Weekly Market Watch
The Future is in Futures
by Pearce Financial, LLC
January 31 to February 4, 2005
Based on last week's trading activity & reports, the following markets are setting up for potential trading opportunities.
Stock indices - The March S&P 500 finds near term support at last week's two and a half month low of 1164.50 followed closely by the major daily Fibonacci .382 retracement at 1160.10. Further support is at the major daily Fibonacci .618 retracement at 1122.80 or even the monthly 18-bar Moving Average at 1110.70. Watch for buy set ups at this price level. The S&P 500 has not closed below the monthly 18-bar Moving Average since the spring of 2003. Near term resistance is at the current daily Fibonacci .382 retracement at 1185.90 and the 18-day Moving Average that it has not closed above for over a month. A rally above it could send the market right up to the January 18th reaction high of 1197.50 in confluence with the current daily Fibonacci .618 retracement at 1199.10. A break out above the 1200 mark may take the market back up to the contract high of 1220.50. Further resistance is at the major monthly Fibonacci .618 retracement at 1265.90. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is oversold on the daily chart. Seasonally, the S&P 500 should move sideways for the first half of February and decline in the second half of the month. Commercials covered some of their big net short position to become the least bearish in nearly two months. Large traders (hedge funds) are now holding their biggest net short position since early November. Small traders are still holding a large net long position.
The March NASDAQ 100 finds near term support at last week's two and a half month low of 1484.00. Further technical support may not be found again until the monthly 18-bar Moving Average at 1451.70 (the NASDAQ 100 has not closed below the monthly 18-bar Moving Average since April of 2003) or the major daily Fibonacci .618 retracement at 1441.40. Near term resistance is at last week's high of 1518.00 (the NASDAQ 100 has made lower weekly highs and lower weekly lows for three consecutive weeks) and the 18-day Moving Average that it has not closed above for a month. A rally above it could indicate that the decline is over and send the market right up to the current daily Fibonacci .618 retracement at 1582.30. Further resistance is at the contract high of 1645.00. A break out to new contract highs could cause the NASDAQ 100 to surge to the December 2001 high of 1738.00. Open Interest is flat. The %R overbought/oversold indicator shows that the NASDAQ 100 is oversold on the daily chart. The NASDAQ 100 should move lower in February. Commercial interests are still holding the biggest net short position in sixteen months. Large traders are now holding the biggest net short position in nearly four months. Small traders increased the size of their record size net long position.
Interest rates - March T-bonds find near term resistance between last week's new contract high of 114-28 and the weekly December high of 114-30. Further resistance is at the major weekly Fibonacci .618 retracement at 116-06. Near term support is at last week's low of 113-12. (T-bonds have only broken a previous week's low once in the last eight weeks). A drop below it could result in a decline to the current major weekly Fibonacci .382 retracement at 110-13 in confluence with the monthly December low of 110-11. Further support is at the current major weekly Fibonacci .618 retracement at 107-19. The March NOB spread (T-notes vs. T-bonds) finds near term resistance at last week's nineteen month high of 2-13 premium T-bonds. Further resistance is at the 2003 all-time weekly high of 3-04. Near term daily support is at the current major daily Fibonacci .382 retracement at 2/32nds premium T-bonds. A drop below it should allow the spread to test the November low of 27/32nds premium T-notes in confluence with the daily December low of 27/32nds premium T-notes. If these lows are taken out look for the spread to hit the current major daily Fibonacci .618 retracement at 1-12 premium T-notes. Open Interest reached a new all-time high again. The %R overbought/oversold indicator shows that T-bonds are overbought on the daily and weekly charts. T-bonds have a seasonal tendency to move lower in February. Commercial interests drastically reduced the size of their net short position to become the least bearish since the first week of August. Large traders interests sold more than half of their large net long position from the previous week to become the least bullish in nearly three months. Small traders are neutral to bearish.
