FSO Editorials: Pearce Financial's Monthly Market Watch ~ 04.03.2006

FSO Editorials

Monthly Market Watch
The Future is in Futures
by Pearce Financial, LLC
April 3, 2006

Based on trading activity and reports, the following markets are setting up for potential trading opportunities.

Stock indices - The June S&P 500 finds near term weekly resistance at the contract high of 1321.30. Further resistance is located between a weekly "A,B,C" wave projection at 1385.00 on the weekly chart and the 2001 high of 1390.00. (This is based on a weekly "A,B,C" wave projection where wave "A" is the move from the weekly October low of 1172.00 to the weekly early January high of 1301.00, wave "B" is the correction from the weekly early January high of 1301.00 to the weekly February low of 1256.00 (which was just above the Fibonacci .382 retracement of wave "A"), and wave "C" is the move back up off of the weekly February low of 1256.00. In bull markets, wave "C" is usually at least the same size as wave "A". The major monthly Fibonacci .786 retracement lurks just beyond this point at 1401.40. If the rally does not end here the S&P 500 may be on the path to test the psychological 1500 mark. Near term support is at the weekly 18-bar Moving Average. (The S&P 500 has not closed below the weekly 18-bar Moving Average since late October). A break below it could send the market down to the monthly March low of 1269.00. (The S&P 500 has not traded below a previous month's low for the last five months). Further support is clustered between this year's current weekly low of 1251.70, the current weekly Fibonacci .382 retracement at 1250.80 (as measured between last year's weekly low of 1136.80 and this year's current multi-year high), and the weekly August high of 1248.40 (old resistance). Failure to stabilize here could result in a decline to the current major daily Fibonacci .382 retracement at 1260.60 (as measured between the daily October low and the current contract high). Further support is at the current weekly Fibonacci .618 retracement at 1229.00 (as measured between the weekly October reaction low and this year's current multi-year high) in confluence with the monthly 18-bar Moving Average near 1227.00. (The S&P 500 has not closed below the monthly 18-bar Moving Average for the last three years). Watch for a buy set-up if this level is reached. This major support level could offer a great risk/reward trade. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is overbought on the weekly and monthly charts. Seasonally, the S&P 500 should trade in a sideways range in April with a dip in the middle of the month. Over the last few years, the "January effect" has diminished a great deal. Commercials are holding the smallest net short position since mid-December. Large traders (hedge funds) are holding their smallest net long position since then. Small traders dumped over half of the big net long position that they were holding a few weeks ago.

The June NASDAQ 100 finds near term resistance at last week's high of 1737.50 in confluence with the major daily Fibonacci .382 retracement at 1738.40. Further resistance is at the weekly January high of 1774.00 followed by the June contract high of 1791.50. If the market can take out these highs it could surge to the psychological 2000 area. Further resistance is at the weekly May 2001 reaction high of 2076.00. Near term support is located between this year's current weekly low of 1634.00, the weekly August high of 1635.00 (old resistance), and the current major weekly Fibonacci .382 retracement at 1630.00 (as measured between last year's weekly low of 1397.00 and this year's current multi-year high of 1774.00). A break below this support cluster could take the market down to the weekly October low of 1523.00. If the market does not stabilize here it could decline to the major weekly Fibonacci .618 retracement at 1482.30 (as measured between the 2004 weekly low of 1302.00 and this year's current high of 1774.00). Open Interest is flat again. The %R overbought/oversold indicator shows that the NASDAQ 100 is near overbought on the daily and monthly charts. The NASDAQ 100 should decline until the middle of April and then rebound to a sideways range for the rest of the month. Commercial interests covered almost three-quarters of their huge net short position to become the least bearish since mid-December. Large traders (hedge funds) are holding their smallest net long position since Thanksgiving. Small traders are now net short for the first time since mid-December.

Interest rates - June T-bonds cracked the major weekly Fibonacci .618 retracement last week and broke below last year's low. Near term support is at last week's new contract low of 108-26. If T-bonds don't establish some sort of support around this level they could collapse to the 2004 low of 103-02 or even a major monthly Fibonacci .618 retracement at 102-16 (as measured between the monthly 2000 low of 89-01 and the 2003 all-time high of 124-10). Near term resistance is at last week's high of 111-12 (T-bonds have made lower weekly highs for four out of the last five weeks) and the 18-day Moving Average that it has closed below nearly every day for the last month. If this near term resistance is conquered the market could test technical resistance clustered between the current minor weekly Fibonacci .618 retracement at 112-28 (as measured between this year's current weekly high of 115-13 and this year's current weekly low of 108-26), the current intermediate weekly Fibonacci .382 retracement at 113-02 (as measured between last year's weekly high of 119-30 and this year's current weekly low of 108-26), and the monthly March high of 113-03. Further resistance is located at this year's current weekly high of 115-13 in confluence with the current intermediate weekly Fibonacci .618 retracement at 115-22 (as measured between the last year's weekly high of 119-30 and this year's current weekly low of 108-26). The June NOB spread (T-notes vs. T-bonds) finds near term support at last week's low of 2-26 premium T-bonds. Further support is at the major weekly Fibonacci .382 retracement at 1-00 premium T-bonds. If this low does not hold the spread could hit the psychological even money level. Near term daily resistance at the current intermediate daily Fibonacci .382 retracement at 3-23 premium T-bonds (as measured between the daily February high at 5-07 premium T-bonds and the current contract low of 2-26 premium T-bonds). Further resistance is at the current major daily Fibonacci .382 retracement at 4-065 premium T-bonds (as measured between the contract high at 6-16 premium T-bonds and the current contract low of 2-26 premium T-bonds) in confluence with the current intermediate daily Fibonacci .618 retracement at 4-095 premium T-bonds. If the spread does not slow down at this level it may rally another point to challenge the daily February high at 5-07 premium T-bonds. Open Interest is picking up just a little. The %R overbought/oversold indicator shows that T-bonds are oversold on the daily and weekly charts. T-bonds have a seasonal tendency to rally slightly for the first half of April and then decline in the second half of the month. Commercial interests are holding a record size net long position. Large traders are holding the biggest net short position since the summer of 2004. Small traders increased the size of their record net short position.

