Financial Sense   Home  l  Broadcast  l  WrapUp  l  Storm Watch  l  About Us  l  Contact Us

Weekly Market Watch
The Future is in Futures
by Pearce Financial, LLC
January 24 - January 28, 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 finds near term resistance between last week's high of 1197.50 and the current daily Fibonacci .618 retracement at 1200.30. A rally above it may allow the market to challenge the current contract high of 1220.50. Further resistance is at the major monthly Fibonacci .618 retracement at 1265.90. If the market does not stop here look for a quick burst to the psychological 1300 mark. Near term support is at last week's two month low of 1167.50 followed closely by the major daily Fibonacci .382 retracement at 1160.10. If the market does not stabilize in this area it could decline to the major daily Fibonacci .618 retracement at 1122.80 or even the monthly 18-bar Moving Average at 1110.70. This will be a good level to watch for buy set ups. The S&P 500 has not closed below the monthly 18-bar Moving Average since the spring of 2003. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is oversold on the daily chart and overbought on the monthly chart. Seasonally, the S&P 500 should move lower in the second half of January and stage a rally in the last couple trading days of the month.  Commercials continued to increase the size of their biggest net short position since September of 2003. Large traders (hedge funds) are holding their biggest net long position since March of 2001. Small traders are holding a large net long position.

The March NASDAQ 100 finds near term support at last week's two and a half month low of 1506.00. If the market cannot recover from this level it may hit the monthly 18-bar Moving Average at 1452.80 (the NASDAQ 100 has not closed below the monthly 18-bar Moving Average since April of 2003) or the major daily Fibonacci .618 retracement at 1441.40. Near term resistance is at last week's high of 1580.50. Further resistance is at the current daily Fibonacci .618 retracement at 1590.70. If the market does not slow down at this level it should be able to approach the contract high of 1645.00. A break out to new contract highs may catapult the NASDAQ 100 up to the December 2001 high of 1738.00. Open Interest is flat. The %R overbought/oversold indicator shows that the NASDAQ 100 is oversold on the daily chart. The NASDAQ 100 should decline from mid-January until the end of February.  Commercial interests are holding the biggest net short position in sixteen months. Large traders are holding the biggest net short position in nearly three months. Small traders are holding a new record size net long position.

Interest rates - March T-bonds find near term resistance between last week's new contract high of 114-16 and the weekly October high of 114-25. Further resistance is at the major weekly Fibonacci .618 retracement at 116-06. Near term support is at last week's low of 113-06. (T-bonds have only broken a previous week's low once in the last seven weeks). A drop below it could result in a decline to the current major weekly Fibonacci .382 retracement at 110-13 in confluence with the monthly December low of 110-11. If March T-bonds do not stabilize here they may be headed 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 last week's nineteen month high of 2-02 premium T-bonds. Further resistance is at the 2003 all-time weekly high of 3-04. Near term daily support is at the current major daily Fibonacci .382 retracement at 8/32nds premium T-notes. A drop below it should allow the spread to test the November low of 27/32nds in confluence with the daily December low of 27/32nds. If these lows are taken out look for the spread to hit the current major daily Fibonacci .618 retracement at 1-22 premium T-notes. Open Interest is at a new all-time high. The %R overbought/oversold indicator shows that T-bonds are overbought on the daily and weekly charts. T-bonds have a seasonal tendency to move sideways for the second half of January.   Commercial interests are still holding a huge short position. Large traders interests are still holding an extremely large net long position. Small traders are neutral.

March T-notes find near term resistance at the current January spike high of 112-18. Further resistance daily is at the daily December high of 112-31. If these highs are exceeded the market has no place left to go but to the contract high of 113-165. A break out to new contract highs should send March T-notes up to the weekly September high of 114-12. Further resistance levels are located at the intermediate weekly Fibonacci .786 retracement at 115-255 and the major weekly Fibonacci .618 retracement at 116-005. Near term support is found at the current intermediate weekly Fibonacci .618 retracement at 110-10 in confluence with the December low of 110-085. A break below this price level should cause T-notes to decline to the current intermediate weekly Fibonacci .786 retracement at 109-065. Further support is at the major daily Fibonacci .618 retracement at 107-20. Open Interest is flat. T-notes have a seasonal tendency to trade in a sideways choppy channel for the second half of January.  Commercials are holding the biggest net long position in nearly four months. Large traders (hedge funds) are neutral. Small traders are still holding a huge net short position.