March T-notes find near term resistance at the January spike high of 112-18. Further resistance daily is at the daily December high of 112-31. If these highs are exceeded the market has no place left to go but to the contract high of 113-165. A break out to new contract highs should send March T-notes up to the weekly September high of 114-12. Further resistance levels are located at the intermediate weekly Fibonacci .786 retracement at 115-255 and the major weekly Fibonacci .618 retracement at 116-005. Near term support is found at last week's low of 111-16. A drop below last week's low could send the market down to the current intermediate weekly Fibonacci .618 retracement at 110-10 in confluence with the December low of 110-085. If notes don't stabilize here look for a further decline to the current intermediate weekly Fibonacci .786 retracement at 109-065. Further support is at the major daily Fibonacci .618 retracement at 107-20. Open Interest is flat. T-notes have a seasonal tendency to decline in February. Commercials increased the size of their large net long position by over 125% from the previous week to become the most bullish since the first week of August. Large traders (hedge funds) are holding the largest net short position in five months. Small traders increased the size of their record net short position.
International bonds - March Canadian 10-year bonds find near term resistance at last week's new contract high of 113.32. Further resistance is at last year's weekly high near 113.50. If the rally does not end here expect the market to visit the 2003 weekly high just above the 114 mark. Near term support is at last week's low of 112.61. (Canadian bonds have only broken a previous week's low once in the last four weeks). A break below it could allow the market to decline to the January low near 111.40 (Canadian bonds have made higher monthly highs and higher monthly lows for seven consecutive months) followed closely by the late December reaction low of 111.20. Further support is at the December low of 110.60. March Euro bunds find near term resistance at the all-time high of 120.31. Further resistance is at the 122 level. Near term support is at last week's low of 119.26. (Euro bunds have only broken a previous week's low once in the last four weeks). Further support is at the late December low of 118.11. March London long gilts find near term support at the January low of 110.51. (Gilts have made higher monthly lows for six consecutive months). Further support is at the December spike low of 109.71 or the daily November low of 109.37. If these lows are violated the market could decline to the major daily Fibonacci .618 retracement at 108.48 in confluence with the daily October low of 108.45. Near term resistance is at the January high of 112.10. Further resistance is at the contract high of 112.65. A break out to new contract highs could take gilts to the psychological 115 mark. March Australian 10-year bonds find near term resistance at the January high of 94.805. Further resistance is at the contract high of 94.875 in confluence with the weekly 2004 high at 94.89. If the rally is not terminated near these highs look for the market to test the major weekly Fibonacci .786 retracement near 95.09. Near term support is at last week's low of 94.575. A break below it could pressure the market back down to the January low of 94.46 in confluence with the November low of 94.445. If these lows do not hold expect a further drop to the major weekly Fibonacci .618 retracement at 94.25. March JGB's (Japanese gov't. bonds) find near term resistance at last week's new contract high of 139.80. Further resistance is at the weekly 2004 high near 140.50. Near term support is at last week's low of 139.36 (JGB's have only broken a previous week's low once in the last eight weeks) and the 18-day Moving Average that it has closed below only one time in January. A break out above it could signal a trend change and send the market down to the late December reaction low of 138.21.
Currencies - The US dollar index finds near term resistance at last week's two and a half month high of 84.14 in confluence with the weekly 18-bar Moving Average that it has not closed above in over four months. Further resistance is at the major daily Fibonacci .382 retracement at 85.40. If the buck does not stop here look for a run to the monthly 18-bar Moving Average at 88.36 (the US dollar index has not closed above the monthly 18-bar Moving Average since March 2002) in confluence with the current major daily Fibonacci .618 retracement at 88.43. The US dollar index has stayed below the 85 mark for twelve consecutive weeks. This is a new time record for being oversold and makes the market very vulnerable to a significant short-covering rally. Near term support is at last week's low of 83.08 (the US dollar index has made higher weekly lows for the last four weeks) and the 18-day Moving Average that it has not closed below for a month. A break below it could indicate a change in the short-term trend and take the market back down to an important technical support zone between the contract low of 80.48 and the 1995 low of 80.14. If the greenback cracks the 80 level it could get smashed to the 1992 low of 78.43. Open Interest is flat. The %R overbought/oversold indicator shows that the greenback is near overbought on the daily chart and still oversold on the monthly chart. The Seasonal index shows that the dollar should move sideways to slightly higher in February. Commercial interests are the least bullish since the first week of September. Large traders are the least bearish in over four months. Small traders are the most bullish in over eight months.
