Here's Why Natural Gas Is Soaring

Technical Outlook

BONDS (MAR) 2/27/2004: The close below the 1st swing support could weigh on the market. Near-term resistance for bonds is at 113.14 and then again at 113.28, while swing support hits at 112.17 and below there at 112.02. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 113.28.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.18. The market's close below the pivot swing number is a mildly negative setup. 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 115.09 and then again at 115.18, while swing support hits at 114.24 and below there at 114.16. The market's short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/26/2004

The stock market continued to put in impressive performance Thursday and did so in the face of potentially negative macro economic information. The stock market also seems to be ignoring soaring energy prices and some periodic hawkish dialogue from the Fed. So far, the stock market doesn't seem to be too concerned about the disjointed action in the US numbers but it is possible that the rising US Dollar is helping the stock market put on a more optimistic attitude.

Technical Outlook

S&P500 (MAR) 2/27/2004: The close over the pivot swing is a somewhat positive setup. The upside daily closing price reversal gives the market a bullish tilt. Underlying support comes in at 1138.80 and 1133.60, with overhead resistance at 1148.20 and 1152.40. The close below the 9-day moving average is a negative short-term indicator for trend. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside objective is now at 1133.60.

S&P E-Mini (MAR): A new contract high was made on the rally. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1133.75. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for the S&P Mini is at 1148.75 and then again at 1152.75, while swing support hits at 1139.25 and below there at 1133.75. The market's close below the 9-day moving average is an indication the short-term trend remains negative.

NASDAQ (MAR) The daily closing price reversal up is a positive indicator that could support higher prices. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The market should run into resistance at 1485.50 and above there at 1494.25 with support at 1464.50 and 1452.25. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1452.25.

MINI DOW (MAR) The close below the 9-day moving average is a negative short-term indicator for trend. The market should run into resistance at 10612 and above there at 10649 with support at 10535 and 10495. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 10495. It is a slightly negative indicator that the close was under the swing pivot.

CURRENCY MARKET RECAP

2/26/2004

The Dollar managed an upside breakout on the charts and with the dialogue from the ECB about cutting interest rates there would seem to be a little more cause for long interest in the Dollar. The fact that the ECB rate cut talk comes on the heels of the Dollar supportive Chinese currency dialogue from the Treasury Secretary means that more than one issue is pushing the Dollar up and the Euro down. Economically the US numbers Thursday were disappointing with the soft numbers slightly edging out the strong numbers. However, the market really isn't tracking off the day-to-day numbers.

Technical Outlook

YEN (MAR): A negative signal for trend short-term was given on a close under the 9-bar moving average. The gap lower on the day session chart is bearish and puts the market on the defensive. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support. Swing resistance is targeted at 91.46 and above there at 91.72, with the yen finding support around 91.00 and below there at 90.80. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 90.80. The market is approaching over sold levels on an RSI reading under 30.

EURO (MAR): Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 1.2334. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2334, with overhead resistance at 1.2526. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. More selling pressure is likely given yesterday's gap lower price action on the day session chart.

PRECIOUS METALS RECAP

2/26/2004

The gold market managed an impressive recovery especially after the Dollar appeared to be breaking out to the upside. The silver market finished the session 40 cents off its low of the day, while platinum and copper (quasi industrial metals) were aggressively higher. In short, it is clear that the gold is being held back by the Dollar and the rest of the metals are prepared to run higher off whatever the funds think is making them attractive. The funds have been extremely aggressive players in the silver and that showed in the action Thursday.

Technical Outlook

SILVER (MAY): The market setup is supportive for early gains with the close over the 1st swing resistance. Initial support for silver is at 651.0 and below there at 619.0 with resistance likely at 667.4 and 695.0. A positive signal for trend short-term was given on a close over the 9-bar moving average. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 667.4. Daily studies suggest buying dips today. The daily closing price reversal up is a positive indicator that could support higher prices.

