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Weekly Market Watch
The Future is in Futures
by Pearce Financial, LLC
February 7 - February 11, 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 may have reversed trend last week when it bounced off of the weekly 18-bar Moving Average, took out the previous week's high, closed above the daily Fibonacci .382 retracement, and closed back above the 18-day Moving Average for the first time in over a month. Near term resistance is at the daily Fibonacci .618 retracement at 1204.20. If the rally does not end here look for a run to the contract high of 1220.50. Further resistance is at the major monthly Fibonacci .618 retracement at 1265.90. Near term support is found between the January low of 1164.50 and the major daily Fibonacci .382 retracement at 1160.10. Further support is at the major daily Fibonacci .618 retracement at 1122.80 in confluence with the monthly 18-bar Moving Average at 1121.10. Watch for buy set ups at this price level. The S&P 500 has not closed below the monthly 18-bar Moving Average since the spring of 2003. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is overbought on the monthly chart. Seasonally, the S&P 500 should move sideways for the first half of February and decline in the second half of the month.  Commercials covered more of their net short position to become the least bearish since Thanksgiving. Large traders (hedge funds) increased the size of their biggest net short position since mid-August. Small traders are still holding a large net long position.

The March NASDAQ 100 broke above a previous week's high for the first time in a month. If the market takes out last week's high of 1539.00 and closes back above the 18-day Moving Average for the first time in over a month it should accelerate the move to the daily Fibonacci .618 retracement at 1582.30. Further resistance is at the contract high of 1645.00. A break out to new contract highs could send the NASDAQ 100 to the December 2001 high of 1738.00. Near term support is at the January low of 1484.00 followed by the monthly 18-bar Moving Average at 1463.90 (the NASDAQ 100 has not closed below the monthly 18-bar Moving Average since April of 2003). Further support is at the major daily Fibonacci .618 retracement at 1441.40. If this price level is significantly broken the market could collapse to the major weekly Fibonacci .382 retracement at 1318.80 or last year's low of 1302.00. Open Interest is quietly increasing. The NASDAQ 100 should move lower in February.  Commercial interests are holding the biggest net short position in sixteen and a half months. Large traders are holding the biggest net short position in over four months. Small traders once again increased the size of their record size net long position.

Interest rates - March T-bonds find near term resistance at last week's new ten and a half month high of 116-07 in confluence with the major weekly Fibonacci .618 retracement at 116-06. Further resistance is at last year's weekly high of 117-26. Near term support is at last week's low of 114-11 (T-bonds have made higher weekly highs and higher weekly lows for five consecutive weeks) and the 18-day Moving Average that it has not closed below for the last month. A break below this near term support could indicate that the trend is reversing and take the market back down to the current major weekly Fibonacci .382 retracement at 111-06. If the market does not rebound from this level expect a further decline to the current major weekly Fibonacci .618 retracement at 108-03. The March NOB spread (T-notes vs. T-bonds) finds near term resistance at last week's new all-time high of 3-08 premium T-bonds. Further resistance is at the psychological 5-00 mark. Near term daily support is at the current major daily Fibonacci .382 retracement at 15/32nds premium T-bonds. Further support is at the November low of 27/32nds premium T-notes in confluence with the daily December low of 27/32nds premium T-notes. After that the spread could be headed to the current major daily Fibonacci .618 retracement at 1-08 premium T-notes. Open Interest reached another new all-time high again. The %R overbought/oversold indicator shows that T-bonds are overbought on the daily and weekly charts. T-bonds have a seasonal tendency to move lower in February.   Commercial interests are now holding the largest net long position since the end of July. Large traders are holding the largest net short position since then. Small traders are the least bearish in three months.