The March Canadian dollar finds near term support staggered between last week's one month low of .8018, the December low of .8017, and the major daily Fibonacci .382 retracement at .7988. If the "looney" does not recover from this level it could plunge to the major daily Fibonacci .618 retracement at .7656. Near term resistance is at the January high of .8370. If this high is exceeded the market could quickly hit the contract high of .8526. A break out to new contract highs may send the "looney" to the 1991 high of .8906. Open Interest is flat. The %R overbought/oversold indicator shows that the "looney" is oversold on the daily chart. Seasonally, the Canadian dollar has a tendency to rally in the first couple of trading days in February and then decline sharply for the rest of the month. Commercial interests are the least bearish since the end of June. Large traders are holding their smallest net long position since then. Small traders are neutral.
The March Australian dollar finds near term support at the weekly 18-bar Moving Average that it has not closed below for the last four and a half months followed closely by the January low of .7475. Further support is at the major daily Fibonacci .382 retracement at .7394 in confluence with the December low of .7388. If the Aussie does not stabilize near 74 cents it could hit the October low of 71 cents in confluence with the major daily Fibonacci .618 retracement at .7094. Near term resistance is at last week's high of .7762. A break out above it could and take the market up to the December 31st reaction high of .7804. Further resistance is at the contract high of .7879. A break out to new contract highs could send the March Australian dollar up to the weekly November high of .7938 or even the weekly 2004 high of .7980. Open Interest is at a one and a half month high. The %R overbought/oversold indicator shows that the Aussie is overbought on the monthly chart. Commercials are still holding a huge net short position. Large traders (hedge funds) are still sitting on a huge net long position. Small traders are bullish.
The March Canadian dollar/Australian dollar spread finds near term support at last week's eight and a half month low of .0334 (about three and a third of a cent) premium Canadian dollar in confluence with the major daily Fibonacci .618 retracement at .0321 (about three and a quarter cents). If the spread does not stabilize in this area look for a decline to the major weekly Fibonacci .618 retracement at .0148 (about one and a half cents). Near term resistance is at the January high of .0694 (about seven cents) premium Canadian dollar. Further resistance is at the current major daily Fibonacci .618 retracement at .0736 (roughly seven and a third of a cent) premium Canadian dollar. If the rally does not end here the spread could make it to the current major daily Fibonacci .786 retracement at .0846 (about eight and a half cents) premium Canadian dollar in confluence with the January high of .0878 (about eight and three-quarter cents) premium Canadian dollar.
The March British pound signaled a trend change last week when it took out a previous week's high for the first time in seven weeks and also closed back above the 18-day Moving Average that it has not closed above for over a month. A break out above last week's nearly one month high of 1.8870 could send sterling up to the current daily Fibonacci .618 retracement at 1.9071. Further resistance is found between the contract high of 1.9446 and the weekly December high of 1.9500. Near term support is at the January low of 1.8464. A break below it could slam sterling down to the major daily Fibonacci .618 retracement at 1.8020. Open Interest is at a three and a half month low. The %R overbought/oversold indicator shows that sterling is near overbought on the monthly chart. The pound has a seasonal tendency to drop in February. Commercials are the least bearish in over three months. Large traders (hedge funds) are holding their smallest net long position since late October. Small traders are neutral to bullish.
The March Swiss franc finds near term support between the weekly 18-bar Moving Average that it has not closed below for the last four and a half months and last week's low of .8371. Further support is at the November low of .8295 or the intermediate daily Fibonacci .382 retracement at .8259. If the market does not establish a support base here expect a decline to the major daily Fibonacci .618 retracement at .8131. Near term resistance is at last week's high of .8507 (the Swiss franc has made lower weekly highs for the last four weeks) and the 18-day Moving Average that it has not closed above for a month. A break out above it could indicate that the trend has changed and send the Swissie to the current daily Fibonacci .618 retracement at .8693. Further resistance is at the contract high of .8892. A break out to new contract highs could easily send the March Swiss franc on up to the psychological 90 cent level or the 1995 high of .9038. Open Interest is flat. The %R overbought/oversold indicator shows that the Swiss franc is near oversold on the daily chart. The Seasonal index shows that the Swiss franc usually moves sideways for most of February and then declines in the last week of the month. Commercial interests are holding the biggest net long position in four months. Large traders are holding the biggest net short position since the end of September. Small traders have made a switch and are now holding the biggest net short position in four months.
