INTEREST RATES
September T-bonds closed higher on Tuesday and are
challenging last week's high crossing at 103-31. Closes
above 103-31 would turn the short-term trend up and could
lead to a test of fib resistance crossing at 104-04, which
marks a 62% retracement level of the November-March decline.
If this resistance level is cleared, June's high crossing at
105-16 then the 75% retracement level crossing at 105-31 are
potential targets later this summer. Closes below last
week's low crossing at 102-08 would confirm a breakout below
the May-June uptrend line thereby opening the door for
additional weakness during July. Momentum indicators such as
stochastics and the RSI will need to see additional strength
before turning bullish.
The CRB INDEX
The CRB posted an inside day with a higher close on Tuesday
leaving Monday's key reversal down unconfirmed. Strength in
grains, precious metals, food, fiber and energies. Closes
above Monday's high at 212.03 are needed to renew the CRB's
rally. Support begins with April's high crossing at 208.39.
Momentum indicators are overbought and turning bearish
thereby increasing the odds that a short-term top might be
in or is near.
ENERGY MARKETS
The energy markets closed higher on Tuesday due to short
covering ahead of the release of this afternoon's API
inventory reports. Expectations for draws in crude oil
stocks provided underlying support for the rest of the
complex. However, gains were limited as Norway and Russia
promised that further production cuts are gone and that they
are no longer with OPEC.
August crude oil closed slightly higher on Tuesday but
remains below June's broken uptrend line, which signals that
last month's corrective bounce has ended. Barring a bullish
surprise in this afternoon's API inventory report, August
crude oil looks to work lower into the later part of July.
If the decline off last week's high continues, June's
reaction low crossing at 25.21 is August's next downside
target later this month. Stochastics and the RSI have turned
bearish signaling that additional weakness is possible near-
term.
August heating oil closed higher on Tuesday due to technical
short covering but remains below June's broken uptrend line.
Stochastics and the RSI have turned bearish signaling that
additional weakness is possible into the later half of July.
If the decline off last week's high continues, June's
reaction low crossing at 64.65 is August's next downside
target.
August unleaded gas closed higher on Tuesday due to
technical short covering as it consolidates some of Monday's
loss. Early weakness saw August spike below minor support
crossing at 75.30. However, a lack of additional selling
once this support level was exceeded triggered a short
covering rebound into the close. Barring a bullish inventory
report this afternoon, the door remains open for sideways to
lower prices into the last half of July. Stochastics and the
RSI have turned bearish signaling that sideways to lower
prices are possible near-term. Closes below today's low
would open the door for a possible test of the lower
boundary of this spring's trading range crossing at 77.12
later this month.
August Henry Hub natural gas posted an inside day with a
higher close on Tuesday as it consolidated some of Monday's
loss. Today's rebound allowed August to close above the 62%
retracement level of this year's rally crossing at 2.98. If
the decline continues, the 75% retracement level of this
year's rally crossing at 2.751 is a possible target later
this month. Stochastics and the RSI are bearish signaling
that lower prices are possible near-term.
CURRENCY FUTURES | REAL TIME FOREX
The September Dollar closed sharply lower for the second day
in a row on Tuesday thereby setting the stage for a likely
test of the late-June low crossing at 105.97, which
coincides with weekly support crossing at 106.01. Closes
below these lows would renew this year's decline while
opening the door for a possible test of the April 2000 low
on the weekly chart crossing at 103.85 later this summer.
Today's low-range close leaves the door open for a steady to
weaker opening of Wednesday's trading. However, I would not
be surprised to see a steady to higher close on Wednesday as
the Dollar might try to consolidate some of this week's
losses above the aforementioned support levels.
The September Euro closed higher on Tuesday as it extended
this week's rebound off last Friday's low. Today's high-
range close sets the stage for a possible test of the late-
June high crossing at 99.56 possibly on Wednesday. Closes
above 99.56 would renew this year's rally, which could lead
to a test of weekly resistance crossing at 101.04 later this
summer. Closes below the May-June uptrend line, which
coincides with the 25% retracement level of this year's
rally crossing at 96.15 would confirm a top while opening
the door for a larger-degree decline during July. The daily
ADX is renewing its bullish mode hinting that sideways to
higher prices are possible near-term.
The September Swiss Franc extended its rebound off last
Friday's low on Tuesday and is poised to test the late-June
high crossing at .6795 possibly on Wednesday. If this
summer's rally resumes, weekly resistance crossing at .6924
is the next upside target later this month. Closes below
last Friday's reaction low crossing at .6570 would increase
the odds that a short-term top might be in or is near. The
daily ADX is bullish indicating that sideways to higher
prices are still possible.
The September Canadian Dollar closed sharply higher on
Tuesday. Today's high-range close sets the stage for a
steady to firmer opening when Wednesday's trading begins.
Closes above the recent reaction high crossing at .6640
would renew this year's rally while opening the door for a
possible test of weekly resistance crossing at .6678 later
this month. This week's rally has turned a number of
momentum indicators including stochastics and the RSI
neutral to bullish once again hinting that sideways to
higher prices are possible near-term.
The September Japanese Yen closed above the previous
reaction high crossing at .8481 on Tuesday thereby renewing
this year's rally. Today's high tested the 75% retracement
level of the 2001-02 decline crossing at .8525. If this
resistance level were cleared, the door would be open for a
possible test of last September's high crossing at .8842
later this summer. The daily ADX remains in a bullish mode
signaling that sideways to higher prices are possible near-
term.
PRECIOUS METALS
August gold closed higher on Tuesday due to weakness in the
Dollar and lower equity prices. Today's close above last
week's high crossing at 316 increases the odds that a short-
term low was posted with Monday's spike below the 38%
retracement level of this year's decline crossing at 309.70.
