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Weekly Market Watch
The Future is in Futures
by Pearce Financial, LLC
February 14 - February 18, 2005

Based on last week's trading activity & reports,
the following markets are setting up for potential trading opportunities. 

Stock indices - The March S&P 500 cleared the daily Fibonacci .618 retracement last week. A rally above last week's one month high of 1209.80 should give the market room to challenge the contract high of 1220.50. A break out to new highs could push the market up to the major monthly Fibonacci .618 retracement at 1265.90. Near term support is at the current intermediate daily Fibonacci .618 retracement at 1181.80. Further support is located between the January low of 1164.50 and the major daily Fibonacci .382 retracement at 1160.10. If the market does not stabilize here it could decline to 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 continued to cover more of their net short position to become the least bearish in three months. Large traders (hedge funds) are holding the biggest net short position since mid-August. Small traders are still holding a large net long position.

The March NASDAQ 100 find near term resistance at the major daily Fibonacci .382 retracement at 1545.50 in confluence with last week's high of 1546.00. Further resistance is at the daily Fibonacci .618 retracement at 1583.50. If the rally does not stop here the market may challenge the contract high of 1645.00. A break out to new contract highs could take the NASDAQ 100 right 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 the market does not stabilize here look for a decline to the major weekly Fibonacci .382 retracement at 1318.80 or even last year's low of 1302.00. Open Interest is slightly higher. The NASDAQ 100 should move lower in February.  Commercial interests are holding the biggest net short position in nearly seventeen months. Large traders are holding the biggest net short position since mid-September. Small traders increased the size of their record size net long position again.

Interest rates - March T-bonds decided not to let the major weekly Fibonacci .618 retracement hold it back. If the market can take out last week's new ten and a half month high of 117-12 it should have no problem challenging last year's weekly high of 117-26. If bonds do not stop here they could keep running to the major weekly Fibonacci .786 retracement at 119-24. Near term support is at last week's low of 115-16 (T-bonds have made higher weekly highs and higher weekly lows for six consecutive weeks) and the 18-day Moving Average that it has not closed below for over a month. A break below this near term support could ignite a sell off to the current major weekly Fibonacci .382 retracement at 111-29. Further support is at the current major weekly Fibonacci .618 retracement at 108-17. The March NOB spread (T-notes vs. T-bonds) finds near term resistance at last week's new all-time high of 3-29 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 1-00 premium T-bonds. Further support is at the November low of 27/32nds premium T-notes in confluence with the daily December low of 25/32nds premium T-notes and the current major daily Fibonacci .618 retracement at 25/32nds premium T-notes. Open Interest hit another record high again. The %R overbought/oversold indicator shows that T-bonds are overbought on the weekly chart. T-bonds have a seasonal tendency to move lower in February.   Commercial interests sold off their big net long position and are once again holding a significant net short position . Large traders are holding a large net long position again. Small traders are the least bearish in three months.

March T-notes find near term resistance at last week's three and a half month daily high of 113-125. Further resistance is at the contract high of 113-165. A break out to new contract highs should take T-notes to the weekly September high of 114-12. If the rally does not end here expect the market to make a run for 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 112-155 (T-notes have only broken a previous week's low once in the last five weeks) and the 18-day Moving Average that it has not closed below for a month. A break below this near term support could cause a decline to the current intermediate weekly Fibonacci .618 retracement at 110-10 in confluence with the December low of 110-085. Further support is at the current intermediate weekly Fibonacci .786 retracement at 109-065. Failure to stabilize here may result in a drop to the major daily Fibonacci .618 retracement at 107-20. Open Interest hit a new all-time high. T-notes have a seasonal tendency to decline in February. Commercials are sold nearly a third of their large net long position from the previous week but they are still bullish. Large traders (hedge funds) covered some of their net short position last week. Small traders are holding a near record net short position.