March T-notes find near term resistance between last week's one and a half month high of 112-275 and the daily December high of 112-31. If these highs are exceeded the market has no place left to go but to the contract high of 113-165. A break out to new contract highs should send March T-notes up to the weekly September high of 114-12. Further resistance levels are located at the intermediate weekly Fibonacci .786 retracement at 115-255 and the major weekly Fibonacci .618 retracement at 116-005. Near term support is found at last week's low of 111-275. (T-notes have only broken a previous week's low once in the last four weeks). Further support is at the current intermediate weekly Fibonacci .618 retracement at 110-10 in confluence with the December low of 110-085. After this level T-notes could 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. The %R overbought/oversold indicator shows that T-notes are overbought on the daily chart. T-notes have a seasonal tendency to decline in February. Commercials are holding the largest net long position since the end of July. Large traders (hedge funds) are holding the largest net short position since late August. Small traders once again increased the size of their record net short position.

International bonds - March Canadian 10-year bonds find near term resistance between last week's new contract high of 113.44 and last year's weekly high near 113.50. After that the market may target the 2003 weekly high just above the 114 mark. Near term support is at last week's low of 112.45 and the 18-day Moving Average that it has closed below only once in the last month. A break below it could take the market down to the January low near 111.40 (Canadian bonds have made higher monthly highs and higher monthly lows for seven consecutive months) or the late December reaction low of 111.20. Further support is at the December low of 110.60.  March Euro bunds find near term resistance at last week's new all-time high of 120.40. Further resistance is at the 122 level. Near term support is at last week's low of 119.58 (Euro bunds have only broken a previous week's low once in the last five weeks) and the 18-day Moving Average that it has closed below only once in the last month. A break below it could signal a trend reversal and send the market back down to the late December low of 118.11.  March London long gilts find near term support at the January low of 110.51. (Gilts have made higher monthly lows for six consecutive months). Further support is at the December spike low of 109.71 or the daily November low of 109.37. If the decline does not end here look for the market to visit the major daily Fibonacci .618 retracement at 108.48 in confluence with the daily October low of 108.45. Near term resistance is at last week's high of 111.79. Further resistance is at the January high of 112.10. If this high is exceeded look for a move to the contract high of 112.65. A break out to new contract highs may allow gilts to make a run for the psychological 115 mark.  March Australian 10-year bonds made an outside reversal up on the weekly chart when it took out the previous week's low and the reversed and took out the previous week's high. This is bullish price action. Near term resistance is at last week's high of 94.72. Further resistance is at the January high of 94.805. A rally above it should send the market up to the contract high of 94.875 in confluence with the weekly 2004 high at 94.89. If the market does not stop here expect a rally to the major weekly Fibonacci .786 retracement near 95.09. Near term support is at last week's low of 94.565. A break below it could send the market down to the January low of 94.46 in confluence with the November low of 94.445. A break below these lows could cause a sell off 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 139.96. Further resistance is at the weekly 2004 high near 140.50. Near term support is at last week's low of 139.40 (JGB's have only broken a previous week's low once in the last nine weeks) and the 18-day Moving Average that it has closed below only once in the last month. A break below it could signal a trend change and send the market down to the late December reaction low of 138.21.

Currencies - The US dollar index finds near term resistance at last week's nearly three month high of 84.48. A rally above it could send the greenback right to the major daily Fibonacci .382 retracement at 85.40. Further resistance is at the monthly 18-bar Moving Average at 87.61 (the US dollar index has not closed above the monthly 18-bar Moving Average in nearly three years) followed by the major daily Fibonacci .618 retracement at 88.43. The US dollar index has now been below the 85 mark for thirteen consecutive weeks. This is a new time record for being oversold. The buck remains vulnerable to an even larger short-covering rally. Near term support is at last week's low of 83.27 (the US dollar index has made higher weekly lows for five consecutive weeks) and the 18-day Moving Average that it has not closed below for over a month. A break below it could reverse the short-term trend and send it to an important technical support zone between the contract low of 80.48 and the 1995 low of 80.14. A clean break below the 80 level could hammer this market down to the 1992 low of 78.43. Open Interest is flat. The %R overbought/oversold indicator shows that the greenback is overbought on the daily chart and about to move out of oversold territory on the monthly chart. The Seasonal index shows that the dollar should move sideways to slightly higher in February.  Commercial interests are the least bullish in six months. Large traders are the least bearish in five months. Small traders are the most bullish since mid-May.