The March Euro currency finds near term support clustered between the weekly 18-bar Moving Average that it has not closed below for four and a half months, the major daily Fibonacci .382 retracement at 1.2947, and the January low of 1.2931. A break below this support zone may take the market down to the major daily Fibonacci .618 retracement at 1.2490. Near term resistance is at last week's high of 1.3132 (the Euro has only broken a previous week's high once in the last four weeks) and the 18-day Moving Average that it has not closed above in a month. A break out above it could be a good clue that the trend is positive for the Euro again and take the market back up to the current major daily Fibonacci .618 retracement at 1.3398. Further resistance is at the all-time high of 1.3687. A break out to new all-time highs could accelerate the market toward the psychological 1.40 area. Open Interest is at a four month low. The %R overbought/oversold indicator shows that the Euro is still close to oversold on the daily chart. Seasonally, the Euro should continue to drop substantially in February.
The March Japanese yen finds near term resistance between the January high of .009864 and the contract high of .009885. A break out to new contract highs should take the market up to the 2000 weekly high of .009974 in confluence with the late 1999 high of .009990. Near term support is at last week's low of .009615 and the weekly 18-bar Moving Average that it has not closed below for the last four months. A break below it could send the market down to the January low of .009549. (The yen has made higher monthly lows for six consecutive months). If this low is broken the yen could decline to the major daily Fibonacci .618 retracement at .009254. Open Interest is flat. The %R overbought/oversold indicator shows that the yen is overbought on the monthly chart. The yen has a seasonal tendency to move sideways to lower in February. Commercial interests are the least bearish since early October. Large traders are the least bullish since then. Small traders are neutral to bullish.
Metals - February gold finds near term support at last week's low of $422.70. (Gold has made higher weekly lows for three consecutive weeks). A break below it could allow the market to slip down to the January low of $419.30. If this low is broken look for a drop to the major daily Fibonacci .618 retracement at $410.70 or the monthly 18-bar Moving Average at $406.90. (Gold has not closed below the monthly 18-bar Moving Average since July of 2001!) If gold does not stabilize near the $400 level it could plunge to major support between the major monthly Fibonacci .382 retracement at $378.30 and last year's monthly low of $372.00. Near term resistance is at last week's high of $430.20 (gold has made lower weekly highs for three out of the last four weeks) and the 18-day Moving Average that it has not closed above in the last month. A break out above it could change the trend and send it to the current daily Fibonacci .618 retracement at $444.70. Further resistance is at the contract high of $460.40. Open Interest is at a four month low. The Seasonal index shows that gold should decline sharply until the end of March. Commercials are holding the smallest net short position in seven months. Large traders (hedge funds) are holding the smallest net long position since Memorial Day. Small traders are neutral.
March silver finds near term resistance at last week's high of $6.89. A rally above it should take the market right up to the current daily Fibonacci .382 retracement at $7.07 in confluence with the December 27th reaction high if $7.09. If the market does not stop here expect a run to the current daily Fibonacci .618 retracement at $7.515. Near term support is at last week's low of $6.68. (Silver has made higher weekly lows for three consecutive weeks). A break below it could take silver back the January low of $6.35. If this low is broken look for a quick decline to the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. If silver breaks below six dollars it could hit last year's weekly low of $5.51. Open Interest is flat. Seasonally, silver should rally at the beginning of February and then decline sharply from mid-February until early April. Commercials are the least bearish since late September. Large traders (hedge funds) are the least bullish since then. Small traders are neutral.
March copper finds near term support at last week's low of 141.00. (March copper has only broken a previous week's low once in the last seven weeks). A break below it could send the market to the January low of 132.35 in confluence with the current major daily Fibonacci .382 retracement at 131.80. (March copper has not broken a previous month's low for the last eight months). If the market breaks below this price level it could plummet to the current major daily Fibonacci .618 retracement at 121.90 or the October low of 120.50. Near term resistance is at last week's nearly one month high 144.50. Further resistance is located at the contract high of 147.75 in confluence with the 2004 weekly high of 148.20. A break out above this price barrier could send copper soaring to the 1988 multi-decade high of 160.65. Open Interest is at a four week high. The %R overbought/oversold indicator shows that copper is still near overbought on the monthly chart. Copper has a seasonal tendency to move sharply higher in February. Commercials are neutral. Large traders (hedge funds) are neutral to bullish. Small traders remain neutral.
