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The Trade Focus commentary was written Wednesday, July 22nd, the market analysis section was written during the course of business on Thursday, July 23rd.
There was not much in the way of economic news released over the course of the week but there was a good deal of price movement over the various market sectors. Starting with the stock indices we saw continuation of the rally which started from the lows made July 8. The NASDAQ particularly was strong and led the way. Metals prices, both precious and industrial followed higher as well. The Gold and Silver continued in what has been to this point a nice 3 stage price move off lows of July 8 and 13 th respectively. The US Dollar continued its trend lower which correlates to its relationship of the past number of months to the stock indices. The grain markets however showed some decoupling from the Dollar and stocks as moderate weather in the major producing states posed little threat to crops. Corn prices in particular have suffered with prospects of terrific yields and with the large number of acres planted. Soybeans stayed more within a consolidative pattern over the course of this past week. The energies benefited too, it seems, from the optimism generated from the stock markets.
This week's market influences were in the form of earnings reports, Federal Reserve Chairman Bernanke's two day testimony before the House and Senate Banking Committees and Health Care reform. We would say that for the most part earnings have not been a disappointment as demonstrated by gains made in the indices this week. We noted that in many cases revenues suffered but the earnings were still able to beat expectations. One case of interest to us was Caterpillar whose stock soared following its earnings release on Tuesday. Its report said that profit declined 66 pct in the second quarter yet raised its forward guidance for the year based on what analysts termed aggressive cost cutting measures. What intrigued us is that media coverage seemed to last all day Tuesday and into Wednesday morning. The stock posted terrific gains and the enthusiasm was said to be based on business prospects from Asia, meaning China. It would seem to us that if China doesn't hold up and come through with surging economic growth that the rest of the world will suffer potentially from more than just a cold. Apple also received a great deal of attention as the new iphone sales were all the talk. In Chairman Bernanke's testimony to the Banking Committees he reiterated that interest rates will remain low for quite some time as the Fed does not anticipate a return to a trend rate of growth until perhaps 2011. There was also attention given to the exit strategy for the accommodative monetary policy and the extraordinary measures that have been enacted due to the financial crises and deep recession. The Chairman assured the Committees the mechanism was in place and that the exit strategy would kick-in according to the rate the economy recovers. Regarding the economic recovery he said that the labor market and consumer play the key roles. We also mentioned the Health Care reform initiative as one of the focus factors for the week. Indeed, the President has addressed this topic in front of the TV cameras each day this week and it culminates in Wednesday night's national prime time news conference. The appearance is supposed to address the first six months of the President's term in office and it is difficult to imagine that the focus on health care reform will not take the spot light during this news conference. Many media outlets have been reporting that the reform bill is having its problems maintaining momentum and may even be taking on some water. It is a huge undertaking and it is reasonable for there to be concern over its administration, cost and economic effects.
 SUGAR (OCT) - Last week we suggested that short entries could be initiated with a close below 1670. Since we last wrote the price has continued to advance and has reached above 1830. We believe that even though 1670 seems like a long way off this approach to a short entry can remain. There may be a continuation to an even higher level but we do not see at this time and price a method of approach to a long entry. |
| Copper (Sept) - We will continue to watch this market for further pattern development. It appears there remains potential to a higher level but we do not have a suggestion to offer at this time. |
Cocoa (Sept) - The active short entry from the sell zone between 2640 and 2690 would have seen the close only stop protection above 2755 (2762) elected. We had suggested an additional short entry approach last week which we will withdraw at this time to allow for further development in this market too.
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 Silver (Sept) - There have been 3 active short entries with the first two of the three originating in the July contract from a price level of 158000 for the initial short entry and the second of the two with the penetration of 138900. These were rolled to the September contract at a price of 129250. The third was initiated in the September contract with neckline penetration of 125800. At this time it appears that the stop protection suggested last week of intraday penetration of 138700 or a close above 137100 will be elected. The price as we are preparing this section is 137900. Our suggestion of a few weeks ago that some short entries could be lifted at 124000 came close as the low for the move was 124350. We do, though, anticipate new short entries will follow. In fact three is a sell zone between 143300 and 147800 and we believe that short entries can be initiated in this price area. Stop protection for these we would suggest at intraday penetration of 150300. Retracement resistance levels are approx.: 138900; 143420; 147950.
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 Gold (Aug) - We believe that short entries can be initiated at a price level of 95800 or above. If elected we suggest stop protection at intraday penetration of 96830. There is a retracement resistance level now at approx 95870 and an extension target of approx. 95950. Retracement levels of support are approx.: 93740; 93130; 92490.
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Euro Currency (Sept) - We suggested last week both a long and short entry approach. We will choose to withdraw these at this time. We believe that this market is close to providing a more clear view of its direction possibly very soon. We will wait for this to develop.
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|  Japanese Yen (Sept) - We believe the pattern that has developed will lead to lower prices and that short entries can be initiated at a price level of 10550 or above. If initiated we suggest stop protection at intraday penetration of 10633. Retracement levels of support are approx.: 10522; 10403; 10284.
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Mexican Peso (Sept) - We suggested a sell zone between 73750 and 74250 existed and that short entries from that price range could use stop protection at intraday penetration of 75225. The high made this week has been 75575 so any short entries would have seen our suggested stop protection elected. We will now need to wait for further pattern development. |
 British Pound (Sept) -
Short entries from intraday penetration of 16178 would have seen the suggested stop protection elected with intraday penetration of 16512. We believe, though, that new short entries can be made with a close below 16198. If elected, the suggested stop protection would be intraday penetration of 16590. Retracement levels of support are approx.: 15870; 15598; 15326.
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 S&P 500 (Sept emini) - There is an active long entry initiated with the close above 15325 (15350). We believe the suggested stop protection can be raised to 94875. Retracement resistance levels are approx.: 99000; 106750. We will update retracement levels of support as soon as the new pattern allows. |
 Feeder Cattle (OCT) - We believe the move and pattern to the upside is has given signs it has been completed. Short entries can be initiated from a price level of 10250 or above. If this is elected we suggest stop protection at intraday penetration of 10492. Retracement levels of support are approx.: 10150; 10045; 9945.
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 Soybeans (Aug) - There is an active short entry from the105350 close of July 7. We suggest that stop protection be maintained at intraday penetration of 107275 or a close above 105375. We still feel that short entries can lighten the quantity at a price level of 94000. Retracement resistance levels are approx.: 105900; 108670; 111475. There are extension targets of approx.: 95800 and 93550.
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| Wheat (Sept) -
There was an active short entry from the close of 51925 on July 6. The suggested stop protection of 55225 would have been elected this week as the high has been 55375. |
T-Bonds (Sept) - There are no active positions.
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 Ten Year Notes (Sept) - The active long entry initiated with the June 15 close of 114-26 would have seen the suggested stop protection elected with the 116-12.5 close of July 17.
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