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BOND MARKET RECAP
1/31/2005
March Bonds closed up 0-06 at 114-27. This was 0-14 up from the low and 0-02 off the high.
March 10 Yr Treasury Notes finished up 0-005 at 112-085, 0-005 off the high and 0-075 up from the low.
The Treasury market continued to impress the trade as prices held close to the old highs even in the face of better than expected US economic information, higher US equity prices and sharply lower energy prices. In other words, the Treasury market isn't paying that much attention to bearish fundamental developments arising from regularly scheduled economic reports. Some traders seem to suggest that yield curve buying continues to dominate the action and that the expectation of an US interest rate hike is indirectly providing some support for Treasuries, as that would seem to insure that future growth will remain controlled.
Technical Outlook
BONDS (MAR) 02/01/2005: The market rallied to a new contract high. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The cross over and close above the 18-day moving average indicates the longer-term trend has turned up. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside objective is at 115-09. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 115-04 and 115-09, while 1st support hits today at 114-20 and below there at 114-08.
TNOTES (MAR) 02/01/2005: 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. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The near-term upside objective is at 112-165. The next area of resistance is around 112-130 and 112-165, while 1st support hits today at 112-040 and below there at 111-300.
STOCK INDICES RECAP
1/31/2005
March S&P finished up 7.1 at 1181.8, 0.9 off the high and 4.5 up from the low.
March S&P E-Mini closed up 6.75 at 1181.5. This was 4.75 up from the low and 1.5 off the high.
March Dow closed up 35 at 10482. This was 30 up from the low and 24 off the high.
The stock market was somewhat impressive in the action Monday but considering the flow of positive fundamental news we are not surprised in the initial rise in prices. However, in retrospect seeing crude oil prices down sharply, the favorable Iraqi election outcome and the mostly favorable corporate news the bulls should have had control over prices. The market was also supported by a mostly favorable sweep of US economic information, especially with Personal Income rising sharper than Personal Income. In the past, the market was concerned that the recovery was being fueled by consumer credit but the information Monday seemed to countervail those fears.
Technical Outlook
S&P 500 (MAR) 02/01/2005: 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. The gap upmove on the day session chart is a bullish indicator for trend. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside target is 1186.30. The next area of resistance is around 1184.50 and 1186.30, while 1st support hits today at 1179.10 and below there at 1175.50.
SP EMINI (MAR) 02/01/2005: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market now above the 18-day moving average suggests the longer-term trend has turned up. A positive setup occurred with the close over the 1st swing resistance. The near-term upside target is at 1186.93. The next area of resistance is around 1184.62 and 1186.93, while 1st support hits today at 1178.38 and below there at 1174.44.
NASDAQ (MAR) 02/01/2005: Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market back below the 18-day moving average suggests the longer-term trend could be turning down. Market positioning is positive with the close over the 1st swing resistance. The near-term upside objective is at 1535.00. Daily studies suggest buying dips today. The next area of resistance is around 1530.00 and 1535.00, while 1st support hits today at 1518.00 and below there at 1511.00.
CURRENCY MARKET RECAP
1/31/2005
March US Dollar finished up 11 at 8364, 22 off the high and 21 up from the low.
March Euro finished down 0.13 at 130.35, 0.3 off the high and 0.15 up from the low.
March Euro Dollar closed down 0.01 at 97.02. This was 0.01 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.02 at 80.59. This was 0.11 up from the low and 0.31 off the high.
March British Pound finished down 0.52 at 187.78, 0.59 off the high and 0.28 up from the low.
March Swiss closed down 0.29 at 84.23. This was 0.02 up from the low and 0.25 off the high.
March Japanese Yen closed down 0.26 at 96.75. This was 0.02 up from the low and 0.3 off the high.
The Dollar disappointed some bulls with the muted reaction to the Iraqi election. The poor performance in the Dollar was made even more prevalent with the markets dismal reaction to a sweep of better than expected economic information. However, with some patently poor economic readings from the UK the currency with the most recent success against the Dollar was under pressure and that gave the Dollar the ability to hold its mostly positive stance throughout the session. The Canadian Dollar impressively managed to hold up above some extremely critical support points on the charts and given the gains in the Canadian it might have forged the most significant action of the session.