June T-notes find near term support at last week's new contract low of 106-04. A break below it could keep T-notes plunging toward a major monthly Fibonacci .618 retracement at 104-04 (as measured between the 2000 low of 93-215 and the 2003 all-time high of 121-01). Near term resistance is at last week's high of 107-17. (June T-notes have only broken a previous week's high once in the last ten weeks). If notes can close above a previous week's high they could quickly rally to an intermediate daily Fibonacci .618 retracement at 108-17 (as measured between the daily January high and the current contract low). Further resistance is located a point higher at an intermediate weekly Fibonacci .382 retracement at 109-105 (as measured between last year's weekly high of 114-16 and this year's current weekly low of 106-12). After that the market could run up to an intermediate weekly Fibonacci .618 retracement at 111-095 (as measured between last year's weekly high of 114-16 and this year's current weekly low of 106-12). Open Interest is very high. The %R overbought/oversold indicator shows that T-notes are oversold on the daily, weekly, and monthly charts. T-notes have a seasonal tendency to move sideways for the first half of April and then decline in the second half of the month. Commercials are holding the biggest net long position since mid-December. Large traders (hedge funds) sold a fraction of their record net long position. Small traders are holding the largest net short position in a year.

International bonds - June Canadian 10-year bonds find near term support between last week's one year low on the weekly chart at 111.51 and the daily June contract low of 111.38. If June Canadian 10-year bonds hit a new contract low expect a quick decline to an intermediate weekly Fibonacci .618 retracement at 110.57 (as measured between the weekly 2004 low of 106.12 and last year's all-time high of 117.78) or even last year's weekly low of 110.04. Failure to stabilize in this area could result in a bigger decline to an intermediate weekly Fibonacci .618 retracement at 106.51 (as measured between the weekly 2002 low of 99.55 and last year's all-time high of 117.78) or even the weekly 2002 low of 106.12. Near term resistance is found between the daily March high of 112.99 and the daily February high of 113.04 followed closely by the current daily Fibonacci .618 retracement at 113.15. Further resistance is at the current intermediate weekly Fibonacci .618 retracement at 113.85 (as measured between this year's current weekly high of 115.29 and this year's current weekly low of 111.51) in confluence with the current major weekly Fibonacci .382 retracement at 113.91 (as measured between last year's all-time high of 117.78 and this year's current weekly low of 111.51). A close above it could send the market a point higher to challenge this year's current weekly high of 115.29 in confluence with the current major weekly Fibonacci .618 retracement at 115.38 (as measured between last year's all-time high of 117.78 and this year's current weekly low of 111.51). June Euro bunds find near term support clustered between the weekly 2005 low of 116.89, last week's low of 116.85, the weekly March 2004 high of 116.81 (old resistance), and a major weekly Fibonacci .618 retracement at 116.70 (as measured between the weekly 2004 low of 111.81 and last year's all-time high of 124.60). If bunds do not stabilize here they could plummet to a major monthly Fibonacci .618 retracement at 112.18 (as measured between the 2002 low of 104.50 and last year's all-time high of 124.60) followed by the 2004 low of 111.81. Near term resistance is at last week's high of 118.43 (bunds have made lower weekly lows and lower weekly highs for four out of the last five weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day for a month). If bunds can break out above a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could quickly rally to the current daily Fibonacci .382 retracement at 118.75. Further resistance is at the current daily Fibonacci .618 retracement at 119.92 followed by the daily February high of 120.20. June London long gilts are in trouble! The market closed below the monthly 18-bar Moving Average for the first time since November 2004. Near term support is at last week's low of 111.49. Further support is at the weekly October low of 111.20. A break below this low could cause the market to decline to the major weekly Fibonacci .618 retracement at 109.15. Near term resistance is at last week's high of 112.46 (gilts have made lower weekly lows and lower weekly highs for five consecutive weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day for a month). If the gilts can break out above a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could quickly rally to the current daily Fibonacci .618 retracement at 113.16. Further resistance is a point higher at the daily February high of 114.20 in confluence with a minor weekly Fibonacci .618 retracement at 114.33 (as measured between this year's current weekly high of 116.08 and last week's low of 111.49). June Australian 10-year bonds find near term weekly support at the March low of 94.545. Further support is at the weekly November low of 94.39. Near term resistance is at the daily March high of 94.76. A strong close above it could send Aussie bonds up to this year's current high on the weekly chart at 94.89 in confluence with the major weekly Fibonacci .786 retracement at 94.895. Further resistance is at the weekly 2005 high of 95.03. June JGB's broke to a five and a half year low and tangled with an intermediate monthly Fibonacci .618 retracement. If the JGBs break below last week's low of 132.81 there could be a meltdown to the major monthly Fibonacci .618 retracement at 130.29 (as measured between the 1994 low of 106.42 and the 2003 all-time high of 145.04) in confluence with the 2000 monthly low of 130.17. Near term resistance is at last week's high of 134.33 (June mini JGBs have made lower weekly lows for ten out of the last eleven weeks and lower weekly highs for four out of the last five weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day since mid-January). If JGBs can break out above a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could quickly rally to the current intermediate weekly Fibonacci .382 retracement at 136.07 (as measured between last year's double top weekly high of 141.35 and this year's current weekly low of 132.81). Further resistance is at the daily January high of 138.06 in confluence with the current intermediate weekly Fibonacci .618 retracement at 138.09 (as measured between last year's double top weekly high of 141.35 and this year's current weekly low of 132.81).

