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KEY EVENTS TO WATCH FOR:

8:30 AM ET. Revised first quarter productivity (Q1 preliminary: -
01%, unit labor costs +5.2%; Forecast: -0.7%, unit labor cost +5.9%)

9:00 AM ET. Redbook weekly survey of US retail sales (Previous week:
+0.6%)

10:00 AM ET. April factory orders (March: +1.4%, Forecast: -2.7%)

10:00 AM ET. May NAPM non-manufacturing index.

KEY HEADLINES:

Fed.'s Kelley to resign after one of two vacant board seats were
filled.

US May layoff's at 80,140, down 52% from April, Challenger said.

Argentina concludes mega debt swap for record $29.5 billion.

Chicago Fed.'s auto symposium participant's see 2001 GDP growth at
2.0%.

US oil refiners raise second-quarter earnings estimates.

Crude oil prices rise as Iraq halts exports.

Peru's Toledo to name Cabinet and economic team soon.

The STOCK INDEXES & MARKETS

The NASDAQ and S&P 500 were mixed overnight in thin trade amidst a
lack of any real economic or corporate news. Nevertheless, a number
of short-term momentum indicators are beginning to turn neutral to
bullish hinting that the setback from May's highs might be coming to
an end. Meanwhile, the Dow confirmed last Friday's key reversal up
thereby increasing the odds that the setback from May's high might be
ending. Monday's rally was enough to turn a number of momentum
indicators neutral to bullish. A higher weekly close for the Dow
would increase the odds that this spring's rally is resuming. If the
decline off May's high resumes, May's reaction low crossing at
10,774.10 is the Dow's next target.

European markets were lower in overnight trading while trading volume
was light. The UK FTSE-100 was down 6.90 points at 5849.60 while the
German DAX-30 was down 13.24 points at 6164.50 as of 11:00 BST.

The Nikkei was lower overnight and briefly traded below the 13,000
level for the first time since April 11 before a short covering
bounce tempered some of its losses. High-technology stocks continued
to lead the decline due to earnings concerns. Losses were tempered
due to mild strength in banking stocks. The Nikkei extended its
decline off May's high as it tested the 50% retracement level
crossing at 12,995. Momentum indicators are bearish but becoming
oversold hinting that a short-term bottom might be in or near. The
Nikkei closed down 130 points to 13,182 overnight.

INTEREST RATES

September bonds were lower overnight on light position adjustment
however, market flow was very thin due to a lack of fresh news to
trade off of. Momentum indicators have turned bullish signaling that
sideways to higher prices into early-June are possible. I am looking
for a steady to lower close on Tuesday as September bonds consolidate
some of its recent gains and trendline breakout. A setback to test
broken fib support crossing at 99-31 is a possible target today.

The German bond market or Bunds were higher overnight driven by
speculation that central banks might step into the foreign exchange
market to support the euro. The June Bunds were last up 0.12 at
106.58.

Japanese government bonds rallied ahead of the lead June contract's
expiry date on June 11. The lead June 10-year JGB futures closed at
140.78 yen, up 0.25 as of 1520 JT.

The ENERGY MARKETS were mixed in overnight trading. Gains in crude
oil were limited following OPEC's minister's assurances that the
cartel would make up any shortfall in output following Iraq's
decision to halt oil exports due to a tiff with the UN over the
oil-for- food program. Trading could be subdued ahead of this week's
API data. Pre-report estimates indicate the trade is looking for
crude oil supplies to drop 1 to 3 million barrels last week. Gasoline
stocks are expected to rise 1.8 to 2.3 million barrels and distillate
stocks are expected to rise 0.7 to 2 million barrels.

July crude oil was slightly lower overnight as it is working on a
potential inside day. Overnight losses led to a move below the 38%
retracement level of this year's rally crossing at 28.26. Closes
below last week's low at 27.55 could lead to a test of April's
reaction low crossing at 27.25 later this month. 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 due to light short covering
following Monday's downside reversal. July continues to consolidate
below broken trendline support thereby leaving the door open for a
test of May's reaction low crossing at 74.55 later this month.
Momentum indicators are bearish but becoming oversold warning bears
to use caution as a low might be near.

July unleaded gas was higher overnight due to light short covering as
it consolidated some of Monday's sharp loss. Additional weakness
during the day session is needed to confirm Monday's key reversal
down. Closes below last Thursday's low crossing at 90.30 would signal
the resumption of the decline off May's high. 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 extends its
short covering rally off last week's low. Short-term momentum
indicators have turned neutral to bullish signaling that additional
short covering during the first half of June is possible. If the
rebound continues, trendline resistance crossing near 4.20 then May's
high at 4.765 are potential targets.

CURRENCIES

The September Euro was lower overnight despite rumors of central bank
intervention to support the currency. A short covering bounce in late
overnight trade tempered some of the euro's losses, which could lead
to sideways trading during the day session. 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 September British Pound was sharply lower overnight as it posted
a new contract low. Multiple closes below last fall's low crossing at
1.4072 would confirm the breakout thereby signaling the resumption of
this year's decline. Momentum indicators have turned bearish with
this week's decline signaling lower prices during the first half of
June are possible.

The September Swiss Franc was slightly higher overnight as it is
working on an inside day as it continues to rebound off last week's
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 is possible.

The September Canadian Dollar was higher overnight following Monday's
inside day with a lower close. September remains poised to test of
May's high crossing at .6541. Closes above .6541 are needed to
confirm an upside breakout of May's trading range thereby renewing
this spring's rally. Momentum indicators are bullish signaling that
sideways to higher prices during the first half of June are possible.