International bonds - March Canadian 10-year bonds find near term resistance at last week's new contract high of 113.04. Further resistance is at last year's weekly high near 113.50. If this high is exceeded look for the market to test the 2003 weekly high just above the 114 mark. Near term support is at the late December reaction low of 111.20. Further support is at last month's low of 110.60. (Canadian bonds have made higher monthly highs and higher monthly lows for six consecutive months).  March Euro bunds find near term resistance at last week's new all-time high of 120.31. A break out above this high could send the market to the 122 level. Near term support is at last week's low of 119.45. (Euro bunds have only broken a previous week's low once in the last seven weeks). A drop below it could take the market down to the late December low of 118.11.  March London long gilts find near term support at last week's low of 110.70. A break below it could allow the market to test last month's spike low of 109.71 (gilts have made higher monthly highs and higher monthly lows for five consecutive months) followed by the daily November low of 109.37. If these lows are taken out the market could break to 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 current January high of 112.10. A rally above it could take the market back up to the contract high of 112.65. A break out to new contract highs could send gilts soaring to the psychological 115 mark. March Australian 10-year bonds find near term resistance at the current January high of 94.805. Further resistance is at the contract high of 94.875 in confluence with the weekly 2004 high at 94.89. A rally above these highs could send the market up to the major weekly Fibonacci .786 retracement near 95.09. Near term support is at the current January low of 94.46 in confluence with the November low of 94.445. A break below these lows could smash the Aussie bonds down to the major weekly Fibonacci .618 retracement at 94.25.  March JGB's  (Japanese gov't. bonds) find near term resistance at last week's new contract high of 139.48 in confluence with the weekly December high at 139.50. Further resistance is at the weekly 2004 high near 140.50. Near term support is at last week's low of 138.81. (JGB's have only broken a previous week's low once in the last seven weeks). A break below it could take the market down to the late December reaction low of 138.21.

Currencies - The US dollar index finds near term resistance at last week's two month high of 84.07. A break out above it could easily trigger enough buy stops to take the market right up to the current major daily Fibonacci .382 retracement at 85.40. The buck has been below the 85 mark for eleven straight weeks so it has now matched the longest time period of staying below this price level. This would imply that the market is still oversold in terms of price levels and time. 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 last week's low of 82.92. (The US dollar index has made higher weekly lows for three consecutive weeks). A break below it could take it down to an important support zone between the contract low of 80.48 and the 1995 low of 80.14. If the greenback does not stabilize near the 80 level it may plummet to the 1992 low of 78.43. Open Interest is at a four month low. The %R overbought/oversold indicator shows that the greenback reached overbought on the daily chart but it is still oversold on the monthly chart. The Seasonal index shows that the dollar should rally sharply in January.  Commercial interests are the least bullish in four and a half months. Large traders are the least bearish in nearly four months. Small traders are the most bullish since Memorial Day.

The March Canadian dollar finds near term support at last week's low of .8085. A drop below it could allow the market to test support between the December low of .8017 followed by the major daily Fibonacci .382 retracement at .7988. If the "looney" does not stabilize here it may drop to the major daily Fibonacci .618 retracement at .7656. Near term resistance is at the current January high of .8370. If this high is exceeded the market will probably test the contract high of .8526. A break out to new contract highs may send the "looney" flying to the 1991 high of .8906. Open Interest is flat. Seasonally, the Canadian dollar has a tendency to decline sharply in January.  Commercial interests are still 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 one month low of .7475 and the weekly 18-bar Moving Average that it has not closed below for the last four months. Further support is at the major daily Fibonacci .382 retracement at .7394 in confluence with the December low of .7388. A clean break below 74 cents could hammer this market to 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. If the March Australian dollar hits a new contract high the path of least resistance may take it on up to the weekly November high of .7938 or even the weekly 2004 high of .7980. Open Interest is flat. The %R overbought/oversold indicator shows that the Aussie is overbought on the monthly chart. Commercials are the least bearish in three months but they still have a huge net short position. Large traders (hedge funds) are the least bearish in three months but they are still holding a huge net long position. Small traders are bullish.