International bonds - March Canadian 10-year bonds find near term resistance at last week's new contract high of 113.78. Further resistance is at the 114 mark. Near term support is at last week's low of 113.18 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 120.98. A rally above it should allow it to continue it's move to the 122 level. Near term support is at last week's low of 120.17 (Euro bunds have only broken a previous week's low once in the last six weeks) and the 18-day Moving Average that it has closed below only once in the last month. A break below it could cause a trend reversal and send bunds to the late December low of 118.11.  March London long gilts find near term resistance at last week's one and a half month high of 112.48. If the market can rally past this high expect it to visit the contract high of 112.65. A break out to new contract highs could send gilts flying on a rampage to the psychological 115 mark. Near term support is at last month's 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. A break below these lows could cause a slide to the major daily Fibonacci .618 retracement at 108.48 in confluence with the daily October low of 108.45.  March Australian 10-year bonds find near term resistance at last week's nearly one month high of 94.75. Further resistance is at the January high of 94.805. After that look for the market to hit 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. Near term support is at last week's low of 94.60. Further support is at the January low of 94.46 in confluence with the November low of 94.445. A break below these lows could smash this market down to the major weekly Fibonacci .618 retracement at 94.25.  March JGB's  (Japanese gov't. bonds) signaled a trend change last week when it broken a previous week's low for the first time in six weeks and also closed back below the 18-day Moving Average for the first time in a month. Near term support is at last week's low of 138.58. After that the market could quickly test the late December reaction low of 138.21. A break below it could hammer the market down to the major weekly Fibonacci .382 retracement at 137.36. Near term resistance is at the contract high of 139.96. Further resistance is at the weekly 2004 high near 140.50.

Currencies - The US dollar index finds near term resistance at the major daily Fibonacci .382 retracement at 85.40 in confluence with last week's three month high of 85.46. Further resistance is clustered between the monthly 18-bar Moving Average at 87.68 (the US dollar index has not closed above the monthly 18-bar Moving Average in nearly three years), the intermediate weekly Fibonacci .618 retracement at 87.91 (as measured between last year's weekly high of 92.50 and last year's weekly low of 80.48) and the major daily Fibonacci .618 retracement at 88.43. Near term support is at last week's low of 84.38(the US dollar index has made higher weekly lows for six consecutive weeks) and the 18-day Moving Average that it has not closed below for over a month. A break below it could immediately take the greenback to the current daily Fibonacci .618 retracement at 82.38. Failure to stabilize here may allow the buck to slide to an important technical support zone between the contract low of 80.48 and the 1995 low of 80.14. Bigger support is found at the 1992 low of 78.43. Open Interest is flat. The %R overbought/oversold indicator shows that the greenback is near overbought on the daily chart and near oversold on the monthly chart. The Seasonal index shows that the dollar should move sideways to slightly higher in February.  Commercial interests are holding a net short position for the first time since Memorial Day. Large traders are the least bearish since late June. Small traders are the most bullish since early May.

The March Canadian dollar fell thru the major daily Fibonacci .382 retracement last week and then reversed back up. If last week's low of .7945 is violated look for the "looney" to quickly hit the major daily Fibonacci .618 retracement at .7656. Near term resistance is at last week's high of .8091 (the Canadian dollar has made lower weekly highs for three out of the last four weeks) and the 18-day Moving Average that it has not closed above for a month. A break out above it could take the market back up to the current daily Fibonacci .382 retracement at .8167. Further resistance is at the current daily Fibonacci .618 retracement at .8304 or even the January high of .8370. Open Interest is flat. 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 net short for the first time since then. Small traders are neutral.

The March Australian dollar finds near term resistance at last week's two and a half month high of .7848. 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. Near term support is at last week's low of .7591 in confluence with the weekly 18-bar Moving Average that it has not closed below for five months. A drop below it could allow the market to visit last month's low of .7475. (The Aussie dollar has only broken a previous monthly low once in the last seven months). If this low is broken the market could quickly drop to the major daily Fibonacci .382 retracement at .7394 in confluence with the December low of .7388. Bigger support is waiting at the October low of 71 cents in confluence with the major daily Fibonacci .618 retracement at .7094. Open Interest is almost at a two month high. The %R overbought/oversold indicator shows that the Aussie is overbought on the daily, weekly, and monthly charts.  Commercials are holding a near record size net short position. Large traders (hedge funds) are holding a near 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 .0236 (about two and a third cents) premium Canadian dollar. Further support is at the major weekly Fibonacci .618 retracement at .0148 (about one and a half cents). Near term resistance is at the current major daily Fibonacci .382 retracement at .0522 (about five and a quarter cents) premium Canadian dollar. Further resistance is found at the January high of .0694 (about seven cents) premium Canadian dollar in confluence with the current major daily Fibonacci .618 retracement at .0699 (about seven cents) premium Canadian dollar. If the rally does not end here the spread could make it to the current major daily Fibonacci .786 retracement at .0825 (about eight and a quarter cents) premium Canadian dollar or even the November high of .0878 (about eight and three-quarter cents) premium Canadian dollar.