The September Japanese Yen was lower overnight and is working on a
potential key reversal down due to profit taking. If last week's gap
crossing at .8425 is filled, it would temper the bullish outlook in
the yen. Closes above last week's high crossing at .8533 are needed
to keep bulls in control of the market. Stochastics and RSI are
bullish but nearing their respective overbought zones warning
trader's to use caution as a short-term top might be near.

PRECIOUS METALS

August comex gold is working on a possible upside reversal in
overnight trading. August continues to consolidate around the 75%
retracement level of the decline off May's high, which crosses at
267.20. If the decline continues, the reaction low crossing at 263.20
is August's next target. Stochastics and RSI are bearish but becoming
oversold warning bears not to press their hand as a low may be near.

July silver was higher overnight due to light short covering
following Monday's sell off. However, the door remains open for a
test of trading range support crossing at 4.31. Momentum indicators
are bearish signaling that additional weakness near-term is possible.
Multiple closes below the lower boundary of this spring's trading
range crossing at 4.31 would open the door for a possible test of
weekly support crossing at 4.15 later this month.

July copper was slightly higher overnight due to short covering
following Monday's spike below May's low crossing at 74.75. Closes
below Monday's low would open the door for additional weakness and
could lead to a test of weekly support crossing at 74.10 later this
spring. Momentum indicators are bearish signaling that sideways to
lower prices into early-June appears are possible.

GRAINS

July corn was higher overnight following Monday's crop conditions
report that showed a drop in the ratings over last week. While
traders continue to downplay the cool/wet conditions especially
across the western Corn Belt, they could not deny Monday's ratings
decline. This week's weather forecast shows only modest improvement
in weather conditions leading some traders to speculate that next
week's crop ratings report will show another decline as well. Gains
were limited due to weather forecasts calling for increased chances
for precip across portions of China, which have been on the dry side.
The ongoing rally in the US Dollar is also keeping a tight lid on
grain prices as it continues to make US grain exports unattractive on
the world markets. Nevertheless, last week's breakout above May's
downtrend line signaled that a short-term bottom has been posted. A
steady to higher close on Tuesday would help set the stage for a
possible of May's high crossing at 2.11 1/2 later this month. Early
calls are for July corn to open 1 to 1 1/4 cents higher this morning.

July wheat was steady in overnight trading following Monday's crop
conditions reports in both winter and spring wheat. Both reports
showed declines in crop ratings from the previous week. Nevertheless,
forecast for improving weather conditions across the plains will
continue to keep July wheat on the defensive for the time being. I
would not be surprised to see a short covering bounce on Tuesday as
July may try and consolidate some of Monday's losses. Early calls are
for July wheat to open steady this morning.

SOYBEAN COMPEX

July soybeans were higher in overnight trading following Monday's
crop conditions report that showed a decline in the crop ratings. The
decline was expected due to the lingering cool/wet conditions across
the Midwest. Overnight gains set the stage for a test of last week's
high crossing at 4.60 1/2. Closes above this high would open the door
for a possible test of March's high crossing at 4.77 3/4 later this
month. Momentum indicators are bullish signaling that sideways to
higher prices near-term are possible. Early calls are for July
soybeans to open 3 to 4 cents higher this morning.

July soybean meal was higher overnight following Monday's upside
reversal and spillover strength from soybeans. This week's friendly
crop conditions report along with continued strong demand could lead
to a test of May's high crossing at 168. Multiple closes above this
resistance level would renew this spring's rally. 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 50 to 70-cents higher this morning.

LIVESTOCK

August hogs posted an inside day with a lower close on Monday due to
light profit taking as it consolidated some of last week's gains.
Nevertheless, the door remains open for a test of April's high
crossing at 65.95 later this month. Much of today's pressure was due
to spillover selling from the limit-down close in bellies. Losses
were limited due to the steady to 75-cent higher cash bids. Momentum
indicators are bullish signaling that sideways to higher prices into
early-June are possible.

August cattle closed lower on Monday on ideas that cash and boxed
beef markets may be topping. The relatively low volume of cash sales
last week indicates that there might be a larger showlist this week.
Momentum indicators are bullish but have become overbought warning
traders to use caution as a top may be near. While the door is still
open for a possible test of this year's high crossing at 75.00,
additional weakness on Tuesday could trigger a round of
long-liquidation.

FOOD & FIBER July coffee closed higher on Monday as it posted a key
reversal up due to short covering. Today's rally was triggered by
talk of possible cold weather moving into Brazil's coffee growing
regions later this week. Additional support came from the latest
commitments of trader's report, which showed that funds had
significantly reduced their long positions. Additional strength on
Tuesday is needed to confirm today's bullish reversal pattern.

July cocoa closed lower on Monday as it extended last week's breakout
below trading range support crossing at 955. Momentum indicators
remain bearish signaling that additional weakness is possible. If the
decline continues, the 75% retracement level at 862 is July's next
target.

July sugar closed higher on Monday as it extended last Friday's short
covering bounce off the 38% retracement level of this spring's rally
crossing at 857. While another day or two of consolidation is
possible, momentum indicators remain bearish signaling that sideways
to lower prices are still possible. If the decline continues, fib
support crossing at 832 then 808 are targets.

July cotton posted a key reversal down on Monday but remains above
psychological support crossing at 40-cents. Early support came from
news of increasing crop losses across west Texas cotton due to
flooding. However, early strength failed to trigger follow-through
buying, which triggered a technical sell off into the close.
Additional weakness on Tuesday is needed to confirm today's bearish
reversal pattern, which could lead to a resumption of this spring's
decline later this month.
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