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M O N D A Y M O R N I N G E X T R E M E M A R K E T S
A complimentary service from INO.com ( http://www.ino.com/ ) CDCD FREE: NetFutures' exclusive eStarter Kit CD-ROM CDCD http://www.ino.com/specials/netfutures/ Andrew, KEY EVENTS TO WATCH FOR: 10:00 AM ET. Weekly grain export inspection reports. 10:00 AM ET. May Challenger monthly layoff report. 10:00 AM ET. May NAPM non-manufacturing index. 1:30 PM ET. Treasury releases results of $23 billion auction of 13- and 26- week bills (Previous accepted rates: 13-week 3.605%, 26-week 3.550%) 3:00 PM ET. USDA planting progress reports. 3:00 PM ET. USDA crop conditions reports. KEY HEADLINES: Oil prices spikes as Iraq stops exporting in protest at UN sanctions. Bristol-Myers, Novartis are leading bidders for DuPont unit, says report. IMC: Greenspan sees little evidence of emergence of US inflation. Barclays reports good first quarter growth from consumer leading and savings. Vivendi may sell BskyB stake to institutions, says report. Duisenberg, Greenspan advocates price stability for growth. Bank of Japan says further deflation "can't be ruled out." Microsoft, AOL talks on Windows XP deal faltering, says report. The STOCK INDEXES & MARKETS The NASDAQ and S&P 500 were higher overnight due to follow-through buying after closing higher last Friday. As long as both indexes hold above their May lows, it appears as though minor low might be forming. Strengthening technology stocks despite a weaker-than-expected NAPM report on Friday continues to support short-term gains. The Dow posted a key reversal up last Friday due to light short covering. Additional gains on Monday are needed to confirm this bullish reversal pattern. However, momentum indicators are bearish warning traders and investors alike to use caution, as the Dow remains vulnerable to additional weakness near-term. If the decline off May's high continues, May's reaction low crossing at 10,774.10 is the Dow's next target. European markets were mostly higher in overnight trading in response to strength in U.S. equity markets, which were higher overnight. The UK FTSE- 100 was up 34.20 points at 5843.80 while the German DAX-30 was 41.05 points at 6166.22 as of 11:01 BST. The Nikkei was higher overnight after fluctuating in less than a 100-point range all day. High technology and banking stocks remain weak due to earnings concerns while selected defensive stocks such as real estate, oil and coal issues were pushed higher. The Nikkei continues to consolidate below the 38% retracement level of this spring's rally that crosses at 13,363. If the decline off May's high continues, the 50% retracement level crossing at 12,995 is a potential target later this year. Momentum indicators remain bearish signaling that additional weakness near-term is possible. The Nikkei closed up 50 points to 13,312. INTEREST RATES September bonds were slightly higher overnight as it extended last week's rally. Last Friday's rally led to a breakout above this spring's downtrend line, which confirmed that a short-term bottom has been posted. I would not be surprised to see a setback on Monday as September might try and test broken trendline line resistance crossing near 100-00 before moving higher during June. Momentum indicators have turned bullish signaling that sideways to higher prices into early-June are possible. The German bond market or Bunds started the new week lower. Germany's contribution to the market is expected to be limited, as many traders are taking the day off for a public holiday. The June Bunds were last up 0.07 at 106.63. Japanese government bond markets were nearly steady overnight as the market was locked in range bound trading. The lead June 10-year JGB futures closed at 140.53 yen, up 0.01 while the yield on the benchmark No. 231 June 10-year cash bond stood at 1.240%, down 0.005 as of 1520 JT. The ENERGY MARKETS were higher in overnight trading in response to news that Iraq has halted oil exports in protest U.S. and U.K. efforts to impose a "smart" sanctions policy. Iraq's oil minister indicated that oil exports would only resume if the UN renewed the oil-for-food deal for the regular six-month interval. July crude oil gapped up on the oil embargo news from Iraq and extended gains overnight as it consolidates above the 38% retracement level of this year's rally crossing at 28.26. Closes below last week's low at 27.55 would open the door for a larger-degree decline ahead of this week's OPEC meeting. Momentum indicators are bearish but nearing their respective oversold zones warning traders to use caution as a short-term bottom might be near. July heating oil was higher overnight but off session highs following a gap higher opening. Like crude oil, heating oil rallied on news of Iraq's halt of oil exports. However, July remains below this spring's uptrend line crossing near 77.60, which strongly suggests that a top and trend change has taken place. Unless July heating oil can close above broken trendline support, May's reaction low crossing at 74.55 is July's next downside