Currencies - The US dollar index finds near term support between the major weekly Fibonacci .382 retracement at 87.93 and this year's current low of 87.69. A drop below this price level could take the market down to the weekly September low of 85.97. Further support is at the major weekly Fibonacci .618 retracement at 85.08. Near term resistance is at the daily March high of 90.79. A strong close above it could allow the market to test the contract high of 91.69. Further resistance is at last year's weekly high of 92.53. If the greenback can break last year's high it could surge to the major monthly Fibonacci .382 retracement at 96.07. Open Interest is flat. The Seasonal index shows that the dollar should decline in April. Commercial interests are neutral. Large traders are neutral. Small traders are also neutral.

The Canadian dollar finds near term support between this year's current weekly low of .8489 and a weekly Fibonacci .382 retracement at .8472 (as measured between the weekly 2005 low of .7855 and this year's current weekly high of .8854). Further support is at the weekly November low of .8357. If the market does not stabilize here it could decline to a weekly Fibonacci .618 retracement at .8237 (as measured between the weekly 2005 low of .7855 and this year's current high of .8854). Near term resistance is found at last week's high of .8659 (the Canadian dollar has made lower weekly highs for four straight weeks) in confluence with the 18-day Moving Average that it has closed below every day for nearly a month). If the "looney" takes out a previous week's high and closes back above the 18-day Moving Average it could quickly rally to the current daily Fibonacci .618 retracement at .8746. Further resistance is located between the contract high of .8879 and the 1991 high of .8906. Open Interest is at the lowest level since July. The %R overbought/oversold indicator shows that the Canadian dollar is almost oversold on the daily chart. Seasonally, the Canadian dollar has a tendency to move higher in April. Commercial interests are now holding the smallest net short position since mid-June. Large traders are net short for the first time since then. Small traders are holding the smallest net long position since Christmas.

The Australian dollar finds near support at last week's one and a half year low of .7006. A break below it could result in a waterfall decline to the monthly September 2004 low of .6850. Further support is at the major monthly Fibonacci .382 retracement at .6763 followed by the monthly 2004 low of .6730. Near term resistance is at last week's high of .7165 (the Aussie dollar has made lower weekly lows and lower weekly highs for seven out of the last eight weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. If the Aussie dollar breaks out above a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could quickly rally to the current daily Fibonacci .382 retracement at .7217. Further resistance is at the current daily Fibonacci .618 retracement at .7348 or even the current major weekly Fibonacci .382 retracement at .7383. Open Interest is at a one month high. The %R overbought/oversold indicator shows that the Australian dollar is near oversold on the daily and weekly charts. Seasonally, the Australian dollar has a tendency to rally in the first half of April and then move sideways for the rest of the month. Commercials are holding the biggest net long position that they have had in years. Large traders (hedge funds) are holding the largest net short position on record. Small traders are also holding a record size net short position.

The June Canadian dollar/Australian dollar finds near term resistance at the new daily closing high of .1528 (about fifteen and a quarter cents) premium Canadian dollar in confluence with the all-time weekly closing high of .1538 (about fifteen and a third of a cent) premium Canadian dollar. Further resistance is at the psychological sixteen cent mark. Near term support is at the current minor daily Fibonacci .618 retracement at .1257 (about twelve and a half cents) premium Canadian dollar. Further support is at the January low of .1089 (just under eleven cents) premium Canadian dollar in confluence with the current major daily Fibonacci .382 retracement at .1089 (just under eleven cents). If the spread does not stabilize here it could plunge to the daily September low of .877 (about eight and three-quarters of a cent) premium Canadian dollar.