The March Canadian dollar/Australian dollar spread finds near term resistance at the current January high of .0694 (about seven cents) premium Canadian dollar. Further resistance is at the current major daily Fibonacci .618 retracement at .0787 (nearly eight cents) premium Canadian dollar. Near term support is 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).

The March British pound finds near term resistance at last week's high of 1.8764 (sterling has made lower weekly highs for six consecutive weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could signal a trend change and send the market back up to the current daily Fibonacci .618 retracement at 1.9071. Further resistance is found between the contract high of 1.9446 and the weekly December high of 1.9500. If the market can clear this hurdle it could jump to the psychological two dollar mark or the 1992 high of 2.0088. Near term support is at last week's nearly two month low of 1.8464. A break below it could keep the market headed toward the major daily Fibonacci .618 retracement at 1.8020. Open Interest is at a three month low. The pound has a seasonal tendency to drop sharply from the beginning of January until March.  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 finds near term support between the weekly 18-bar Moving Average that it has not closed below since mid-September and last week's two and a half month low of .8377. A break below this support zone could allow the Swissie to slide 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 last week's high of .8535. (The Swiss franc has made lower weekly highs for three consecutive weeks). A rally above it could allow the Swissie to test the current daily Fibonacci .618 retracement at .8695. If the rally does not end here it may run to the contract high of .8892. Further resistance is found between the psychological 90 cent level and the 1995 high of .9038. Open Interest is flat. The %R overbought/oversold indicator shows that the Swiss franc is oversold on the daily chart. The Seasonal index shows that the Swiss franc usually declines sharply in January.  Commercial interests are about the least bearish since October. Large traders are holding the smallest net long position since then. Small traders are holding the smallest net long position since early October.

The March Euro currency finds near term support clustered between the weekly 18-bar Moving Average that it has not closed below for the last four months, and the major daily Fibonacci .382 retracement at 1.2947, and last week's two month low of 1.2931. If the market does not establish a price support base in this area it could quickly decline to the major daily Fibonacci .618 retracement at 1.2490. Near term resistance is at last week's high of 1.3128. (The Euro has made lower weekly highs for three consecutive weeks). A rally above it could take the Euro back up the current major daily Fibonacci .618 retracement at 1.3398. Further resistance is at the all-time high of 1.3687. A break out to new all-time highs could allow the market to quickly approach the psychological 1.40 area. Open Interest is at a three month low. The %R overbought/oversold indicator shows that the Euro is oversold on the daily chart. Seasonally, the Euro should drop substantially in the second half of January.

The March Japanese yen finds near term resistance between the current January high of .009864 and the contract high of .009885. Further resistance is at the 2000 weekly high of .009974 in confluence with the late 1999 high of .009990. Near term support is at last week's low of .009656. (The yen has only broken a previous week's low once in the last six weeks). A break below it could send the market down to 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 plunge to the major daily Fibonacci .618 retracement at .009254. Open Interest is flat. The %R overbought/oversold indicator shows that the yen is overbought on the weekly and monthly charts. The yen has a seasonal tendency to decline sharply in January.  Commercial interests are the least bearish in three months. Large traders are the least bullish since early October. Small traders are also the least bullish since then.

Metals - February gold finds near term support at the current January low of $417.10. Further support is at 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!) If the market does not stabilize here it should test major support between the major monthly Fibonacci .382 retracement at $378.30 and last year's monthly low of $372.00. Near term resistance is at last week's high of $428.50 (gold has made lower weekly highs for three consecutive weeks) and the 18-day Moving Average that it has closed above only once in the last month and a half. A break out above it could reverse the down trend and send gold to the current daily Fibonacci .618 retracement at $442.50. Further resistance is at the contract high of $458.20. Open Interest is at a three and a half month low. The %R overbought/oversold indicator shows that gold is oversold on the daily chart. The Seasonal index shows that gold should establish an important seasonal high in mid-January and then decline sharply until the end of March.  Commercials are now holding the smallest net short position in seven months. Large traders (hedge funds) are holding the smallest net long position since mid-June. Small traders are neutral.