The March British pound finds near term resistance at the current February high of 1.8890. Further resistance is at the daily Fibonacci .618 retracement at 1.9071. If sterling can make it past this price barrier look for a run to the contract high of 1.9446 or the weekly December high of 1.9500. Near term support is found at last week's two and a half month low of 1.8456. 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 %R overbought/oversold indicator shows that sterling is near oversold on the daily chart. The pound has a seasonal tendency to drop in February.  Commercials are the least bearish since October. Large traders (hedge funds) are the least bullish since late October. Small traders are neutral to bullish.

The March Swiss franc plunged thru the intermediate daily Fibonacci .382 retracement last week and tested an intermediate weekly Fibonacci .618 retracement. Near term support is located at last week's three and a half month low of .8169 and followed closely by the major daily Fibonacci .618 retracement at .8131. A break below these lows should take the market right down to the psychological 80 cent mark. Near term resistance is at last week's high of .8319 (the Swiss franc 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 allow the Swissie to test the current daily Fibonacci .618 retracement at .8616. Further resistance is at the current daily Fibonacci .786 retracement at .8737. Open Interest is flat. The %R overbought/oversold indicator shows that the Swiss franc is still near oversold on the daily chart. The Seasonal index shows that the Swiss franc usually moves sideways for most of February and then declines in the last week of the month.  Commercial interests are holding the biggest net long position since September of 2003. Large traders are holding the biggest net short position since then. Small traders are holding the biggest net short position since May.

The March Euro currency finds near term support at last week's three month low of 1.2735. Further support is at the major daily Fibonacci .618 retracement at 1.2490. After that look for the Euro to test the monthly 18-bar Moving Average at 1.2406. (The Euro has not closed below the monthly 18-bar Moving Average in about three years). Near term resistance is at last week's high of 1.2910 (the Euro 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 down trend and take the Euro back to the current major daily Fibonacci .618 retracement at 1.3323. Further resistance is at the current major daily Fibonacci .786 retracement at 1.3483. Open Interest is flat. The %R overbought/oversold indicator shows that the Euro is near oversold on the daily chart. Seasonally, the Euro should continue to drop substantially in February.

The March Japanese yen broke a previous month's low for the first time since July. This could be an indication of bigger things to come. A break below last week's three and a half month low of .009375 could take the yen right to the major daily Fibonacci .618 retracement at .009254. Further support is at the psychological .009000 mark. Near term resistance is at last week's high of .009636. (The yen has made lower weekly highs for the last four 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. Open Interest is flat. The %R overbought/oversold indicator shows that the yen is near oversold on the daily chart. The yen has a seasonal tendency to move sideways to lower in February.  Commercial interests are now net long for the first time in four months. Large traders are holding the biggest net short position since then. Small traders are the least bullish since then.

Metals - April gold finds near term support at last week's four and a half month low of $411.50 followed closely by the major daily Fibonacci .618 retracement at $410.70 and the monthly 18-bar Moving Average at $408.80. (Gold has not closed below the monthly 18-bar Moving Average since July of 2001). If gold does not stabilize in this area it could plummet to the major monthly Fibonacci .382 retracement at $378.30 or even last year's monthly low of $372.00. Near term resistance is at last week's high of $423.40 (gold has made lower weekly highs for five out of the last six weeks) and the 18-day Moving Average that it has closed below most of the time over the last month. A break out above it could allow gold to rally back up to the current daily Fibonacci .382 retracement at $430.20. If it does not stop here it may be headed to the current daily Fibonacci .618 retracement at $441.70. Further resistance is at the contract high of $460.40. Open Interest is at the lowest level since mid-September. The %R overbought/oversold indicator shows that gold is near 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 August of 2002. Large traders (hedge funds) are holding the smallest net long position since September of 2002. Small traders are neutral.

