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

Weekly Market Watch
The Future is in Futures
by Pearce Financial, LLC
May 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 tested critical support at the monthly 18-bar Moving Average and rebounded. This was a bullish indication since the market has not closed below the monthly 18-bar Moving Average in two years. Long term traders should now long this market with protective sell stops below the April low of 1136.80 or liquidating on a month end close below the monthly 18-bar Moving Average. A break below this support should take the market right down 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. If the June S&P 500 can take out the May 5th high of 1180.00 it could quickly run up to the daily April high of 1195.70 in confluence with the current daily Fibonacci .618 retracement at 1196.90. Further resistance is at the contract high of 1234.10. A break out to new highs could send the S&P 500 screaming to the major monthly Fibonacci .618 retracement at 1265.90. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is still near overbought on the monthly chart. Seasonally, the S&P 500 should rally thru most of May and then decline during the last week.  Commercials are bullish. Large traders (hedge funds) are holding the smallest net short position in three months. Small traders are holding the smallest net long position since Thanksgiving.

The June NASDAQ 100 closed below the monthly 18-bar Moving Average for the first time in two years. This is not good! A break below the daily April low of 1397.00 could cause a waterfall decline to the major weekly Fibonacci .382 retracement at 1319.80 or last year's low of 1302.00. However, the market did an impressive job of recovering and closing above a two week high. The NASDAQ stopped right a daily down trend line drawn across the daily March high of 1563.50 and the daily April high of 1511.00. A rally above the May 6th high of 1465.00 should allow the market to challenge the major weekly Fibonacci .382 retracement at 1491.00. Further resistance is at major weekly Fibonacci .618 retracement at 1549.00 followed by the daily March high of 1563.50. If the market breaks thru this barrier it could soar to this year's high of 1643.00. Open Interest is flat. The NASDAQ 100 should be under pressure in May.  Commercial interests are holding the biggest net long position since mid-December. Large traders (hedge funds) are still holding a sizable short position. Small traders are neutral.

Interest rates - June T-bonds hit a two and a half month high and tested a weekly Fibonacci .786 retracement. If the market takes out the daily April high of 115-17 it could quickly test the contract high of 116-21. Further resistance is at this year's current weekly high of 117-12 or even last year's weekly high of 117-26. For five out of the last six weeks T-bonds have made higher weekly lows than the previous week. A break below the May 4th spike low of 113-14 (caused by the Treasury's announcement that it's considering bring back 30-year bonds) and the major daily Fibonacci .618 retracement at 113-01 could cause a quick drop to the major daily Fibonacci .618 retracement at 111-16. If the market cannot recover from this level it should slide to this year's current low of 109-00 or the major weekly Fibonacci .618 retracement at 108-17. If the market does not stabilize in this support zone it may be headed to major weekly Fibonacci .786 retracement at 106-04. The June NOB spread (T-notes vs. T-bonds) finds near term resistance between the daily May 3rd high of 3-15 premium T-bonds in confluence with the major daily Fibonacci .786 retracement at 3-155 premium T-bonds. Further resistance is at the all-time high of 4-02 premium T-bonds. Near term daily support at the current daily Fibonacci .618 retracement at 2-045 premium T-bonds. After that look for a decline to the daily March low of 1-10 premium T-bonds. Open Interest is flat. T-bonds have a seasonal tendency to decline in the first half of May and then rally in the second half of the month.   Commercial interests are holding their smallest net long position in nearly three months. Large traders are the least bearish since late February. Small traders are still holding a large net short position.

June T-notes tested a minor weekly Fibonacci .618 retracement and then backed down. If the market attempts another rally and clears the daily May 5th high of 112-015 it should have no problem testing the contract high of 112-16. A break out to new contract highs could shoot June T-notes to this year's weekly September high of 113-125. Further resistance is just around the corner at the weekly September high of 114-12. For a half dozen weeks this market has been climbing and making higher weekly lows every week and higher weekly highs for five out of the last six weeks. A break below the May 6th low of 110-295 and the major daily Fibonacci .382 retracement at 110-14 could end this run and take the market right down to the major daily Fibonacci .618 retracement at 109-14. Further support may not be found again until this year's current weekly low of 107-265 and last year's weekly low of 107-255. A clean break below it could smash T-notes to the 105-00 level. Open Interest is hanging near the all-time high. T-notes have a seasonal tendency to drop just beyond the first week of May and then rally for the rest of the month.  Commercials sold off a significant portion of their net long position to be the least bullish since late February. Large traders (hedge funds) are the least bearish in two months. Small traders are holding the smallest net short position since mid-January.

