KEY EVENTS TO WATCH FOR:
10:00 AM ET. USDA Weekly Export Inspection Report
10:00 AM ET. November Help-Wanted Index (last 40)
10:00 AM ET. November New Home Sales (Seen -0.7%, last -
4.5%)
The STOCK INDEXES & MARKETS
The US stock indexes were modestly higher overnight due to technical
short covering. The March NASDAQ 100 was slightly higher overnight
however, the door remains open for a test November's low crossing at
984.50, which coincides with the 50% retracement level later this
winter. Stochastics and the RSI are oversold but have turned bearish
again hinting that additional weakness is possible. Closes above last
week's high crossing at 1046 would signal that a low has likely been
posted. The March NASDAQ 100 was up 4.50 points at 1006 as of 6:40
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 slightly higher overnight as it consolidates above the 50%
retracement level of this fall's rally crossing at 863.85. Stochastics and
the RSI are oversold but have turned bearish again signaling that
additional weakness is possible near-term. Closes above last week's high
crossing at 903.30 are needed to confirm that a low has been posted.
Overnight strength sets the stage for a steady to firmer tone during the
day session. The March S&P was up 3.70 points at 875.50 as of 6:43
AM ET.
The Nikkei 225 Stock market closed lower on Monday due to profit
taking triggered by weakness on Wall Street. However, the mid-range
close leaves the door open for sideways trading on Tuesday. If the
rebound off December's low continues, the 50% retracement level
crossing at 8789 is the next upside target. Stochastics and the RSI are
bullish signaling that sideways to higher prices are possible into early-
January. The Nikkei closed down 135 points at 8579.
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INTEREST RATES
March T-bonds were lower overnight due to light profit taking as it
consolidates some of last Friday's rally, which led to a breakout above
November's high crossing at 112-11. March bonds are currently testing
this broken resistance level, which is normal market action. Multiple
closes above November's high could lead to an eventual test of October's
high crossing at 113-26 later this winter. Stochastics and the RSI are
bullish but overbought hinting that a top might be in or is near.
Overnight action sets the stage for a steady to weaker opening when the
day session begins later this morning.
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ENERGY MARKETS
The energy markets were higher overnight as they extend their rallies off
November's lows. The ongoing workers strike in Venezuela and
heightened concerns about a possible war between the U. S. and Iraq in
the near future continue to underpin energy prices.
February crude oil was higher overnight and has broken out above the
75% retracement level of the 2000-01 decline crossing at 32.82. Friday's
higher close confirmed Thursday's key reversal up and sets the stage for
sideways to higher prices into early-January. If the rally continues, the
February 2000 high on the monthly chart crossing at 34.37 is the next
target later this winter. The rising ADX signals that additional short-
term gains are possible. Overnight strength sets the stage for a steady to
firmer tone during the day session.
February heating oil was higher overnight as it extends last week's
breakout above weekly resistance marked by the January 2001 high
crossing at 89.65. The stage is set for a possible test of the 75%
retracement level of the 2000-02 decline on the weekly chart, which
crosses at 96.44 later this winter. Overnight strength sets the stage for a
steady to firmer 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. Trendline support begins near 90.60.
February unleaded gas was slightly higher overnight as it extends last
week's breakout above weekly resistance crossing at 90.87. The daily
ADX (a trend-following indicator) is bullish signaling that sideways to
higher prices are possible into the end of the year. If the rally continues,
long-term resistance crossing at 101.05, which marks the 75%
retracement level of the 2001 decline on the weekly chart is February's
next upside target. Overnight strength sets the stage for a firmer tone
during the day session. Initial trendline support crosses near 92.10.
February Henry Hub natural gas was lower overnight and poised to test
key support marked by the reaction low crossing at 4.935. Closes below
this support level would greatly increase the odds that a short-term top
has likely been posted. If the rally off November's low resumes, weekly
resistance crossing at 5.71 is a possible target in the near future.
Stochastics and the RSI are overbought and the daily ADX (a trend-
following indicator) is turning down signaling that a short-term top is in
or near.
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CURRENCY FUTURES | REAL TIME FOREX
The March Dollar was slightly higher overnight due to light short
covering but remains poised to test of the 62% retracement level of the
1998-2001 rally crossing at 102.41 later this winter. The daily ADX is
bearish and rising signaling that sideways to lower prices are possible
into early-January. Closes above initial trendline resistance crossing near
103.37 would increase the odds that a bottom has been posted.
