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Monthly Market Watch
The
Future is in Futures
by Pearce
Financial, LLC
APRIL 2005
Based
on last week's trading activity & reports,
the following markets are setting up for potential trading
opportunities.
Stock indices - The June S&P 500 looks like it has ended the short-term down trend. After making lower weekly lows for four weeks and lower weekly highs for three weeks the market rallied above a two week high and closed back above the 18-day Moving Average for the first time in nearly a month. A rally above last week's high of 1195.70 should confirm that the up trend has resumed. This should clear the path for the S&P 500 to test the current daily Fibonacci .618 retracement at 1208.40. Further resistance is at the contract high of 1234.10. 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 clustered between the daily March low of 1166.80, the current minor weekly Fibonacci .382 retracement at 1165.00 (as measured between last year's weekly low of 1060.20 and this years' current weekly high of 1229.80), and this year's current weekly low of 1064.50. A break below it should immediately trigger a sell off to the monthly 18-bar Moving Average at 1140.00. This is an important area to watch for buy set ups. The S&P 500 has not closed below the monthly 18-bar Moving Average since May of 2003. A close below this monthly 18-bar Moving Average would be a warning sign that an important trend change could be under way. This occurrence could quickly break the market to the psychological 1100 mark. Further support is located between last year's weekly low of 1060.20 and the major weekly Fibonacci .382 retracement at 1053.20. 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 make a decline in mid-April and then rebound quickly. Commercials are holding the smallest net short position in five months. Large traders (hedge funds) are still holding about the same size of a big net short position they had back in August. Small traders are holding the smallest net long position in over four months.
The June NASDAQ 100 made an outside reversal down on the weekly chart at the end of March. This was bearish price action. Then the market reversed last week and took out a two week high. It look's like the bull has conquered the bear once again. A rally above last week's high of 1511.00 could send the market back up to the daily March high of 1563.50 or the current major daily Fibonacci .618 retracement at 1576.00. Further resistance is at this year's current high of 1643.00. A break out to new contract highs could send the NASDAQ 100 soaring to the December 2001 high of 1738.00. A break below the March low of 1466.00 should allow the market to quickly test the minor weekly Fibonacci .618 retracement at 1432.20. Bigger support is found between the major weekly Fibonacci .382 retracement at 1319.80 and last year's low of 1302.00. Open Interest is at multi-month lows. The NASDAQ 100 should move sharply lower in the first half of April and then recover in the second half of the month. Commercial interests are holding the biggest net long position in three and a half months. Large traders (hedge funds) have hardly budged on the big net short position they have been holding for two months. Small traders are holding the smallest net long position in nearly four months.
Interest rates - June T-bonds snapped out of their down trend after the monthly unemployment report on April Fool's day. The market cracked above the previous week's high and closed above the 18-day Moving Average for the first time since mid-February. A rally above last week's high of 110-00 and the April 1st high of 110-02 should take the market right to the major daily Fibonacci .618 retracement at 110-23. Further resistance is at the contract high of 112-16. A break out to new contract highs should allow June T-notes to test this year's weekly September high of 113-125. If the rally does not end here T-notes could easily test the weekly September high of 114-12. Near term support is found at the double bottom at this year's current weekly low of 107-265 and last year's weekly low of 107-255. A clean break below it could hammer the market down to the 105-00 area very quickly. Open Interest hit is still near the all-time high. T-notes have a seasonal tendency to move sideways in the first half of April and then decline in the second half of the month. Commercial sold just a fraction of their record net long position. Large traders (hedge funds) are holding a near record net short position. Small traders covered a small amount of their record net short position.
June T-notes find near term support clustered between last week's multi-month low of 109-12, the major daily Fibonacci .382 retracement at 109-07, and the intermediate weekly Fibonacci .786 retracement at 109-065. If the market does not stabilize here look for a decline to the major daily Fibonacci .618 retracement at 107-065. Near term resistance is found at last week's high of 110-18 (T-notes have made lower weekly lows and lower weekly highs for three consecutive weeks) in confluence with the current daily Fibonacci .382 retracement at 110-185. If the market makes it past this mark it should go to the current daily Fibonacci .618 retracement at 111-10. A rally above it could take June T-notes to the contract high of 112-16. A break out to new highs should send this market up to the weekly February high of 113-125. Open Interest pulled back slightly from the all-time high. The %R overbought/oversold indicator shows that T-notes briefly reached oversold territory on the daily chart. T-notes have a seasonal tendency to drop sharply in March. Commercials sold just a fraction of their record net long position. Large traders (hedge funds) are holding a near record net short position. Small traders covered a small amount of their record net short position.
