KEY EVENTS TO WATCH FOR:
8:30 AM ET. Final Third-Quarter Corporate Profits (revised
+2.1%)
8:30 AM ET. Final Third-Quarter Gross Domestic Product (seen
+4%, revised +4%)
The STOCK INDEXES & MARKETS
The US stock indexes were slightly higher overnight. The March
NASDAQ 100 was higher overnight due to light short covering as it
consolidated some of Thursday's losses. March has broken out below the
38% retracement level of this fall's rally crossing at 1028.87 and is
poised to test November's low crossing at 984.50, which coincides with
the 50% retracement level later this month. Stochastics and the RSI are
oversold but remain bearish hinting that additional weakness is possible
near-term. The March NASDAQ 100 was up 3.00 points at 1016.50 as
of 6:44 AM ET. Overnight action sets the stage for a steady to firmer
opening by the NASDAQ composite index later this morning. The
March S&P 500 index was also higher overnight due to technical short
covering as it consolidates some of its losses of the past three days while
consolidating just above the 38% retracement level of this fall's rally
crossing at 885. Closes below Thursday's low at 878.80 would confirm a
breakout below the 38% retracement level of this fall's rally which
would open the door for a test of November's low crossing at 872 later
this winter. Overnight strength sets the stage for a firmer tone during the
day session. The March S&P was up 5.20 points at 890 as of 6:47 AM
ET.
The Nikkei 225 Stock market closed lower on Friday leaving Thursday's
upside reversal unconfirmed. The Nikkei continues to hover above
November's low crossing at .8247. Closes below October's low crossing
at 8197 would confirm a downside breakout below this fall's trading
range. Stochastics and the RSI are bearish but very oversold hinting that
a low might be near. Closes above Tuesday's high crossing at 8584
would temper the near-term bearish outlook in the market. The Nikkei
closed down 56 points at 8332.
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INTEREST RATES
March T-bonds were modestly lower overnight due to profit taking as it
consolidated some of Thursday's rally. March is consolidating just below
the 75% retracement level of November's decline crossing at 111-00. If
this resistance level is cleared, November's high crossing at 112-11 is
the next upside target later this winter. Stochastics and the RSI have
turned bullish again signaling that sideways to higher prices is possible
into the end of the year. Overnight weakness sets the stage for a steady
to weaker opening when the day session begins trading.
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ENERGY MARKETS
The energy markets were lower overnight due to light profit taking as
statements from the U.N. and diplomats indicate that Iraq still has room
to maneuver despite omissions in its weapons declaration.
February crude oil was modestly lower overnight following Thursday's
lower close, which left Wednesday's key reversal up unconfirmed.
February crude oil continues to consolidate below weekly resistance
crossing at 31.39, its next target. The rising ADX signals that additional
short-term gains are possible. Overnight weakness sets the stage for a
softer tone during the day session.
February heating oil was lower overnight due to light profit taking as it
consolidates some of this week's gains following Thursday's test of
weekly fib resistance crossing at 87.43. If this resistance level is cleared,
the January 2001 high on the weekly chart crossing at 89.65 is the next
target later this winter. Overnight weakness sets the stage for a softer
tone during the day session. The daily ADX (a trend-following
indicator) is rising signaling that sideways to higher prices are possible
into the end of the year. Support begins with October's high crossing at
81.80.
February unleaded gas was slightly lower overnight due to profit taking
as it consolidates some of this week's gains following Thursday's mid-
range close. Nevertheless, the door remains open for February to test
weekly resistance crossing at 90.87 later this month. The daily ADX (a
trend-following indicator) is bullish signaling that sideways to higher
prices are possible into the end of the year. Overnight weakness sets the
stage for a softer tone during the day session. Initial support begins with
Wednesday's low crossing at 83.85.
February Henry Hub natural gas was slightly lower overnight due to
spillover selling following Thursday's downside reversal. Closes below
Wednesday's low crossing at 4.935 would greatly increase the odds that
a double top with last week's high was posted on Thursday. Until then,
the door remains open for a possible test of weekly resistance crossing at
5.71 in the near future. Stochastics and the RSI are overbought while the
daily ADX (a trend-following indicator) is bullish signaling that
additional strength is still possible.