GOLD (APR): Support for gold today comes in near 388.90, while resistance is pegged at 400.50. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 388.90. It is a slightly negative indicator that the close was under the swing pivot. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

2/26/2004

While the copper market is showing signs of aggressive two-sided trade the market is certainly leaning to the upside. With a new high close the recent consolidation pattern would seem to be defeated but it is becoming very clear that the market is extensively overbought. Apparently there were some traders attempting to pick a top and they were supposedly the ones being forced to buy the market around the highs. The macro economic reports Thursday were mostly offsetting and the stock market was higher so one might suggest that the outside factors contributed to the strength in copper.

ENERGY MARKET RECAP

2/26/2004

The crude oil market might have been a little exhausted from the recent sharp gains but the natural gas market showed no such weakness. The US Department of Energy seemed to be in the Press attempting to politically push OPEC for more supply and suggested that the world economy was being hurt by the high price of oil. In the past OPEC has been willing to avoid thrusting the world economy into a recession, so it would not be surprising to see the tone from OPEC soften. The natural gas market soared possibly in a catch up move to the prior crude run and possibly because the draw numbers were in the upper end of the expected range. The annual surplus was reduced to 253 bcf and that could have held back prices.

Technical Outlook

CRUDE OIL (APR): The close over the pivot swing is a somewhat positive setup. Support for crude is keyed on 35.19 and below there at 34.84, with resistance pegged at 35.84 and 36.14. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 36.14.

UNLEADED GAS (APR): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 113.53. The market has a slightly positive tilt with the close over the swing pivot. Resistance today is at 113.53, while support should be found around 108.93. The market made a new contract high on the rally. The market could take on a defensive posture with the daily closing price reversal down. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (APR):The close over the pivot swing is a somewhat positive setup. Heating oil should encounter support around 90.03, with resistance is at 94.23. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 94.23.

CORN MARKET RECAP

2/26/2004

May Corn finished up 4 1/2 at 303, equal to the high and 7 up from the low. December Corn closed up 2 at 294 1/4. This was 4 3/4 up from the low and 3/4 off the high. May Rice finished down 0.01 at 9.05, 0.12 off the high and 0.21 up from the low. A surge in fund buying into the close helped support a higher close and new contract highs for the 5th session in a row. Funds were noted buyers of at least 4000 contracts. Rumors that China may mandate usage of corn-based ethanol in key producing provinces helped provide underlying support. Weakness in soybeans dragged the market lower early in the session but solid export sales news helped provide underlying support. Weekly export sales for corn came in at 987,200 tons as compared with 662,300 tons necessary each week to reach the USDA projection and 750,000-1.0 million tons expected. Cumulative sales have reached 63.9% of the forecast for the season as compared with 59.6% on average for this time of the year. The prominent buyers on the week were Mexico at 365,100 tons, South Korea at 165,500 and Tunisia at 75,000 tons.

Technical Outlook

CORN (MAY) 2/27/2004: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 307 3/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 307 3/4 today, with support at 293 3/4. The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. The market rallied to a new contract high.

SOY COMPLEX RECAP

2/26/2004

May Soybeans finished down 5 at 923, 5 1/2 off the high and 11 up from the low. November Soybeans closed up 1 at 733. This was 18 up from the low and 3 1/2 off the high. May Soymeal closed down 2.1 at 278.5. This was 2.5 up from the low and 3 off the high. May Soybean Oil finished up 0.04 at 33.63, 0.19 off the high and 0.58 up from the low. It seems that the worst of the wet weather in northern Brazil is past and that the market is responding to weak export demand. In addition, nearby oil futures experienced a reversal and lower close on Wednesday from a 19 1/2 year high after the market was up as much as 19% from the February lows. While there was some follow-through selling early today, the market managed to hold support and close higher. The surge in prices over the past two weeks significantly slowed the export pace and even caused cancellations. Weekly export sales for soybeans came in at a negative (cancellations) of 4600 tons as compared with 61,600 tons necessary each week to reach the USDA projection and 50,000-200,000 tons expected. China cancelled some US soybeans. Cumulative sales have reached 83% of the forecast for the season as compared with 81.7% on average for this time of the year. Meal sales came in at negative 127,700 tons as compared with 25,300 tons necessary each week to reach the USDA projection and trade expectations of 0-50,000 tons. The sales included a decrease of 145,600 tons to unknown destination. Oil sales also saw cancellations with weekly sales of negative 4100 tons. Oil registrations were down to 4491 lots on Wednesday from 4557 the previous session. Rumors that some soybeans could be offered into the delivery period helped to pressure the market late in the session after talk all week that there would be no deliveries. Delivery expectations for meal came in at 0-200 contracts. Delivery expectations for oil came in at 0-2000 contracts.