target. July unleaded gas was higher overnight but near session lows as the short covering bounce began to fade in late-session trading. Nevertheless, a higher close during the day session would strongly suggest that last Thursday's spike below May's reaction low crossing at 91.20 marked a double bottom. Momentum indicators remain bearish signaling that sideways to lower prices near-term are still possible. July Henry Hub natural gas was higher overnight as it continues to consolidate above last October's low crossing at 3.86. Multiple closes above last week's high crossing at 4.075 would increase the odds that a short-term bottom has been posted. Short-term momentum indicators have become oversold warning bears not to press their hand as downside risk appears limited for the time being. CURRENCIES The September Euro was higher overnight as a combination of euro- supportive and yen-negative comments from various central bankers appears to have given the currency a modest bounce. It will take closes above last week's high crossing at 85.70 to temper the near-term bearish outlook in the market. If the decline continues, a test of last October's lows crossing at 83.77 is possible later this month. The daily ADX (a trend-following indicator) is still bearish signaling that sideways to lower prices are possible into early-June are possible. The September British Pound opened higher due to light short covering overnight hinting that last Friday's low might have completed the setback from last Wednesday's high. Momentum indicators are neutral to bullish, which suggests that sideways to higher prices into early-June are possible. If the rebound off May's low resumes, trendline resistance crossing near 1.4290 is September's next target. The September Swiss Franc opened higher overnight and is challenging last week's gap, which led to a breakout into new contract lows. It would take closes above last Wednesday's high of .5644 to temper the bearish outlook in the market. Until then, the door is open for a test of weekly support crossing at .5488 later this month following last week's breakout below last October's low crossing at .5643. The ADX (a trend-following indicator) is bearish signaling that additional weakness during June is possible. The September Canadian Dollar was higher overnight and remains poised for a test of May's high crossing at .6541 later this week. Closes above .6541 are needed to confirm an upside breakout of May's trading range thereby renewing this spring's rally. Momentum indicators have turned bullish signaling that sideways to higher prices during the first half of June are possible. The September Japanese Yen was lower overnight due to light profit taking. Nevertheless, last week's breakout above trading range resistance has opened the door for additional gains this spring. If the yen's rally continues, minor resistance crossing at .8702 is the next target later this month. The daily ADX (a trend-following indicator) has entered a bullish trend mode signaling that additional strength is possible. PRECIOUS METALS August comex gold is working on a possible inside day but was lower overnight as it remains poised to extend its decline off May's high following last Thursday's breakout below April's uptrend line crossing near 267.50. If August gold resumes its decline, a test of this spring's low crossing at 257.30 is a potential target later this year. Stochastics and RSI are bearish signaling that additional weakness into June is likely. July silver was slightly lower overnight as it is working on a possible inside day. A lower close during the day session would signal an end to last Friday's short covering bounce. Momentum indicators have turned bearish signaling that additional weakness near-term is possible. If the decline off May's high continues, a test of the lower boundary of this spring's trading range crossing at 4.31 is July's next target later this month. July copper was slightly higher overnight due to light short covering as it has become slightly oversold on a short-term basis following last week's decline. However, the door remains open for a test of May's low crossing at 74.75 later this month. Momentum indicators are bearish signaling that sideways to lower prices into early-June appears likely. Closes below May's low could lead to a test of weekly support crossing at 74.10 later this spring. GRAINS July corn was lower overnight as traders await this morning's export inspection report and this afternoon's planting progress and crop conditions reports. Cool/wet weather across the western Corn Belt has slowed early crop development and has forced some replanting as some areas have experienced excessive moisture, which has drowned out some of the crop. For the most part traders do not seem too concerned over planting delays in the western Corn Belt but do have their eye on a potential drought, which might be developing in China. Last Friday's gap and close above May's downtrend line crossing at 1.93 1/4 strongly suggests that a short-term low has likely been posted. If July extends last week's