International bonds - June Canadian 10-year bonds look like they are on their way back down. After reaching a two month high at the end of April and making an outside bar on the weekly chart the market chose to break below a two week low and crash below the short-term moving averages. Near term support is located at the May 6th low of 112.13 in confluence with the current daily Fibonacci .382 retracement at 112.10. Further support is at the current daily Fibonacci .618 retracement at 111.31. A break below it could allow the market to slip back down to the daily March low of 110.04. Near term resistance is at the daily contract high of 113.37. Further resistance is at this year's weekly high of 113.78 followed by the 2003 weekly high of 114.09.  June Euro bunds took out the old all-time high by just a few ticks and then backed off quickly. If the market plummets from here it will leave a beautiful double top behind on the weekly chart. If the market can take out the new all-time high of 121.06 it could quickly test the psychological 122 mark. Near term support is at the May 6th low of 120.24. (June Euro bunds have made higher weekly lows for eight consecutive weeks and higher weekly highs for six consecutive weeks). A break below it should allow the market to pull back to the current daily Fibonacci .382 retracement at 119.47. Further support is about a point lower at the current daily Fibonacci .618 retracement at 118.48. If bunds do not stabilize here expect a sell off to the daily March low of 116.89.  June London long gilts look like they about to have a break down. The market took out a previous week's low for the first time in eight weeks and also closed lower on the weekly chart for the first time in eight weeks. Gilts also closed below the 18-day Moving Average for the first time in a month and a half. A break below the May 6th low of 110.88 should take the market right down to the current daily Fibonacci .382 retracement at 110.37. Further support is at the current daily Fibonacci .618 retracement at 109.59. If the decline does not end here June gilts may be on their way to the contract low of 108.32.  June Australian 10-year bonds find near term resistance at the nearly four month high of 94.76 reached on May 6th. A rally above it could send the market up to last year's weekly high of 94.89. Near term support is at the May 2nd low of 94.615. (June Australian 10-year bonds have made higher weekly highs and higher weekly lows for six consecutive weeks). A weak close below it could cause a retracement to the current daily Fibonacci .618 retracement at 94.40. Further support is at the contract low of 94.175.  June JGB's  (Japanese gov't. bonds) find near term resistance at the May 6th contract high of 140.94. Further resistance is at the psychological 142.00 mark followed by the major weekly Fibonacci .618 retracement at 142.50. Near term support is at the May 2nd low of 140.52 (June JGB's have made higher weekly lows for eight consecutive weeks) and the 18-day Moving Average that it has not closed below for nearly months. A break below this near term support could cause a slide to the current daily Fibonacci .382 retracement at 139.51. If JGB's do not stabilize here look for them to hit the current daily Fibonacci .618 retracement at 138.63.

Currencies - The US dollar index finds near term resistance between the daily April high of 85.31 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 the April low of 83.31. Further support is close behind at the current major daily Fibonacci .618 retracement at 82.49. If the greenback does not stabilize at this level it may decline to the daily March low of 81.24. If this low is broken expect the buck to plunge to last year's weekly low of 80.48 or the 1995 low of 80.14. Open Interest is at a six week high. The Seasonal index shows that the dollar should move sideways to higher in May.  Commercial interests are holding their biggest net short position in nearly a year! Large traders are holding their biggest net long position since then. Small traders are neutral.