The British pound seems to have gotten confined to a trading range on the weekly chart. Near term resistance at the daily March high of 1.7642. A rally above it could allow the market to test a cluster of resistance between the daily January high of 1.7910, the intermediate weekly Fibonacci .618 retracement at 1.7940, and the major weekly Fibonacci .382 retracement at 1.7983. A break out above this resistance zone could send sterling shooting up to the weekly September high of 1.8492. Near term support is at the daily March low of 1.7248. Failure to stabilize here could send sterling back down to the contract low of 1.7076. If this low is broken cable to drop to the psychological 1.65 area. Open Interest is at the lowest level since late December. The pound has a seasonal tendency to rally in the first half of April and then move sideways for the rest of the month. Commercials are neutral. Large traders (hedge funds) are neutral. Small traders are also neutral.

The June Swiss franc finds near term support at the contract low of .7633. Further support is at the weekly November low of .7548. A close below it could hammer the market down to the weekly 2003 low of .7010. Near term resistance is found at the daily March high of .7845. A rally above it should take the market up to the current intermediate daily Fibonacci .618 retracement at .7909. Further resistance is the January high of .8078. Open Interest is at the lowest level since early January. The Seasonal index shows that the Swiss franc usually moves sideways in April. Commercial interests sold a fraction of their record size net long position. Large traders covered just a small amount of their record size net short position. Small traders are still holding a sizable net short position.

The Euro currency finds near term support at the daily February low of 1.1905. Further support is at the contract low of 1.1798. A break below it could cause a decline to the weekly November low of 1.1661 or even the major monthly Fibonacci .382 retracement at 1.1608. Near term resistance is at the daily March high of 1.2278. A strong close above it could catapult the Euro up to the daily January high of 1.2423 followed closely by the major weekly Fibonacci .382 retracement at 1.2435. Further resistance is at the weekly September high of 1.2598. Open Interest is flat. The %R overbought/oversold indicator shows that the Euro is nearing overbought territory on the daily chart. Seasonally, the Euro should move sideways to lower in April. Commercial interests are holding the biggest net short position that they have had since November 2004. Large traders are holding the biggest net long position since then. Small traders are neutral to bullish on the Euro.

The Japanese yen has been locked in a trading range for two months. Near term resistance is at the daily March high of .008780. Further resistance is at the January high of .008990. A close above it could launch the market on a flight to the weekly September high of .009208 followed by the major weekly Fibonacci .618 retracement at .009248. Near term support is at the daily March low of .008498 followed by the June contract low of .008455. Further support is at the weekly December low of .008252. Failure to stabilize here could take the yen to the psychological .008000 area. Open Interest is flat. The yen has a seasonal tendency to move slightly higher for the first half of April and then go sideways for the rest of the month. Commercial interests are neutral to bullish on the yen. Large traders are neutral to bearish. Small traders are neutral.

Metals - June gold finds near term resistance at last week's new contract high of $592.00. Further resistance is at the psychological $600 mark. If the market moves past this mark look for resistance at $618.50 on the weekly chart. This is based on a weekly "A,B,C" wave projection where wave "A" is the move from last year's weekly low of $410.10 to the weekly mid-December high of $538.50, wave "B" is the correction from the weekly mid-December high of $538.50 to the mid-December low of $490.10 (which was only six ticks away from an exact Fibonacci .382 retracement of wave "A"), and wave "C" is the move back up off of the mid-December low of $490.10. In bull markets, wave "C" is usually at least the same size as wave "A". Near term support is at an intermediate daily Fibonacci .382 retracement at $542.70 (as measured between the daily November low of $468.00 and the current contract high) in confluence with the daily March low of $540.20. (Gold has made higher monthly lows for seven out of the last nine months). A break below it could send the market down to support at a daily chart gap between $532.00 and $528.00 in confluence with the current major daily Fibonacci .382 retracement at $530.40 (as measured between the June contract low of $430.70 and the current contract high). Failure to stabilize here could result in a decline to a major weekly Fibonacci .382 retracement at $505.10 (as measured between the weekly 2004 low and this year's current high) in confluence with the daily December low of $501.00. Open Interest is at a one month high. The %R overbought/oversold indicator shows that gold is overbought on the daily, weekly, and monthly charts. The Seasonal index shows that gold should rally in the first week of April and then move just slightly lower for the rest of the month. Commercials are holding the smallest net short position since August. Large traders (hedge funds) are holding their smallest net long position since then. Small traders are surprisingly neutral on gold.

May silver nailed resistance at a major monthly Fibonacci .382 retracement at $11.715 (as measured between the September 1980 reaction high of $25.00 and the 1991 multi-decade low of $3.505) last week. A strong close above last week's new multi-decade high of $11.715 could send the market soaring to the 1983 high of $14.93. Further resistance is at a major monthly Fibonacci .618 retracement at $16.79 (as measured between the September 1980 reaction high of $25.00 and the 1991 multi-decade low of $3.505). Near term support is at last week's low of $10.785 (May silver has made higher weekly highs and higher weekly lows for six consecutive weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed above the 18-day Moving Average every day for over a month now). If silver breaks a previous week's low and the 9-day Moving Average closes back below the 18-day Moving Average the market could quickly drop to the March 3rd reaction high of $10.31 (old resistance). Further support is at the March low of $9.67 (May silver has made higher monthly highs and higher monthly lows for seven consecutive months) in confluence with the current intermediate daily Fibonacci .618 retracement at $9.635 (as measured between the daily December low of $8.35 and the current contract high). Failure to stabilize here could take May silver on down to this year's current weekly low of $8.76 in confluence with the current major daily Fibonacci .618 retracement at $8.715 (as measured between the daily August low of $6.862 and the current contract high). Open Interest is at the highest level since mid-December. The %R overbought/oversold indicator shows that silver is overbought on the daily, weekly, and monthly charts. Seasonally, silver should decline in the first half of April and then flat line for the rest of the month. Commercials are holding a huge net short position. Large traders (hedge funds) sold off a little bit of their big net long position. Small traders are neutral.