March silver may have reversed trend last week. The market took out a two week high like it did in late December but this time it also closed above the 18-day Moving Average for the first time in the last month and a half. A break out above last week's high of $6.83 could send the market up to the current daily Fibonacci .382 retracement at $7.07 in confluence with the December 27th reaction high if $7.09. Further resistance is at the current daily Fibonacci .618 retracement at $7.515. Near term support is at the current January low of $6.35. Further support is at the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. A break below six dollars send silver to last year's weekly low of $5.51. Open Interest is flat. Seasonally, silver should be flat to lower in the second half of January. Commercials are the least bearish since late September. Large traders (hedge funds) are the least bullish since then. Small traders are neutral.

March copper finds near term support at last week's low of 137.20. (March copper has only broken a previous week's low once in the last six weeks). A break below it could allow the market to test the current January low of 132.35 in confluence with the current major daily Fibonacci .382 retracement at 131.80. If March copper slips below this support level it may plunge to the current major daily Fibonacci .618 retracement at 121.90 or the October low of 120.50. Near term resistance is at the daily chart gap between last week's high 144.00 and 145.80. If the market fills this huge gap it could challenge the contract high of 147.75 in confluence with the 2004 weekly high of 148.20. A break out above this price barrier could send copper soaring to the 1988 multi-decade high of 160.65. Open Interest is at a two month low. The %R overbought/oversold indicator shows that copper is still near overbought on the monthly chart. Copper has a seasonal tendency to move sideways in January.  Commercials are neutral. Large traders (hedge funds) are neutral to bullish. Small traders remain neutral.

Energies - February crude oil finds near term resistance at the current major daily Fibonacci .618 retracement at $49.09 in confluence with last week's one and a half month high of $49.35. Further resistance is at the November 30th reaction high of $50.40. If the market does not stop here it may attempt to test the all-time high of $55.65. Near term support is at last week's low of $46.71. (Crude oil has only broken a previous week's low once in the last six weeks). Further support is at the current intermediate daily Fibonacci .618 retracement at $44.28. A break below this level could allow the market to test bigger weekly support between the weekly December low of $40.25 and the 2003 weekly high of $39.99 (old resistance). If the market does not recover from this level expect a swift decline to the 2004 weekly low of $32.20 or the major weekly Fibonacci .618 retracement at $31.58. Open Interest is at a two month high. The %R overbought/oversold indicator shows that crude oil is overbought on the daily chart. The Seasonal index shows that crude oil should decline in the second half of January.  Commercial interests are the least bullish in nearly three months. Large traders are holding the biggest net long position since late October. Small traders remain bearish.

February Unleaded Gas finds near term resistance at last week's one and a half month high of 130.90. Further resistance is at the daily November high of 136.30 in confluence with the current major daily Fibonacci .786 retracement at 136.60. Near term support is at last week's low of 123.50. (February gasoline has made higher weekly lows for five out of the last six weeks). Further support is at the current intermediate daily Fibonacci .618 retracement at 115.59. If the market does not stabilize here it may decline to the daily December low of 106.50 followed by the weekly December low of 103.50. A break below this price level could send gasoline to last year's weekly low at 92.90. Open Interest reached a new all-time high. The %R overbought/oversold indicator shows that gasoline is overbought on the daily chart. Seasonally, gasoline should decline in the second half of January.  Commercials interests are the most bearish in two and a half months. Large traders are holding the biggest net long position since late October. Small traders are neutral.

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 resistance is at last week's high of 6.68. A rally above it could send the market right up to the current daily Fibonacci .382 retracement at 7.335. Further resistance is at the daily December high of 7.85. Near term support is at the contract low of 5.71. If February natural gas hits a new contract low it may not find support again until the psychological 5.00 mark. Open Interest is at the highest level since February of 2003. Natural gas has a seasonal tendency to decline substantially from January to mid-February.  Commercial interests are holding their biggest net long position since Thanksgiving of 2003. Large traders increased the size of their biggest net short position in three years. Small traders are neutral to bullish.

