Will We Have More Upside In Cattle?
BOND MARKET RECAP
8/30/2004
September Bonds closed up 0-15 at 111-26. This
was 0-12 up from the low and 0-01 off the high.
September 10 Yr Treasury Notes finished up 0-095
at 113-030, equal to the high and 0-080 up from the low.
Despite sharply lower energy prices and the
prospect for less restraint on the economy the Treasury market firmed and
managed to rise very close to an upside breakout on the charts. We saw the
Personal Income reading as supportive but the Personal Spending reading might
have countervailed any bullish tilt from the scheduled numbers. It also seemed
by the Treasury market was more concerned with weak equity market action than it
was with the weakness in the energy complex. Some traders seemed to be making
early bets on the week ending US monthly payroll report.
Technical Outlook
BONDS (SEP) 08/31/2004: The daily stochastics
have crossed over up which is a bullish indication. Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. Market positioning
is positive with the close over the 1st swing resistance. The next upside
objective is 112-14. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 112-08 and 112-14, while 1st
support hits today at 111-19 and below there at 111-03.
TNOTES (SEP) 08/31/2004: The daily stochastics
have crossed over up which is a bullish indication. Studies are showing positive
momentum but are now in overbought territory, so some caution is warranted. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. The outside day up is somewhat positive. The market setup is supportive
for early gains with the close over the 1st swing resistance. The next upside
target is 113-140. The next area of resistance is around 113-105 and 113-140,
while 1st support hits today at 112-300 and below there at 112-205.
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STOCK INDICES RECAP
8/30/2004
September S&P finished down 9.2 at 1099, 7.7 off
the high and 1 up from the low.
September S&P E-Mini closed down 9.25 at 1099.
This was 1 up from the low and 9 off the high.
September Dow closed down 77 at 10123. This was 7
up from the low and 69 off the high.
September Dow E-Mini finished down 76 at 10124,
72 off the high and 8 up from the low.
The stock market started the session out soft and
seemed to get even weaker into mid session despite the fact that energy prices
in the midst of an aggressive liquidation. The trade suggested that the GOP
convention was prompting profit taking as some traders’ feared violent protests
or even a terrorists attack. We also have to think that stocks were generally
overbought and vulnerable to profit taking from the big August rally. Other
traders suggested that it was time to bank profits considering the week ending
monthly payroll report. However, a sustained decline in energy prices would
certainly serve to improve the macro economic outlook.
Technical Outlook
S&P 500 (SEP) 08/31/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. The defensive setup, with the close under
the 2nd swing support, could cause some early weakness. The next upside target
is 1109.42. The next area of resistance is around 1103.44 and 1109.42, while 1st
support hits today at 1094.75 and below there at 1092.03.
SP EMINI (SEP) 08/31/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A negative signal for trend short-term was given on a close under the
9-bar moving average. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The
near-term upside target is at 1111.12. The next area of resistance is around
1104.25 and 1111.12, while 1st support hits today at 1094.25 and below there at
1091.13.
NASDAQ (SEP) 08/31/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The market’s short-term trend is negative
as the close remains below the 9-day moving average. The gap down on the day
session chart is bearish with more selling pressure possible today. The close
below the 2nd swing support number puts the market on the defensive. The
near-term upside objective is at 1391.00. The next area of resistance is around
1377.00 and 1391.00, while 1st support hits today at 1357.00 and below there at
1351.00.
MINIDOW (SEP) 08/31/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. The market is in a bearish position with the close below
the 2nd swing support number. The near-term upside objective is at 10219. The
next area of resistance is around 10163 and 10219, while 1st support hits today
at 10083 and below there at 10060.
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CURRENCY MARKET RECAP
8/30/2004
September US Dollar finished down 6 at 8974, 20
off the high and 14 up from the low.
September Euro finished up 0.28 at 120.48, 0.19
off the high and 0.31 up from the low.
September Euro Dollar closed up 0.0075 at 98.125.
This was 0.005 up from the low and 0.005 off the high.
September Canadian Dollar closed down 0.34 at
75.78. This was 0.03 up from the low and 0.34 off the high.
September British Pound finished up 0.41 at
179.13, 0.43 off the high and 0.44 up from the low.
September Swiss closed up 0.15 at 78.21. This was
0.16 up from the low and 0.22 off the high.
September Japanese Yen closed down 0.24 at 91.02.