Energies - March crude oil finds near term resistance at last week's nearly two month high of $49.75. Further resistance is at the November 30th reaction high of $50.40. A break out above this high could take the market back up to the contract high of $54.00. Near term support is at last week's low of $46.80 (crude oil has only broken a previous week's low once in the last seven weeks) and the 18-day Moving Average that it has closed below only once in the last month. A break below this near term support could indicate a reversal of the short-term trend and take the market back down to the current intermediate daily Fibonacci .618 retracement at $44.44. Further technical support is found between the weekly December low of $40.25 and the 2003 weekly high of $39.99 (old resistance). Open Interest is at a two and a half month high. The Seasonal index shows that crude oil should move sideways to lower in February. Commercial interests are holding the biggest net short position since the beginning of October. Large traders more than doubled the size of their big net long position from the previous week to become the most bullish since the beginning of October. Small traders remain bearish.
March Unleaded Gas finds near term resistance at last week's three month high of 138.40. If the market does not pause here look for it to test the weekly October high of 144.50. A break out above this high could allow the market to test last year's all-time high of 147.00. Near term support is at last week's low of 130.00 (March gasoline has made higher weekly lows and higher weekly highs for the last four weeks) and the 18-day Moving Average that it has not closed for nearly a month. A break below this near term support could signal a trend change and send the market to the current intermediate daily Fibonacci .618 retracement at 120.23. Further support is at the daily December low of 109.81. Open Interest reached a new all-time high again. The %R overbought/oversold indicator shows that gasoline is overbought on the daily chart. Seasonally, gasoline should decline in February. Commercials interests are now the most bearish in three months. Large traders are holding the biggest net long position since late October. Small traders are neutral.
March natural gas finds near term resistance at the January high of 6.72. (March natural gas has made lower monthly highs and lower monthly lows for three consecutive months). Further resistance is at the current daily Fibonacci .382 retracement at 7.19. If the rally does not stop here look for a run to the daily December high of 7.67. Near term support is at last week's low of 6.15. (March natural gas has made higher weekly lows for three consecutive weeks). A break below it could allow the market to visit the contract low of 5.77. If March natural gas hits a new contract low it could plummet to the psychological 5.00 mark. Open Interest is at a one month low. Natural gas has a seasonal tendency to move sideways to lower until mid-February and then rally sharply in the second half of the month. Commercial interests sold a small amount of their biggest net long position since Thanksgiving of 2003. Large traders are still holding the biggest net short position in three years. Small traders remain neutral to bullish.
Meats - April live cattle finds near term resistance at last week's high of 88.40. (April cattle has only broken a previous week's high once in the last five weeks). A rally above it could take the market back up to the contract high of 90.30. A break out to new highs should allow this market to visit the weekly January high of 92.75 in confluence with the weekly December high at 92.95. Further resistance is at the major weekly Fibonacci .786 retracement at 97.00. Near term support is at the January low of 85.65. (April cattle has only broken a previous month's low once in the last four months). A break below it could pull the market down to the December low of 83.45. Further support is at the November low of 82.00. Open Interest is at a new all-time high. The Seasonal index shows that cattle should rally in a choppy fashion in February. Commercials are holding the biggest net short position in three months. Large traders (hedge funds) are the most bullish in six and a half months. Small traders are holding the biggest net short position since March of 2001.
March feeders find near term resistance at the January high of 103.25. Further resistance is at the contract high of 105.30. A break out to new contract highs could launch March feeders to the major weekly Fibonacci .618 retracement at 111.32. Near term support is at last week's low of 99.30. (March feeders have only broken a previous week's low once in the last four weeks). Further support is staggered between the January low of 96.25 (March feeders have only broken a previous month's low once in the last four months), the December low of 95.70, and the November low of 95.00. Open Interest is at a five month high. The %R overbought/oversold indicator shows that feeders are oversold on the weekly chart. Seasonally, feeders should move sideways to slightly lower in February. Commercial interests are the least bullish in two months. Large traders are holding the biggest net long position in seven months. Small traders are holding the biggest net short position since October of 2003.