Meats - February live cattle finds near term resistance at the contract high of 92.75 in confluence with the weekly December high at 92.95. Further resistance is at the major weekly Fibonacci .786 retracement at 97.00. Near term support is at the current January low of 87.40. Further support is at the November low of 85.25. After that look for cattle to hit the daily May low of 83.25. If this low is broken the market may decline to the major daily Fibonacci .618 retracement at 81.75. Open Interest is at an all-time high. The %R overbought/oversold indicator shows that cattle is nearing overbought levels on the daily and weekly charts. The Seasonal index shows that cattle should drop this week and then rebound in the last week of January.  Commercials are now holding the biggest net short position since late October. Large traders (hedge funds) are the most bullish in six and a half months. Small traders increased the size of their biggest net short position since March of 2001.

March feeders find near term resistance at last week's two and a half month high of 103.25. Further resistance is at the contract high of 105.30. A break out to new contract highs could launch March feeders to the major weekly Fibonacci .618 retracement at 111.32. Near term support is at last week's low of 100.25. (March feeders have only broken a previous week's low once in the last six weeks). Further support is at the current intermediate daily Fibonacci .618 retracement at 98.15. If the market does not stabilize here it may test last month's low of 95.70 or the November low of 95.00. (March feeders have only broken a previous month's low once in the last four months). Further support is at the major daily Fibonacci .618 retracement at 92.95. Open Interest is at a three month high. Seasonally, feeders should move sideways to slightly higher from mid-January to mid-February.  Commercial interests are the least bullish in two months. Large traders are holding the biggest net long position since late June. Small traders are holding the biggest net short position since October of 2003.

February lean hogs broke a two week low and closed below the 18-day Moving Average for the first time in almost a month. A break below last week's low of 73.87 could send the market down to the December low of 70.55. (February lean hogs have made higher monthly lows for ten consecutive months). Further support is close behind at the major daily Fibonacci .382 retracement at 69.45 or the September high of 68.75 (old resistance). If the decline does not end here hogs could fall to the October low of 63.30. Near term resistance is found between the current January high of 77.35 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 is still near the all-time high. The %R overbought/oversold indicator shows that hogs are still near overbought on the monthly chart. Hogs have a seasonal tendency to rally sharply in January.  Commercials are increasing the size of their biggest net short position in nearly seven months. Large traders (hedge funds) are now holding the biggest net long position on record. Small traders are holding a record short position.

Grains - March soybeans find near term support between last week's low of $5.124 and the contract low of $5.10. If March soybeans don't establish support near five dollars they could plunge to the 2002 low of $4.154 or the 1999 multi-decade low of $4.014. Near term resistance is at last week's high of $5.244. (March soybeans have made lower weekly highs for three out of the last four weeks). A rally above it could allow the market to test resistance between the November high of $5.65 and the current intermediate daily Fibonacci .382 retracement at $5.682. If beans can overcome this barrier they could run to the current intermediate daily Fibonacci .618 retracement at $6.04 followed by a daily chart gap between $6.06 and $6.23 in confluence with the major daily Fibonacci .382 retracement at $6.16. Open Interest is at a three month high. The %R overbought/oversold indicator shows that beans are oversold on the daily and weekly charts. The Seasonal index shows that soybeans usually decline in January.  Commercial interests are holding a new record size net long position. Large traders are holding a new record size net short position. Small traders are the least bearish in six months.

March soy meal finds near term support between last week's low of $152.00 and the contract low of $150.50. Further support is at the weekly 2002 low of $145.40. If this low does not stop the decline meal may be on the way to the 1999 multi-year low of $120.30. Near term resistance is at last week's high of $159.20. (March meal has made lower weekly highs for four out of the last five weeks). A rally above it could send the market up to the current January high of $167.30 or the December high of $169.00. If these highs are exceeded look for the market to test a daily chart gap between $177.30 and $178.30. Further resistance is at the current major daily Fibonacci .382 retracement at $186.80. Open Interest hit an eight month high. The %R overbought/oversold indicator shows that meal is oversold on the weekly and monthly charts. Seasonally, soy meal should decline until about mid-February.  Commercials are holding a new record-size net long position. Large traders (hedge funds) are holding a new record-size net short position. Small traders are extremely bearish.

