W E D N E S D A Y   M O R N I N G   E X T R E M E   M A R K E T S
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Andrew,

KEY EVENTS TO WATCH FOR:

9:00 AM ET. Redbook weekly survey of US retail sales (Previous week:
+1.3%)

9:00 AM ET. Bank of Tokyo-Mitsubishi weekly US chain store sales
(Previous week: +0.5%)

12:30 PM ET. Treasury releases results of $20 billion, 14-day cash
management bill auction.

1:00 PM ET. Federal Reserve Bank of Dallas President Robert McTeer
speaks on the economy to the Frost Bank.

1:30 PM ET. Treasury releases results of $10 billion , 2-year note
auction.

6:30 PM ET. ABC/Money Magazine releases consumer confidence polls.

KEY HEADLINES:

US May consumer confidence at 115.5 verses April's revised at 109.9.

US consumer confidence rebounds unexpectedly.

US consumer spending picks up, but income growth slows.

US personal incomes rose 0.3% in April, consumer spending up 0.4%.

Bank of Canada cuts rates by another quarter point.

Bush asks $150 million from Congress for low income energy aid.

The STOCK INDEXES & MARKETS

The NASDAQ and S&P 500 were lower overnight as selling pressure
continues due to weakness in technology stocks. Both the Nasdaq and
June S&P 500 have broken out below this spring's uptrend lines
thereby increasing the odds that short-term tops have been posted.
Momentum indicators have also turned bearish warning traders and
investors alike that additional weakness into early-June appears
likely. Meanwhile, the Dow closed modestly higher on Tuesday due to
light short covering ahead of the close. Nevertheless, the recent
breakout below this spring's uptrend line that crosses near 11,100
signaled that a top has been posted. If the decline off last week's
high continues, May's reaction low crossing at 10,774.10 is the Dow's
next target.

European markets were lower in overnight trading due to spillover
pressure from Tuesday's poor performance on Wall Street and ongoing
weakness in the euro. The UK FTSE-100 was down 53.90 points at
5810.00 while the German DAX-30 was down 43.98 points at 6067.35 as
of 11:00 BST.

The Nikkei closed sharply lower overnight as it broke out below May's
reaction low crossing at 13,694 to renew its decline off May's high.
The door is open for additional weakness with the 38% retracement
level of this spring's rally crossing at 13,363 being the next likely
downside target later this spring. Momentum indicators remain bearish
signaling that additional weakness near-term is possible. The
overnight sell off was triggered by a downgrade of high-tech stocks
by analysts. The Nikkei closed down 2% or 280.54 points to 13,493.35.

INTEREST RATES

June bonds opened higher overnight as they consolidated some of
Tuesday's losses. June bonds may continue to drift sideways ahead of
Friday's employment report amidst a lack of fresh economic news to
trade off of. Nevertheless, momentum indicators remain bearish
warning traders that a test of May's reaction low crossing at 98-24
is still a potential target later this spring. If this support level
gives way, weekly fib support crossing at 98-07 is a target.

The German bond market or Bunds were lower overnight in response to
the latest money supply figures for the euro-zone. The annual rate of
M3 growth in April was 4.7% compared with 4.6% in March. The June
Bunds were last down 0.07 at 106.15.

Japanese government bond markets were slightly higher overnight but
remains locked within a narrow trading range. Light support came from
weakness in the Nikkei. The lead June 10-year JGB futures closed at
140.19 yen, up 0.11 while the yield on the benchmark No. 231 June
10-year cash bond stood at 1.280%, unchanged as of 1520 JT.

The ENERGY MARKETS were mostly higher in overnight trading due to
light short covering as the products consolidated some of Tuesday's
losses. Additional support came from concerns over Iraq's threats to
curtail oil exports. This week's API inventory data review is as
follows. Crude oil and unleaded gasoline stocks are expected to have
risen 1.2 million barrels last week, while distillate stocks are
anticipated to have climbed 0.6 million barrels. Refinery operations
are seen unchanged to up 0.55 percentage points of capacity.