May copper finds near term resistance at last week's new contract high of 251.00 in confluence with last week's new weekly all-time high of 252.35. Further resistance is at the psychological three dollar mark. Near term support is at last week's low of 239.70 (May copper has made higher weekly highs and higher weekly lows for five out of the last six consecutive weeks) in confluence with the 18-day Moving Average that it has closed above every day since early March. If this market breaks a previous week's low and closes below the 18-day Moving Average it could quickly drop to the March low of 213.80 (May copper has made higher monthly highs and higher monthly lows for eight consecutive months) in confluence with the weekly 18-bar Moving Average that it has not closed below since last Spring. A break below it could send the market to an intermediate weekly Fibonacci .382 retracement at 206.50 (as measured between the weekly 2005 low of 132.35 and the current weekly all-time high of 252.35) or even this year's current weekly low of 201.20. Open Interest is almost back up to a two month high. The %R overbought/oversold indicator shows that copper is still overbought on the daily, weekly, and monthly charts. Copper has a seasonal tendency to decline in the first week of April and then move sideways for the rest of the month. Commercials are holding the biggest net short position in two months. Large traders (hedge funds) are the least bullish since last fall. Small traders are still neutral.

Energies - May crude oil broke thru resistance at the daily Fibonacci .618 retracement last week. Near term resistance is at last week's high of $67.30. If crude oil does not stop here it could surge to the daily contract high of $70.29 or even last year's all-time high on the weekly chart $70.85. A break out to new all-time highs could put crude oil back on course for the psychological $80 mark. This lines up with two different "A,B,C" wave projections on two different time frames. The first "A,B,C" wave long-term projection is on the monthly chart where wave "A" is the move from the 2001 multi-month reaction low of $16.70 up to what was then an all-time high in 2004 at $55.65, wave "B" is the correction from this all-time high to the December 2004 reaction low of $40.25 (which was only a half-dollar below the monthly Fibonacci .382 retracement of wave "A"), and wave "C" is the move back up off of the 2004 reaction low of $40.25. In bull markets, wave "C" is usually at least the same size as wave "A". So that would put a minimum target for wave "C" at $79.20. The next "A,B,C" wave projection is on the weekly chart where wave "A" is the move from the weekly May 2005 reaction low of $46.20 up to the all-time high on the weekly chart $70.85, wave "B" is the correction from the all-time high on the weekly chart $70.85 to the weekly November low of $55.40 (which was only a few ticks below a weekly Fibonacci .618 retracement of wave "A"), and wave "C" is the move back up off of the weekly November low of $55.40. In bull markets, wave "C" is usually at least the same size as wave "A". This puts a minimum target for wave "C" at $80.05. Near term support is at the monthly March low of $59.25 (crude oil has made higher monthly lows for three out of the last four months) and the monthly 18-bar Moving Average near $58.00. (Crude oil has not closed below the monthly 18-bar Moving Average since October 2003). A break below this level could send crude oil down to technical support clustered between the weekly 2004 high of $55.65 (old resistance), a weekly Fibonacci .618 retracement at $55.62 (as measured between the weekly May low of $46.20 and last year's all-time high on the weekly chart at $70.85), and the weekly November reaction low of $55.40. Further support is at a major weekly Fibonacci .618 retracement at $50.16 (as measured between the 2001 low of $16.70 and last year's all-time high on the weekly chart at $70.85) in confluence with the psychological $50 mark. Open Interest is sitting near the all-time high. The %R overbought/oversold indicator shows that crude oil is overbought on the daily and monthly charts. The Seasonal index shows that crude oil should move sideways in April. Commercial interests are neutral to bullish on crude oil. Large traders are also neutral to bullish. Small traders are holding the biggest net short position since Christmas.

May Unleaded Gas finds near term resistance last week's high of 192.50. Further resistance is at last week's nearly seven month high on the weekly chart at 200.25. A break out above this high could drive gasoline prices up to a major weekly Fibonacci .618 retracement of 214.37 (as measured between last year's weekly all-time high of 292.00 and this year's current weekly low of 136.75). Near term support is at the current daily Fibonacci .382 retracement at 177.60, last week's low of 177.40 (May gasoline has made higher weekly lows for six consecutive weeks), and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed above the 18-day Moving Average every day for a month). If this market breaks a previous week's low and the 9-day Moving Average closes back below the 18-day Moving Average it could decline to the current daily Fibonacci .618 retracement at 168.40. Failure to stabilize here could send the market back down to the daily February low of 153.50. Open Interest is at a five month low. The %R overbought/oversold indicator shows that gasoline is overbought on the daily chart. Seasonally, gasoline should move slightly higher in April. Commercial interests are holding the smallest net short position since May. Large traders are holding the smallest net long position since then. Small traders are neutral.