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CURRENCY FUTURES | REAL TIME FOREX
The March Dollar was slightly higher overnight due to light short
covering as it consolidates below broken weekly support crossing at
104.12. Multiple closes below this support level would open the door for
a possible test of the 62% retracement level of the 1998-2001 rally
crossing at 102.41 later this winter. Stochastics and the RSI are bearish
but oversold while the daily ADX is rising hinting that sideways to
lower prices are possible near-term. Closes above Monday's high at
104.78 would temper the near-term bearish outlook in the market.
The March Euro is working on an inside day but was lower overnight as
it consolidates below weekly resistance crossing at 102.745. Multiple
closes above this resistance level could lead to a test of the January 2000
high on the weekly chart, which crosses at 104.64 later this winter.
Stochastics and the RSI are bullish signaling that sideways to higher
prices are possible near-term. Overnight weakness sets the stage for a
softer tone during the day session.
The March British Pound was slightly lower overnight as it consolidates
just above weekly resistance crossing at 1.5928. Multiple closes above
this resistance level are needed to confirm this week's breakout.
Stochastics and the RSI are bullish but overbought while the daily ADX
(a trend-following indicator) is bullish and rising signaling that sideways
to higher prices are possible near-term. Overnight weakness sets the
stage for a softer tone during the day session.
The March Swiss Franc was slightly lower overnight due to profit taking
as it consolidates some of this month's rally. However, March remains
poised to test weekly resistance crossing at .7080 in the near future.
Momentum indicators are bullish and the ADX is rising signaling that
sideways to higher prices are possible near-term. Overnight weakness
sets the stage for a softer tone during the day session.
The March Canadian Dollar was steady to lower overnight as it
consolidates above November's high crossing at .6424 and below weekly
resistance crossing at .6452. Closes below Monday's low crossing at
.6368 would greatly increase the odds that a double top with November's
high has been posted. Stochastics and the RSI are overbought, diverging
and turning neutral warning bulls to use caution as a short-term top
might be in or is near. Overnight action sets the stage for a softer tone
during the day session.
The March Japanese Yen was lower overnight as it consolidates below
the 75% retracement level of the November-December decline crossing
at .8320. Closes above Tuesday's high at .8351 would renew this month's
rebound, which could lead to a test of November's high crossing at .8421
later this winter. Stochastics and the RSI are bullish signaling that
sideways to higher prices are possible near-term. I am looking for a
steady to softer tone during the day session.
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PRECIOUS AND NON-FERROUS METALS
February gold was lower overnight due to profit taking triggered by
strength in the U.S. Dollar and weakness in the energy complex.
Thursday's high spiked above the 62% retracement level of the 1996-
1999 decline on the weekly February chart crossing at 355.50. Closes
above this resistance level could lead to an eventual test of the May
1997 high on the weekly February gold chart, which crosses at 363.60
later this winter. The daily ADX (a trend-following indicator) is bullish
signaling that sideways to higher prices are possible into the end of the
year. Closes below broken weekly resistance crossing at 339 would
temper the near-term bullish outlook in the market. Overnight weakness
sets the stage for a weaker tone during the day session.
March silver was lower overnight due to profit taking triggered by
spillover weakness from gold. March is trading just below trading range
resistance crossing at 4.75. Closes above last Friday's high crossing at
4.805 or below Tuesday's low at 4.61 are needed to clear up near-term
direction in the market. The ADX bullish and rising hinting that
sideways to higher prices is possible into the end of the year. Overnight
weakness sets a softer tone for the day session.
March copper was slightly lower overnight and is challenging the 50%
retracement level of this fall's rally crossing at 72.02, which coincides
with November's, low at 71.90. If these support levels were broken, the
door would be open for a possible test of the 62% retracement level
crossing at 70.78 later this winter. Stochastics and the RSI are bearish
signaling that additional weakness is possible near-term. Overnight
action sets the stage for a steady tone during the day session.
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FOOD & FIBER
March coffee closed lower on Thursday and below the 62%
retracement level of the August-October rally crossing at
61.66 ending a three-day corrective bounce off last Friday's
low. Stochastics and the RSI are oversold and have turned
neutral hinting that a short-term low might be in or is
near. However, closes above last week's gap crossing at
65.50 are needed before a bottom can be confirmed. If the
decline resumes, the 75% retracement level crossing at 58.28
is a possible target later this month.
March cocoa posted an inside day with a higher close on
Thursday as it consolidates below the 62% retracement level
of this fall's decline crossing at 21.12. If this resistance
level is cleared, gap resistance crossing at 2200 is a
possible target later this winter. Closes below last
Monday's gap at 1961 would all but confirm that the rebound
off November's low has come to an end. Stochastics and the
RSI are overbought and have turned neutral hinting that a
top might be in or near.