Technical Outlook
YEN (MAR) 02/01/2005: The close under the 60-day moving average indicates the longer-term trend could be turning down. 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. It is a slightly negative indicator that the close was under the swing pivot. The next downside target is now at 96.50. The next area of resistance is around 96.91 and 97.14, while 1st support hits today at 96.59 and below there at 96.50.
EURO (MAR) 02/01/2005: The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. 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 under the swing pivot. The next upside objective is 130.83. The next area of resistance is around 130.57 and 130.83, while 1st support hits today at 130.13 and below there at 129.94.
PRECIOUS METALS RECAP
1/31/2005
April Gold closed down 4 at 424.1. This was 2.6 up from the low and 2.5 off the high.
March Silver finished down 0.048 at 6.747, 0.018 off the high and 0.127 up from the low.
April Platinum closed up 1.5 at 873.8. This was 3.8 up from the low and 2.2 off the high.
The gold market was seemingly under moderate pressure early in the session as the market was apparently seeing flight to quality liquidation following the Iraqi election. It seemed as if all the metals were under a long liquidation tilt but surprisingly the Dollar was not in our opinion an overwhelming catalyst behind the weakness in gold. To many metals traders it must be disappointing to see the Iraqi election pass so quietly and even more concerning that stronger than expected US economic numbers haven't provided more support to the metals from the physical demand component.
Technical Outlook
SILVER (MAR) 02/01/2005: Momentum studies are trending higher but have entered overbought levels. The cross over and close above the 18-day moving average is an indication the longer-term trend has turned positive. It is a slightly negative indicator that the close was lower than the pivot swing number. The next upside target is 686.5. The next area of resistance is around 682.0 and 686.5, while 1st support hits today at 667.5 and below there at 657.5.
GOLD (APR) 02/01/2005: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close below the 18-day moving average is an indication the longer-term trend has turned down. The close below the 2nd swing support number puts the market on the defensive. The near-term upside target is at 429.1. The next area of resistance is around 426.6 and 429.1, while 1st support hits today at 421.6 and below there at 419.0.
COPPER MARKET RECAP
1/31/2005
March Copper finished down 0.35 at 143.50, 0.20 off the high and 1.20 up from the low.
The copper market appeared to start the week off in a profit taking mode and after the mostly favorable macro economic news of the last three sessions one would have expected the bullishly biased copper market to have extended on the upside. However, longer term forecast continue to suggest that production is on the rise and that 2004 production increased by over 6% when compared to 2003 and that seems to have undermined the bull camp. We also think that comments from the Shanghai copper market suggesting lackluster interest ahead of the coming Chinese holiday prompted some longs to bank profits and move to the sidelines. Apparently the Government of Chile predicted that the average price of copper in 2005 would be in a range of 1.16 to 1.2, which is significantly lower than the average price in 2004 of 1.31 and that was seen as a negative.
ENERGY MARKET RECAP
1/31/2005
March Crude Oil closed up 1.02 at 48.20. This was 2.15 up from the low and 0.05 off the high.
March Heating Oil closed up 2.09 at 134.81. This was 6.46 up from the low and 0.19 off the high.
March Unleaded Gas finished up 2.55 at 134.76, 0.24 off the high and 6.66 up from the low.
March Natural Gas finished up 0.06 at 6.32, 0.01 off the high and 0.20 up from the low.
March Propane closed down 0.03 at 0.70. This was 0.00 up from the low and 0.01 off the high.
The energy complex caved in following the OPEC decision on Sunday to hold production steady. Certainly the passage of the Iraqi election dropped the anxiety level and also prompted some long liquidation. Providing some support to prices Monday were comments from OPEC that they would probably not be hiking production into the March time frame, when many expect demand to kick up. OPEC went on to suggest that $50 crude oil pricing probably wasn't that damaging to the world economy and that would seem to temper some of the overtly bearish ideas that were floated last week by various OPEC members. In the 6 to 10 day weather forecast it is clear that temps remain mild for at least the coming week and that should leave the bears with a minor edge.