The March Euro was slightly lower overnight due to light profit taking
as it consolidates some of last week's gains but remains above broken
weekly resistance crossing at 102.745. If the rally continues, the January
2000 high on the weekly chart, which crosses at 104.64 is a potential
target 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 lower overnight due to light profit taking
after failing to test the previous reaction high crossing at 1.5968 earlier
in the session. If profit taking continues into the day session, it could
lead to a downside reversal during the day session. Closes above the
previous reaction high crossing at 1.5968 are needed to renew March's
rally off November's low. Closes below last week's low crossing at
1.5774 would open the door for a larger-degree decline into early-
January.
The March Swiss Franc was lower overnight due to profit taking as it
consolidates some of last week's gains. If the rally continues, the 50%
retracement level of the 1995-2000 decline on the monthly chart
crossing at .7263 is March's next upside target later this winter.
Momentum indicators are overbought however, the ADX is rising
signaling that sideways to higher prices are possible near-term.
Trendline support begins near .7080. Overnight strength sets the stage
for a steady to weaker tone during the day session.
The March Canadian Dollar was lower overnight due to spillover selling
following last Friday's low-range close. Last week's breakout below the
November-December uptrend line opens the door for a larger-degree
decline into early January. If the decline continues, fib support crossing
at .6334 and then .6307 are possible targets later this winter. Stochastics
and the RSI are bearish signaling that additional weakness is possible.
Overnight weakness sets the stage for additional long-liquidation during
the day session.
The March Japanese Yen was sharply higher overnight as it extends last
week's breakout above the 75% retracement level of the November-
December decline crossing at .8320. The stage is set for 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. Overnight action sets the stage for a steady to firmer tone
during the day session.
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PRECIOUS AND NON-FERROUS METALS
February gold was slightly lower overnight due to light profit taking.
February needs to close above the 62% retracement level of the 1996-
1999 decline on the weekly February chart crossing at 355.50 or below
broken weekly resistance crossing at 339 are needed to clear up near-
term direction in the market. If this month's rally continues, the May
1997 high on the weekly February gold chart crossing at 363.60 is a
potential target later this winter. The daily ADX (a trend-following
indicator) is bullish and rising signaling that sideways to higher prices
are possible into early-January. Overnight weakness sets the stage for a
softer tone during the day session.
March silver was higher overnight due to short covering as it extends
last week's rebound. March needs to close above December's high
crossing at 4.805 or below the December 20th low crossing at 4.605 to
clear up near-term direction. The ADX has returned to a bullish mode
hinting that additional strength is possible near-term. Overnight strength
sets the stage for a firmer tone for the day session.
March copper was higher overnight due to short covering, which has led
to a rebound above the 62% retracement level of this fall's rally crossing
at 70.78. However, it will take closes above trendline resistance crossing
near .7100 to signal that a short-term bottom has been posted. If the
decline continues, the 75% retracement level crossing at .6924 is a
possible target later this winter. Stochastics and the RSI are oversold and
turning neutral to bullish hinting that a short-term low might be in or is
near. Overnight action sets the stage for a steady to firmer tone during
the day session.
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FOOD & FIBER
March coffee closed higher on Friday but remains below the
62% retracement level of the August-October rally crossing
at 61.66. Today's mid-range close leaves the door open for
sideways trading on Monday. Closes above last week's high
crossing at 63.20 or below December's low crossing at 60.00
are needed to clear up near-term direction in the market. If
this fall's decline resumes, the 75% retracement level
crossing at 58.28 is a possible target later this winter.
Stochastics and the RSI are oversold and have turned neutral
hinting that a short-term low might be in or is near.
March cocoa closed lower on Friday and below the lower
boundary of December's pennant formation. Stochastics and
the RSI are overbought and have turned bearish signaling
that sideways to lower prices are possible into early-
January. A short covering bounce ahead of the close tempered
some of today's loss and leaves the door open for sideways
trading on Monday. If the decline continues, the December
9th gap crossing at 1961 is March's next downside target.
March sugar closed lower on Friday but ended up posting an
inside week. Closes above 763 or below 727 are needed to
clear up near-term direction in the market. Stochastics and
the RSI are bullish hinting that sideways to lower prices
are possible into early-January.