July crude oil was higher overnight as it continues to rebound off
last Friday's low on Iraq output concerns. However, July continues to
consolidate below broken trendline support crossing near 29.25. It
would take multiple closes above this broken support level to temper
the near-term bearish outlook in July crude. Until then, the rebound
appears to be corrective as the door has been open for sideways to
lower prices into early-June. Momentum indicators are bearish
signaling that sideways to lower prices are possible. If July's
decline resumes, the reaction lows at 28.03 then 27.25 are July's
next targets.

July heating oil was higher overnight as it is working on an inside
day to consolidate some of Tuesday's loss. A higher close during the
day session would leave Tuesday's key reversal down unconfirmed. If
the decline continues, a test of this spring's uptrend line crossing
near 77.30 is July's next target. Multiple closes below this uptrend
line are needed to confirm a top and trend change has taken place.
Momentum indicators are bearish warning bulls that additional
weakness is possible.

July unleaded gas is working on an inside day in overnight trading
due to light short covering. Nevertheless, the setback from last
week's high has turned momentum indicators bearish signaling that
additional weakness into early-June is possible. If the decline
continues, trendline support crossing near 93.25 is July's next
target.

July Henry Hub natural gas was lower overnight as it extends this
spring's decline. Tuesday's breakout below last October's low
crossing at 3.86 has opened the door for a possible test of fib
support crossing at 3.64 later this spring. The daily ADX (a
trend-following indicator) remains in a bearish modes signaling that
additional weakness near-term is possible. However, momentum
indicators have become extremely oversold warning bears to use
caution as a low might be near.

CURRENCIES

The June Euro was lower overnight but is working on an inside day as
it consolidates above last November's low crossing at 84.73. If the
decline resumes, a test of last October's lows crossing at 83.53 is
possible later this spring. The daily ADX (a trend-following
indicator) has entered a bearish trend mode signaling that sideways
to lower prices are possible into early- June.

The June British Pound was slightly lower, overnight as it
consolidates some of Tuesday's gains. Momentum indicators are turning
neutral to bullish following the rebound off last week's low, which
suggests that a broad double bottom might be in place. Nevertheless,
multiple closes below trading range support crossing at 1.4112 would
open the door for a possible test of last fall's low at 1.4052 later
this spring.

The June Swiss Franc was lower in overnight trading as it is working
on an inside day. June continues to consolidate above the contract
low crossing at .5603. Multiple closes below this support level would
renew this spring's decline while opening the door for a possible
test of weekly support crossing at .5488 later this year. Momentum
indicators are bearish but becoming oversold warning traders to use
caution as a broad double bottom might be forming.

The June Canadian Dollar was lower overnight due to light profit
taking and may be forming a possible downside reversal. However, it
will take multiple closes above .6548 or below .6425 to clear up
near-term direction in the market. Momentum indicators are turning
neutral to bullish hinting that a minor low might be in or near.

The June Japanese Yen was lower in narrow trading overnight but
remains below trading range resistance that crosses at .8339. Closes
above.8433 are needed to confirm an upside breakout of this spring's
trading range. Momentum indicators are bullish signaling that
additional gains near-term are possible.

PRECIOUS METALS

August comex gold was lower overnight as it extends its decline off
last week's spike high due to long-liquidation. Stochastics and RSI
are bearish signaling that additional weakness into June is likely.
This week's breakout below broken resistance crossing at 276.20 has
opened the door for a test of trendline support crossing near 271.70
later this spring.

July silver was lower overnight and is below trading range resistance
crossing at 4.525. Multiple closes below 4.525 would signal that
May's short covering rally has likely come to an end. Momentum
indicators are turning neutral to bearish hinting that a short-term
top has likely been posted.

July copper was slightly higher overnight due to light short covering
following Tuesday's sharp decline. Upside potential during the day
session appears limited as the tone of the market has turned
decidedly bearish following Tuesday's sell-off. Momentum indicators
are turning bearish signaling that sideways to lower prices into
early-June appears likely. If the decline continues, May's low at
74.75 is July's next target.