March silver made an outside reversal up on the weekly chart last week when it took out the previous week's low and then reversed to take out the previous week's high. This is bullish price action. Near term resistance at last week's two month high of $7.24. Further resistance is at the daily Fibonacci .618 retracement at $7.515. A strong break out above this level may send the market to test the daily Fibonacci .786 retracement at $7.83 or fill the huge gap on the daily chart at $.86. Near term support is at last week's low of $6.49. Further support is found at the monthly 18-bar Moving Average at $6.435 (silver has not closed below the monthly 18-bar Moving Average since June 2003) followed by the January low of $6.35. A break below last month's low could hammer silver down to the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. After this support level silver could head to last year's weekly low of $5.51. Open Interest is at the lowest level in over four months. The %R overbought/oversold indicator shows that silver is overbought on the daily chart. 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 June. Large traders (hedge funds) are the least bullish since late September. Small traders are neutral.

March copper finds near term support at the current February 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 copper does not recover from this area it could plummet 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 found between the contract high of 147.75 in confluence with the 2004 weekly high of 148.20. If copper can clear this resistance zone it may run to the 1988 multi-decade high of 160.65. Open Interest is flat. 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 finds near term support at last week's one month low of $44.60 followed by the intermediate daily Fibonacci .618 retracement at $44.44. Further support is located 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. If the market does not slow down at this barrier it could run back up to the contract high of $54.00. Open Interest almost matched the all-time high. The Seasonal index shows that crude oil should move sideways to lower in February.  Commercial interests are neutral to bearish on crude oil. Large traders are holding the biggest net long position since October. Small traders remain bearish.

March Unleaded Gas finds near term support at last week's low of 120.50 in confluence with the intermediate daily Fibonacci .618 retracement at 120.23. Further support is at the daily December low of 109.00. If this low is broken gasoline may visit the weekly December low of 103.50. Near term resistance is at the January high of 138.40. Further resistance is at the weekly October high of 144.50. If this high is exceeded gasoline may challenge last year's all-time high of 147.00. Open Interest is not too far from the all-time high. Seasonally, gasoline should decline in February.  Commercials interests are holding the biggest net short position since late October. Large traders are holding the biggest net long position since early October. Small traders are holding the biggest net long position since late October.

March natural gas finds near term resistance at last week's high of 6.27. (March natural gas has made lower weekly highs and lower weekly lows for three consecutive weeks). If this high is exceeded the market may test the January high of 6.72. (March natural gas has made lower monthly highs and lower monthly lows for three consecutive months). A break out above last month's high should clear the way for the market to hit 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 5.95. Further support is at the contract low of 5.77. A break to new contract lows could push March natural gas down to the psychological 5.00 mark. Open Interest is flat at high levels. 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 made an outside reversal down on the weekly chart when it took out the previous week's high and then turned and took out the previous week's low. This is bearish price action. A break below last week's low of 86.65 and the January 24th reaction low of 86.55 should take the market right to the January low of 85.65. (April cattle has only broken a previous month's low once in the last four months). A break below last month's could send the market to the December low of 83.45. Further support is at the November low of 82.00. Near term resistance is at last week's high of 89.62. Further resistance is at 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. After that the market could be headed up to the major weekly Fibonacci .786 retracement at 97.00. Open Interest reached another new all-time high. The Seasonal index shows that cattle should rally in a choppy fashion in February. Commercials are holding the biggest net short position since late October. Large traders (hedge funds) are holding the biggest net long position in eight months. Small traders are holding the biggest net short position in over four years.