International bonds - June Canadian 10-year bonds find near term resistance at last week's high of 112.06 in confluence with the daily March high of 112.11. Further resistance is at the contract high of 112.97. A break out to new contract highs should clear the path for Canadian bonds to test this year's weekly high of 113.78. Near term support is at the current daily Fibonacci .618 retracement at 110.81. A break below it could allow the market to slip back down to the contract low of 110.04 June Euro bunds find near term resistance at last week's multi-week high of 119.37. A strong close above it could allow the market to challenge the contract high of 120.02. Further resistance is at the all-time high of 120.98. Near term support is at last week's low of 118.59. (June Euro bunds have made higher weekly lows for the last four weeks). Further support is at the current daily Fibonacci .618 retracement at 117.84. A break below it could send the June Euro bunds down to the contract low of 116.89. June London long gilts find near term resistance at the major daily Fibonacci .618 retracement at 110.51 in confluence with last week's one and a half month high of 110.55. A break out above this barrier could send the market to the daily February high of 111.86. Further resistance is at this year's weekly high of 112.48. Near term support is at last week's low of 109.65. (June gilts have made higher weekly lows for the last four weeks). Further support is at the current daily Fibonacci .618 retracement at 109.17. A break below it could allow the market to test the contract low of 108.32. June Australian 10-year bonds find near term resistance at last week's one month high of 94.455. Further resistance is at the daily Fibonacci .618 retracement at 94.53. After that look for the market to make a run for this year's high on the daily chart at 94.75. Near term support is at the current daily Fibonacci .618 retracement at 94.28. Further support is at the contract low of 94.175. June JGB's (Japanese gov't. bonds) find near term resistance at the contract high of 139.71. Further resistance is at the weekly 2004 high of 140.45. Near term support is at last week's low of 139.02 (June JGB's have made higher weekly lows for five consecutive weeks) and the 18-day Moving Average that it has not closed below for nearly a month. A break below this near term support could cause a bigger correction and take the market down to the current daily Fibonacci .618 retracement at 138.14. If JGB's do not stabilize here they may be on their way to the contract low of 137.17.
Currencies - The US dollar index finds near term resistance between last week's two month high of 85.10 and the daily February high of 85.47. A break thru this price barrier could allow the market to test 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). Further resistance is at the psychological 90 cent mark. Near term support is at last week's low of 84.31. (The US dollar index has made higher weekly lows for the last four weeks). A break below it could cause the greenback to tumble down to the current major daily Fibonacci .618 retracement at 82.49. Further support is at the daily March low of 81.24. If this low is broken expect the buck to get whacked hard and visit last year's weekly low of 80.48 or the 1995 low of 80.14. Open Interest is sitting flat at the same levels it was at in January and most of February. The %R overbought/oversold indicator shows that the greenback is overbought on the daily chart and near oversold on the monthly chart. The Seasonal index shows that the dollar should move decline in April. Commercial interests are holding their biggest net short position since late May. Large traders are net long for the first time since then. Small traders are slightly bullish on the buck.
The Canadian dollar finds near term daily resistance clustered between the March high of .8357, the January high of .8370, and the major daily Fibonacci .786 retracement at .8379. A break out above it could send the "looney" right up to the contract high of .8495. Further resistance will be near by at last year's weekly high of .8530. Near term support is found between last week's one month low of .8121 and the daily Fibonacci .618 retracement at .8107. Further support is at the February low of .7952. Open Interest is at a two month low. Seasonally, the Canadian dollar has a tendency to rally sharply in April. Commercial interests are holding the biggest net short position in over four months. Large traders are holding the biggest net long position since late November. Small traders are neutral.