This was 0.32 up from the low and 0.13 off the high.
The Dollar managed a new high for the move but
then fell back as energy price declines seemed to rob the market of support. In
the recent past the Dollar seemed to be supported by soaring energy prices but
given the size of the break in crude oil since the August high it is possible
that the Dollar ends up getting a boost from sharply lower energy prices as that
could upgrade the US economy quicker than other economies. US personal income
was somewhat softer than expected but it seemed like the Personal spending
readings were stronger than early expectations and that left the Dollar mired
within a range.
Technical Outlook
YEN (SEP) 08/31/2004: The major trend has turned
down with the cross over back below the 40-day moving average. The daily
stochastics gave a bearish indicator with a crossover down. 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 close below
the 9-day moving average is a negative short-term indicator for trend. The gap
lower on the day session chart is bearish and puts the market on the defensive.
The swing indicator gave a moderately negative reading with the close below the
1st support number. The next downside target is 90.53. Short-term indicators on
the defensive. Consider selling an intraday bounce. The next area of resistance
is around 91.24 and 91.42, while 1st support hits today at 90.80 and below there
at 90.53.
EURO (SEP) 08/31/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s short-term trend is
negative as the close remains below the 9-day moving average. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
downside target is now at 119.95. The next area of resistance is around 120.73
and 120.95, while 1st support hits today at 120.23 and below there at 119.95.
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PRECIOUS METALS RECAP
8/30/2004
December Gold closed up 4.6 at 410. This was 2.8
up from the low and 1.4 off the high.
December Silver finished up 0.12 at 6.747, 0.118
off the high and 0.097 up from the low.
October Platinum closed up 2.5 at 867. This was
6.5 up from the low and 2.5 off the high.
All the metals were higher Monday despite an
initial rally in the Dollar, weaker equity prices and lower geopolitical
concerns. In other words, the metals could have come under pressure from a
number of fronts but instead seemed to track for a change on their own volition.
With a gold company, the Sons of Gwalia indicating they were already unwinding
hedges due to financial issues we can understand the light buying of gold but in
the end moderate gains in silver seemed to confirm a broad based interest in the
long side.
Technical Outlook
SILVER (DEC) 08/31/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The close below the 9-day moving average is a negative
short-term indicator for trend. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next downside
objective is 653.8. The next area of resistance is around 685.5 and 696.7, while
1st support hits today at 664.0 and below there at 653.8.
GOLD (DEC) 08/31/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. A positive signal
for trend short-term was given on a close over the 9-bar moving average. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The next downside objective is 405.5. The next area of resistance is
around 412.1 and 413.8, while 1st support hits today at 407.9 and below there at
405.5.
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COPPER MARKET RECAP
8/30/2004
December Copper finished up 0.50 at 126.45, 0.85
off the high and 0.70 up from the low.
The copper market was initially lifted off the
opening because of strength in the Asian copper market but some longs were
disappointing by the fact that US stocks and bonds didn’t show any direct
improvement in their macro economic outlook as a result of the sharply lower
energy prices. In fact, equity prices seem to have busted a 2 week long inverse
relationship to energy prices and therefore the copper bulls might have missed
out on an opportunity. The labor front from Peru was also quiet and that might
have taken some of the speculative interest out of the long side.
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ENERGY MARKET RECAP
8/30/2004
October Crude Oil closed down 0.90 at 42.28. This
was 0.98 up from the low and 1.18 off the high.
October Heating Oil closed down 2.45 at 113.09.
This was 1.99 up from the low and 3.41 off the high.
October Unleaded Gas finished down 3.31 at
113.78, 4.02 off the high and 1.93 up from the low.
October Natural Gas finished up 0.04 at 5.23,
0.02 off the high and 0.11 up from the low.
October Propane closed down 0.02 at 0.76. This
was equal to the low and equal to the high.
The energy complex didn’t seem to believe the
Iraqi pipeline problems and as the session progressed it became clear that the
shutdown of the southern pipeline wasn’t a big issue. In fact, according to the
Port Agent at Basra they were fully operational and 60,000 barrels per hour.
Adding to the downside momentum the Monday were suggestions from Al-Sadr that
his men should lay down their arms and that he might attempt to join the
political process in Iraq. Seeing Iraqi supply flow continue at the same time
that the geopolitical headwinds in Iraq calm could be a very negative setup for
crude oil.