The Canadian dollar finds near term daily support at the May 2nd low of .7907. A weak close below 79 cents could indicate a bigger drop to come and perhaps send it all the way down to the intermediate weekly Fibonacci .618 retracement at .7668 or the major weekly Fibonacci .382 retracement at .7628. Near term resistance is at the May 6th high of .8080. (The "looney" has made lower weekly lows for seven consecutive weeks). A rally above it could allow the market to test a barrier between the April 22nd reaction high of .8125 and the current major daily Fibonacci .382 retracement at .8132. A break out above it could send the "looney" right up to the current major daily Fibonacci .618 retracement at .8270. Seasonally, the Canadian dollar has a tendency move sideways to lower in the first half of May and then rally in the second half.  Commercial interests are holding the biggest net long position since November 2000. Large traders are holding the biggest net short position since October 2000. Small traders are the least bullish since January of 2002.

The Australian dollar finds near term resistance at the daily April high of .7819. A break out above it should allow the market to test the contract high of .7933. Near term support is at the May 2nd low of .7697. Further support is at the daily April low of .7588. If the Aussie does not rebound from this level it will face pretty important support a penny lower at the monthly 18-bar Moving Average at .7479 (the Aussie dollar has not closed below the monthly 18-bar Moving Average on over three years) in confluence with this year's weekly low of .7475. If the market does cannot hold it's ground here look for a downward acceleration to the intermediate weekly Fibonacci .618 retracement at .7212. Open Interest is at a six week high. The %R overbought/oversold indicator shows that the Aussie is overbought on the monthly chart. Seasonally, the Australian dollar has a tendency to rally during the first week of May and then drop for the rest of the month.  Commercials have turned neutral on the Aussie. Large traders (hedge funds) are neutral to bullish. Small traders are neutral as well.

The March Canadian dollar/Australian dollar spread finds near term support at the daily April low of .0162 (just over one and a half cents) premium Canadian dollar in confluence with the major weekly Fibonacci .618 retracement at .0146 (just under one and a half cents) premium Canadian dollar. Further support is at the psychological even money mark. Near term resistance is at the May 6th closing high of .0336 (about three and one third of a cent) premium Canadian dollar. Further resistance is found at the current major daily Fibonacci .382 retracement at .0453 (about four and a half cents) premium Canadian dollar. If spread can strengthen beyond this level look for a rally to the daily March high of .0591 (about six cents) premium Canadian dollar followed closely by the current major daily Fibonacci .786 retracement at .0634 (about six and one third of a cent) premium Canadian dollar.

The British pound finds near term weekly resistance staggered between the April high of 1.9168, the March high of 1.9318, and finally last year's weekly high of 1.9500. For four out of the last five weeks, sterling has made higher weekly lows than the previous week. A break below the March 3rd low of 1.8850 could cause a further decline to the April low of 1.8613 or even the March low of 1.8524. Just below that is the monthly 18-bar Moving Average at 1.8461. (Sterling has not closed below the monthly 18-bar Moving Average on over three years). A close below the monthly 18-bar Moving Average could be a strong indication that the long-term trend has changed direction. Open Interest reached the highest level since mid-March. The %R overbought/oversold indicator shows that sterling is still near the overbought area on the monthly chart. The pound has a seasonal tendency to decline in May.  Commercials are still holding a large net short position on sterling. Large traders (hedge funds) are neutral to bullish. Small traders are also neutral to bullish

The Swiss franc finds near term support between the daily April low of .8229 and the daily February low of .8216. Just below it lurks the monthly 18-bar Moving Average at .8191. (The Swissie has not closed below the monthly 18-bar Moving Average in over three years). If support level is demolished the trend could should be considered bearish on the long-term charts. This could easily drive the market down to the intermediate weekly Fibonacci .618 retracement at .7729. Near term resistance is at the daily April high of .8543. Further resistance is at the current major daily Fibonacci .618 retracement at .8651. If the Swissie makes it past this level perhaps it may run to the daily March high of .8756 in confluence with the current major daily Fibonacci .786 retracement at .8769. Open Interest is flat. The %R overbought/oversold indicator shows that the Swiss franc is nearing oversold on the daily chart. The Seasonal index shows that the Swiss franc usually moves slightly higher during the first week of May and then drops for the rest of the month.  Commercial interests are holding a large net long position. Large traders covered some of their large net short position. Small traders are bearish on the Swissie.