The March Canadian dollar finds near term support at last week's three and a half month low of .7996 and the major daily Fibonacci .382 retracement at .7988. Further support is at the major daily Fibonacci .618 retracement at .7656. Near term resistance is at the current daily Fibonacci .382 retracement at .8198. A rally above it could allow the market to test the January high of .8370. Further resistance is at the contract high of .8526. A break out to new contract highs could take the "looney" on up to the 1991 high of .8906. Open Interest increased slightly. The %R overbought/oversold indicator shows that the "looney" is oversold on the daily chart. Seasonally, the Canadian dollar has a tendency to rally in the first couple of trading days in February and then decline sharply for the rest of the month.  Commercial interests are the least bearish since the end of June. Large traders are holding their smallest net long position since then. Small traders are neutral.

The March Australian dollar finds near term support at last week's low of .7652 (the Aussie dollar has only broken a previous week's low once in the last four weeks) followed by the weekly 18-bar Moving Average that it has not closed below for nearly five months. A drop below it could allow the market to visit the January low of .7475. (The Aussie dollar has only broken a previous monthly low once in the last seven months). If last month's low is broken the market could plummet to the major daily Fibonacci .382 retracement at .7394 in confluence with the December low of .7388. Failure to stabilize here could result in another sell off to the October low of 71 cents in confluence with the major daily Fibonacci .618 retracement at .7094. Near term resistance is at last week's high of .7766. If it's exceeded the market should test the December 31st reaction high of .7804. Further resistance is at the contract high of .7879. A break out to new contract highs could take the March Australian dollar right to the weekly November high of .7938 or even the weekly 2004 high of .7980. Open Interest is almost at a two month high. The %R overbought/oversold indicator shows that the Aussie is overbought on the monthly chart.  Commercials are holding new record size net short position. Large traders (hedge funds) are holding new record size net long position. Small traders are bullish.

The March Canadian dollar/Australian dollar spread finds near term support at last week's nine month low of .0316 (just over three cents) premium Canadian dollar in confluence with the major daily Fibonacci .618 retracement at .0321 (about three and a quarter cents). Further support is at the major weekly Fibonacci .618 retracement at .0148 (about one and a half cents). Near term resistance is at the January high of .0694 (about seven cents) premium Canadian dollar followed closely by the current major daily Fibonacci .618 retracement at .0729 (just over seven and a quarter of a cent) premium Canadian dollar. If the rally does not end here the spread could make it to the current major daily Fibonacci .786 retracement at .0842 (about eight and a half cents) premium Canadian dollar in confluence with the January high of .0878 (about eight and three-quarter cents) premium Canadian dollar.

The March British pound finds near term resistance at last week's one month high of 1.8890. Further resistance is at the daily Fibonacci .618 retracement at 1.9071. If the market does not stop at this level it may run up to the contract high of 1.9446 or the weekly December high of 1.9500. Near term support is at the January low of 1.8464. Further support is at the monthly 18-bar Moving Average at 1.8096 (sterling has not closed below the monthly 18-bar Moving Average in nearly three years) followed by the major daily Fibonacci .618 retracement at 1.8020. Open Interest is flat. The pound has a seasonal tendency to drop in February.  Commercials are the least bearish since October. Large traders (hedge funds) are neutral to bullish. Small traders are also neutral to bullish.