The Australian dollar finds near term resistance at last week's high of .7705. (The Aussie dollar has made lower weekly highs and lower weekly lows for the last four weeks). A rally above it should allow the market to test the current daily Fibonacci .618 retracement at .7859. Further resistance is at the contract high of .7933. Near term support is located between last week's low of .7588 and the daily February low of .7564. A break below these lows should cause the Aussie to quickly test this year's weekly low of .7475 or the monthly 18-bar Moving Average at .7442. (The Aussie dollar has not closed below the monthly 18-bar Moving Average on over three years). If the market does not rebound from this support level expect it to the intermediate weekly Fibonacci .618 retracement at .7212. Open Interest is at a two month low. The %R overbought/oversold indicator shows that the Aussie is oversold on the daily chart but near overbought on the monthly chart. Seasonally, the Australian dollar has a tendency to rally for the first half of April and then move sideways to slightly lower for the remainder of the month. Commercials are now the least bearish in six months. Large traders (hedge funds) are the least bullish since then. Small traders are holding their smallest net long position since late September.
The March Canadian dollar/Australian dollar spread finds near term resistance at the daily Mach closing high of .0591 (about six cents) premium Canadian dollar. Further resistance is found at the current major daily Fibonacci .618 retracement at .0732 (about seven and a third cents) premium Canadian dollar in confluence with the January high of .0746 (about seven and a half 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 .0861 (about eight and a half cents) premium Canadian dollar. Near term support is at the current daily Fibonacci .618 retracement at .0385 (just under four cents) premium Canadian dollar. Further support is at the daily spread low of .0257 (about two and a half cents).
The British pound finds near term resistance at last week's high of 1.8800. (Sterling has made lower weekly highs for the last four weeks). A rally above it could allow the market to test the current daily Fibonacci .618 retracement at 1.8958. Further resistance is at the daily March high of 1.9227. If sterling can make it past this high expect it to quickly hit the contract high of 1.9350. Near term support is found between the daily March low of 1.8524 and this year's current weekly low of 1.8456. Further support is just a little further at the monthly 18-bar Moving Average at 1.8351. (The pound has not closed below the monthly 18-bar Moving Average in over three years). Open Interest is sitting flat at a two month low. The %R overbought/oversold indicator shows that sterling is near oversold on the daily chart and near overbought on the monthly chart. The pound has a seasonal tendency to make a strong rally in mid-April and then move sideways for the rest of the month. Commercials are neutral to bearish on sterling right now. Large traders (hedge funds) are neutral to bullish. Small traders are also neutral to bullish.
The Swiss franc finds near term support between last week's nearly two month low of .8269 and the daily February low of .8216. Further support is clustered between the intermediate weekly Fibonacci .382 retracement at .8173, this year's current weekly low of .8169, and the monthly 18-bar Moving Average at .8156. (The Swissie has not closed below the monthly 18-bar Moving Average in over three years). If support is not established in this area the market could plunge to the intermediate weekly Fibonacci .618 retracement at .7729. Near term resistance is at last week's high of .8390. (The Swiss franc has made lower weekly highs for three consecutive weeks). A break out above it could allow the Swissie to test the current daily Fibonacci .618 retracement at .8570. Further resistance is at the daily March high of .8756. Open Interest is near multi-month lows. 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 in April. 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 Euro currency finds near term support between last week's nearly two month low of 1.2822 and the daily February low of 1.2762. Further support is at the monthly 18-bar Moving Average at 1.2581. (The Euro has not closed below the monthly 18-bar Moving Average in over three years). This is closely followed by the minor weekly Fibonacci .618 retracement at 1.2487. If the Euro does not stabilize here it may be doomed to test the $1.20 level again. Near term resistance is at last week's high of 1.2962 (the Euro has made lower weekly highs for the last four weeks). A break out above it could allow the Euro to come up for air and test the current daily Fibonacci .618 retracement at 1.3247. Further resistance is at the daily March high at 1.3510. Open Interest is stabilizing near multi-month lows. The %R overbought/oversold indicator shows that the Euro is oversold on the daily chart. Seasonally, the Euro should moves sideways for most of April and then decline slightly in the latter part of the month.