March bean oil finds near term support between last week's new contract low of 19.41 and the 2003 weekly low of 19.30. Further support is at the major weekly Fibonacci .786 retracement at 18.81. Near term resistance is at last week's high of 19.80. (March bean oil has made lower weekly lows and lower weekly highs for three consecutive weeks). A rally above it could allow the market to test a resistance cluster between the current intermediate daily Fibonacci .382 retracement at 21.77, the November high of 22.03, and the October high of 22.15. A strong close above 22 cents could allow the market to test the current major daily Fibonacci .382 retracement at 22.98 and the current intermediate daily Fibonacci .618 retracement at 23.24. Open Interest is at a nine and a half month high. The %R overbought/oversold indicator shows that bean oil is oversold on the daily and weekly charts. Bean oil has a seasonal tendency to move sideways in January.  Commercial interests are holding a new record 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 $1.954. Further support is at the 2002 low of $1.914. If this low is broken expect the market to hit the 2001 low of $1.84. Near term resistance is at last week's high of $1.982. Further resistance is at the current the January high of $2.096. A break out above this high could send the market to the current minor daily Fibonacci .382 retracement at $2.174 in confluence with the November high of $2.19. Further resistance is at the current minor daily Fibonacci .618 retracement at $2.31. If the rally does not end here expect March corn to visit another price barrier between the current major daily Fibonacci .382 retracement at $2.514, the September high of $2.514, and the August high of $2.53. Open Interest is at a two month high. The %R overbought/oversold indicator shows that corn is still oversold on the daily, weekly, and monthly charts. The Seasonal index shows that corn should decline in the second half of January.  Commercials are holding a new record net long position. Large traders (hedge funds) are holding a new record size net short position. Small traders are very bearish.

March rice finds near term support at the contract low of 6.90. A break to new lows could clear the path for the market to test last year's weekly low of 6.58 or even the major weekly Fibonacci .618 retracement at 6.445. Near term resistance is at last week's high of 7.22. (March rice has made lower weekly highs for the last four weeks). Bigger resistance is located at the daily double top December high of 7.85. A break out above it should send the market up to the current major daily Fibonacci .382 retracement at 7.985. Further resistance is at the 8.50 level. Open Interest is sitting flat at a four month low. Seasonally, rice should establish an important seasonal high in mid-January and then decline until May. Commercial interests are neutral. Large traders (hedge funds) are neutral to bearish. Small traders are neutral to bullish.

March oats finds near term resistance at last week's four month high of $1.73. Further resistance is at the September high of $1.77. If this high is exceeded look for a run to last year's high on the weekly chart at $1.85. Near term support is found between last week's low of $1.62 and the current intermediate daily Fibonacci .382 retracement at $1.616. If this support does not hold the market could decline to the current January low of $1.52 in confluence with the December low of $1.51. (March oats has made higher monthly lows for four out of the last five months). If last month's low is broken look for a drop to the October low of $1.434. Open Interest is at a two month high. The %R overbought/oversold indicator shows that oats are overbought on the daily and weekly charts. Oats have a seasonal tendency to decline sharply in January. Commercials increased the size of their biggest net short position in seven months. Large traders (hedge funds) are the most bullish since May. Small traders remain neutral.

March wheat finds near term support at the contract low of $2.922. A drop to new contract lows could easily send the market to last year's weekly low of $2.824. Further support is at the monthly 2003 low of $2.73 or the major monthly Fibonacci .786 retracement at $2.676. Near term resistance is found between the current January high of $3.12 and the current minor daily Fibonacci .382 retracement at $3.15. If the market makes it past this level expect a rally to the November high of $3.314 or the October high of $3.36. Open Interest hit a new record high. The %R overbought/oversold indicator shows that wheat is near oversold on the daily chart. The Seasonal index shows that wheat should establish an important seasonal high in mid-January and then drop sharply for the rest of the month.  Commercial interests are holding a new record size net long position. Large traders are holding a new record net short position. Small traders are neutral.