Technical Outlook

SOYBEANS (MAY) 02/27/04 The market tilt is slightly negative with the close under the pivot. The next area of resistance is around 933 and 939 , while 1st support hits today at 916 1/2 and below there at 906 . The market's close on the 9-day moving average is neutral. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 939 . The market is approaching overbought levels with an RSI over 70.

MEAL (MAY): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 284.0. First resistance comes in at 281.0, with support at 275.5. The close above the 9-day moving average is a positive short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot. The market is becoming somewhat overbought now that the RSI is over 70.

BEAN OIL (MAY): A positive signal for trend short-term was given on a close over the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 32.78. It is a slightly negative indicator that the close was lower than the pivot swing number. The daily closing price reversal up is a positive indicator that could support higher prices. Daily swing resistance is found at 34.05 and above there at 34.32. Support should be encountered at 33.28 and 32.78. The market is approaching overbought levels with an RSI over 70.

WHEAT MARKET RECAP

2/26/2004

May Wheat finished up 2 at 396 1/2, 1 1/2 off the high and 6 1/2 up from the low. July Wheat closed up 1 1/2 at 395 1/2. This was 6 1/2 up from the low and 1 1/2 off the high. July Oats closed unchanged at 161 1/2. This was 1 1/2 up from the low and 1 1/2 off the high. Solid gains in the corn market into the close support the late gains in wheat and the lack of follow-through to the downside on the move to below Wednesday's lows failed to attract new sellers. July wheat had an outside day up which leaves the chart pattern positive in the eyes of the technicians. A wet forecast from the National Weather Service for the first 10 days of March failed to offset support from solid export sales. Weekly export sales came in at 565,300 tons (old crop at 415,300 tons) as compared with 311,000 tons necessary each week to reach the USDA projection and 300,000-400,000 tons expected. China was a noted buyer of 100,000 tons for old crop and 150,000 tons for new crop which means that next weeks sales should remain strong from China purchases in the past several days. Cumulative sales have reached 85.5% of the forecast for the season as compared with 78.6% on average for this time of the year. The overbought condition of the market basis traditional technical indicators is seen as a limiting factor. CBOT registrations as of Wednesday were at 1960 contracts, unchanged on the day as there was continued rolling out of the March contract ahead of first notice day Friday. The International Grain Council pegged world production for 2004 at 601 million tons as compared with 557 million tons last year.

Technical Outlook

WHEAT (MAY) 2/27/2004: 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. Expect near-term support around 392 and below there at 387 , with resistance levels at 400 and 403 . A positive signal for trend short-term was given on a close over the 9-bar moving average. Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 403 .

LIVE CATTLE RECAP

2/26/2004

April cattle closed moderately higher for the 4th session in a row with the market up 75 points on the session and up 422 points on the week. Strong cash markets this week, up $3 to $82, and continued expectations for the export market to Mexico to open soon helped support. In addition, the surge in beef prices this week is supporting improving packer profit margins and market-ready supplies are still relatively tight. Boxed-beef cut-out values were up $1.60 to $133.47 as compared with $128.13 last week at this time. In addition, the market found support from talk of increased retail advertising for beef ahead. Slaughter came in well under expectations for the second day in a row at just 114,000 head as compared with 118,000-124,000 expected.

Technical Outlook

CATTLE (APR) 2/27/2004: Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 77.70. The market setup is supportive for early gains with the close over the 1st swing resistance. Support should be encountered at 76.72 and below there at 76.35. Market resistance is at 77.40 and then again at 77.70. 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.

LEAN HOGS RECAP

2/26/2004

April hogs experienced the second highest close for the history of the contract and closed sharply higher on the day. The market found solid buying support from funds and speculators as cash hogs came in .50-$1.00 higher at many locations as compared with expectations for a lower market. With futures at a discount to cash, the futures are quite sensitive on sessions when cash trades higher. The 2-day lean index for the period ending February 24th was down 35 cents to $62.64 as compared with $63.82 last week at this time.