The March Swiss franc finds near term support at last week's three and a half month low of .8266 in confluence with the intermediate daily Fibonacci .382 retracement at .8259. If the market does not stabilize in this price range it could drop to the major daily Fibonacci .618 retracement at .8131. Near term resistance is at last week's high of .8453 (the Swiss franc has made lower weekly highs for five consecutive weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could be an important sign that the trend has reversed. If this occurs look for the Swissie to rebound to the current daily Fibonacci .618 retracement at .8653. Further resistance is at the contract high of .8892. A break out to new contract highs could take the March Swiss franc to the psychological 90 cent level in confluence with 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 moves sideways for most of February and then declines in the last week of the month.  Commercial interests are holding the biggest net long position since mid-September. Large traders are holding the biggest net short position since then. Small traders are holding the biggest net short position since mid-September.

The March Euro currency finds near term support at last week's nearly three month low of 1.2873. If this support is violated look for a quick decline to the major daily Fibonacci .618 retracement at 1.2490. Near term resistance is at last week's high of 1.3100 (the Euro has only broken a previous week's high once in the last five weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could indicate a trend change and take the Euro up to the current major daily Fibonacci .618 retracement at 1.3376. Further resistance is at the all-time high of 1.3687. A break out to new all-time highs could launch the market to the psychological 1.40 mark. Open Interest is flat. The %R overbought/oversold indicator shows that the Euro is oversold on the daily chart. Seasonally, the Euro should continue to drop substantially in February.

The March Japanese yen finds near term resistance at last week's high of .009706. (The yen has made lower weekly highs for three consecutive weeks). A rally above it could send the market back up to the January high of .009864 or the contract high of .009885. If the March yen hits a new contract high it could quickly test the 2000 weekly high of .009974 in confluence with the late 1999 high of .009990. Near term support is at the weekly 18-bar Moving Average that it has not closed below for the last four months in confluence with last week's low of .009570. This is closely followed by the January low of .009549. (The yen has made higher monthly lows for six consecutive months). A break below this low could take the yen to the major daily Fibonacci .618 retracement at .009254. Open Interest is flat. The %R overbought/oversold indicator shows that the yen is overbought on the monthly chart. The yen has a seasonal tendency to move sideways to lower in February.  Commercial interests are the least bearish since mid-October. Large traders are the least bullish since then. Small traders are neutral to bullish.

Metals - April gold finds near term support at last week's nearly four month low of $415.50. After that the market could test the major daily Fibonacci .618 retracement at $410.70 in confluence with the monthly 18-bar Moving Average at $409.00. (Gold has not closed below the monthly 18-bar Moving Average since July of 2001). Bigger technical support is located 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 $426.60 (gold has made lower weekly highs for four out of the last five weeks) and the 18-day Moving Average that it has closed below a majority of the time over the last month. A break out above it could change the trend and send it to the current daily Fibonacci .618 retracement at $443.20. Further resistance is at the contract high of $460.40. Open Interest is at a four 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 decline sharply until the end of March.  Commercials are holding the smallest net short position since mid-June. Large traders (hedge funds) are holding the smallest net long position since late May. Small traders are neutral.

March silver finds near term resistance at the January high of $6.89. Further resistance is found at the current daily Fibonacci .382 retracement at $7.07 in confluence with the December 27th reaction high if $7.09. If the market does not back down from this price it could be headed for the current daily Fibonacci .618 retracement at $7.515. Near term support is at last week's low of $6.59. Further support is found between the monthly 18-bar Moving Average at $6.44 (silver has not closed below the monthly 18-bar Moving Average since June 2003) and the January low of $6.35. A break below last month's low could drop the market right to the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. If silver breaks below six dollars it could hit last year's weekly low of $5.51. Open Interest is flat. Seasonally, silver should rally at the beginning of February and then decline sharply from mid-February until early April.  Commercials are the least bearish since mid-September. Large traders (hedge funds) are the least bullish since late September. Small traders are neutral.