Softs - March coffee finds near term support clustered between the current January low of 95.10, the current major daily Fibonacci .382 retracement at 94.40, and the December low of 93 cents. A break below this price zone should take the market down to the current major daily Fibonacci .618 retracement at 85.60. Near term resistance is at last week's high of 105.70. Further resistance is at the contract high of 108.70. A break out to new contract highs could send coffee to the July of 2000 high of 119.00. Open Interest is flat. The %R overbought/oversold indicator shows that coffee is overbought on the monthly chart. Seasonally, coffee should head lower in January.  Commercials are holding a near record net short position. Large traders (hedge funds) are holding a near record net long position. Small traders are neutral.

March cocoa finds near term support at the current January low of $1,464. Further support is at the daily October low of $1,408. If cocoa does not stabilize near $1,400 it may visit the contract low of $1,340. Near term resistance is found between last week's high of $1,512 (March cocoa has made lower weekly highs for six consecutive weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above this short term resistance could be a good clue that the trend has changed. This could send March cocoa up to the current daily Fibonacci .382 retracement at $1,595. If the run does not stop here the market may be headed to the current daily Fibonacci .618 retracement at $1,677. Further resistance is at the December high of $1,723 followed by the current daily Fibonacci .786 retracement at $1,734. Open Interest is flat. The %R overbought/oversold indicator shows that cocoa is oversold on the daily chart. Cocoa has a seasonal tendency to trade in a choppy range in January.  Commercial interests are the least bearish in over two months. Large traders are the least bullish in two months. Small traders are still heavily net long.

March sugar finds near term support between the current January low of 8.51 and the December low of 8.44. (March sugar has made higher monthly lows for nine out of the last ten months). A break below last month's low could signal a major trend termination and send sugar right to the current major daily Fibonacci .382 retracement at 8.13 in confluence with the daily August low of 8.13. Near term resistance is located between the current January high of 9.23 and the contract high of 9.37. A break out above it could quickly send the market to the intermediate weekly Fibonacci .786 retracement at 10.02. Open Interest is still very high. The %R overbought/oversold indicator shows that sugar is nearly overbought on the monthly chart. The Seasonal index shows that sugar should move sideways for the rest of the month. Commercials are neutral to bearish. Large traders (hedge funds) are neutral to bullish. Small traders are neutral to bullish.

March orange juice finds near term support at the current January low of 77 cents in confluence with the December low of 76.90. (March OJ has made higher monthly lows for three out of the last four months). A break below this level should immediately send the market to the major daily Fibonacci .618 retracement at 74.95. Further support is at the weekly November low of 69.20. Near term resistance is at last week's high of 84.15 (March OJ has made lower weekly highs for the last four weeks). A rally above it could allow the market to challenge the December high of 89 cents. Further resistance is at the contract high of 93.50. Open Interest is sitting flat at the lowest level since Thanksgiving. Seasonally, OJ should rally sharply in January.  Commercial are the least bearish in seven months. Large traders are holding the smallest net long position since July. Small traders are the least bullish since September of 2003.

March cotton finds near term resistance at last week's three month high of 48.31. A break out above this level should send the market to the October high of 50.50 in confluence with the current intermediate daily Fibonacci .618 retracement at 50.85. If the rally does not end here look for a run to the September high of 56.50. Near term support is at last week's low of 45.80. (March cotton has made higher weekly lows for five out of the last six weeks). Further support is at the current daily Fibonacci .618 retracement at 44.24. If the market does not stabilize here it may test the contract low of 41.72. A break to new contract lows could allow cotton to hit the October 2002 reaction low of 40.50 in confluence with the major monthly Fibonacci .786 retracement at 40.31. Failure to stabilize near 40 cents could take cotton down to the 2002 low of 31.47 or the 2001 all-time low of 28.20. Open Interest is at a one year high. Cotton has a seasonal tendency to trade in a choppy fashion with a lower bias in January.  Commercials  are now holding the biggest net short cotton position since March. Large traders (hedge funds) are net long for the first time since last March. Small traders are holding the biggest net long cotton position since March of 2003.

Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

© 2004 Pearce Financial, LLC
Archived Editorials

CONTACT INFORMATION
Pearce Financial, LLC
(800) 800-1399
Email l Website

Futures trading involves risk and is not necessarily appropriate for all investors.
Notice & Disclaimer

Financial Sense   Home  l  Broadcast  l  WrapUp  l  Storm Watch  l  About Us  l  Contact Us