The Japanese yen finds near term support at last week's five and a half month low of .009233. Further support is at the psychological .009000 mark. If the decline does not end here look for a drop to last year's low of .008710. Near term resistance is at last week's high of .009350. (The yen has made lower weekly highs for three consecutive weeks). A rally above it could send the market to the current major daily Fibonacci .382 retracement at .009499. If the rally does not end here look for it to test the current major daily Fibonacci .618 retracement at .009664 or even the daily March high of .009725. Open Interest is staring to recover from the six month low it hit a couple of weeks ago. The %R overbought/oversold indicator shows that the yen is oversold on the daily chart. The yen has a seasonal tendency to move higher in the first half of April and then sideways for the rest of the month. Commercial interests are holding the largest net long position since August of 2003. Large traders are holding the biggest net short position since January of 2001. Small traders are holding their biggest net short position since October.
Metals - June gold finds near term support at last week's one and a half month low of $424.70. A break below it could send the market down to the monthly 18-bar Moving Average at $414.80 (gold has not closed below the monthly 18-bar Moving Average since July of 2001) in confluence with the daily February low of $414.00. Failure to establish support here could hammer gold 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 $430.50. (June gold has made lower weekly highs for the last four weeks). A break out above it could allow gold to rally back up to the current daily Fibonacci .618 retracement at $440.80. If the rally does not end here it may be headed to the daily March high of $450.80. Open Interest is flat. The %R overbought/oversold indicator shows that gold is oversold on the daily chart. The Seasonal index shows that gold should rally in the first week of April, then decline until the middle of the month, and finally level off and move sideways to slightly higher in the last week of the month. Commercials are holding a very large net short position in gold right now. Large traders (hedge funds) are holding a sizable net long position. Small traders are neutral.
May silver finds near term support at the March low of $6.83. A break below it could cause a sell off to the daily February low of $6.52 or the daily January low of $6.405. If these lows are broken silver could plunge to the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. Near term resistance at the current daily Fibonacci .618 retracement at $7.355. Further resistance is at the daily March high at $7.68. A strong break out above this high may send May silver up the major daily Fibonacci .786 retracement at $7.88. Open Interest is flat. Seasonally, silver should drift lower in April. Commercials are neutral. Large traders (hedge funds) are also neutral on silver. Small traders are neutral as well.
May copper has been locked in a trading range for weeks. A break below the daily March low of 144.30 and the intermediate daily Fibonacci .382 retracement at 143.50 could send May copper down to the major daily Fibonacci .382 retracement at 138.70 in confluence with the intermediate daily Fibonacci .618 retracement at 138.10. If copper does not stabilize here expect a decline to the daily February low of 134.40. Near term resistance is at the contract high 152.10. A break out to new contract highs could send copper soaring to the 1988 multi-decade high of 160.65. Open Interest hit a new all-time high. The %R overbought/oversold indicator shows that copper is near overbought on the daily, weekly, and monthly charts. Copper has a seasonal tendency to move quietly lower in April. Commercials are neutral to bearish. Large traders (hedge funds) are neutral to bullish. Small traders are bearish on copper.
Energies - May crude oil finds near term resistance at last week's new all-time high of $58.20. Further resistance is at the psychological $60 mark. A strong close above sixty dollars could launch this market up to the $70's. Near term support is located between last week's low of $52.70 and the March 30th reaction low of $52.50. The current major daily Fibonacci .382 retracement lends support about a buck lower at $51.59. After that May crude oil could try to fill a daily chart gap between $50.15 and $49.50. Open Interest hit a new all-time high. The %R overbought/oversold indicator shows that crude oil is overbought on the monthly chart. The Seasonal index shows that crude oil should move higher until late April and then drop during the last week of the month. Commercial interests are holding the biggest net short position since May. Large traders are holding a new record size net long position. Small traders are neutral.
May Unleaded Gas made a huge outside reversal down on the weekly chart when it made a new all-time high and then reversed to break the lows of the previous two weeks. This is bearish price action. A break below last week's low of 151.00 could allow May gasoline to test the daily March low of 140.00 in confluence with the current major daily Fibonacci .618 retracement at 139.73. Near term resistance is at the current major daily Fibonacci .618 retracement at 165.71. Further resistance is at last week's new all-time high of 174.80. After that gasoline could test the psychological two dollar mark. Open Interest hit a new all-time high. The %R overbought/oversold indicator shows that gasoline is near overbought on the monthly chart. Seasonally, gasoline should rally sharply in April. Commercials interests are holding the biggest net short position in thirteen months. Large traders are holding a near record size net long position. Small traders are holding the biggest net long position in a year.
