 11 off the high.
June Dow closed down 9 at 10337. This was 2 up
from the low and 68 off the high.
The stock market extended the gains early in the
session that began early in the week, but ran into profit taking. While stock
prices might not have specifically benefited from the favorable economic
readings Friday morning, those readings go a long way toward improving
sentiment. Certainly, the residual concern of high oil prices and General Motors
hangs over the market. In the end, seeing such an improvement in a critical
monthly report should provide support to stock prices over the coming week.
Technical Outlook
S&P 500 (JUN) 05/09/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
It is a slightly negative indicator that the close was lower than the pivot
swing number. The near-term upside objective is at 1181.77. The next area of
resistance is around 1175.55 and 1181.77, while 1st support hits today at
1167.05 and below there at 1164.78.
SP EMINI (JUN) 05/09/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. The market
could take on a defensive posture with the daily closing price reversal down. It
is a slightly negative indicator that the close was under the swing pivot. The
next upside target is 1185.18. The next area of resistance is around 1176.87 and
1185.18, while 1st support hits today at 1165.63 and below there at 1162.69.
NASDAQ (JUN) 05/09/2005: The upside crossover of
the 9 & 18 bar moving average is a positive signal. Momentum studies are rising
from mid-range, which could accelerate 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 close over the pivot swing is a somewhat positive
setup. The near-term upside objective is at 1471.00. The next area of resistance
is around 1464.00 and 1471.00, while 1st support hits today at 1451.00 and below
there at 1445.00.
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CURRENCY MARKET RECAP
5/6/2005
June US Dollar finished up 68 at 8462, 7 off the
high and 72 up from the low.
June Euro finished down 1.29 at 128.29, 1.39 off
the high and 0.09 up from the low.
June Euro Dollar closed down 0.055 at 96.55. This
was 0.01 up from the low and 0.055 off the high.
June Canadian Dollar closed up 0.24 at 80.63.
This was 0.45 up from the low and 0.16 off the high.
June British Pound finished down 1.48 at 188.72,
1.03 off the high and 0.09 up from the low.
June Swiss closed down 0.87 at 83.02. This was
0.09 up from the low and 0.82 off the high.
June Japanese Yen closed down 0.48 at 95.6. This
was 0.2 up from the low and 0.25 off the high.
It is not surprising that the US dollar benefited
from the better than expected payroll number. However, countervailing the
strength in the US dollar were a series of developments with respect to the
Chinese currency. With both the US and Chinese making comments regarding a more
flexible Yuan, few traders were willing to pay us for fresh dollar positions.
The US Treasury Secretary suggested the Chinese were moving toward a flexible
currency, but would not comment on any timetable. Chinese officials also
suggested movement toward flexibility, but suggested change would come slowly.
Perhaps the most significant development in the currency markets Friday was the
strength in the Canadian dollar. The Canadian posted good payroll numbers and a
very positive technical trade on Friday.
Technical Outlook
YEN (JUN) 05/09/2005: The daily stochastics have
crossed over down which is a bearish indication. Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The major trend could be turning up with the close back above the 18-day
moving average. The gap lower on the day session chart is bearish and puts the
market on the defensive. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The next downside target is now at
95.17. The next area of resistance is around 95.82 and 96.06, while 1st support
hits today at 95.38 and below there at 95.17.
EURO (JUN) 05/09/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
close below the 2nd swing support number puts the market on the defensive. The
next downside target is now at 127.14. The next area of resistance is around
129.03 and 130.09, while 1st support hits today at 127.55 and below there at
127.14.
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PRECIOUS METALS RECAP
5/6/2005
June Gold closed down 3.8 at 426.9. This was 2.4
up from the low and 3.9 off the high.
July Silver finished down 0.098 at 6.965, 0.1 off
the high and 0.065 up from the low.
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The gold market certainly deserved to fall in the
action Friday as the sharp rise in the Dollar had the typical impact. However,
we suspect that the much better than expected US Non-Farm payroll readings helps
to eradicate some of the recent deflationary concerns that have been present on
all the metals markets. We also think that the increased talk about a flexible
Chinese currency countervails the upward track in the Dollar and that should
eventually lend some support to gold. In fact, given the sharp downward pulse in
the gold and the recovery off the lows on Friday it is possible that the market
found a found a fundamental bottom.