April lean hogs find near term support at last week's one month low of 74.30. (April hogs have only broken a previous month's low once in the last eleven months). If this low is broken the market could collapse to the major daily Fibonacci .382 retracement at 68.97 in confluence with the December low of 68.70. Near term resistance is at the contract high of 78.60. A break out to new contract highs could take April hogs to the 2004 weekly high of 82.70. Open Interest is sitting flat near the all-time high. The %R overbought/oversold indicator shows that hogs are still near overbought on the monthly chart. Hogs have a seasonal tendency to drop substantially in February. Commercials covered some of their big net short position but they are still pretty bearish. Large traders (hedge funds) sold a fraction of their record net long position. Small traders are holding a near record short position.
Grains - March soybeans find near term support between the January low of $5.124 and the contract low of $5.10. A break below five dollars could crush March soybeans and send them to the 2002 low of $4.154 or the 1999 multi-decade low of $4.014. Near term resistance is at last week's high of $5.294. A rally above it could send the market to the November high of $5.65 and the current intermediate daily Fibonacci .382 retracement at $5.682. Further resistance is at the current intermediate daily Fibonacci .618 retracement at $6.04 followed by a daily chart gap between $6.06 and $6.23 in confluence with the major daily Fibonacci .382 retracement at $6.16. Open Interest is at a three month high. The %R overbought/oversold indicator shows that beans are oversold on the daily and weekly charts and nearing oversold on the monthly chart. The Seasonal index shows that soybeans usually establish an important bottom in mid-February and then rally into the summer. Commercial interests increased the size of their record size net long position. Large traders also increased the size of their record size net short position. Small traders are the least bearish in six months.
March soy meal finds near term support between the January low of $152.00 and the contract low of $150.50. Further support is at the weekly 2002 low of $145.40. A break below this low could pressure meal to visit the 1999 multi-year low of $120.30. Near term resistance is at last week's high of $159.50. Further resistance is found between the January high of $167.30 and the December high of $169.00. A break out above these highs could allow the market to attempt to fill a daily chart gap between $177.30 and $178.30. Further resistance is at the current major daily Fibonacci .382 retracement at $186.80. Open Interest is at the highest level since mid-November. The %R overbought/oversold indicator shows that meal is oversold on the daily, weekly, and monthly charts. Seasonally, soy meal should post an important seasonal low in mid-February. Commercials are holding a record-size net long position. Large traders (hedge funds) are holding a new record-size net short position. Small traders remain very bearish.
March bean oil made an outside reversal down last week when it took out the previous week's high and then reversed and dropped below the previous week's low. On the weekly chart, bean oil has not traded this low since October of 2002. This sort of price action should be construed as bearish. Near term support is at last week's new contract low of 19.22. Further support is at the major weekly Fibonacci .786 retracement at 18.81. If the decline does not end here the market could plunge to the psychological 18 cent mark. Near term resistance is at last week's high of 19.97 (March bean oil has only broken a previous week's high once in the last four weeks) and the 18-day Moving Average that it has not closed above for over a month. This is closely followed by the January high of 20.55. (March bean oil has made lower monthly highs for the last four months). A break out above this level could reverse the down trend and send the market back to technical resistance clusters at the December high of 21.63 in confluence with the current intermediate daily Fibonacci .382 retracement at 21.66 and the November high of 22.03 in confluence with the October high of 22.15. A strong close above 22 cents could allow the market to test the current major daily Fibonacci .382 retracement at 22.86 or the current intermediate daily Fibonacci .618 retracement at 23.16. Open Interest is still near a nine and a half month high. The %R overbought/oversold indicator shows that bean oil is oversold on the daily and weekly charts. Bean oil has a seasonal tendency to rally from February thru May. Commercial interests are holding a record net long position. Large traders are holding their biggest net short position since the summer of 1999. Small traders are the most bearish since October of 2001.