Technical Outlook
CRUDE OIL (MAR) 02/01/2005: Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market now above the 18-day moving average suggests the longer-term trend has turned up. The upside closing price reversal on the daily chart is somewhat bullish. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is 45.48. The next area of resistance is around 49.30 and 49.87, while 1st support hits today at 47.10 and below there at 45.48.
UNLEADED (MAR) 02/01/2005: Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The cross over and close above the 18-day moving average is an indication the longer-term trend has turned positive. The daily closing price reversal up is a positive indicator that could support higher prices. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is now at 126.26. The next area of resistance is around 138.20 and 140.05, while 1st support hits today at 131.31 and below there at 126.26.
HEATING OIL (MAR) 02/01/2005: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The major trend could be turning up with the close back above the 18-day moving average. The daily closing price reversal up is a positive indicator that could support higher prices. The market has a slightly positive tilt with the close over the swing pivot. The next downside target is now at 126.60. The next area of resistance is around 138.13 and 139.89, while 1st support hits today at 131.49 and below there at 126.60.
CORN MARKET RECAP
1/31/2005
March Corn finished up 1 1/4 at 197, 1/2 off the high and 1 3/4 up from the low. May Corn closed up 1 1/4 at 204 1/2. This was 1 3/4 up from the low and 1/2 off the high.
The higher close for March corn after making a contract low and taking out Friday's range is consider a key reversal and could support more active technical buying and short-covering on Tuesday. The inability to add to the downside early in the trading session helped trigger a move higher on the session and a bounce. Funds were noted buyers of near 2500 contracts into the mid-session. The weekend Commitment-of-Traders report with options showed a record net short position of the fund trader and of the combined speculative position which helped support some short-covering. Weekly export inspections came in at 32.69 million bushels as compared with trade expectations for 28-33 million and 40.8 million bushels necessary each week to reach the USDA projection. Cumulative shipments have reached 37% of the USDA forecast for the season as compared with 40% on average for this time of the year. Resistance for March corn comes in at 197 3/4 and 198 1/2 with support at 195 1/4 and 191.
Technical Outlook
CORN (MAR) 02/01/2005: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The major trend has turned down with the cross over back below the 18-day moving average. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is 194 1/2. The next area of resistance is around 198 and 198 3/4, while 1st support hits today at 196 and below there at 194 1/2.
SOY COMPLEX RECAP
1/31/2005
March Soybeans finished up 3/4 at 514 3/4, 3 3/4 off the high and 4 3/4 up from the low. May Soybeans closed down 1/2 at 512 1/2. This was 4 1/2 up from the low and 3 off the high.
March Soymeal closed down 0.3 at 153.8. This was 0.5 up from the low and 2.0 off the high.
March Soybean Oil finished up 0.12 at 19.36, 0.17 off the high and 0.21 up from the low.
The new low close for meal clashed with a reversal and higher close from a contract low in oil to support a mixed trade in soybeans. In the overnight session, March soybeans came within 1/2 cent of a new contract low. May soybeans broke to new contract lows early today on reports of rain over the weekend in key growing regions in Brazil and Argentina. Weakness in palm oil futures in Malaysia overnight and at the China exchange added to the bearish tone early. A lack of follow-through fund selling after the weekend Commitment-of-Traders report showed near record net short positions of the speculator for soybeans and meal helped trigger another round of short-covering to push futures higher on the session but May soybeans closed lower on the day. Oil also closed higher on the session after posting an early contract low. Technicians may turn a bit friendlier the market on the higher close after hitting new lows. In addition, a lack of producer selling helped firm the cash basis level and added to the short-covering support this morning. Weekly export inspections came in at 26.819 million bushels as compared with trade expectations for 27-32 million and 11.5 million bushels necessary each week to reach the USDA projection. Cumulative shipments have reached 64.6% of the USDA forecast for the season as compared with 58.6% on average for this time of the year. Funds were noted buyers of near 3500 soybean contracts into the mid-session. Resistance for March soybeans comes in at 519 1/4 and 521 1/2 with support at 511 and 508 1/2.
Technical Outlook
BEANS (MAR) 02/01/2005: Momentum studies are declining, but have fallen to oversold levels. The market back below the 18-day moving average suggests the longer-term trend could be turning down. The daily closing price reversal up is a positive indicator that could support higher prices. The market has a slightly positive tilt with the close over the swing pivot. The next downside objective is now at 506. The next area of resistance is around 519 and 523, while 1st support hits today at 510 1/2 and below there at 506.
