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Weekly Market Watch
The
Future is in Futures
by Pearce
Financial, LLC
January 10 - January
14 , 2004
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 made an outside reversal down on the weekly chart
last week when it took out the previous week's high and then reversed to
take out the previous week's low for the first time in six weeks. The
market also closed below the 18-day Moving Average for the first time in
a month. This is bearish price action. If the market breaks below last
week's low of 1182.80 it could quickly test the current major daily
Fibonacci .382 retracement at 1160.10. If the market does not recover
from this price level it may slide to the current major daily Fibonacci
.618 retracement at 1122.80 or even the monthly 18-bar Moving Average at
1112.80. This would be an ideal technical support area to look for buy
set ups. The S&P 500 has not closed below the monthly 18-bar Moving
Average since the spring of 2003. Near term resistance is at last week's
new three year high of 1220.50. Further resistance is at the major
monthly Fibonacci .618 retracement at 1265.90. After that look for the
market to test the psychological 1300 mark quickly. Open Interest is at
a one and a half year high. 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 rally for the second half of
December. Commercials
are holding the biggest net short position in sixteen months. Large
traders (hedge funds) are still slightly net long. Small traders are
holding the biggest net long position in seven months.
The March NASDAQ 100 took out last month's monthly high and then reversed to break a previous month's monthly low for the first time in five months. This created an outside reversal down on the monthly chart. This is bearish price action. A break below last week's low of 1557.50 should send the market right to the current major daily Fibonacci .382 retracement at 1519.10. Further support is found between the monthly 18-bar Moving Average at 1458.80 (the NASDAQ 100 has not closed below the monthly 18-bar Moving Average since April of 2003) and the current major daily Fibonacci .618 retracement at 1441.40. Near term resistance is at the contract high of 1645.00. A break out above it could launch this market to the December 2001 high of 1738.00. Open Interest hit a new multi-month high. The %R overbought/oversold indicator shows that the NASDAQ 100 is overbought on the weekly and weekly charts. The NASDAQ 100 should trade in a choppy range in December. Commercial interests are increasing the size of their biggest net short position in nearly sixteen months. Large are neutral to bullish. Small traders are holding their biggest net long position in over a year.
Interest rates - March T-bonds find near term resistance between last week's high of 113-28 and the contract high of 114-02. A rally above it should take the March T-bonds right on up to the weekly October high of 114-25. Further resistance is at the major weekly Fibonacci .618 retracement at 116-06. Near term technical support is at the current major weekly Fibonacci .382 retracement at 110-13 in confluence with the monthly December low of 110-11. Last month was the first time since May that T-bonds traded below a previous month's low on the monthly chart. If this support level fails March T-bonds could plummet to the current major weekly Fibonacci .618 retracement at 107-19. The March NOB spread (T-notes vs. T-bonds) finds near term resistance at the spread high of 1-03 premium T-bonds followed closely by the major weekly Fibonacci .786 retracement at 1-08. Further resistance is at the psychological 2-00 level. Near term daily support is clustered between the current major daily Fibonacci .382 retracement at 24/32nds premium T-notes, the November low of 27/32nds, and the current daily December low of 27/32nds. A break below this support zone could send the spread to the current major daily Fibonacci .618 retracement at 1-28 premium T-notes. Open Interest is flat. T-bonds have a seasonal tendency to rally sharply for the rest of the month. Commercial interests are still sitting on a huge short position. Large traders interests are still holding an extremely large net long position. Small traders remain heavily net short position.
March T-notes find near term resistance at the daily December high of 112-31. Further resistance daily is at the contract high of 113-165. If March T-notes hit a new contract high look for them to quickly test the weekly September high of 114-12. After that T-notes do not find technical price resistance levels until the intermediate weekly Fibonacci .786 retracement at 115-255 or the major weekly Fibonacci .618 retracement at 116-005. Near term support is found at the current intermediate weekly Fibonacci .618 retracement at 110-10 in confluence with the current December low of 110-085. Further support is a point lower at the current intermediate weekly Fibonacci .786 retracement at 109-065. A break below this support area should cause a decline to the major daily Fibonacci .618 retracement at 107-20. Open Interest is flat. T-notes have a seasonal tendency to rally in December. Commercials are neutral. Large traders (hedge funds) are neutral to slightly bullish. Small traders are still holding a huge net short position.