March copper finds near term support at last week's low of 135.60. Further support is at the January low of 132.35 in confluence with the major daily Fibonacci .382 retracement at 131.80. (March copper has not broken a previous month's low for the last eight months). If the market fails to recover from this price level it could plunge to the major daily Fibonacci .618 retracement at 121.90 or the October low of 120.50. Near term resistance is at the January 28th reaction high 144.50. Further resistance is located at the contract high of 147.75 in confluence with the 2004 weekly high of 148.20. A break out above this price barrier could send copper soaring to the 1988 multi-decade high of 160.65. Open Interest is declining again. Copper has a seasonal tendency to move sharply higher in February.  Commercials are neutral. Large traders (hedge funds) are neutral. Small traders remain neutral.

Energies - March crude oil broke a previous week's low for the first time in five weeks and closed below the 18-day Moving Average for the first time in a month. This could mean that the market has further downside potential. If the market breaks last week's low of $45.75 it should go right to the intermediate daily Fibonacci .618 retracement at $44.44. Further technical support is found between the weekly December low of $40.25 and the 2003 weekly high of $39.99 (old resistance). Near term resistance is at the January high of $49.75 in confluence with the major weekly Fibonacci .618 retracement at $49.77. This is closely followed by the November 30th reaction high of $50.40. A break out above this high could take the market back up to the contract high of $54.00. Open Interest is almost at a four month high. The Seasonal index shows that crude oil should move sideways to lower in February.  Commercial interests are holding the biggest net short position in four months. Large traders are holding the biggest net long position since then. Small traders remain bearish.

March Unleaded Gas broke a previous week's low for the first time in five weeks and closed below the 18-day Moving Average for the first time in a month. This is bearish price action! A break below last week's low of 125.00 should send gasoline to the intermediate daily Fibonacci .618 retracement at 120.23. Further support is at the daily December low of 109.81. Near term resistance is at the January high of 138.40. If the market does not pause here look for it to test the weekly October high of 144.50. A break out above this high could allow the market to test last year's all-time high of 147.00. Open Interest is near the all-time high. Seasonally, gasoline should decline in February.  Commercials interests are holding the biggest net short position in nearly four months. Large traders are holding the biggest net long position since then. Small traders are holding the biggest net long position since late October.

March natural gas finds near term resistance at the January high of 6.72. (March natural gas has made lower monthly highs and lower monthly lows for three consecutive months). If this high is exceeded look for the market to test the current daily Fibonacci .382 retracement at 7.19. Further resistance is at the daily December high of 7.67. Near term support is at last week's low of 6.07. (March natural gas has made higher weekly lows for three out of the last four weeks). Further support is at the contract low of 5.77. If March natural gas hits a new contract low it could plunge to the psychological 5.00 mark. Open Interest is still pretty high. Natural gas has a seasonal tendency to move sideways to lower until mid-February and then rally sharply in the second half of the month.  Commercial interests are now the most bearish in two months. Large traders are now the least bearish in two months. Small traders remain neutral to bullish.

Meats - April live cattle finds near term resistance between last week's high of 88.75 and the daily Fibonacci .618 retracement at 88.87. A rally above it could allow the market to test the contract high of 90.30. If April cattle hits a new contract high it could run to the weekly January high of 92.75 in confluence with the weekly December high at 92.95. Further resistance is at the major weekly Fibonacci .786 retracement at 97.00. Near term support is at the January 24th reaction low of 86.55. Further support is at the January low of 85.65. (April cattle has only broken a previous month's low once in the last four months). If last month's low is broken expect the market to slide to the December low of 83.45. Further support is at the November low of 82.00. Open Interest reached a new all-time high again. The Seasonal index shows that cattle should rally in a choppy fashion in February.  Commercials are neutral to bearish on cattle. Large traders (hedge funds) are the most bullish since August. Small traders are holding the biggest net short position since March of 2001.

March feeders find near term resistance at the January high of 103.25. Further resistance is at the contract high of 105.30. If March feeders break out to new contract highs look for a run to the major weekly Fibonacci .618 retracement at 111.32. Near term support is at last week's low of 99.20. Further support is staggered between the January low of 96.25 (March feeders have only broken a previous month's low once in the last four months), the December low of 95.70, and the November low of 95.00. Open Interest is at the highest level since late August. The %R overbought/oversold indicator shows that feeders are oversold on the weekly chart. Seasonally, feeders should move sideways to slightly lower in February.  Commercial interests are the least bullish in three 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.