Technical Outlook
CRUDE OIL (OCT) 08/31/2004: The major trend has
turned down with the cross over back below the 40-day moving average. Daily
stochastics are trending lower but have declined into oversold territory. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. The outside day down is a negative signal. There could
be some early pressure today given the market’s negative setup with the close
below the 2nd swing support. The next downside objective is 40.17. The next area
of resistance is around 43.35 and 44.48, while 1st support hits today at 41.20
and below there at 40.17.
UNLEADED (OCT) 08/31/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
outside day down and close below the previous day’s low is a negative signal.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. The next downside objective is now at
108.36. Some caution in pressing the downside is warranted with the RSI under
30. The next area of resistance is around 116.75 and 120.25, while 1st support
hits today at 110.81 and below there at 108.36.
HEATING OIL (OCT) 08/31/2004: A negative
indicator was given with the downside crossover of the 9 & 18 bar moving
average. Daily stochastics declining into oversold territory suggest the selling
may be drying up soon. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. A negative signal was given by
the outside day down. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside target is now at
108.05. The next area of resistance is around 115.79 and 118.84, while 1st
support hits today at 110.39 and below there at 108.05.
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CORN MARKET RECAP
8/30/2004
September Corn finished up 4 1/4 at 224
1/2, 4 1/4 off the high and 2 1/2 up from the low. December Corn closed up 6 1/4
at 235 1/4. This was 3 3/4 up from the low and 3 3/4 off the high.
Weather watchers indicate the possibility of cold
or frosty weather for the northern section of the Midwest for the September 9th
to the 13th time frame. This, along with a hefty net short position of the
speculator reported in Friday’s Commitment-of-Traders report with options (net
short 68,906 contracts) helped to trigger buying and strong gains on speculative
short-covering early in the session. Stops were hit above the market to add to
the buying spree. If freezing weather were to hit next week in the Dakota’s,
Minnesota and northern Iowa and end the growing season, yield estimates would
likely drop as the crop will not be mature enough in these areas. In addition,
traders are looking for a 1-2% decline in crop conditions (rated good to
excellent) for tonight’s weekly crop progress report and strength in the soybean
market added to the bullish tone. In addition, the short-term technical
indicators were thought to be in an oversold condition. Traders are looking for
500-1000 contracts for delivery on first notice day. Weekly export inspection
came in at 32.567 million bushels as compared with trade estimates near 30-35
million bushels. Taiwan is tendering for 56,000 tons of US corn. December corn
support moves up to 234 3/4 and 231 1/4 with next resistance at 240 1/4 and 245
1/4.
Technical Outlook
CORN (DEC) 08/31/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close below the 9-day moving average is a negative short-term indicator for
trend. The market setup is supportive for early gains with the close over the
1st swing resistance. The next downside objective is 227 3/4. The next area of
resistance is around 239 and 242 3/4, while 1st support hits today at 231 1/2
and below there at 227 3/4.
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SOY COMPLEX RECAP
8/30/2004
September Soybeans finished up 22 at 622 1/2, 8
1/2 off the high and 12 1/2 up from the low. November Soybeans closed up 24 3/4
at 620 1/2. This was 13 1/2 up from the low and 8 1/2 off the high.
December Soymeal closed up 6.2 at 180.2. This was
2.7 up from the low and 3.3 off the high.
December Soybean Oil finished up 1.11 at 24.73,
0.2 off the high and 0.58 up from the low.
Talk of freezing type temperatures on the
longer-term weather maps (September 9th to the 13th) helped to support the early
strong surge in the market. The hefty net short position of the speculator as
reported in Friday’s Commitment-of-Traders report with options (net short 23,643
contracts) and the frost scare for the northern cornbelt for mid-September
clashed to support strong gains on speculative short-covering. In addition,
traders are looking for a 1-2% decline in crop conditions (rated good to
excellent) for tonight’s weekly crop progress report. The market also found
support from ideas that the increased tropical storm activity expected in the
next few weeks might interrupt harvest activities in the southeast or the delta.
Weekly export inspection came in at 2.293 million bushels as compared with trade
estimates near 500,000-3.0 million bushels. For deliveries on first notice day,
traders are looking for no soybeans, no meal and 700-1000 lots of oil.
Resistance for November soybeans comes in at 629 and 633 1/2 with support at 616
and 608.