International bonds - March Canadian 10-year bonds find near term resistance at the contract high of 112.76 followed by the weekly December high of 113.00. A break out above it should send the market to last year's weekly high near 113.50. Near term support is at the late December reaction low of 111.20. A break below it could pull the market down to the December low of 110.60. This is an important area since Canadian bonds have made higher monthly highs and higher monthly lows for six consecutive months. If last month's low is violated the market could immediately target the daily November low of 109.85. March Euro bunds find near term resistance at last week's high of 119.69. A rally above it could send the market back up to the contract high of 119.97 in confluence with the 2003 all-time high near the 120 mark. Near term support is at the late December low of 118.11. A break below it could send bunds down to a technical support cluster between the current major daily Fibonacci .382 retracement at 116.22, the current intermediate daily Fibonacci .618 retracement near 115.82, and the November low near 115.65 (bunds have made higher monthly highs and higher monthly lows for five consecutive months). Further support may not be found again until the current major daily Fibonacci .618 retracement at 113.90 or even the daily September low near 113.30. March London long gilts find near term support at the December spike low of 109.71 followed by the daily November low of 109.37. (Gilts have made higher monthly highs and higher monthly lows for five consecutive months). Further support is found at the current major daily Fibonacci .618 retracement at 108.48 in confluence with the daily October low of 108.45. Near term resistance is at the contract high of 112.65. A break out above it should send the market up to the psychological 115 mark. March Australian 10-year bonds find near term support at last week's low of 94.46 in confluence with the November low of 94.445. A break below this price level could smash Aussie bonds to the major weekly Fibonacci .618 retracement at 94.25. Near term resistance is at last week's high of 94.68 (Aussie bonds have made lower weekly highs for the last four weeks) followed closely by the current major daily Fibonacci .618 retracement at 94.715. If the market exceeds this price level it may head to the contract high of 94.875 in confluence with the weekly 2004 high at 94.89. Further resistance is at the major weekly Fibonacci .786 retracement near 95.09. March JGB's (Japanese gov't. bonds) find near term resistance at last week's high of 138.88. (JGB's have made lower weekly highs for three consecutive weeks). A break out above it could take the market back up to the contract high of 139.27. Further resistance is at the weekly December high at 139.50. If this high is exceeded JGB's could run to the weekly 2004 high near 140.50. Near term support is at the late December reaction low of 138.21. A break below it could send the market to the current daily intermediate Fibonacci .618 retracement at 137.07.
Currencies - The US dollar index drew a line in the sand this last week. Odds are good that the US dollar has established it's high or low for the whole year already. We say that because the US dollar index has established it's high or low for the year in the first full trading week of January in eight out of the last eleven years. That's an accuracy of nearly 73%! Our bias on the US dollar is to the upside for five reasons: 1.) The dollar reached oversold levels on the chart. The greenback lost about a third of it's value between January 2002 and the nine and a half year low it hit on December 31st. 2.) The buck reached a price level that has acted as good technical support springboard in the past. When the US dollar index previously fell below the 81 cent mark it rallied several hundred points within weeks. 3.) last week the greenback rallied back above the monthly December high. This market has not broken a previous month's high since last May! 4.) The US dollar has now stayed below the 85 mark for nine weeks straight. Since the US dollar index began trading in 1985 there has been seven instances when the market stayed below the 85 mark on the weekly chart. This lasted anywhere from one week to eleven weeks. The average amount of time was seven and a half weeks. If we throw out the only time it stayed below 85 for just one week the average amount of time was just over eight and a half weeks. Currently, the US dollar index has been below 85 for nine consecutive weeks. This market is ripe for a rally. 5.) Bearish sentiment for the buck is at record levels. Once all of the bearish news is finally factored into the dollar it could be supported by massive short-covering. A rally above last week's high of 83.90 could be the confirmation needed to send the buck running. The first technical resistance level it will encounter is the current major daily Fibonacci .382 retracement at 85.40. Further resistance is at 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. Near term support is at the nine and a half year contract low of 80.48. Further support is at the 1995 low of 80.14. A close below the 80 level could hammer the dollar down to the 1992 low of 78.43. Open Interest is at the lowest level in nearly two months. The %R overbought/oversold indicator shows that the greenback is oversold on the monthly chart. The Seasonal index shows that the dollar should decline sharply in December. Commercial interests are the least bullish since mid-September. Large traders are the least bearish since the end of September but they are still sitting on a hefty net short position. Small traders are neutral.