Stochastics and the RSI are oversold and turning bullish
with this week's rebound signaling that sideways to higher
prices are possible near-term. If this week's rebound
continues, fib resistance crossing at 320.30, then 322.90
are possible short-term upside objectives. Closes below
Monday's low would be open for a possible test of the 50%
retracement level crossing at 302.90 later this summer.
September silver closed sharply higher on Tuesday and above
last week's high crossing at 5.005. Today's high-range close
sets the stage for a possible test of June's reaction high
crossing at 5.075, then the contract high at 5.17 later this
month. Momentum indicators are bullish hinting that sideways
to higher prices are possible near-term.
September copper closed slightly lower on Tuesday as it
consolidates above Monday's low crossing at 75.30. September
remains range bound and needs to close above last week's
high at 77.90 or below 74.50 to clear up near-term direction
in the market. Momentum indicators are neutral to bullish
hinting that sideways to higher prices are possible near-
term.
FOOD & FIBER
September closed higher on Tuesday as it extended Monday's
short covering rally. Closes above last week's high crossing
at 52.45 would confirm a breakout above this spring's
downtrend line while opening the door for a possible test of
May's high crossing at 55.50 later this summer. Stochastics
and the RSI are bullish signaling that sideways to higher
prices are possible near-term.
September cocoa closed sharply higher on Tuesday and is
poised to test weekly resistance crossing at 1777 possibly
on Wednesday. Stochastics and the RSI are bullish but
overbought while the ADX signals that sideways to higher
prices are possible near-term. Trendline support begins near
1700.
October sugar renewed its rebound off June's low and closed
higher on Tuesday. The stage is set for a test of the top of
this spring's trading range crossing at 584 possibly on
Wednesday. If this resistance level is cleared, the 38%
retracement level of the 2001-02 decline crossing at 614 is
a possible target later this month. Stochastics and the RSI
are bullish signaling that sideways to higher prices are
possible near term.
December cotton posted an inside day with a higher close on
Tuesday as it continues to consolidate above this spring's
uptrend line crossing near 46.10. Closes above the late-June
high at 49.78 or below this spring's uptrend line are needed
to clear up near-term direction in the market. The daily ADX
turned down from levels often associated with market tops on
Monday thereby increasing the odds that a short-term top is
in or near. Trading is likely to remain choppy ahead of
Thursday's supply-demand report.
GRAINS & SOYBEAN COMPLEX
September corn closed higher on Tuesday following Monday's
crop condition report that showed a 5% decline in the good
to excellent crop rating, which came in at 53%. Additional
support came from forecast calling for triple digit temps to
move into the Midwest next week. However, gains were
limited due to forecasts calling for increased chances for
precip across portions of the Midwest over the next few
days. September needs to close above last Friday's high
crossing at 2.37 or below last week's low at 2.29 to clear
up near-term direction in the market. Closes above the
early-July high at 2.42 would renew this summer's rally and
could lead to a test of the 2.50 pivot level later this
month. Closes below 2.29 could trigger additional long-
liquidation that could lead to an eventual test of May's
high crossing at 2.22 3/4 then June's gap crossing at 2.17
later this month. Momentum indicators are overbought and
turning however, the daily ADX (a trend-following indicator)
remains in a bullish mode signaling that sideways to higher
prices are possible near-term.
September wheat closed higher on Tuesday due to spillover
strength from corn and beans. The wheat market continues to
play a following roll to the volatile row-crops. However,
September continues to consolidate below weekly resistance
crossing at 3.25 and above last week's reaction low at 3.16.
A breakout of this narrow trading range will point the
direction of the near-term trend. The daily ADX remains
bullish hinting that sideways to higher prices are possible
near-term. Trading is likely to be choppy ahead of
Thursday's supply-demand report. If this summer's rally
resumes, the 1998 high on the weekly September chart
crossing at 3.44 is a possible target later this summer.
SOYBEAN COMPLEX
August soybeans gapped up and closed higher on Tuesday
follow Monday's bullish crop condition report that showed a
decline in the good-excellent rating to 52%. Additional
support came from extended weather forecasts calling for
triple digit temps to possibly move into the Midwest next
week. Strong nearby demand, which is being reflected by the
inverse spreads in the market and stronger basis levels both
in the interior and at the gulf is also providing additional
support to the market. Today's breakout above weekly
resistance crossing at 5.49 has opened the door for a
possible test of the May 2000 high crossing at 5.84 1/2
later this month. The daily ADX is in a bullish mode
signaling that sideways to higher prices are possible near-
term.
August soybean meal closed higher on Tuesday spiking above
the next level of weekly resistance crossing at 183.70.
Closes above 183.70 would open the door for a likely test of
the May 2000 high crossing at 188.30 later this month. The
daily ADX (a trend-following indicator) is still bullish
signaling that sideways to higher prices are possible near-
term. Closes below last week's low crossing at 176 would
strongly suggest that a top has likely been posted.
LIVESTOCK and MEATS
August hogs closed sharply lower on Tuesday and below broken
trading range resistance crossing at 49.65 thereby
confirming Monday's downside reversal. Pressure came from
lower cash bids and contract rolling from August to October.
Today's close below broken trading range resistance crossing
at 49.65 leaves the door open for sideways to lower prices
on Wednesday. If the rebound off the late-June low resumes,
May's reaction high crossing at 53.40 is a possible target
in the near future.
August cattle closed below June's uptrend line crossing near
64.00 on Tuesday thereby increasing the odds that last week
have high marked a double top with May's high. The mid-range
close leaves the door open for sideways trading on Wednesday
as August cattle might try to test June's broken uptrend
line, which is normal market action following a trendline
breakout. Stochastics and the RSI are overbought and have
turned bearish signaling that additional weakness is
possible into the later part of July.