May natural gas finds near term resistance at the contract high of 7.850 in confluence with the weekly Fibonacci .618 retracement at 7.867. If the market does not slow down here expect it to hit the weekly Fibonacci .786 retracement at 8.453. Near term support is at last week's low of 7.200. (Natural gas has only broken a previous week's low on the weekly chart once in the last seven weeks). If this low fails to support the market look for a decline to the March 28th reaction low of 7.060 in confluence with the current major daily Fibonacci .382 retracement at 7.048. Further support is at the current major daily Fibonacci .618 retracement at 6.552. Open Interest is at the highest level since the summer of 2002. Natural gas has a seasonal tendency to move higher until late April and then decline during the last week of the month. Commercial interests are holding the biggest net short position since October. Large traders are holding the biggest net long position since then. Small traders are holding a record size net long position.
Meats - June live cattle find near term support at last week's one month low 83.40. A break below it could send the market to the current major daily Fibonacci .618 retracement at 81.80. Further support is at the daily February low of 80.80. Near term resistance is at last week's high of 85.95 in confluence with the current daily Fibonacci .618 retracement at 86.07. A strong close above this price level could allow June cattle to test the contract high of 87.70. Further resistance is at this year's current weekly high of 92.75 in confluence with the weekly December high at 92.95. Open Interest is near an all-time high. The Seasonal index shows that cattle should rally in the first week of April and then decline for the rest of the month. Commercials are neutral to bearish on cattle. Large traders (hedge funds) are holding a large net long position. Small traders are holding their biggest net short position in several years.
May feeders made an outside bar on the weekly chart when it made a new all-time high and then reversed to break a previous week's low for the first time in weeks. This is bearish price action. A break below last week's low of 103.75 could encourage a bigger sell off to the current major daily Fibonacci .382 retracement at 101.95 in confluence with the mid-March low of 101.90. If the decline does not end here the market may be headed to the current major daily Fibonacci .618 retracement at 98.95 in confluence with a daily chart gap between 99.20 and 98.80. Near term resistance is at last week's new contract high of 106.75. Further resistance is at the major weekly Fibonacci .618 retracement at 111.32. Open Interest is at the highest level in over five years. Seasonally, feeders should move slightly higher in the first half of April and then decline to an important seasonal low in the second half of the month. Commercial interests are the least bullish in nearly two years. Large traders are holding the biggest net long position since August of 2003. Small traders are holding the biggest net short position since September of 2003.
June lean hogs find near term support at last week's one and a half low of 76.45. A break below it could send the market right down to the daily February low of 75.50 or the major daily Fibonacci .382 retracement at 75.05. If the market does not stabilize here look for a decline to the major daily Fibonacci .618 retracement at 70.65 in confluence with the daily December low of 70.57. Near term resistance is located between the contract high of 82.20 and the 2004 weekly high of 82.70. A clean break out to new contract highs could send hogs screaming to the 1997 weekly high of 86.60. Open Interest is flat. The %R overbought/oversold indicator shows that hogs are oversold on the daily chart. Hogs have a seasonal tendency to move sideways in the first week of April and then rally sharply for the rest of the month. Commercials are holding their biggest net long position in fourteen months. Large traders (hedge funds) are still holding the smallest net long position since late October. Small traders remain very bearish and continue holding a sizable short position.
Grains - May soybeans find near term support at last week's one month low of $6.08. A break below it could spill the beans to the major daily Fibonacci .618 retracement at $5.736. If the market does not stabilize here it could test the major daily Fibonacci .786 retracement at $5.416. Near term resistance is at the March 31st reaction high of $6.61. Further resistance is at the contract high of $6.914. A strong close above it could cause a run to the $7.50 area. Open Interest is flat. The Seasonal index shows that soybeans usually move sideways to slightly higher in April. Commercial interests are holding the smallest net long position since August. Large traders are holding the largest net long position since July. Small traders are holding a huge net short position.