The March Canadian dollar finds near term support at the December low of .8017. Further support is at the major daily Fibonacci .382 retracement at .7988. If the "looney" does not rebound from this price level it could drop to the major daily Fibonacci .618 retracement at .7656. Near term resistance is at the December 31st reaction high of .8352. A rally above it could send the market back up to the contract high of .8526. If the "looney" hits a new contract high it may fly to the 1991 high of .8906. Open Interest plunged to a five and a half month low. Seasonally, the Canadian dollar has a tendency to decline sharply for most of December and then rally sharply in the last week of the month. Commercial interests are the least bearish since July. Large traders are holding their smallest net long position since late June. Small traders are neutral.
The March Australian dollar finds near term support between last week's low of .7502 and the weekly 18-bar Moving Average that it has not closed below for the last four months. A break below this support cluster should allow the Aussie to quickly test the major daily Fibonacci .382 retracement at .7394 in confluence with the December low of .7388. Further support may not be found again until the October low of 71 cents in confluence with the major daily Fibonacci .618 retracement at .7094. Near term resistance is at the December 31st reaction high of .7804. Further resistance is at the contract high of .7879. A break out to new highs could send the March Aussie dollar to the weekly November high of .7938 or even the weekly 2004 high of .7980. Open Interest is at the lowest level since late October. Commercials are still holding a near record net short position. Large traders (hedge funds) are still holding a record net long position. Small traders are bullish.
The March Canadian dollar/Australian dollar spread finds near term support at the December low of .0467 (about four and two-thirds of a cent) premium Canadian dollar in confluence with the July low of .0454 (about four and a half cents). A break below it could take the spread to the major daily Fibonacci .618 retracement at .0321 (about three and a quarter cents). Near term resistance is at the current major daily Fibonacci .382 retracement at .0665 (about six and two-thirds of a cent) premium Canadian dollar. Further resistance is at the current major daily Fibonacci .618 retracement at .0787 (nearly eight cents) premium Canadian dollar.
The March British pound finds near term support clustered between last week's low of 1.8571, the weekly 18-bar Moving Average that it has not closed below for three months, and the major daily Fibonacci .382 retracement at 1.8565. A break below this price level could pound this market down to the major daily Fibonacci .618 retracement at 1.8020. Near term resistance is at the current daily Fibonacci .618 retracement at 1.9112 in confluence with last week's high of 1.9120 (sterling has made lower weekly highs for the last four weeks). A rally above it could allow the market to test the contract high of 1.9446 or the weekly December high of 1.9500. A break out above this price zone could cause a surge to the psychological two dollar mark or the 1992 high of 2.0088. Open Interest is at a one and a half month low. The %R overbought/oversold indicator shows that the pound is overbought on the daily, weekly, and monthly charts. The pound has a seasonal tendency to rally sharply in December. Commercials are the least bearish in two and a half months. Large traders (hedge funds) are holding their smallest net long position since late October. Small traders are selling out of their net long position.
The March Swiss franc broke a previous month's low for the first time in five months. If the market drops below the support cluster at last week's low of .8436, the weekly 18-bar Moving Average that it has not closed below since mid-September, and the major daily Fibonacci .382 retracement at .8421 it could accelerate to the November low of .8295 or the intermediate daily Fibonacci .382 retracement at .8259. Further support is at the major daily Fibonacci .618 retracement at .8131. Near term resistance is at the current major daily Fibonacci .618 retracement at .8718. A break out above it could allow this market to visit the contract high of .8892. Further resistance is at the psychological 90 cent level followed closely by the 1995 high of .9038. Open Interest is at the lowest level since late October. The %R overbought/oversold indicator shows that the Swiss franc is overbought on the monthly chart. The Seasonal index shows that the Swiss franc usually rallies in December. Commercial interests are now holding the smallest net short position in three months. Large traders are holding the smallest net long position in three months. Small traders are holding the smallest net long position since early October.