May natural gas finds near term resistance at the March high of 7.650. (May natural gas has made lower monthly highs for five out of the last six months). A rally above last month's high could cause a rally to the current major daily Fibonacci .382 retracement at 8.390 (as measured between the contract high of 11.190 and the daily March low of 6.660). Further resistance is at the current major daily Fibonacci .618 retracement at 9.460. Near term support is at the daily March low of 6.660. Further support is at the psychological 6.000 level. Failure to stabilize here could result in a decline to the psychological 5.000 mark. Open Interest is at a new all-time high. The %R overbought/oversold indicator shows that natural gas is oversold on the weekly chart. Natural gas has a seasonal tendency to move sideways in April. Commercial interests are holding the biggest net short position since October. Large traders are still holding a huge net short position but they are the least bearish since late October. Small traders are holding the biggest net long position since September.

Meats - June live cattle find near term support at last week's new contract low of 74.30. Further support is at the psychological 70 area. Near term resistance is at last week's high of 77.15 (June live cattle has made lower weekly highs for eleven consecutive weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every single day since mid-January). If the market breaks a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average expect a run up to the current major daily Fibonacci .382 retracement at 79.52. A strong close above it may allow the market to run to the current major daily Fibonacci .618 retracement at 82.77 in confluence with the daily March high of 82.95. Open Interest is back near the all-time high. The %R overbought/oversold indicator shows that cattle is oversold on the daily and weekly charts. The Seasonal index shows that cattle should rally modestly in April. Commercial interests are holding a new record size net long position. Large traders are holding the largest net short position since August. Small traders are holding the smallest net short position since September.

May feeders tested support at the major daily Fibonacci .618 retracement last week. A break below last week's multi-month low of 101.70 could send the market down to the psychological 100 mark in confluence with the major daily Fibonacci .786 retracement at 99.92 (as measured between the contract high of 114.30 and the contract low of 96.00). Failure to stabilize here could pressure May feeders down to the contract low of 96.00. Near term resistance is at last week's high of 105.10 (May feeders have made lower weekly highs for ten out of eleven weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every single day since mid-January). If the market breaks a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average expect a run up to the current major daily Fibonacci .382 retracement at 106.52 followed closely by the March 20th reaction high of 107.65. Further resistance is at the current major daily Fibonacci .618 retracement at 109.50. Open Interest hit a new all-time high. The %R overbought/oversold indicator shows that feeders are near oversold on the daily and weekly charts. Seasonally, feeders should move sideways in April. Commercials are holding the biggest net long position in a year. Large traders (hedge funds) are holding the smallest net long position since last summer. Small traders are now holding a new record size net short position.

May lean hogs find near term resistance at last week's high of 67.60 (June live cattle has made lower weekly highs for four consecutive weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average for nearly a month). If the market breaks a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could try to fill the gap on the daily chart between 69.15 and 69.40. Further resistance is at the current major daily Fibonacci .618 retracement at 70.20. A strong close above it may allow the market to challenge the daily March high of 71.67. Near term support is at the daily March low of 64.95 in confluence with the major daily Fibonacci .618 retracement at 64.82 (as measured between the contract high of 73.45 and the contract low of 59.50). Further support is at the daily September low of 62.00. If this low is broken June hogs could decline to the contract low of 59.50. Open Interest is sitting flat near the all-time high. Hogs have a seasonal tendency to rally sharply in the first week of April and then continue slightly higher for the rest of the month. Commercials are holding a near record net long position. Large traders (hedge funds) are still holding a huge net short position. Small traders are holding a near record net short position.

Grains - May soybeans find near term resistance at last week's high of $5.89 (May beans have made lower weekly highs for five out of the last six weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average since late February). If the market breaks a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could rally to the current major daily Fibonacci .382 retracement at $5.986. Further resistance is at the current major daily Fibonacci .382 retracement at $6.156 in confluence with the daily February high of $6.17. A close above it could allow the market to test the January high of $6.43. Near term support is at last week's nearly four month low of $5.712. Further support is at the contract low of $5.594. If beans break down to close at new contract lows they could spill to the major double bottom on the weekly chart between the 2004 low of $5.01 and the 2005 low of $4.984. Open Interest is near an all-time high. The Seasonal index shows that soybeans should rally in April. Commercial interests are holding the largest net long position in nearly fourteen months. Large traders are holding the largest net short position in nearly fourteen months. Small traders are also holding the largest net short position in fourteen months.