March cotton closed higher on Friday due to light trade and
options related buying. This morning's export sales report
showed net sales of 178,600 running bales, which was 16%
below the previous week's low and 26% below the 4-week
average. Today's rebound led to a close above November's
high crossing at 51.80. Multiple closes above November's
high crossing at 51.80 would confirm Monday's breakout while
opening the door for a possible test of weekly resistance
crossing near 55 cents later this winter. Stochastics and
the RSI are overbought but bullish hinting that additional
strength into early-January is possible.
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GRAINS & SOYBEAN COMPLEX
March corn was fractionally lower overnight due to light fund selling
following last Friday's low-range close. Rumors of possible Starlink
contamination of corn shipped to Japan have rekindled fears of a
possible backlash from our foreign grain customers, which devastated
corn sales two years ago. Closes below 2.38 3/4 along with a downturn
by stochastics and the RSI would greatly increase the odds that the
rebound off December's low has ended. The fact that the wheat market
continues to decline is also weighing on corn prices and will continue to
limit upside potential until that market finds a bottom and stabilizes.
Look for trading to be rather subdued this week unless the report of
Starlink contamination of U.S. corn to Japan is confirmed. Many traders
are looking for another downward revision in U.S. corn exports in the
upcoming January supply-demand report. If this materializes, it would
raise ending stocks above 900 million bushels, which the market
currently believes to be adequate for the coming year. Closes above
minor resistance crossing at 2.45 3/4 could lead to a larger-degree
rebound ahead of the January supply-demand report. Early calls are for
March corn to open steady to 1 cent lower this morning.
March wheat was higher overnight due to short covering following
Friday's lower close, which tested the lower boundary of this fall's
downtrending channel. If the decline continues, a test of the late-July
low crossing at 3.32 and then the 75% retracement level of this
summer's rally crossing at 3.26 1/4 are possible targets later this winter.
Stochastics and the RSI are oversold however, the daily ADX (a trend-
following indicator) is bearish and rising signaling that sideways to
lower prices are possible into early-January. Early calls are for March
wheat to open 1 to 2 cents higher this morning.
SOYBEAN COMPLEX
March soybeans were lower overnight due to profit taking on ideas that
last Friday's rebound was overdone. Closes above the December 3rd gap
crossing at 5.78 or below December's low crossing at 5.49 are needed to
clear up near-term direction in the market. Stochastics and the RSI are
bullish signaling that sideways to higher prices are possible into early-
January. Overnight action sets the stage for a steady to softer opening on
Monday.
March soybean meal was lower overnight due to spillover weakness
from soybeans. March meal remains below this fall's downtrend line
crossing near 167. Closes above last week's high crossing at 168.90 are
needed to confirm a trendline breakout. Until then, the door remains
open for sideways to lower prices into early-January. Closes below
December's low crossing at 162.20 would renew this fall's decline.
Stochastics and the RSI are still bullish hinting that sideways too higher
prices are possible near-term. Opening calls are for January meal to open
$0.60 to $0.90 lower this morning.
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LIVESTOCK and MEATS
February hogs posted an inside day with a lower close on
Friday due to profit taking ahead of the weekend. The mid-
range close leaves the door open for sideways trading on
Monday. Trading is likely to be choppy ahead of the release
of the quarterly hogs and pigs report Monday afternoon.
Traders are expecting next Monday's report to show a 3%
decline in marketings for 2003. Technically, stochastics and
the RSI are bullish signaling that sideways to higher prices
are possible into early-January. If the rebound off
December's low continues, the contract high crossing at
55.17 is a possible target later this winter. Today's mid-
range close sets the stage for a steady opening on Monday.
February cattle posted a key reversal down on Friday. Early
strength led to a spike above the previous contract high
crossing at 79.65. However, follow-through buying failed to
materialize and spillover weakness from hogs pressured the
market into the close. Losses in thin post-holiday trading
were exaggerated by sell stops. Additional weakness on
Monday is needed to confirm today's bearish reversal
pattern. However, closes below this month's low crossing at
77.10 are needed before a double top is confirmed. If the
rally continues, weekly resistance crossing at 81.07 is a
potential target later this winter. Stochastics and the RSI
bullish hinting that sideways to higher prices are possible
into early-January.
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