April lean hogs broke a previous month's low for the first time in several months. This is very bearish. A break below last week's one month low of 72.50 should smash the market to the major daily Fibonacci .382 retracement at 68.97 in confluence with the December low of 68.70. Near term resistance is at the current daily Fibonacci .618 retracement at 76.27. A rally above it could allow the market to visit the contract high of 78.60. A break out to new contract highs could take April hogs to the 2004 weekly high of 82.70. Open Interest is flat but still near the all-time high. Hogs have a seasonal tendency to drop substantially in February.  Commercials covered more than a third of their big net short position from the previous week but they remain bearish. Large traders (hedge funds) are reducing the size of their record net long position. Small traders are holding a near record short position.

Grains - March soybeans find near term support at last week's two and a half year low of $4.984. A clean break below it could hammer March soybeans all the way down to the 2002 low of $4.154 or the 1999 multi-decade low of $4.014. Near term resistance is at the current minor daily Fibonacci .382 retracement at $5.24. A rally above it could send the market to the current intermediate daily Fibonacci .382 retracement at $5.61 in confluence with the November high of $5.65. Further resistance is at the current intermediate daily Fibonacci .618 retracement at $5.994 followed by a daily chart gap between $6.06 and $6.23 in confluence with the major daily Fibonacci .382 retracement at $6.086. Open Interest is at a three and a half month high. The %R overbought/oversold indicator shows that beans are oversold on the daily, weekly and monthly charts. The Seasonal index shows that soybeans usually establish an important bottom in mid-February and then rally into the summer.  Commercial interests increased the size of their record size net long position. Large traders also increased the size of their record size net short position. Small traders are the least bearish in six months.

March soy meal finds near term support between last week's new contract low of $148.80. Further support is at the weekly 2002 low of $145.40. If this low is broken the market could plunge to the 1999 multi-year low of $120.30. Near term resistance is at the January 26th reaction high of $159.50. A rally above it could clear the way for the market to visit the January high of $167.30 and the December high of $169.00. Further resistance is at a daily chart gap between $177.30 and $178.30. If the gap is filled soy meal may run to the current major daily Fibonacci .382 retracement at $185.70. Open Interest is almost at a ten month high. The %R overbought/oversold indicator shows that meal is oversold on the daily, weekly, and monthly charts. Seasonally, soy meal should post an important seasonal low in mid-February.  Commercials increased the size of their record net long position. Large traders (hedge funds) increased the size of their record net short position. Small traders remain very bearish.

March bean oil finds near term support at last week's new contract low of 18.82 in confluence with the major weekly Fibonacci .786 retracement at 18.81. After that the market could challenge the psychological 18 cent mark. Near term resistance is at last week's high of 19.53 (March bean oil has only broken a previous week's high once in the last five weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could terminate the bear trend and send the market right to the January high of 20.55. (March bean oil has made lower monthly highs for the last four months). A break out above this level could push the market to the current intermediate daily Fibonacci .382 retracement at 21.41 or the December high of 21.63. Another technical resistance zone lurks overhead between the November high of 22.03 and the October high of 22.15. After that March bean oil could test the current intermediate daily Fibonacci .618 retracement at 23.01. Open Interest is reached the highest level since last March. The %R overbought/oversold indicator shows that bean oil is oversold on the daily and weekly charts. Bean oil has a seasonal tendency to rally from February thru May.  Commercial interests increased the size of their record net long position. Large traders increased the size of their biggest net short position since the summer of 1999. Small traders are still the most bearish since October of 2001.