MEAL (MAR) 02/01/2005: 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 outside day down and close below the previous day's low is a negative signal. The market tilt is slightly negative with the close under the pivot. The next downside target is now at 151.7. The next area of resistance is around 155.0 and 156.6, while 1st support hits today at 152.6 and below there at 151.7.
BEANOIL (MAR) 02/01/2005: The market made a new contract low on the break. 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 upside closing price reversal on the daily chart is somewhat bullish. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside target is now at 18.97. The next area of resistance is around 19.55 and 19.73, while 1st support hits today at 19.17 and below there at 18.97.
WHEAT MARKET RECAP
1/31/2005
March Wheat finished up 1 at 291, 1 off the high and 3 1/2 up from the low. May Wheat closed up 1 1/4 at 298 3/4. This was 3 3/4 up from the low and 1/4 off the high.
The higher close after reaching a contract low is a bullish technical development and could support soma additional technical support on Tuesday. Good weather for the US crop and a lack of export news helped trigger the early weakness and move to new contract lows and with the weekend Commitment-of-Traders report showing an oversold condition, the higher close on the day and above the opening is considered a key reversal. Weekend news that Pakistan seeks 100,000 tons of wheat from Russia or Argentina helped to pressure the market early in the session. South Korea bought 19,000 tons of US wheat over the weekend. Weekly export inspections came in at 21.5 million bushels as compared with trade expectations for 12-17 million and 16.1 million bushels necessary each week to reach the USDA projection. Cumulative shipments have reached 71.9% of the USDA forecast for the season as compared with 68.3% on average for this time of the year. March wheat resistance comes in at 292 and 293 1/2 with support at 289 and 287 1/2.
Technical Outlook
WHEAT (MAR) 02/01/2005: The market broke to a new contract low. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The close below the 18-day moving average is an indication the longer-term trend has turned down. The daily closing price reversal up on the daily chart is somewhat positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside objective is 286. The next area of resistance is around 293 1/4 and 294 3/4, while 1st support hits today at 288 3/4 and below there at 286.
LIVE CATTLE RECAP
1/31/2005
February Live Cattle finished up 0.45 at 90.22, 0.12 off the high and 1.07 up from the low.
March Feeder Cattle closed up 0.30 at 100.52. This was 1.07 up from the low and 0.27 off the high.
April live cattle pushed moderately higher on the session (up 65) finding support from a positive Cattle Inventory report and ideas that the recent sharp break in beef prices might help clean-up supply due to better demand. Boxed-beef cut-out values were down 38 cents into the mid-session to $143.27 as compared with $151.33 last week at this time. Some talk of sloppy feedlot conditions due to weekend rains helped support but a lack of rain in the forecast for the week is likely to dry up pens. Estimated Federally Inspected Slaughter came in at 117,000 head versus trade guesses ranging from 115,000 to 118,000. Resistance comes in at 88.42 and 88.87 for April cattle.
Technical Outlook
CATTLE (FEB) 02/01/2005: The daily stochastics gave a bullish indicator with a crossover up. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The major trend could be turning up with the close back above the 18-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 91.170. The next area of resistance is around 90.820 and 91.170, while 1st support hits today at 89.650 and below there at 88.800.
LEAN HOGS RECAP
1/31/2005
February Lean Hogs finished down 0.35 at 73.77, 0.52 off the high and 0.32 up from the low.
February Pork Bellies closed down 0.37 at 94.00. This was 0.70 up from the low and 0.70 off the high.
Strength in the pork product market, and particularly the loin market on Friday helped support a bounce in the hog market in spite of talk of potentially lower cash markets early this week. The jump in loin prices gives traders hope that exports, once again, could help clean-up the hefty supply of pork and keep the cash market firm. The outlook for mild weather in the Midwest this week helped limit the buying support. The market also found support on follow-through technical buying after the reversal on Friday. Estimated Federally Inspected Slaughter came in at 395,000 head versus trade guesses ranging from 390,000 to 396,000. The CME 2-day lean index for the period ending January 27th came in at 74.92, up 17 cents from the previous session and up from 73.76 one week previous. April hogs closed 25 higher on the session with resistance coming in at 75.95 and 76.45, a 50% correction of the January 18th to January 28th break.