March sugar closed sharply higher on Thursday thereby
negating Wednesday's decline. Today's new high close for the
week keeps the corrective rebound off last week's low alive.
Today's high-range close leaves the door open for a steady
to firmer opening on Friday. If this month's rebound
continues November's high at 777 and then December's high at
789 are possible targets. Closes below last week's low
crossing at 715 would open the door for a larger-degree
decline into the end of the year. Stochastics and the RSI
are poised to turn neutral to bullish with additional
strength.
March cotton posted an inside day with a lower close on
Thursday despite a strong weekly export sales report. Net
sales were 211,900 running bales, which were 7% under the 4-
week average. Nevertheless, stochastics and the RSI are
bullish hinting that sideways to higher prices are possible
into the last half of December. If March extends this
month's rally, November's high crossing at 51.80 is a
potential target later this winter.
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GRAINS & SOYBEAN COMPLEX
March corn was fractionally higher overnight following Thursday's mid-
range close. Closes above Monday's high crossing at 2.41 3/4 or below
Tuesday's low at 2.37 1/2 are needed to clear up near-term direction in
the market. Ongoing concerns about export demand along with stiff
competition from China will continue to limit near-term upside potential
in the market. I would not be surprised to see March corn drift sideways
in a narrow trading range into the January supply-demand report.
Stochastics and the RSI are bullish signaling that sideways to higher
prices are possible into the end of December. Early calls are for March
corn to open steady to a 1/2 cent higher this morning.
March wheat was lower overnight following Thursday's low-range close.
This week's export sales report was nearly double the previous week's
level however, overall export demand remains sluggish. With little fresh
supportive news for the market to chew on, March wheat appears
vulnerable to additional weakness into the end of the year. Overnight
weakness saw March wheat trade below the 62% retracement level of
this year's rally crossing at 3.49 1/2. Closes below this support level
would open the door for a test of the July 31 gap crossing at 3.42 1/2
later this winter. Early calls are for December wheat to open 1 to 2 cents
lower this morning.
SOYBEAN COMPLEX
January soybeans were higher overnight as they extend this week's short
covering rebound following Wednesday's spiked below November's low.
Spillover support from this week's strong export sales report along with
a slightly bullish shift in South America's weather provided overnight
support to the market. Closes above last week's high at 5.77 or below
this week's low crossing at 5.52 1/2 are needed to clear up near-term
direction in the market. Momentum indicators are bearish hinting that
sideways to lower prices are possible into the end of the year. Pre-
opening calls are for January soybeans to open 1 to 2 cents higher this
morning.
January soybean meal was steady overnight in subdued trading
following Thursday's mid-range close. January continues to consolidate
above November's low crossing at 162.50. Closes below this support
level and then last week's low crossing at 161.30 would renew this fall's
decline and could lead to a test of July's low crossing at 159 later this
winter. Stochastics and the RSI are turning bearish again hinting that
sideways to lower prices are possible near-term. Early calls are for
January soybean meal to open steady this morning.
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LIVESTOCK and MEATS
February hogs posted a key reversal up on Thursday due to
short covering ahead of the weekend. Spillover support from
sharply higher bellies also underpinned today's rally. Early
weakness led to a spike below this fall's uptrend line
crossing near 50.75. Closes below this uptrend line and last
week's low crossing at 50.35 are needed to confirm a trend
change while opening the door for a test of the 38%
retracement level of the June-December rally crossing at
48.80 later this month. Stochastics and the RSI are still
bearish hinting that sideways to lower prices are possible
near term. Closes above Tuesday's high at 53.30 would set
the stage for a possible year-end rally.
February cattle posted an inside day with a higher close on
Thursday due to winter weather concerns and pre-report
positioning ahead of Friday's monthly cattle-on-feed report.
February continues to consolidate below weekly resistance
crossing at 79.25. If this resistance level is cleared,
December's high at 79.65 and then weekly resistance crossing
at 81.07 are potential targets later this winter. Today's
high-range close leaves the door open for a steady to firmer
opening on Friday. Closes below last week's low crossing at
77.10 would confirm an end to the current short covering
bounce while opening the door for sideways to lower prices
into the end of the year. Stochastics and the RSI bullish
hinting that sideways to higher prices are possible near-
term.
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