Technical Outlook
BEANS (NOV) 08/31/2004: 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. Daily stochastics
have risen into overbought territory which will tend to support reversal action
if it occurs. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. There could be more upside follow through
since the market closed above the 2nd swing resistance. The near-term upside
objective is at 641 1/4. The next area of resistance is around 631 1/2 and 641
1/4, while 1st support hits today at 609 1/2 and below there at 597 1/4.
MEAL (DEC) 08/31/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
A positive signal for trend short-term was given on a close over the 9-bar
moving average. The market setup is supportive for early gains with the close
over the 1st swing resistance. The next downside target is now at 174.4. The
next area of resistance is around 183.2 and 186.3, while 1st support hits today
at 177.2 and below there at 174.4.
BEANOIL (DEC) 08/31/2004: Rising stochastics at
overbought levels warrant some caution for bulls. A positive signal for trend
short-term was given on a close over the 9-bar moving average. Follow through
buying looks likely if the market can hold yesterday’s gap on the day session
chart. There could be more upside follow through since the market closed above
the 2nd swing resistance. The near-term upside objective is at 25.41. With a
reading over 70, the 9-day RSI is approaching overbought levels. The next area
of resistance is around 25.11 and 25.41, while 1st support hits today at 24.34
and below there at 23.86.
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WHEAT MARKET RECAP
8/30/2004
September Wheat finished up 1 3/4 at 303 1/4, 5 3/4 off the
high and 1 1/4 up from the low. December Wheat closed up 2 at 316 1/4. This was
1 1/4 up from the low and 5 3/4 off the high.
The surge higher in the other grain markets
helped to trigger active short-covering and new buying early in the session but
a lack of follow-through interest on new buying and a trade psychology that
“prices need to stay cheap to attract exports” helped to trigger the late
session weakness. For deliveries on first notice day, traders are looking for
near 1000 contracts which might soften the cash market. On previous rallies,
traders became concerned with the competitiveness of US wheat which might be a
factor to limit short-covering support. Fund traders were noted as net short
near 22,000 contracts in Friday’s COT with options report. Weekly export
inspections came in at 26.563 million bushels as compared with trade
expectations at 19-24 million bushels. Support for December wheat comes in at
311 3/4 and 309 with 323 1/2 and 330 1/4 as next resistance.
Technical Outlook
WHEAT (DEC) 08/31/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The close over the pivot swing is a somewhat
positive setup. The next downside target is now at 310 1/2. The next area of
resistance is around 319 3/4 and 324 1/4, while 1st support hits today at 312
3/4 and below there at 310 1/2.
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LIVE CATTLE RECAP
8/30/2004
October Live Cattle closed up 1.57 at 84.42. This
was 1.87 up from the low and 0.02 off the high.
October Feeder Cattle finished up 1.22 at 110.05,
0.15 off the high and 1.75 up from the low.
After closing lower for 10 sessions in a row, the
October cattle managed to push sharply higher into the close today as
short-covering and talk of the oversold condition of the market helped to
support. Heavy slaughter weights, the slower slaughter pace due to weak packer
demand and fears of increased competition from other meats in the weeks ahead
helped to pressure the market early but there was a lack of follow-through
selling interest and the market bounced. Boxed beef cutout values (600-750
choice) were down $.61 at mid-session to $136.09 from $140.32 last week at this
time. The reversal and outside day up might support more upside over the
near-term.
Technical Outlook
CATTLE (OCT) 08/31/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. A negative signal for trend short-term was given on a close
under the 9-bar moving average. The outside day up is a positive signal. The
market has a bullish tilt coming into today’s trade with the close above the 2nd
swing resistance. The next downside objective is now at 82.070. The next area of
resistance is around 85.370 and 85.850, while 1st support hits today at 83.500
and below there at 82.070.
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LEAN HOGS RECAP
8/30/2004
October Lean Hogs closed up 1.30 at 65.02. This
was 1.52 up from the low and 0.22 off the high.
February Pork Bellies finished up 1.35 at 93.45,
0.15 off the high and 1.55 up from the low.
October hogs continue to find support from the
stiff discount of futures to the cash market and closed higher. Weakness in the
cash markets failed to pressure futures markets as the rally in the cattle
market and talk of a seasonal tendency for October futures to rally during
September helped support. The CME 2-day lean index for the period ending August
26th was down 48 cents from the previous session to $73.65 as compared with
76.30 on August 18th. Traders view the outlook into the 4th quarter as negative
but the decent in the cash market may have to pick-up pace in order to threaten
to reach the 63.50 level into October.