Technical Outlook
HOGS (FEB) 02/01/2005: 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. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside target is 73.000. The next area of resistance is around 74.200 and 74.650, while 1st support hits today at 73.370 and below there at 73.000.
COCOA MARKET RECAP
1/31/2005
March Cocoa finished down 37 at 1525, 33 off the high and 2 up from the low.
The cocoa market gapped down and managed an impressive range down and that would seem to leave the market with some additional downside. In fact, according to the latest COT report it would seem like the cocoa market was long enough to justify the stop loss selling wave that seemed to dominate the market on Monday. In fact, despite the fact that physical supply is starting to taper off the market isn't apparently capable of holding all of the recent gains. In fact, reports of origin selling seemed to be behind the break Monday and that would seem to insinuate that buying interest is thinning along with supply flow.
Technical Outlook
COCOA (MAR) 02/01/2005: 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 indicates the longer-term trend has turned up. The gap lower price action on the day session chart is a bearish indicator for trend. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support. The next upside target is 1567. The next area of resistance is around 1542 and 1567, while 1st support hits today at 1508 and below there at 1498.
COFFEE MARKET RECAP
1/31/2005
March Coffee closed up 0.05 at 105.35. This was 0.75 up from the low and 0.65 off the high.
As opposed to the sugar market, the coffee market seemed to be somewhat impacted by the rollover action, but since the most recent COT report showed only a minimal 700 contract increase in the net spec and fund long position, we are not overly concerned about the short term overbought status of the coffee market. In conclusion consolidating the gains from last Friday should leave the bull camp in control of coffee. With the London market hitting a new high for 2005 that should have fostered a little more gains in the US market. However, the trade was confused by reports from Vietnamese Trade Minister that the recently harvested crop would be at least 10% larger than last year's crop. Traders had been looking for a decline in the Vietnamese coffee crop.
Technical Outlook
COFFEE (MAR) 02/01/2005: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The major trend could be turning up with the close back above the 18-day moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The near-term upside target is at 106.70. The next area of resistance is around 106.05 and 106.70, while 1st support hits today at 104.70 and below there at 103.95.
SUGAR MARKET RECAP
1/31/2005
March Sugar closed up 0.07 at 9.22. This was 0.09 up from the low and 0.02 off the high.
The apparently the trade detected fund buying despite the recent overly long fund long reading in the COT report. Furthermore, it would also seem like some of the early buying was short covering by the trade and with the market poised just below the contract highs, control of the market would seem to sit with the bull camp. For the market to manage more gains in the face of roll over action suggests that some longs are willing to stick with positions regardless of overbought technicals. Seeing minimal gains in the New York sugar market after the startling impressive gains in the London white sugar market, seems to hint at an overbought situation in the US.
Technical Outlook
SUGAR (MAR) 02/01/2005: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The cross over and close above the 18-day moving average indicates the longer-term trend has turned up. The close over the pivot swing is a somewhat positive setup. The next upside objective is 9.31. The next area of resistance is around 9.27 and 9.31, while 1st support hits today at 9.17 and below there at 9.10.
COTTON MARKET RECAP
1/31/2005
March Cotton finished up 0.41 at 43.76, 0.34 off the high and 0.41 up from the low.
The market managed to push higher on the session finding support from the oversold condition and from Friday's news from the Cotton Council survey that planted acreage for the coming year is likely to be near unchanged from last year and not a big jump anticipated by the trade. While higher on the day, futures failed to take out Friday's highs and given the bullish news, some traders might see this as a failure. Uzbekistan raised its cotton fibre output for last year to 976,565 tonnes, up 3.3% from the previous year.
Technical Outlook
COTTON (MAR) 02/01/2005: The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. Daily stochastics are trending lower but have declined into oversold territory. The close below the 18-day moving average is an indication the longer-term trend has turned 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 43.00. The next area of resistance is around 44.13 and 44.49, while 1st support hits today at 43.39 and below there at 43.00.
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