March corn finds near term support between the contract low of $1.942 and 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 $1.982. (March corn has only broken a previous week's high once in the last four weeks). A rally above it could allow the market to test the January high of $2.096. (March corn has made lower monthly highs for eight consecutive months). A break out above last month's high could send the market to the current minor daily Fibonacci .382 retracement at $2.166 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 market does not peak out here look for a rally to a technical resistance cluster between the current major daily Fibonacci .382 retracement at $2.506, the September high of $2.514, and the August high of $2.53. Open Interest is at a two and a half month high. The %R overbought/oversold indicator shows that corn is still oversold on the daily, weekly, and monthly charts. The Seasonal index shows that corn should move sideways for most of February and then establish an important seasonal low at the end of the month.  Commercials increased the size of their record net long position again. Large traders (hedge funds) increased the size of their record size net short position. Small traders remain very bearish.

March rice finds near term support at last week's new contract low of 6.47 in confluence with the major weekly Fibonacci .618 retracement at 6.445. Further support is at the psychological 6.00 mark. Near term resistance is at last week's high of 6.74 (March rice has only broken a previous week's high once in the last six weeks) and the 18-day Moving Average that it has not closed above for over a month. A break out above it could reverse the trend and take rice back up to the current major daily Fibonacci .382 retracement at 7.72 or the daily double top December high of 7.85. Further resistance is at the current major daily Fibonacci .618 retracement at 8.49. Open Interest is at a three and a half month high. The %R overbought/oversold indicator shows that rice is oversold on the daily and weekly charts. Seasonally, rice should decline from the start of February until early May.  Commercial interests are the most bullish in three months. Large traders (hedge funds) are the most bearish since the end of November. Small traders are neutral to bullish.

March oats is showing signs that it may be reversing the up trend. The market broke a previous week's low for the first time in four weeks and also closed below the 18-day Moving Average for the first time in about a month. Then the market tagged the intermediate daily Fibonacci .382 retracement. A break below last week's low of $1.606 should take the market right to the January low of $1.52 in confluence with the December low of $1.51. (March oats has made higher monthly lows for four out of the last five months). If the market breaks these lows look for a drop to the October low of $1.434. Near term resistance is at the January high of $1.73. Further resistance is at the September high of $1.77. A break out above this high should send March oats right up to last year's weekly high of $1.85. Open Interest is at the highest level since late August. Oats have a seasonal tendency to move sideways in the first week of February and then decline sharply for the rest of the month.  Commercials increased the size of their biggest net short position since mid-May. Large traders (hedge funds) increased the size of their biggest net long position since early May. Small traders remain neutral.

March wheat finds near term support between last week's new contract low of $2.87 and last year's weekly low of $2.824. Further support is at the monthly 2003 low of $2.73 followed by the major monthly Fibonacci .786 retracement at $2.676. Near term resistance is at last week's high of $2.94. (March wheat has made lower weekly highs for the last four weeks). A rally above it could send the market up to technical resistance clustered between the weekly 18-bar Moving Average that it has not closed above since May, the current minor daily Fibonacci .382 retracement at $3.116, and the January high of $3.12. If the market does not back down from this wall of resistance expect it to launch an assault on the November high of $3.314 or the October high of $3.36. Open Interest hit a new record high again. The %R overbought/oversold indicator shows that wheat is oversold on the daily and weekly charts. The Seasonal index shows that wheat should move sideways for the first half of February and then drop sharply for the rest of the month.  Commercial interests increased the size of their record size net long position. Large traders increased the size of their record net short position. Small traders are neutral.

Softs - March coffee interests increased the size of their record size net long position. Large traders increased the size of their record net short position. Small traders are neutral.  Commercials are still holding a near record net short position. Large traders (hedge funds) are still holding a near record net long position. Small traders are neutral.