Technical Outlook
HOGS (OCT) 08/31/2004: The crossover up in the
daily stochastics is a bullish signal. Rising from oversold levels, daily
momentum studies would support higher prices, especially on a close above
resistance. The market’s short-term trend is positive on the close above the
9-day moving average. 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 66.450. The next area of resistance
is around 65.900 and 66.450, while 1st support hits today at 64.170 and below
there at 62.970.
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COCOA MARKET RECAP
8/30/2004
December Cocoa finished up 3 at 1719, 3 off the
high and 33 up from the low.
The cocoa market forged an inside day but did
mount a close within close proximity to an upside breakout on the charts. We
continue to see a broad mix of spec, fund and industry buying and few signs of
physical or origin selling. The trade continues monitor the weather with an
ongoing concern of dryness. While Cameroon document rain from over the weekend
the Ivory Coast stations either didn’t see rain or were not reporting rain as of
mid session Monday. Even Nigerian growing regions were seeing some rainfall with
other Africans areas to see light rains later this week.
Technical Outlook
COCOA (DEC) 08/31/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s close above the
9-day moving average suggests the short-term trend remains positive. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
near-term upside objective is at 1747. The next area of resistance is around
1737 and 1747, while 1st support hits today at 1701 and below there at 1676.
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COFFEE MARKET RECAP
8/30/2004
December Coffee closed down 1.50 at 72.10. This
was 1.00 up from the low and 1.50 off the high.
The coffee market failed to hold a series of
chart support lines and considering the magnitude of the daily range it would
seem like the bears have taken control over prices. With upcoming rain events
not expected to delay harvest the coffee market might attempt to force the
remaining small spec longs from the market. The market also decided that the
next two cold fronts are not likely to result in a freeze and that also gave the
sellers confidence to attack the market. With the locals pressing prices Monday
many expect the downside to extend in the coming sessions.
Technical Outlook
COFFEE (DEC) 08/31/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The market’s short-term trend is negative
as the close remains below the 9-day moving average. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. The
near-term upside target is at 74.70. The next area of resistance is around 73.35
and 74.70, while 1st support hits today at 70.90 and below there at 69.75.
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SUGAR MARKET RECAP
8/30/2004
October Sugar closed up 0.07 at 7.73. This was
0.04 up from the low and 0.08 off the high.
October sugar closed slightly firmer on Monday,
but still within the market’s recent trading range (782 to 760). Speculation
that India bought a couple of cargoes of sugar from Australia could not be
confirmed, but seemed to support prices Monday. With a poor crop expected for
03/04 and 04/05, traders are speculating India will be a significant sugar
importer although the country has said it does not plan to import sugar this
year. Monday’s session was quiet with London closed, the start of the Republican
convention and the US holiday next week.
Technical Outlook
SUGAR (OCT) 08/31/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s short-term trend is
positive on the close above the 9-day moving average. Market positioning is
positive with the close over the 1st swing resistance. The near-term upside
objective is at 7.86. Short-term indicators suggest buying pullbacks today. The
next area of resistance is around 7.79 and 7.86, while 1st support hits today at
7.67 and below there at 7.62.
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COTTON MARKET RECAP
8/30/2004
October Cotton finished up 3.00 at 50.90, equal
to the high and 2.65 up from the low.
The heavy rain in North and South Carolina
combined with the potential for another storm along a similar track gave the
cotton a limit up session Monday. With the funds massive short coming into the
session it is clear they are trapped in bad positions. With the Press reporting
speculative and trade buying it would seem that more than the usual contingent
of buyers is present and that could mean an extension of the gains. Some traders
initially blamed the upside action on end of month book squaring but the action
was strong enough to suggest other participation.
Technical Outlook
COTTON (OCT) 08/31/2004: The crossover up in the
daily stochastics is a bullish signal. Studies are showing positive momentum but
are now in overbought territory, so some caution is warranted. The close above
the 9-day moving average is a positive short-term indicator for trend. Follow
through buying looks likely if the market can hold yesterday’s gap on the day
session chart. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The next upside target is 52.88. The next
area of resistance is around 52.22 and 52.88, while 1st support hits today at
49.58 and below there at 47.59.