March corn finds near term support between last week's new contract low of $1.952 and the 2002 low of $1.914. Further support is at the 2001 low of $1.84. Near term resistance is at the January high of $2.096. A break out above this high could send the market to the current minor daily Fibonacci .382 retracement at $2.174 in confluence with the November high of $2.19. Further resistance is at the current minor daily Fibonacci .618 retracement at $2.31. After that March corn could be headed to another price barrier between the current major daily Fibonacci .382 retracement at $2.512, the September high of $2.514, and the August high of $2.53. Open Interest is at a two month high. The %R overbought/oversold indicator shows that corn is still oversold on the daily, weekly, and monthly charts. The Seasonal index shows that corn should move sideways for most of February and then establish an important seasonal low at the end of the month. Commercials increased the size of their record net long position. Large traders (hedge funds) are holding a record size net short position. Small traders are very bearish.
March rice made an outside reversal down on the weekly chart last week when it took out the previous week's high and then reversed and took out the previous week's low. The market actually hit the lowest level in nearly a year and a half on the weekly chart. This is bearish price action. Near term support is at last week's new contract low of 6.54 followed by the major weekly Fibonacci .618 retracement at 6.445. Further support is at the psychological 6.00 mark. Near term resistance is at last week's high of 7.28 (March rice has only broken a previous week's high once in the last five weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could signal a trend change and send the market back up to challenge the current major daily Fibonacci .382 retracement at 7.76 followed closely by the daily double top December high of 7.85. Further resistance is at the 8.50 level in confluence with the current major daily Fibonacci .618 retracement at 8.52. Open Interest is at a two month high. The %R overbought/oversold indicator shows that rice is oversold on the daily and weekly charts. Seasonal Commercial interests are neutral. Large traders (hedge funds) are neutral to bearish. Small traders are neutral to bullish.
March oats finds near term resistance at the January high of $1.73. Further resistance is at the September high of $1.77. A break out above this high should send March oats right up to last year's weekly high of $1.85. Near term support is at last week's low of $1.656 (March oats have made higher weekly lows for three consecutive weeks) and the 18-day Moving Average that it has closed below only once in the last month. A break below it should send the market right to the current intermediate daily Fibonacci .382 retracement at $1.616. Further support is at the January low of $1.52 in confluence with the December low of $1.51. (March oats has made higher monthly lows for four out of the last five months). If the market does not stabilize here expect a decline to the October low of $1.434. Open Interest is at a two and a half month high. The %R overbought/oversold indicator shows that oats are overbought on the daily and weekly charts. Oats have a seasonal tendency to move sideways in the first week of February and then decline sharply for the rest of the month. Commercials increased the size of their biggest net short position since Memorial Day. Large traders (hedge funds) are holding their biggest net long position since early May. Small traders remain neutral.
March wheat finds near term support at last week's new contract low of $2.882. A break to new contract lows should keep the market on track for last year's weekly low of $2.824. Further support is at the monthly 2003 low of $2.73 followed by the major monthly Fibonacci .786 retracement at $2.676. Near term resistance is at last week's high of $2.996. (March wheat has made lower weekly highs for three consecutive weeks). A rally above it could send the market up to technical resistance clustered between the weekly 18-bar Moving Average that it has not closed above since May, the January high of $3.12, and the current minor daily Fibonacci .382 retracement at $3.124. If the market can conquer this barrier look for a run to the November high of $3.314 or the October high of $3.36. Open Interest hit a new record high again. The %R overbought/oversold indicator shows that wheat is oversold on the daily and weekly charts. The Seasonal index shows that wheat should move sideways for the first half of February and then drop sharply for the rest of the month. Commercial interests are holding a record size net long position. Large traders are holding a new record net short position. Small traders are neutral.
Softs - March coffee finds near term resistance is at last week's high of 106.25. Further resistance is at the contract high of 108.70. If the market can break out to new highs it may rocket to the July of 2000 high of 119.00. Near term support is found between the current January low of 95.10 (March coffee has made higher monthly lows for five consecutive months), the current major daily Fibonacci .382 retracement at 94.40, and the December low of 93 cents. If this support zone is compromised the market could quickly erode to the current major daily Fibonacci .618 retracement at 85.60. Further support is at the major weekly Fibonacci .382 retracement at 83 cents. Open Interest is flat. The %R overbought/oversold indicator shows that coffee is overbought on the weekly and monthly charts. Seasonally, coffee should rally in February. Commercials are still holding a near record net short position. Large traders (hedge funds) are still holding a near record net long position. Small traders are neutral.