short covering rally, a test of May's high crossing at 2.11 1/2 is the next upside target. Early calls are for July corn to open 2 to 2 1/4 cents lower this morning. July wheat was lower in overnight trading due light profit taking following last Friday's test of May's uptrend line. Losses were limited due to disease concerns in Kansas and last week's strong export sales report. Multiple closes above May's downtrend line, which crosses near 2.72, would signal that a short-term bottom has been posted. While supply side fundamentals remain bullish, export demand needs to show significant improvement in order for July wheat to sustain a late-spring rally. One of the most important things that could happen to help sluggish wheat exports would be to see the U.S. Dollar fall from current levels. Early calls are for July wheat to open 1 to 1 1/4 cents lower this morning. SOYBEAN COMPEX July soybeans were lower in overnight trading due to light profit taking as the market consolidates some of last week's gains. Last week's breakout above this spring's trading range along with closes above recent highs crossing at 4.53 1/2 have opening the door for a possible test of March's high crossing at 4.77 3/4 later this month. Cool/wet weather across the Midwest Soybean Belt has raised concerns over emergence and planting delays. Traders will be closely watching today's export inspection, planting progress and crop conditions reports for near-term direction in the market. Early calls are for July soybeans to open 1 to 1 1/4 cents lower this morning. July soybean meal was steady overnight despite last Friday's downside reversal. Stronger than expected export demand last week along with a tight domestic cash market continues to underpin the meal market. July meal is at an important crossroads and will need to close above 168 or below 159.60 to clear up near-term direction in the market. Short-term momentum indicators are still bearish warning bulls that closes into new highs for this spring are needed to renew the rally off March's low. Early calls are for July soybean meal to open steady this morning. LIVESTOCK August hogs closed sharply higher for the fourth day in a row filling April's gap crossing at 64.90. The stage is set for additional gains and a likely test of April's high crossing at 65.95 later this month. This week's rally underpinned by fund buying is due in part to futures discount to the cash market and ideas that loin prices should bottom next week. Momentum indicators are bullish signaling that sideways to higher prices into early-June are possible. August cattle closed out the week on a high note as the stage is set for a test of January's high crossing at 75.00 next week. The discount of futures to the cash market along with higher cash bids this week continues to underpin August's rally. Momentum indicators are bullish but have become overbought warning traders to use caution as a top may be near. FOOD & FIBER July coffee closed higher on Friday due to light short covering ahead of the weekend. However, a sell off ahead of the close tempered much of today's early gains leaving the door open for sideways to lower prices next week. This week's breakout into new contract lows has opened the door for a test of long-term support crossing at 51.70 later this month. July cocoa closed higher on Friday due to light short covering following Thursday's breakout below trading range support crossing at 955. Momentum indicators remain bearish despite their oversold condition hinting that additional weakness into early-June is possible. If the decline continues, the 75% retracement level at 862 is July's next target. July sugar closed higher on Friday due to light short covering as it consolidates around the 38% retracement level of this spring's rally crossing at 857. Momentum indicators remain bearish signaling that sideways to lower prices next week is still possible. If the decline continues, fib support crossing at 832 then 808 are targets. July cotton extended this week's short covering rally as it consolidates above psychological support crossing at 40-cents. Light support came from today's export sales report that came in at 107,300 bales. Additional support came from news of some 300,000 to 350,000 acres of west Texas cotton being destroyed by flooding. However, upside potential remains limited due to this year's burdensome carryout levels, which are expected to grow in the coming year. _____________________________________________________________________ extreme SIGNALS - Daily Trade Alerts - Only 20 Spaces Left! _____________________________________________________________________ <<< DOUBLE YOUR MONEY TRADES <<< <<< EXCLUSIVELY REVEALED <<< <<< BY IOWA SOYBEAN FARMER <<< Dear Andrew: Family farmer, hedger and trader Ken Seehusen has agreed to send you his private personal trading signals. For years Ken has produced extraordinary profits for himself and an elite group of friends and traders. Today, INO.com offers a small window of opportunity for you to join them! 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