Technical Outlook
SILVER (JUL) 05/09/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The market setup is somewhat
negative with the close under the 1st swing support. The next downside objective
is now at 680.9. The next area of resistance is around 704.8 and 713.9, while
1st support hits today at 688.3 and below there at 680.9.
GOLD (JUN) 05/09/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The market back
below the 18-day moving average suggests the longer-term trend could be turning
down. The market is in a bearish position with the close below the 2nd swing
support number. The next downside target is now at 421.0. The next area of
resistance is around 430.0 and 433.5, while 1st support hits today at 423.8 and
below there at 421.0.
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COPPER MARKET RECAP
5/6/2005
June Copper closed up 1.30 at 146.10. This was
1.40 up from the low and equal to the high.
After settling down on top of critical chart
support levels in the prior session, the copper market managed with a short
covering bounce. In addition to the technical reversal, the demand outlook in
copper was certainly helped by the US payroll reading. The COT report released
Friday afternoon showed a very balanced spec and fund long position in copper
and that could indicate a key low has been forged. The close Friday effectively
puts copper market beyond a week long Asian holiday period.
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ENERGY MARKET RECAP
5/6/2005
June Crude Oil closed up 0.13 at 50.96. This was
0.71 up from the low and 1.29 off the high.
June Heating Oil closed down 1.26 at 143.11. This
was 1.91 up from the low and 2.89 off the high.
June Unleaded Gas finished down 0.32 at 147.60,
3.80 off the high and 1.60 up from the low.
June Natural Gas finished down 0.07 at 6.62, 0.16
off the high and 0.07 up from the low.
June Propane closed up 0.02 at 0.83. This was
equal to the low and equal to the high.
As we indicated in the comments throughout this
week, a large portion of the April break in prices was the result of sagging
economic sentiment. In our opinion, the rally Friday in energies was almost
totally driven by an upgrade in demand forecasts. In other words, the threat of
rising supply is at least for the time being countervailed by rising demand
expectations.
Technical Outlook
CRUDE OIL (JUN) 05/09/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The close over the pivot swing
is a somewhat positive setup. The next upside target is 53.10. The next area of
resistance is around 51.96 and 53.10, while 1st support hits today at 49.96 and
below there at 49.11.
UNLEADED (JUN) 05/09/2005: 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 market could
take on a defensive posture with the daily closing price reversal down. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The next downside objective is now at 142.75. The next area of
resistance is around 150.30 and 153.55, while 1st support hits today at 144.90
and below there at 142.75.
HEATING OIL (JUN) 05/09/2005: Momentum studies
are still bearish but are now at oversold levels and will tend to support
reversal action if it occurs. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The market’s close below the
pivot swing number is a mildly negative setup. The next downside objective is
138.56. The next area of resistance is around 145.50 and 148.15, while 1st
support hits today at 140.71 and below there at 138.56.
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CORN MARKET RECAP
5/6/2005
July Corn finished up 1/4 at 208 1/4, 3/4
off the high and 2 1/4 up from the low. December Corn closed up 1/2 at 226. This
was 2 1/4 up from the low and 3/4 off the high.
Favorable weather for planting and ideas that
yesterday’s bounce was a bit overdone helped to pressure the market early in the
day. However, strength in the other grains support the bounce to slightly higher
on the day into the close but July corn closed 5 1/4 cents lower on the week.
There was some underlying support seen from relatively dry and warm weather in
the forecast for the mid-west for this weekend and again next weekend. Funds
were noted sellers of near 3500 contracts into the mid-session. For Monday
night’s weekly crop progress report, traders are looking for planting progress
to reach 60-65% as compared with 52% this week. Stats Canada pegged corn stocks
at 5.27 million tonnes (as of March 31st) as compared with 4.95 million last
year. Support for July corn comes in at 205 1/2 with resistance at 211 1/4.
Technical Outlook
CORN (JUL) 05/09/2005: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next downside objective is now at 205. The next area of
resistance is around 209 3/4 and 210 3/4, while 1st support hits today at 206
3/4 and below there at 205.
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SOY COMPLEX RECAP
5/6/2005
July Soybeans finished up 11 1/4 at 640, 2 off
the high and 14 1/2 up from the low. November Soybeans closed up 8 1/4 at 625.
This was 11 up from the low and 1 off the high.
July Soymeal closed up 2.4 at 194.6. This was 3.1
up from the low and 1.4 off the high.
July Soybean Oil finished up 0.54 at 23.31, 0.04
off the high and 0.68 up from the low.