March feeders are holding the biggest net short position since late October. Large traders (hedge funds) are holding the biggest net long position in eight months. Small traders are holding the biggest net short position in over four years.  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 find near term support at last week's one and a half month low of 71.65. A break below it could ignite a sell off to the major daily Fibonacci .382 retracement at 68.97 in confluence with the December low of 68.70. Near term resistance is at last week's high of 74.85. (April lean hogs have made lower weekly highs for three consecutive weeks). A rally above it could allow the market to test the current daily Fibonacci .618 retracement at 75.95. Further resistance is at the contract high of 78.60. A break out to new contract highs could send April hogs back up to the 2004 weekly high of 82.70. Open Interest is flat. The %R overbought/oversold indicator shows that hogs are oversold on the daily chart. Hogs have a seasonal tendency to drop substantially in February.  Commercials are holding their smallest net short position in three months. Large traders (hedge funds) are holding the smallest net long position since late October. Small traders are holding a very large short position.

Grains - March soybeans is starting to act bullish. The market took out the previous week's high and closed above the 18-day Moving Average for the first time in a month. It also tested the current minor daily Fibonacci .382 retracement. Near term resistance is at last week's high of $5.284. Further resistance is at the current intermediate daily Fibonacci .382 retracement at $5.61 in confluence with the November high of $5.65. If the rally does not end here look for March soybeans to test technical resistance clustered between the current intermediate daily Fibonacci .618 retracement at $5.994, the major daily Fibonacci .382 retracement at $6.086, and a daily chart gap between $6.06 and $6.23. Near term support is at the current contract low of $4.984. A weak close below it could keep March soybeans headed for the 2002 low of $4.154 or the 1999 multi-decade low of $4.014. Open Interest is almost at an eleven month high. The %R overbought/oversold indicator shows that beans are oversold on the 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 are holding a near record size net long position. Large traders are holding a near record size net short position. Small traders are the least bearish in six months.

March soy meal is acting bullish. The market made an outside reversal up on the weekly chart last week when it took out the previous week's low and then reversed to break out above the previous week's high. The market also closed above the 18-day Moving Average for the first time in nearly a month. This is bullish price action. Near term resistance is found at last week's high of $158.60 in confluence with the January 26th reaction high of $159.50. A rally above this price zone 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 $185.30. Near term support is located between last week's new contract low of $148.10 and the weekly 2002 low of $145.40. Further support may not be found again until the 1999 multi-year low of $120.30. Open Interest is at the highest level since April. The %R overbought/oversold indicator shows that meal is oversold on the weekly and monthly charts. Seasonally, soy meal should post an important seasonal low in mid-February.  Commercials once again increased the size of their record net long position. Large traders (hedge funds) increased the size of their record net short position as well. Small traders remain very bearish.

March bean oil signaled a trend change last week. The market hit a one month high and also closed above the 18-day Moving Average for the first time in a month and a half. Near term resistance is at last week's high of 20.13 followed by the January high of 20.55. (March bean oil has made lower monthly highs for the last four months). A break out above last month's high could allow March bean oil to visit the current intermediate daily Fibonacci .382 retracement at 21.41 or the December high of 21.63. Another technical resistance zone is located 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. Near term support is at the contract low of 18.82 in confluence with the major weekly Fibonacci .786 retracement at 18.81. Further support is at the psychological 18 cent mark. Open Interest is at an eleven month high. The %R overbought/oversold indicator shows that bean oil is oversold on the weekly chart. Bean oil has a seasonal tendency to rally from February thru May.  Commercial interests increased the size of their record net long position again. 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 signaled a trend change last week. The market rallied above the previous week's high and closed above the 18-day Moving Average for the first time in nearly a month. A break out above last week's high of $1.996 could cause a bigger short-covering rally and send corn to the January high of $2.096. (March corn has made lower monthly highs for eight consecutive months). If the market can clear last month's high expect it to test 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. After that March corn may be headed for a bigger 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. Near term support is found between the contract low of $1.942 and the 2002 low of $1.914. Further support is at the 2001 low of $1.84. Open Interest is at a ten month high. The %R overbought/oversold indicator shows that corn is still oversold on the 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 are holding their record net long position. Large traders (hedge funds) increased the size of their record size net short position again. Small traders remain very bearish.

March rice finds near term support at the 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 6.77 and the 18-day Moving Average that it has not closed above for a month and a half. If this happens look for the market to run 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 the highest level since mid-October. The %R overbought/oversold indicator shows that rice is oversold on the weekly chart. 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 find near term support at last week's low of $1.606. A break below it should let this market quickly test 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 these lows do not hold expect the market to hit 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. The %R overbought/oversold indicator shows that oats are overbought on the weekly chart. 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 are holding the biggest net short position since mid-May. Large traders (hedge funds) are holding the biggest net long position since early May. Small traders remain neutral.