March soy meal might have signaled a trend change last week when it took out a previous week's high for the first time in six weeks and the 9-day Moving Average closes back above the 18-day Moving Average for the first time since early February. A rally above last week's high of $181.00 should allow meal to test the current intermediate daily Fibonacci .382 retracement at $184.60. Further resistance is at the current intermediate daily Fibonacci .618 retracement at $192.20 in confluence with the January 30th reaction high of $192.10. After that May meal may be headed up to the daily January high of $202.50. Near term support is at the daily March low of $172.30 in confluence with the double bottom at the contract low of $172.00. Further support is at the weekly October low of $162.30. If this low doesn't hold meal could slide to last year's weekly low of $148.10 or the 2004 weekly low of $146.60. Open Interest is at a multi-month high. The %R overbought/oversold indicator shows that bean meal is near oversold on the monthly chart. Seasonally, soy meal should rally in April. Commercials are holding the biggest net long position in fourteen months. Large traders (hedge funds) are holding the biggest net short position since then. Small traders are neutral to bearish on meal.

March bean oil tested support at the daily Fibonacci .618 retracement. A break below last week's low of 22.64 could pull the rug out from under the market and send it down to the current daily Fibonacci .786 retracement at 22.13 in confluence with the daily February low of 22.10. Further support is at the contract low of 21.35. A break to new lows could quickly send May bean oil down to the weekly December low of 20.62. Near term resistance is at last week's high of 23.25 (May bean oil has made lower weekly highs for three out of the last four weeks) and the 18-day Moving Average it has closed below every day since early March. If the market breaks a previous week's high and closes above the 18-day Moving Average it could rally to the current daily Fibonacci .618 retracement at 24.10. Further resistance is at the daily March high of 25.01. After that expect May bean oil to test the daily October high of 25.25 in confluence with the current major daily Fibonacci .786 retracement at 25.28. Open Interest is flat at high levels. Bean oil has a seasonal tendency to make a strong rally in April. Commercial interests are holding the biggest net short position since November. Large traders are holding the biggest net long position since the end of October. Small traders are neutral.

May corn finds near term resistance at last week's new multi-month high of $2.43. If the market breaks this high it should hit the major daily Fibonacci .618 retracement at $2.502. Further resistance is at last year's weekly high of $2.63. Near term support is at the huge daily chart gap between $2.35 and $2.28. If this gap is filled May corn could drop to the daily March low of $2.17. Further support is at the contract low of $2.086 in confluence with the current major weekly Fibonacci .618 retracement at $2.076. Failure to stabilize here could result in a break to last year's low on the weekly chart at $1.86. Open Interest hit a new all-time high. The Seasonal index shows that corn should move sideways in the first half of April and then move higher for the second half of the month. Commercials are holding the biggest net long position in two months. Large traders (hedge funds) are holding the smallest net long position since then. Small traders covered some of their huge net short position.

May rice finds near term resistance at the daily March high of 8.830. Further resistance is at the contract high of 9.010. A break out to new highs could take rice right up to the major weekly Fibonacci .618 retracement at 9.330. Near term support is at the daily March low of 8.040. Further support is at the weekly March low of 7.880 in confluence with the daily December low of 7.880. If rice breaks this price level it could decline to the major weekly Fibonacci .618 retracement at 7.115. Open Interest hit a two month low. The %R overbought/oversold indicator shows that rice is overbought on the daily,weekly, and monthly charts. Seasonally, rice should move sideways in April. Commercial interests are now holding the smallest net short position since mid-December. Large traders (hedge funds) are holding the smallest net long position in two months. Small traders are holding the smallest net long position since November.

May oats finds near term resistance at last week's high of $1.754 (May oats have made lower weekly highs for four out of the last five weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average since late February). If the market breaks a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could rally to the current major daily Fibonacci .382 retracement at $1.814. Further resistance is at the current major daily Fibonacci .618 retracement at $1.886. If the rally does not end here it may run on up to the daily contract high of $2.006 and the weekly February high of $2.026. Near term support is at last week's multi-month low of $1.694. A break below it could cause a decline to the major weekly Fibonacci .618 retracement at $1.586. Open Interest is sitting flat at a two month low. The %R overbought/oversold indicator shows that oats are oversold on the daily chart. Oats have a seasonal tendency to move in a choppy range with a bearish bias in April. Commercials are holding the smallest net short position since mid-November. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are the least bullish since Thanksgiving.

May wheat finds near term support at last week's two month low of $3.384. A break below it could keep wheat heading down toward the major weekly Fibonacci .618 retracement at $3.196 in confluence with the contract low of $3.164. A break to new lows may pressure May wheat down to the weekly December low of $2.924. Near term resistance is at last week's high of $3.504 (May wheat has made lower weekly highs for four consecutive weeks) and the 18-day Moving Average it has closed below every day since early March. If the market breaks a previous week's high and closes above the 18-day Moving Average it could rally to the current daily Fibonacci .382 retracement at $3.584. Further resistance is at the current daily Fibonacci .618 retracement at $3.706. Open Interest is at an all-time high. The %R overbought/oversold indicator shows that wheat is oversold on the daily chart. The Seasonal index shows that wheat should move sideways in April. Commercial interests are holding the biggest net long position in two months. Large traders are holding the biggest net short position since then. Small traders are holding a record size net short position.