The March Euro currency signaled a trend change last week when it broke a previous week's low for the first time in a month, took out a previous bar's low on the monthly chart for the first time since August, and also closed below the 18-day Moving Average. A break below last week's low of 1.3032 should send the Euro right to the major daily Fibonacci .382 retracement at 1.2947. Further support is at the major daily Fibonacci .618 retracement at 1.2490. Near term resistance is at the current major daily Fibonacci .618 retracement at 1.3437. A break out above it could send the Euro back up to the all-time high of 1.3687. Further resistance is at the psychological 1.40 area. Open Interest dropped to a two month low. The %R overbought/oversold indicator shows that the Euro is overbought on the monthly chart. Seasonally, the Euro should rally sharply in December.
The March Japanese yen finds near term support at the December low of .009476. (The yen has made higher monthly lows for five consecutive months). If last month's low is broken the yen could slide to the major daily Fibonacci .618 retracement at .009254. Near term resistance is at the December 31st reaction high of .009825. Further resistance is at the contract high of .009885. A break out to new highs could carry the March yen up to the 2000 high of .009974 in confluence with the late 1999 high of .009990. Open Interest is at the lowest level in nearly two months. The %R overbought/oversold indicator shows that the yen is overbought on the monthly chart. The yen has a seasonal tendency to decline in December. Commercial interests are the least bearish since mid-October. Large traders are the least bullish since then. Small traders are the least bullish since then as well.
Metals - February gold broke a previous month's low for the first time in eight months. Given that this market is highly correlated with the US dollar (inversely) it is not surprising that this happened. A break below last week's nearly three month low of $417.10 should take gold to the major daily Fibonacci .618 retracement at $408.30 or the current monthly 18-bar Moving Average at $406.50. (Gold has not closed below the monthly 18-bar Moving Average since July of 2001!) Major support for this market will be found between the major monthly Fibonacci .382 retracement at $378.30 and last year's monthly low of $372.00. Near term resistance is at the current daily Fibonacci .618 retracement at $442.50. A rally above it could allow the market to test the contract high of $458.20. Open Interest is at a six week low. The %R overbought/oversold indicator shows that gold is still overbought on the monthly chart. The Seasonal index shows that gold should rally in December. Commercials are now holding the smallest net short position in three and a half months. Large traders (hedge funds) are holding the smallest net long position since mid-September. Small traders are neutral.
March silver finds near term support at last week's multi-month low of $6.35. Further support is found at the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. If silver does not stabilize near six bucks it could plunge to last year's low on the weekly chart at $5.51. Near term resistance is at the current daily Fibonacci .382 retracement at $7.07 in confluence with the December 27th reaction high if $7.09 and the 18-day Moving Average that it has not closed above for a month. A break out above this level could allow silver to test the current daily Fibonacci .618 retracement at $7.515. Open Interest is at a two and a half month low. The %R overbought/oversold indicator shows that silver is oversold on the daily chart. Seasonally, silver should rally in December. Commercials are now the least bearish in over three months. Large traders (hedge funds) are now the least bullish since late September. Small traders are neutral.
March copper broke a previous month's low on the monthly chart for the first time since June. This market is showing signs that the bull is growing weary. Near term support is at last week's low of 132.35 in confluence with the current major daily Fibonacci .382 retracement at 131.80. A break below it could send copper to the current major daily Fibonacci .618 retracement at 121.90 or the October low of 120.50. Near term resistance is at the contract high of 147.75 in confluence with the 2004 weekly high of 148.20. If copper breaks thru this barrier it could go screaming up the 1988 multi-decade high of 160.65. Open Interest is flat. The %R overbought/oversold indicator shows that copper is overbought on the weekly and monthly charts. Copper has a seasonal tendency to rally for the rest of the month. Commercials are still holding the same size of net short position that they have had for weeks. Large traders (hedge funds) are still bullish. Small traders remain neutral.