March wheat is sure acting bullish. The market took out the previous week's high for the first time in five weeks and closed above the 18-day Moving Average for the first time in a month. A rally above last week's high of $2.976 could send wheat 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. Further resistance is at the November high of $3.314 followed closely by the October high of $3.36. Near term support is located between the 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. Open Interest reached a new all-time high again. 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 again. Large traders increased the size of their record net short position as well. Small traders are the least bullish since August.

Softs - March coffee finds near term resistance at last week's new multi-year high of 115.30. Further resistance is at the July of 2000 high of 119.00. If this high is taken out coffee may hit the 2000 high of 126.00. Near term support is at last week's low of 110.40 (March coffee has made higher weekly lows and higher weekly highs for the last four weeks) and the 18-day Moving Average that it has not closed below for a month. A break below this near term support could potentially reverse the up trend and take coffee down to technical support between the current major daily Fibonacci .382 retracement at 98.50 and the current January low of 95.10. (March coffee has made higher monthly lows for five consecutive months). A break below last month's low could cause a decline to the current major daily Fibonacci .618 retracement at 88.10. Further support is at the current major weekly Fibonacci .382 retracement at 87.10. Open Interest is high. The %R overbought/oversold indicator shows that coffee is overbought on the daily, weekly, and monthly charts. Seasonally, coffee should rally in February.  Commercials are still holding a near record net short position. Large traders (hedge funds) are still holding a near record net long position. Small traders are neutral.

March cocoa finds near term resistance at last week's nearly two month high of $1,621. A rally above it could send the market 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 the current daily Fibonacci .382 retracement at $1,561 in confluence with last week's low of $1,530. (March cocoa has made higher weekly lows for the last four weeks). Further support is at the current daily Fibonacci .618 retracement at $1,524. A break below it could allow the market to slip back down to the January low of $1,464. Further support is at the daily October low of $1,408. 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 increased the size of their large net short position. Large traders increased the size of their large net long position again. Small traders also increased the size of their large net long position.

March sugar finds near term support at an intermediate daily Fibonacci .618 retracement at 8.72 in confluence with the current February 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. After that the market could drift down to the 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 January high of 9.33 and the contract high of 9.37. Further resistance is at the intermediate weekly Fibonacci .786 retracement at 10.02. A strong close above ten cents could send sugar soaring to the 2000 high of 11.40 in confluence with the major monthly Fibonacci .618 retracement at 11.45. Open Interest is still near the 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 near record size net short position. Large traders (hedge funds) are holding a near record size net long position. Small traders are holding the largest net long position on record.

March orange juice finds near term resistance at last week's one month high of 86.75. 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. Near term support is at last week's low of 83.50. (OJ has not broken a previous weekly bar low in the last five 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 broken OJ could quickly hit the major daily Fibonacci .618 retracement at 74.95. Further support is at the weekly November low of 69.20. Open Interest is at the highest level since mid-December. The %R overbought/oversold indicator shows that OJ is near overbought on the weekly chart. Seasonally, OJ should drop sharply in February.  Commercial are the least bearish since mid-June. Large traders are holding the smallest net long position since the beginning of July. Small traders are the least bullish since September of 2003.

March cotton finds near term support between last week's low of 42.61 and the January low of 42.40. Further support is at the contract low of 41.72. If March cotton hits a new contract low it should head right to the October 2002 reaction low of 40.50 in confluence with the major monthly Fibonacci .786 retracement at 40.31. A clean break below 40 cents could cause the market to unravel further and hit to the 2002 low of 31.47 or the 2001 all-time low of 28.20. Near term resistance is at last week's high of 45.30. A rally above it may allow the market to creep back up to the January high of 48.31. If this high is exceeded the market may rally to 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 high. Cotton has a seasonal tendency to drop sharply in the first week of February and then run higher until mid-March.   Commercials more than doubled the size of their net long position from last week. Large traders (hedge funds) increased the size of the net short position. 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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