Technical Outlook

HOGS (APR) 2/27/2004: There could be more upside follow through since the market closed above the 2nd swing resistance. Resistance levels comes in at 62.10 and 62.32 today, while support is around 61.22 and then 60.57. The upside crossover of the 9 & 18 bar moving average is a positive signal. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 62.32.

COCOA MARKET RECAP

2/26/2004

The cocoa market surprised the trade with more gains and given the magnitude of the gains it would not seem like the market was being driven exclusively by fund short covering. The cocoa market did see signs that rebel controlled cocoa was once again being put through domestic channels and that could be seen as a potential future negative. Apparently the funds were aggressive buyers but we get the sense that the buying was fresh buying and not just short covering.

Technical Outlook

COCOA (MAY)02/27/04 The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. Cocoa should run into resistance at 1610 and above there at 1629 with support at 1552 and 1513. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1629.00.

COFFEE MARKET RECAP

2/26/2004

July coffee closed 220 points higher on the session and the market is now up 440 points on the week with fund and speculative buying supporting solid gains. In spite of what would appear to be increasingly negative short-term fundamentals, the market pushed sharply higher on the week as fund traders were active buyers and producer sellers are stepping back from the market to see how far the market might run. The improving crop conditions and excellent weather in Brazil coffee growing areas along with rising exchange stocks are factors which could keep the market in a long liquidation mode but there does not seem to be a slow-down in the CRB surge or the surge in fund buying this week. CSCE stocks were up 10.746 bags to 4.487 million tons with 91,110 bags pending review.

Technical Outlook

COFFEE (MAY)2/27/04 The outside day up and close above the previous day's high is a positive signal. The daily closing price reversal up is positive. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. 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 80.30.The Coffee contract should run into resistance at 78.50 and above there at 80.30 with support at 74.15 and 71.60. The market's short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

2/26/2004

May sugar rallied another 7 points to close at 622 which is up 34 on the week. While the trade sentiment remains quite bearish, and there is more and more talk that high freight rates have stifled demand, the typical end user has already been operating hand to mouth and there also appears to be plenty of pent-up demand in the market. Major producer sellers seem to be on the sidelines to see how far China and Middle East buying might pull the price higher. Futures opened lower but like many commodity markets in the past few weeks, the lack of new selling interested shifted to a sudden increase in fund buying. While funds are likely building large net long positions in many markets, especially ones where China is an importer, in the case of sugar, funds are probably still in the process of liquidating long positions.

Technical Outlook

SUGAR (MAY) 2/27/2004: Market positioning is positive with the close over the 1st swing resistance. Swing resistance comes in at 6.34, with support found at 6.04. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 6.34. The market is becoming somewhat overbought now that the RSI is over 70.

COTTON MARKET RECAP

2/26/2004

July cotton closed limit-up and to the highest level since January 27th finding support from aggressive speculative, fund and trade house buying when the market failed to react to the downside after disappointing export sales. Talk that China buyers could be more active in the weeks just ahead with rumors that China had issued import permits for 500,000-1.0 million bales helped to trigger the surge higher. Weekly export sales came in at 197,200 bales as compared with 61,700 bales necessary each week to reach the USDA projection and trade expectations for 250,000 to 300,000 bales. Cumulative sales have reached 87.9% of the USDA forecast for the season as compared with 87.8% on average for this time of the year. Shipments for the week came in at 271,800 bales as compared with expectations of 240,000 to 300,000 bales. China has now booked 4.09 million bales of US cotton so far this season as compared with 1.02 million bales last year at this time.

Technical Outlook

COTTON (MAY) 2/27/2004: A positive indicator was given with the upside crossover of the 9 & 18 bar moving average. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. Next resistance area comes in at 74.81 and then again at 75.63, while support is targeted at 71.52 and 69.05. The market now above the 40-day moving average suggests the longer-term trend is up. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 75.63. The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. ORANGE JUICE (MAY)2/27/04 The new contract low and close above the previous day's high constitutes a key reversal which is a bullish signal. The sell-off took the market to a new contract low. The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 62.65 and above there at 63.70 with support at 61.15 and 60.70. The market's short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 60.7.