Energies - February crude oil finds near term support between the weekly December low of $40.25 and the 2003 weekly high of $39.99 (old resistance). A break below this price level could smash crude oil down to the 2004 weekly low of $32.20 or the major weekly Fibonacci .618 retracement at $31.58. Near term resistance is at last week's high of $46.10, the current major daily Fibonacci .382 retracement at $46.19, and the December 17th reaction high of $46.60. A break out above it could take the market up to the current major daily Fibonacci .618 retracement at $49.46 or the November 30th reaction high of $50.55. Further resistance is at the all-time high of $55.65. Open Interest is at a two and a half month low. The Seasonal index shows that crude oil should rally for the rest of the month. For the last few weeks, Commercial interests have been holding the biggest net long position since the fourth quarter of 2003. Large traders are neutral to bearish. Small traders remain bearish.
February Heating Oil made an outside reversal up on the weekly chart when it took out the previous week's low and then reversed to clear the previous week's high. This is bullish price action. A break out above last week's high of 129.00 and a rally over the current major daily Fibonacci .382 retracement at 132.04 could take prices to the current major daily Fibonacci .618 retracement at 141.46. If the market does not stop here it may be headed to the daily November high of 147.90 in confluence with the current major daily Fibonacci .786 retracement at 148.16. Near term support is at the major weekly Fibonacci .382 retracement at 117.90 and last week's low of 116.80. A break below it could allow for a further decline to the major monthly Fibonacci .382 retracement at 110.22. Open Interest is at a six month low. Seasonally, heating oil should rally in the second half of the month. Commercials interests are still holding one of their biggest net long positions since the winter of 2002. Large traders are the most bearish in years. Small traders are now the most bearish in fifteen months.
February natural gas finds near term support at last week's new contract low of 5.71. Further support is at the psychological 5.00 mark. Near term resistance is at last week's high of 6.10 (natural gas has only broken a previous week's high once in the last six weeks) and the 18-day Moving Average that it has closed above only once since Thanksgiving. A break out above this near term resistance could temporarily reverse the down trend in natural gas and take it up to the current daily Fibonacci .382 retracement at 7.335. Further resistance is at the daily December high of 7.85. Open Interest is at a six week high. Natural gas has a seasonal tendency to rally sharply for most of December and then decline in the last week of the month. Commercial interests substantially increased the size of their net long position from the previous week to become the most bullish since Thanksgiving of 2003. Large traders are holding the biggest net short position in thirteen months. Small traders are neutral to bullish.
Meats - February live cattle finds near term support at last week's low of 87.40. A break below it could allow the market to test the November low of 85.25. If cattle does not stabilize here look for a decline to the daily May low of 83.25. Further support is at the major daily Fibonacci .618 retracement at 81.75. Near term resistance is the contract high of 92.00 followed by the weekly December high at 92.95. A break out above these highs could cause a stampede to the major weekly Fibonacci .786 retracement at 97.00. Open Interest is at the highest level since late June. The Seasonal index shows that cattle should establish an important seasonal low in mid-December and rally for the rest of the month. Commercials are now holding the biggest net short position in two and a half months. Large traders (hedge funds) are the most bullish since August. Small traders are holding the biggest net short position in almost thirteen months.
March feeders find near term support between the December low of 95.70 and the November low of 95.00. A break below it could send the market to the major daily Fibonacci .618 retracement at 92.95. Near term resistance is at the December high of 102.40. Further resistance is at the contract high of 105.30. A break out to new contract highs could send the market up to the major weekly Fibonacci .618 retracement at 111.32. Open Interest is flat. Seasonally, feeders should decline sharply rally in December. Commercial interests are the least bullish in two months. Large traders are holding the biggest net long position since late October. Small traders are holding the biggest net short position since August.
February lean hogs find near term support at the December low of 70.55. Further support is found at the major daily Fibonacci .382 retracement at 69.45 or the September high of 68.75 (old resistance). If the market does not recover here it could dive to the October low of 63.30. Near term resistance is found between last week's high of 77.15 and the contract high of 77.72. A break out to new contract highs could send the market up to the 2004 weekly high of 82.70. Open Interest pulled back to a one month low. The %R overbought/oversold indicator shows that hogs are still near overbought on the monthly chart. Hogs have a seasonal tendency to move sideways for the rest of the month. Commercials are neutral. Large traders (hedge funds) are holding the biggest net long position since May of 2000. Small traders increased the size of their record short position.