March soy meal finds near term support at last week's one month low of $181.30. Further support is at the major daily Fibonacci .618 retracement at $170.50. After that look for a decline to the major daily Fibonacci .786 retracement at $161.10. Near term resistance is found at the March 31st reaction high of $198.50. Further resistance is at the contract high of $205.00. A break out to new contract highs could send the market up to the major weekly Fibonacci .382 retracement at $235.20. Open Interest is at the lowest level since August. Seasonally, soy meal should move sideways to slightly higher in April. Commercials are holding a huge net short position. Large traders (hedge funds) are holding the biggest net long position since last summer. Small traders are the most bullish since October.
May bean oil finds near term support at last week's one and a half month low of 22.16. A break below it should knock another penny off the price and take the market right to the major daily Fibonacci .618 retracement at 21.20. If this retracement does hold look for May bean oil to test a daily chart gap between 20.55 and 20.33 or even tag the major daily Fibonacci .786 retracement at 20.24. Near term resistance is at the March 31st reaction high of 24.05. Further resistance is at the daily March high of 24.75. If this high is exceeded expect May bean oil to test the daily September high of 25.40. Open Interest is sitting flat at low levels. Bean oil has a seasonal tendency to rally in April. Commercial interests are holding the biggest net short position in eleven months. Large traders are holding their biggest net long position since last summer. Small traders are holding the biggest net long position in eleven months.
May corn finds near term support at last week's two month low of $2.03 in confluence with the contract low of $2.02. A break below two dollars could allow the market to slip down to last year's weekly low of $1.91. Further support is at the 2001 low of $1.84. Near term resistance is at the March 31st reaction high of $2.182. Further resistance is at the daily March high of $2.31. A rally above this high should allow the market to immediately test the major daily Fibonacci .618 retracement at $2.364. Open Interest is at a one year high. The %R overbought/oversold indicator shows that corn is oversold on the daily and monthly charts. The Seasonal index shows that corn should be flat in April. Commercials are neutral to bullish on corn. Large traders (hedge funds) decreased the size of their net long position over the last three weeks. Small traders are increasing the size of their huge net short position.
May rice finds near term support at last week's low of 6.79. A drop below it could allow the market to quickly test the daily Fibonacci .618 retracement at 6.69. Further support is at the contract low of 6.34. Near term resistance is at the daily March high of 7.25. Further resistance is at the current major daily Fibonacci .618 retracement at 7.675. Open Interest is at a one year high. Seasonally, rice should decline in April. Commercial interests are holding the biggest net short position since last June. Large traders (hedge funds) are holding the biggest net long position since then. Small traders are neutral to bullish.
May oats find near term support at the April 1st low of $1.52. A break below it should let this market quickly test the contract low of $1.464 or the major weekly Fibonacci .618 retracement at $1.422. Near term resistance is at the current daily Fibonacci .618 retracement at $1.68. Further resistance is at the daily March spike high of $1.776. If this high is exceeded expect oats to go right on up to last year's weekly high of $1.85. Open Interest is flat. Oats have a seasonal tendency to move sideways to lower in April. Commercials are holding the biggest net short position since mid-May. Large traders (hedge funds) are holding a very large net long position. Small traders are holding the biggest net long position since June.
May wheat finds near term support at last week's one and a half month low of $3.074. A break below it should take the market down to the contract low of $2.95. If May wheat hits a new contract low look for a drop to last year's weekly low of $2.824. Near term resistance is at last week's high of $3.23. (Wheat has made lower weekly highs and lower weekly lows for three consecutive weeks). A break out above it could allow for a rally to the current daily Fibonacci .618 retracement at $3.454. Further resistance is at a daily chart gap between $3.55 and $3.56 in confluence with the current daily Fibonacci .786 retracement at $3.56. Open Interest is just under the all-time high. The %R overbought/oversold indicator shows that wheat is nearing oversold on the daily chart. The Seasonal index shows that wheat should move sideways in April. Commercial interests are slightly bullish on wheat again. Large traders are now neutral. Small traders are holding the biggest net short position in years.