March cocoa tested an intermediate weekly Fibonacci .382 retracement last week. If last week's one and a half month high of $1,609 is exceeded expect the market to move right up to the daily Fibonacci .618 retracement at $1,677. Further resistance is at the December high of $1,723 or the daily Fibonacci .786 retracement at $1,734. Near term support is at last week's low of $1,523. (March cocoa has made higher weekly lows for three consecutive weeks). A break below it could send the market all the way back down to the January low of $1,464. Further support is at the daily October low of $1,408. If March cocoa does not stabilize here it could challenge the contract low of $1,340. Open Interest is at a four month low. Cocoa has a seasonal tendency to move sideways for the first half of February and then drop in the second half of the month. Commercial interests are holding a large net short position. Large traders are starting to increase the size of their net long position again. Small traders are still heavily net long.

March sugar finds near term resistance between the January high of 9.33 and the contract high of 9.37. A break out to new contract highs should send March sugar right to the intermediate weekly Fibonacci .786 retracement at 10.02. If the market does not flinch at this price level it may be headed for the 2000 high of 11.40 in confluence with the major monthly Fibonacci .618 retracement at 11.45. Near term support is at an intermediate daily Fibonacci .618 retracement at 8.72 in confluence with last week's low of 8.71. A break below it should take the market back to the January low of 8.51 (March sugar has made higher monthly lows for ten out of the last eleven months) or the December low of 8.44. If these lows do not hold look for sugar to quickly hit the major daily Fibonacci .382 retracement at 8.13 in confluence with the daily August low of 8.13. Open Interest hit another new all-time high. The %R overbought/oversold indicator shows that sugar is overbought on the weekly and monthly charts. The Seasonal index shows that sugar should move higher for most of February and then decline sharply in the last week of the month.  Commercials are holding a new record size net short position. Large traders (hedge funds) are holding a new record size net long position. Small traders are holding the largest net long position on record.

March orange juice finds near term support at last week's low of 79.80. (March OJ has made higher weekly lows for three consecutive weeks). A break below it could allow the market to challenge the January low of 77 cents in confluence with the December low of 76.90. (March OJ has made higher monthly lows for four out of the last five months). If these lows are violated expect a decline to the major daily Fibonacci .618 retracement at 74.95. Further support is at the weekly November low of 69.20. Near term resistance is at last week's high of 83.60 (March OJ has made lower weekly highs for five consecutive weeks) and the 18-day Moving Average that it has closed above only once in the last month. A break out above it could reverse the trend and take OJ up to the December high of 89 cents. Further resistance is at the contract high of 93.50. Open Interest is at a one month high. Seasonally, OJ should drop sharply in February.  Commercial are holding a new record size net short position. Large traders (hedge funds) are holding a new record size net long position. Small traders are holding the largest net long position on record.

March orange juice finds near term support at last week's low of 79.85. (March OJ has made higher weekly lows for the last four weeks). Further support is at the January low of 77 cents in confluence with the December low of 76.90. (March OJ has made higher monthly lows for four out of the last five months). If these lows are taken out expect OJ to drop 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 nearly one month high of 86.40. Further resistance is at the December high of 89 cents. If this high is exceeded March OJ could challenge the contract high of 93.50. Open Interest is at a one and a half month high. The %R overbought/oversold indicator shows that OJ is overbought on the weekly chart. Seasonally, OJ should drop sharply in February. Commercials are the least bearish since mid-June. Large traders are holding the smallest net long position since the beginning of July. Small traders are the least bullish since September of 2003.

March cotton finds near term support at the January low of 42.40. Further support is at the contract low of 41.72. If March cotton hits a new contract low look for it to slide to 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 result in a free fall to the 2002 low of 31.47 or the 2001 all-time low of 28.20. Near term resistance is at the January high of 48.31. A rally above it could encourage March cotton to test the October high of 50.50 in confluence with the current intermediate daily Fibonacci .618 retracement at 50.85. Further resistance is at the September high of 56.50. Open Interest is at a one month low. The %R overbought/oversold indicator shows that cotton is oversold on the daily and weekly charts. Cotton has a seasonal tendency to drop sharply in the first week of February and then run higher until mid-March.   Commercials  are now net long again for the first time in a month. Large traders (hedge funds) are now net short again for the first time in a month. Small traders are still holding a large net long position.

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
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