Grains - March soybeans find near term resistance between the November high of $5.65 and the current intermediate daily Fibonacci .382 retracement at $5.682. Further resistance is found 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 and the major daily Fibonacci .382 retracement at $6.16. Near term support is at the contract low of $5.10. A break to new lows could cause a collapse to the 2002 low of $4.154 or the 1999 multi-decade low of $4.014. Open Interest hit the highest level since late October. The %R overbought/oversold indicator shows that beans are oversold on the weekly chart. The Seasonal index shows that soybeans usually decline in December. Commercial interests are still holing a huge net long position. Large traders are holding a huge net short position. Small traders are the least bearish in nearly five months.
March soy meal finds near term resistance at the December high of $169.00. A break out above it should send the market to a daily chart gap between $177.30 and $178.30. Further resistance is at the current major daily Fibonacci .382 retracement at $186.80. Near term support is at the contract low of $150.50. Further support is at the weekly 2002 low of $145.40. A break below this level could crush meal to the 1999 multi-year low of $120.30. Open Interest is at a one and a half month low. The %R overbought/oversold indicator shows that meal is still oversold on the weekly and monthly charts. Seasonally, soy meal should decline in December. Commercials are holding a record net long position. Large traders (hedge funds) are still holding their biggest net short position since May of 1999. Small traders are now net short for the first time in six years!
March bean oil finds near term support at last week's new contract low of 19.83. Further support is at the 2003 weekly low of 19.30. After that the market could decline to the major weekly Fibonacci .786 retracement at 18.81. Near term resistance is clustered between the November high of 22.03, the current intermediate daily Fibonacci .382 retracement at 22.03, and the October high of 22.15. If this price barrier is conquered bean oil could run on up to another price barrier between the current major daily Fibonacci .382 retracement at 23.24 and the current intermediate daily Fibonacci .618 retracement at 23.40. Open Interest picked up a little and hit a one 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 decline in December. Commercial interests are still holding a sizable net long position. Large traders are holding one of their biggest net short position in years. Small traders are the most bearish since October of 2001.
March corn finds near term support at last week's new contract low of $2.004. If the market hits a new contract low it could easily test the 2002 low of $1.914. Further support is at the 2001 low of $1.84. Near term resistance is at last week's high of $2.096. A break out above it could send the market to the November high of $2.19 in confluence with the current minor daily Fibonacci .382 retracement at $2.204. Further resistance is at the current minor daily Fibonacci .618 retracement at $2.33. A bigger price barrier is located at the September high of $2.514, the August high of $2.53, and the current major daily Fibonacci .382 retracement at $2.544. Open Interest is flat. 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 establish an important seasonal low in mid-December. Commercials are still holding a record net long position. Large traders (hedge funds) are holding a record size net short position. Small traders remain bearish.
March rice finds near term support at last week's new contract low of 6.90. A break below it could slam the market to last year's weekly low of 6.58 followed by the major weekly Fibonacci .618 retracement at 6.445. Near term resistance is at the daily double top December high of 7.85. A rally above it should pull March rice right up to the current major daily Fibonacci .382 retracement at 7.985. Further resistance is at the 8.50 level. Open Interest is flat. Seasonally, rice should move slightly higher in December. Commercial interests are holding the largest net short position since last summer. Large traders (hedge funds) are the most bullish in three months. Small traders are neutral to bullish.
March oats made an outside reversal up on the weekly chart when it took out the previous week's low and then reversed to take out the previous week's high. This is a bullish sign. Near term resistance is at last week's three month high of $1.624 followed closely by the intermediate daily Fibonacci .618 retracement at $1.642 in confluence with a daily chart gap between $1.64 and $1.656. Further resistance is at the September high of $1.77. Near term support is at last week's low of $1.52. Further support is at the October low of $1.434. If this low is broken March oats could test the contract low of $1.352. Open Interest is flat. Oats have a seasonal tendency to decline for most of December and then rally during the last week of the month. Commercials are holding their biggest net short position since July. Large traders (hedge funds) are the most bullish in three months. Small traders remain neutral.