Softs - May coffee made an outside reversal down on the weekly chart when it took out the previous week's high by a tick and then reversed to plummet to the lowest level in nearly two months. The market broke a previous month's low for the first time since August. This kind of price action is very bearish. Near term support is found at last week's low of 114.75 in confluence with the major daily Fibonacci .618 retracement at 114.20. A break below it could cause an immediate decline to the major daily Fibonacci .618 retracement at 98.60 or this year's low on the daily chart at 97.40. Near term resistance is at last week's high of 128.85 in confluence with the previous week's high of 128.80 and followed closely by the current major daily Fibonacci .618 retracement at 130.05. Further resistance is at the contract high of 139.50. If this high is taken out coffee should test the 1999 high of 145.00 followed closely by the major weekly Fibonacci .382 retracement at 147.10. Open Interest is near the all-time high. The %R overbought/oversold indicator shows that coffee is oversold on the daily chart but still near overbought on the monthly chart. Seasonally, coffee should rally slightly in April. Commercials covered a small amount of their record net short position. Large traders (hedge funds) are still holding a near record net long position. Small traders are neutral.
May cocoa finds near term support at last week's two and a half month low of $1,510 in confluence with the major weekly Fibonacci .618 retracement at $1,509. Further support is at this year's current low on the weekly chart at $1,464. If this low is broken May cocoa could test the daily October low of $1,423. Near term resistance is at last week's high of $1,595. (Cocoa has made lower weekly highs and lower weekly lows for three consecutive weeks). A break out above it should allow the market to rally to the current daily Fibonacci .618 retracement at $1,640 or even the April 1st reaction high of $1,669. If the market does not stop here it could continue on to the daily Fibonacci .618 retracement at $1,720. Further resistance is at the current daily Fibonacci .786 retracement at $1,777. Open Interest is at a one month low. The %R overbought/oversold indicator shows that cocoa is oversold on the daily chart. Cocoa has a seasonal tendency to drop in the first week of April and then move sideways for the rest of the month. Commercial interests covered a small amount of their record net short position. Large traders covered a small amount of their record net long position. Small traders are neutral.
May sugar finds near term support at last week's six and a half month low of 8.39. Further support is at the psychological 8 cent mark. Near term resistance is located at last week's high of 8.72. (Sugar has made lower weekly highs and lower weekly lows for three consecutive weeks). Further resistance is at the current major daily Fibonacci .382 retracement at 8.85. If the rally does not end here look for May sugar to have a go at the current major daily Fibonacci .618 retracement at 9.13. Further resistance is found between the daily March high of 9.29 and the current major daily Fibonacci .786 retracement at 9.33. Open Interest is flat. The %R overbought/oversold indicator shows that sugar is staring to recover from oversold levels on the daily chart. The Seasonal index shows that sugar should move sideways for most of April and then decline sharply in the last week of the month. Commercials are holding the smallest net short position in thirteen months. Large traders (hedge funds) are holding the smallest net long position in thirteen months. Small traders are holding the smallest net long position in fourteen months.
May orange juice looks bearish. The market nearly formed a triple top on the daily chart. Then it made an outside reversal down on the weekly chart and traded at the lowest price in nearly a month. A break below last week's low of 94.30 should allow the market to hit the major daily Fibonacci .382 retracement at 91.20. Failure to stabilize here could send May OJ down to the major daily Fibonacci .618 retracement at 84.65. Near term resistance is at the contract high of 101.85. Further resistance is at the weekly 2002 high of 106.00. A break out above this high could carry May OJ to the major monthly Fibonacci .382 retracement at 112.40. Open Interest is at a six week high. The %R overbought/oversold indicator shows that OJ is near overbought on the weekly chart. Seasonally, OJ should drop in April. Commercial are the most bearish since mid-December. Large traders are holding the largest net long position since then. Small traders are the least bullish since September of 2003.
May cotton finds near term support at last week's low of 51.25. (May cotton has only broken a previous week's low once in the last eight weeks). Further support is found at the daily March low of 49.10. If the market can take out this low it should have no problem testing the major daily Fibonacci .618 retracement at 46.63. Near term resistance is clustered between the daily March high of 54.60, the weekly September high of 55.20, and the monthly 18-bar Moving Average at 55.57. If cotton can clear this price barrier expect it to quickly test the major weekly Fibonacci .382 retracement at 58.35. Open Interest is near the all-time high. Cotton has a seasonal tendency to rally sharply in April. Commercials are holding the largest net short position in fourteen months. Large traders (hedge funds) are holding the largest net long position since then. Small traders are holding the largest net long position in years.
Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.
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