March cocoa signaled a trend change last week when it broke out above a two week high for the first time in seven weeks and also closed above the 18-day Moving Average for the first time in over a month. Near term resistance is found at the daily Fibonacci .382 retracement at $1,595 in confluence with last week's high of $1,596. Further resistance is at the daily Fibonacci .618 retracement at $1,677. If the market does not slow down at this level it may hit the December high of $1,723 or the daily Fibonacci .786 retracement at $1,734. Near term support is at the January low of $1,464. Further support is at the daily October low of $1,408. A break below this price level should send cocoa right down to the contract low of $1,340. Open Interest is flat. Cocoa has a seasonal tendency to move sideways for the first half of February and then drop in the second half of the month. Commercial interests are the least bearish in over two months. Large traders are the least bullish in two months. Small traders are still heavily net long.
March sugar finds near term resistance between last week's high of 9.33 and the contract high of 9.37. If March sugar breaks out to a new contract high look for a rally to the intermediate weekly Fibonacci .786 retracement at 10.02. A strong close above ten cents could catapult the market to the 2000 high of 11.40 in confluence with the major monthly Fibonacci .618 retracement at 11.45. Near term support is located between the January low of 8.51 (March sugar has made higher monthly lows for ten out of the last eleven months) and the December low of 8.44. A break below these lows should take sugar to the major daily Fibonacci .382 retracement at 8.13 in confluence with the daily August low of 8.13. Open Interest hit a new all-time high. The %R overbought/oversold indicator shows that sugar is overbought on the daily, weekly, and monthly charts. The Seasonal index shows that sugar should move higher for most of February and then decline sharply in the last week of the month. Commercials are neutral to bearish. Large traders (hedge funds) are neutral to bullish. Small traders are neutral to bullish.
March orange juice finds near term support at last week's low of 79.80. (March OJ has made higher weekly lows for three consecutive weeks). A break below it could allow the market to challenge the January low of 77 cents in confluence with the December low of 76.90. (March OJ has made higher monthly lows for four out of the last five months). If these lows are violated expect a decline to the major daily Fibonacci .618 retracement at 74.95. Further support is at the weekly November low of 69.20. Near term resistance is at last week's high of 83.60 (March OJ has made lower weekly highs for five consecutive weeks) and the 18-day Moving Average that it has closed above only once in the last month. A break out above it could reverse the trend and take OJ up to the December high of 89 cents. Further resistance is at the contract high of 93.50. Open Interest is at a one month high. Seasonally, OJ should drop sharply in February. Commercial are the least bearish since mid-June. Large traders are holding the smallest net long position since July. Small traders are the least bullish since September of 2003.
March cotton signaled a trend change last week when it broke a two week low and closed below the 18-day Moving Average for the first time in a month. Near term support is found at last week's one month low of 42.40. Further support is at the contract low of 41.72. A break to new contract lows should send cotton to the October 2002 reaction low of 40.50 in confluence with the major monthly Fibonacci .786 retracement at 40.31. A break below 40 cents could smash the market to the 2002 low of 31.47 or the 2001 all-time low of 28.20. Near term resistance is at the January high of 48.31. Further resistance is at the October high of 50.50 in confluence with the current intermediate daily Fibonacci .618 retracement at 50.85. If March cotton can clear this level it could be on it's way to the September high of 56.50. Open Interest is at a one year high. The %R overbought/oversold indicator shows that cotton is oversold on the daily and weekly charts. Cotton has a seasonal tendency to drop sharply in the first week of February and then run higher until mid-March. Commercials are holding the biggest net short cotton position in almost a year. Large traders (hedge funds) more than tripled the size of their net long position from the previous week to become the most bullish in about eleven months. Small traders are holding the biggest net long cotton position since the first week of January 2003.
Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.
© 2005 Pearce Financial, LLC
Contact Information
Pearce Financial, LLC
(800) 800-1399 | Email
Futures trading involves risk and is not necessarily appropriate for all investors. Notice & Disclaimer