Favorable weather for planting in the mid-west
this weekend helped to push futures lower early in the session. However, some
light dry weather concerns and positioning ahead of next weeks USDA reports
helped support. July soybeans closed moderately higher on the session and up 13
3/4 cents on the week. There were only 8 contracts delivered against the May
futures this morning and no meal or oil. There is a little concern with a drier
than normal trend in some areas of the mid-west but the weather is expected to
be ideal for fast plantings pace. For Monday night’s weekly crop progress
report, traders are looking for planting progress to reach 25-30% as compared
with 8% this week. Severe dryness has Australia canola producers nervous over a
potential sharp drop in planted acreage this year if the drought continues this
month. Stats Canada pegged canola stocks at 3.74 million tonnes (as of March
31st) as compared with 2.52 million last year and trade expectations near 3.9
million. Iran announced a tender to buy 35,000-70,000 tonnes of soybean oil.
July soybean support comes in at 631 1/2 with resistance at 643 and 653 1/4.
Technical Outlook
BEANS (JUL) 05/09/2005: The major trend could be
turning up with the close back above the 40-day moving average. A bullish signal
was given with an upside crossover of the daily stochastics. Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The next upside objective is 653 1/4. The next area of resistance is
around 648 1/4 and 653 1/4, while 1st support hits today at 631 3/4 and below
there at 620 1/2.
MEAL (JUL) 05/09/2005: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The market now above the 18-day moving average suggests the
longer-term trend has turned up. There could be more upside follow through since
the market closed above the 2nd swing resistance. The next downside objective is
now at 189.7. The next area of resistance is around 196.8 and 198.6, while 1st
support hits today at 192.4 and below there at 189.7.
BEANOIL (JUL) 05/09/2005: The market now above
the 40-day moving average suggests the longer-term trend has turned up. Momentum
studies are rising from mid-range, which could accelerate 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. 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 objective is 23.87. The next area of resistance is around 23.67 and
23.87, while 1st support hits today at 22.95 and below there at 22.43.
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WHEAT MARKET RECAP
5/6/2005
July Wheat finished up 3 1/4 at 317, 2 off the high and 5 up
from the low. December Wheat closed up 3 1/2 at 335 1/4. This was 5 up from the
low and 1 1/2 off the high.
Fears of big production news for next weeks USDA
Crop Production report and talk of lower export demand for the new crop season
helped to pressure futures early. However, some concerns that weather could turn
more threatening for the next few weeks with the potential for some hot and dry
conditions over the central plains helped support. Fears of weak demand for the
first look at the new crop season in next week’s supply/demand report helped
limit the support. July wheat closed 3 1/4 higher on the session but down 9
cents on the week. In addition, after closing lower for 7 sessions in a row
there was talk of the oversold technical condition of the market which sparked
some short-covering. The deliveries against the May contract came in at 142 lots
today from 116 lots yesterday. Stats Canada pegged wheat stocks (as of March
31st) at 15.25 million tonnes as compared with 13.76 million tonnes last year
and trade expectation near 12.4-15.8 million tonnes. July wheat support comes in
at 312 1/2 with 322 3/4 and 326 as resistance.
Technical Outlook
WHEAT (JUL) 05/09/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. The daily closing
price reversal up on the daily chart is somewhat positive. Market positioning is
positive with the close over the 1st swing resistance. The next downside
objective is 309 1/4. The next area of resistance is around 320 1/2 and 323 1/4,
while 1st support hits today at 313 1/2 and below there at 309 1/4.
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LIVE CATTLE RECAP
5/6/2005
June Live Cattle finished down 0.37 at 85.05,
0.55 off the high and 0.20 up from the low.
May Feeder Cattle closed down 0.20 at 110.22.
This was 0.47 up from the low and 0.10 off the high.
June cattle closed 37 lower on the session and 57
lower on the week with more talk of weak beef prices and lower cash cattle
markets helping to pressure. Cash cattle finally traded in the southern plains
at $91.00, down $2.00 on the week. In addition, boxed-beef cut-out values were
down nearly $3.00 on Thursday and fell another $1.45 at mid session today to
$158.88 as compared with $163.44 one week ago. Slaughter came in at 127,000 head
as compared with trade expectations of 118,000-120,000 head.
Technical Outlook
CATTLE (JUN) 05/09/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next downside objective is 84.400. The next area of resistance is
around 85.400 and 85.870, while 1st support hits today at 84.700 and below there
at 84.400.