Softs - May coffee signaled a trend change last week when it took out a previous week's high for the first time in a month and closed above the 18-day Moving Average for the first time in two months. Near term resistance is at last week's high of 109.60. If coffee clears this high and the 9-day Moving Average closes back above the 18-day Moving Average the market should test the current daily Fibonacci .382 retracement at 113.05. Further resistance is at the current daily Fibonacci .618 retracement at 118.95. If the market does not back off at this level it may be out to challenge the daily January high of 128.50. Near term support is at the daily March low of 103.50. A break below it could take the market down to the daily December low of 95.80. Further support is at the contract low of 92.10. Open Interest is almost at a two month high. Seasonally, coffee should rally just slightly in April. Commercials covered two-thirds of their big net short position to become the least bearish in almost three months. Large traders (hedge funds) are holding the smallest net long position since the beginning of the year. Small traders are holding the smallest net long position in six months.

May cocoa finds near term support at last week's low of $1,471. (May cocoa has only broken a previous week's low once in the last four weeks). A break below it could send the market down to the daily February low of $1,425 in confluence with the current major daily Fibonacci .786 retracement at $1,421. Failure to establish support here could cause a decline to the contract low of $1,366. If cocoa hits a new contract low look for it to visit last year's weekly double bottom low at $1,315. Near term resistance is at the daily March high of $1,523 followed by the daily Fibonacci .618 retracement at $1,547. Further resistance is at the daily January high of $1,623 or even a weekly intermediate Fibonacci .618 retracement at $1,646 (as measured between the weekly 2005 high of $1,850 and the weekly 2005 low of $1,315). Open Interest is flat. The %R overbought/oversold indicator shows that cocoa is oversold on the daily chart. Cocoa has a seasonal tendency to decline sharply in the first week of April and then move sideways for the rest of the month. Commercial are holding the smallest net short position since Thanksgiving. Large traders are holding the smallest net long position since then. Small traders remain neutral.

May sugar tested resistance at the daily Fibonacci .618 retracement last week. A rally above last week's high of 18.48 could allow the market to test the contract high of 19.65 or the weekly February high of 19.73. A strong close above twenty cents could take sugar up to the 25 cent mark. The white sugar market in London broke out to new multi-decade highs. This could be a supportive factor for the New York sugar market as well. Near term support is at last week's low of 17.17 (May sugar has made higher weekly lows for three consecutive weeks) followed by the weekly 18-bar Moving Average that it has not closed below since last May. A break below it could send the market down to the March low of 16.19. (On the continuous monthly chart, sugar has made higher monthly lows for eleven consecutive months). If May sugar breaks last month's low it could plummet to the major monthly Fibonacci .382 retracement at 13.86 (as measured between this year's current weekly high of 19.73 and the 1999 multi-year low of 4.36). Open Interest is flat. The %R overbought/oversold indicator shows that sugar is near overbought territory on the daily,weekly, and monthly charts. The Seasonal index shows that sugar should decline just slightly in April. Commercials are holding the smallest net short position since July. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are neutral.

May orange juice tested the major monthly Fibonacci .618 retracement last week. A rally above the current contract high of 151.50 could allow the market to make a run for the monthly 1992 high of 161.00. Further resistance is at the major monthly Fibonacci .786 retracement at 173.90 in confluence with the monthly 1991 high of 174.25. Near term support is at last week's low of 143.70 (May OJ has made higher weekly lows for nine out of the last ten weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed above the 18-day Moving Average every day for two months). If the market breaks a previous week's low and the 9-day Moving Average closes back below the 18-day Moving Average May orange juice could test support at the current intermediate daily Fibonacci .382 retracement at 137.75 (as measured between the current daily 2006 low of 115.50 and the current contract high of 151.50). Failure to stabilize here could result in a further decline to the daily March low of 129.60 (May OJ has made higher monthly lows and higher monthly highs for six out of the last seven months). A break below last month's low could send May OJ down to this year's current weekly low of 114.50 in confluence with the current major weekly Fibonacci .382 retracement at 114.30 (as measured between the weekly 2004 low of 54.20 and this year's current weekly high of 151.50). Open Interest is at the highest level in a year and a half. The %R overbought/oversold indicator shows that OJ is overbought on the daily, weekly, and monthly charts. Seasonally, OJ should decline in the first half of April and then move sideways for the second half of the month. Commercials are holding the biggest net short position since mid-December. Large traders are holding the largest net long position since then. Small traders are neutral as well.

May cotton finds near term support at the daily March low of 52.02. A break below it should allow the market to tag the contract low of 51.08. If this low does not support May cotton the market could decline to the weekly November low of 48.25. Near term resistance is at last week's high of 53.90 (May cotton has made lower weekly highs for seven consecutive weeks) in confluence with the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day since mid-February). If cotton takes out a previous week's high and the 9-day Moving Average closes back above the 18-day Moving Average the market could rally on up to the current daily Fibonacci .382 retracement at 54.53. Further resistance is at the current daily Fibonacci .618 retracement at 56.09 followed closely by a gap on the daily chart between 56.15 and 56.55. After that May cotton may not find technical resistance until the daily February high of 58.60. Open Interest is at an all-time high. Cotton has a seasonal tendency to decline sharply in the first week of April and then move sideways in a choppy range for the remainder of the month. Commercials are holding the biggest net long position in nearly four months. Large traders (hedge funds) are holding their biggest net short position since the beginning of December. Small traders are neutral to bullish on cotton.

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.

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