March wheat finds near term support at last week's new contract low of $2.922. Further support is at last year's weekly low of $2.824. If this low is broken wheat could quickly test the monthly 2003 low of $2.73 or the major monthly Fibonacci .786 retracement at $2.676. Near term resistance is found between last week's high of $3.12 and the current minor daily Fibonacci .382 retracement at $3.15. Further resistance is at the November high of $3.314 and the October high of $3.36. Open Interest reached a new record high. The %R overbought/oversold indicator shows that wheat is oversold on the daily chart. The Seasonal index shows that wheat should decline until mid-December and then rally during the last week of the month. Commercial interests are still holding a record size net long position. Large traders are still holding a record net short position. Small traders are neutral.
Softs - March coffee finds near term support between last week's low of 95.60, the current major daily Fibonacci .382 retracement at 94.40, and the December low of 93 cents. A break below this support area could carry the market down to the current major daily Fibonacci .618 retracement at 85.60. Near term resistance is at the contract high of 108.70. A break out above it could launch the coffee market to the July of 2000 high of 119.00. Open Interest is at a six month high. The %R overbought/oversold indicator shows that coffee is overbought on the daily, weekly, monthly charts. Seasonally, coffee should rally in December. Commercials are holding a new record net short position. Large traders (hedge funds) are holding a new record net long position. Small traders are neutral.
March cocoa finds near term support at last week's two month low of $1,470. A break below it could allow the market to visit the daily October low of $1,408. If the market does not establish support here it may test the contract low of $1,340. Near term resistance is found between last week's high of $1,554 (March cocoa has made lower weekly highs and lower weekly lows 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 reversed. This could take March cocoa up to the current daily Fibonacci .618 retracement at $1,679. Further resistance is at the December high of $1,723. Open Interest is at a one and a half month high. Cocoa has a seasonal tendency to rally in December. Commercial interests are the least bearish in two months but they are still holding a large net short position. Large traders are the least bullish in two months. Small traders are still very net long.
March sugar finds near term resistance at last week's high of 9.23 followed by the contract high of 9.37. A break out to new contract highs should allow the market to run to the intermediate weekly Fibonacci .786 retracement at 10.02. Near term support is at last week's low of 8.69 in confluence with the weekly 18-bar Moving Average that the market has only closed below once in the last eleven months. A drop below it could send March sugar down to the December low of 8.44 or even the November low of 8.35. If these lows are broken look for the market to go right down to the current major daily Fibonacci .382 retracement at 8.13 in confluence with the daily August low of 8.13. Open Interest is flat. The Seasonal index shows that sugar should rally for the rest of the month. Commercials are still sitting on a large net short position. Large traders (hedge funds) remain aggressively net long. Small traders are bullish.
March orange juice signaled a trend change last week when it broke a previous week's low and closed below the 18-day Moving Average for the first time in over a month. A break below last week's low of 77 cents could allow the major daily Fibonacci .618 retracement at 74.95. Failure to stabilize here should pressure this market down to the weekly November low of 69.20. Near term resistance is found at the December high of 89 cents. A rally above it could allow March OJ to test the contract high of 93.50. Open Interest is at a two month high. The %R overbought/oversold indicator shows that OJ is overbought on the daily and weekly charts. Seasonally, OJ should decline sharply in December. Commercial are still holding a large net short OJ position. Large traders are holding a huge net long position. Small traders are the least bullish since September of 2003.
March cotton finds near term resistance between last week's two and a half month high of 46.98 and the intermediate daily Fibonacci .382 retracement at 47.37. Further resistance is at the October high of 50.50 followed closely by the current intermediate daily Fibonacci .618 retracement at 50.85. Near term support is at last week's low of 43.41. A break below it may cause a re-test of the contract low of 41.72. If March cotton hits a new low look for a decline to the October 2002 reaction low of 40.50 and the major monthly Fibonacci .786 retracement at 40.31. A close below 40 cents could cause cotton to free fall to the 2002 low of 31.47 or the 2001 all-time low of 28.20. Open Interest is flat. The %R overbought/oversold indicator shows that cotton is oversold on the weekly chart. Cotton has a seasonal tendency to rally sharply in the second half of the month. Commercials are now holding the smallest net long cotton position in nine months. Large traders (hedge funds) are now the least bearish since mid-September. Small traders are holding the biggest net long cotton position in nearly a year.
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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