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LEAN HOGS RECAP
5/6/2005
June Lean Hogs finished down 1.07 at 76.15, 0.72
off the high and 0.25 up from the low.
May Pork Bellies closed down 1.60 at 81.35. This
was 0.05 up from the low and 1.45 off the high.
June hogs closed 107 lower on the session and
down 130 for the week. Cash markets were steady to $1.00 lower which helped
trigger some of the long liquidation selling and sell-tops were activated after
the sharply lower opening. The CME 2-Day lean Index for the period ending May
4th came in at 76.34 which was up 1.37 from the previous session and up from
70.89 the previous week. Slaughter came in at 353,000 head as compared with
trade expectations of 360,000-380,000 head.
Technical Outlook
HOGS (JUN) 05/09/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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 market setup is somewhat negative with the
close under the 1st swing support. The next downside target is 75.300. The next
area of resistance is around 76.620 and 77.220, while 1st support hits today at
75.670 and below there at 75.300.
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COCOA MARKET RECAP
5/6/2005
July Cocoa finished up 4 at 1484, 3 off the high
and 29 up from the low.
Extremely negative price action continues in
cocoa but the market eventually managed to return to the consolidation after a
downside breakout. However, the market has remained weak despite patently
supportive fundamental information. Certainly an additional upward thrust in the
Dollar conspired to prompt some selling in cocoa, but the main thrust in prices
early was probably mostly technical in nature as the market probably triggered
several sell signals on the new low for the move. However, it is possible that
the small spec long position was thoroughly leveled with the washout Friday.
Technical Outlook
COCOA (JUL) 05/09/2005: The crossover up in the
daily stochastics is a bullish signal. 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 major trend has turned down with the cross over back below
the 18-day moving average. The upside closing price reversal on the daily chart
is somewhat bullish. The market has a slightly positive tilt with the close over
the swing pivot. The next upside target is 1509. The next area of resistance is
around 1500 and 1509, while 1st support hits today at 1468 and below there at
1446.
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COFFEE MARKET RECAP
5/6/2005
July Coffee closed up 1.55 at 124.50. This was
3.50 up from the low and 0.30 off the high.
July coffee closed 155 higher on the session but
closed 345 points lower on the week. The surge higher in London to a new 5 1/2
year peak helped support the market. A lack of commercial interest in New York
and continued long liquidation selling kept the trade choppy to lower on the
week in spite of what appears to be some bullish fundamentals for the next
several months.
Technical Outlook
COFFEE (JUL) 05/09/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market now above the 18-day moving average suggests the longer-term trend has
turned up. The market has a slightly positive tilt with the close over the swing
pivot. The next downside target is 119.95. The next area of resistance is around
126.40 and 127.50, while 1st support hits today at 122.65 and below there at
119.95.
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SUGAR MARKET RECAP
5/6/2005
July Sugar closed up 0.19 at 8.42. This was 0.21
up from the low and 0.01 off the high.
July sugar closed 19 higher on the session but 24
lower on the week. Ideas that the recent sharp break has attracted new buying in
the cash market from countries like China and Russia helped to support the
market and so did more active buying from trade houses. China was a noted buyer
of Guatemala sugar which helped support. Some weather concerns with the slow
start to the beet crop in Russia and drought concerns from Australia added to
the positive tone.
Technical Outlook
SUGAR (JUL) 05/09/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend has turned down with the cross over back below the 18-day
moving average. The daily closing price reversal up on the daily chart is
somewhat positive. A positive setup occurred with the close over the 1st swing
resistance. The next downside objective is 8.15. The next area of resistance is
around 8.53 and 8.59, while 1st support hits today at 8.31 and below there at
8.15.
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COTTON MARKET RECAP
5/6/2005
July Cotton finished up 0.23 at 53.49, 0.36 off
the high and 0.74 up from the low.
July cotton closed 23 higher on the session but
down 356 points for the week. Volume was light as the market attempted to absorb
the massive sell-off on the week after confirmation of huge buying from China.
Next weeks supply./demand report is expected to give the first forecast for the
2005/2006 season. The bullish outlook from China from the USDA attaché could
help support a bullish look at the world report.
Technical Outlook
COTTON (JUL) 05/09/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The close over the pivot swing is a
somewhat positive setup. The next downside objective is now at 52.30. The next
area of resistance is around 54.03 and 54.49, while 1st support hits today at
52.94 and below there at 52.30.