GRAINS

July corn was steady overnight as it consolidates below weekly
support crossing at 1.91 1/2. Multiple closes below this key support
level are needed to confirm a breakout thereby opening the door for a
possible test of last summer's low crossing at 1.74 1/2 later this
year. Tuesday's planting intentions report showed that 95% of this
year's corn crop is in the ground compared with the five-year average
of 92%. The crop conditions report showed that 80% of the corn has
emerged with 5% poor, 25% fair, and 70% good- excellent. Yesterday's
export inspection report came in at 32.383 million bushels, which was
above the previous week's level but is still below the pace needed to
meet the latest USDA export projection. Traders are now looking for
the USDA to lower its export projection in the June supply/demand
report, which would only add to the bearish carryout level for
2001-02. Early calls are for July corn to open steady this morning.

July wheat was higher in overnight trading as last week's cool-wet
conditions have improved winter wheat conditions slightly. However,
the latest export inspection report continued to show slow export
demand, which have off set supply concerns this spring. It would take
multiple closes above broken support crossing at 2.65 to temper the
near term bearish outlook in July wheat. Until then, the door remains
open for a test of weekly gap support crossing at 2.56 then the
long-term pivot level at 2.50 later this spring. Early calls are for
July wheat to open 2 to 2 3/4 cents higher this morning.

SOYBEAN COMPEX

July soybeans were fractionally higher in overnight trading due to
short covering following Tuesday's breakout below this spring's
uptrend line. The latest planting progress report showed that 70% of
the bean crop has been planted, which is 6 points above the five-year
average. While a short covering bounce is possible during the day
session on Wednesday, odds now appears as though last Friday's high
marked a double top on the daily chart. Momentum indicators are
turning bearish from overbought positions signaling that sideways to
lower prices into early-June appear likely. Early calls are for July
soybeans to open steady to a 1/4 of a cent higher this morning.

July soybean meal was higher overnight due to short covering
following Tuesday's trendline breakout. Multiple closes below
trendline support crossing near 162.60 are needed to confirm this
week's breakout. At the same time, momentum indicators are turning
bearish from overbought conditions thereby increasing the odds that a
short-term top has likely been posted. Early calls are for July
soybean meal to open 20 to 50-cents higher this morning.

LIVESTOCK

June hogs closed sharply higher on Tuesday following last Friday's
announcement by the USDA that the government was easing its ban on
livestock and uncooked meat from the EU. Today's rally strongly
suggests that last week's lows marked a double bottom with the
early-May lows, which coincided with the 38% retracement level of the
2000-01 rally. Momentum indicators are turning neutral to bullish
with today's rally signaling that sideways to higher prices into
early-June are possible.

August cattle closed higher on Tuesday and above the 75% retracement
level of this year's decline crossing at 73.83. Today's rally renewed
May's advance while opening the door for a likely test of January's
high crossing at 75.00 later this spring. Momentum indicators have
become overbought but remain bullish signaling that additional gains
near-term are possible.

FOOD & FIBER July coffee posted an inside day with a slightly lower
close as it consolidated some of last Friday's losses. The door
remains open for a test of April's low crossing at 58.80. Closes
below this support level would renew this year's decline and set the
stage for a possible test of long-term support crossing at 51.70
later this year.

July cocoa closed lower on Tuesday following last Friday's gap down,
which signaled that a broad double top has been posted. Momentum
indicators have turned bearish signaling that additional weakness
into early-June is likely. I would not be surprised to see a short
covering bounce on Wednesday as July might try and consolidate some
of its recent losses.

July sugar closed sharply lower on Tuesday and below trading range
support crossing at 879. Multiple closes below 879 are needed to
confirm today's breakout and trend change. Stochastics and RSI are
bearish signaling that sideways to lower prices near-term are
possible. I would not be surprised to see a short covering bounce on
Wednesday as July might try and test broken support before extending
its decline.

July cotton posted an upside reversal on Tuesday due to light short
covering. Early session weakness led to a spike below psychological
support crossing at 40-cents. Multiple closes below the 40-cent
support level could lead to an eventual test of the 1986 low crossing
at 29.50 cents. If last Friday's gap crossing at 42.15 is filled this
week, it would increase the odds that the gap was an exhaustion gap,
which is associated with a market that is bottoming.
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