The Euro currency is testing a price support zone between the May 6th low of 1.2820, the daily April low of 1.2786, and the daily February low of 1.2762. This is followed closely by the monthly 18-bar Moving Average at 1.2629. (The Euro has not closed below the monthly 18-bar Moving Average in over three years). A drop below this price range should make it easy for the market to get to the minor weekly Fibonacci .618 retracement at 1.2487. Further support for the Euro is at the $1.20 level again. Near term resistance is at the daily April high of 1.3143. Further resistance is at the current major daily Fibonacci .618 retracement at 1.3341. If the Euro does not stop here expect it to visit it the current major daily Fibonacci .786 retracement at 1.3498 in confluence with the daily March high of 1.3510. Open Interest is flat. The %R overbought/oversold indicator shows that the Euro is oversold on the daily chart. Seasonally, the Euro should move higher during the first week of May and then sideways for the remainder of the month.

The Japanese yen finds near term resistance at the current weekly Fibonacci .618 retracement at .009623 in confluence with the May 4th high of .009629. Further resistance is at the daily March high of .009725. If the rally does not end here the yen could test this year's current weekly high of .009864. Near term support at the May 2nd low of .009515. (The Japanese yen has made higher weekly lows and higher weekly highs for the last four weeks). Further support is at the current major daily Fibonacci .618 retracement at .009384. If the decline does not end here the June yen may quickly test the contract low of .009233 in confluence with the major monthly up trend line drawn across the 2002 low of .007415, the August 2003 low of .008296, and the 2004 low of .008710. A break below it could spell disaster for the yen. Open Interest is almost at a two month high. The %R overbought/oversold indicator shows that the yen is nearing overbought on the daily chart. The yen has a seasonal tendency to rally during the first week of May and then head south for the rest of the month.  Commercial interests are back to neutral on the yen. Large traders covered some of their net short position but they still remain bearish. Small traders are neutral.

Metals - June gold finds near term support at the May 6th low of $424.50 in confluence with the daily April low of $423.50. A break below it could send the market down to the monthly 18-bar Moving Average at $417.10 (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. If gold does not find a strong support base here look for it to get whacked hard a tumble toward the major monthly Fibonacci .382 retracement at $378.30 or even last year's monthly low of $372.00. Near term resistance is located between the daily April high of $439.10 and the current intermediate daily Fibonacci .618 retracement at $440.40. Further resistance is at the daily March high of $450.80. Open Interest is flat. The %R overbought/oversold indicator shows that gold is nearing oversold on the daily chart. The Seasonal index shows that gold should move sideways to slightly higher in May. Commercials are holding an historically large net short position in gold. Large traders (hedge funds) are still holding a very large net long position. Small traders are neutral.

July silver tested support at the monthly 18-bar Moving Average and held...so far. (Silver has not closed below the monthly 18-bar Moving Average in nearly two years). A break below the May 2nd low of $6.81 could take the market right on down to the contract low of $6.44. If July silver makes a new low look for it to slide 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 intermediate daily Fibonacci .618 retracement at $7.385 in confluence with the daily April high of $7.40. Further resistance is at the daily March high at $7.74. Open Interest is flat. Seasonally, silver should move sideways to slightly lower in May. Commercials are the least bearish since last June. Large traders (hedge funds) are holding the smallest net long position since October of 2003. Small traders remain neutral.

July copper continues to kill time in the trading range that has held it captive for weeks on end. A break below the daily April low of 140.50 could allow copper to test the psychological 1.35 mark or even this year's current weekly low of 132.35. Near term resistance is at the contract high 152.50. Further resistance is at last year's current weekly high of 155.00. A break out to new contract highs could send copper soaring to the 1988 multi-decade high of 160.65. Open Interest is at the lowest level since mid-February. The %R overbought/oversold indicator shows that copper is overbought on the monthly chart. Copper has a seasonal tendency to decline in May.  Commercials are still neutral. Large traders (hedge funds) are neutral as well. Small traders are the most bearish since October of 2001.

Energies - June crude oil has spent four weeks trading either side of the big psychological $50 area. A break below the May 4th low of $48.80 could allow the market to test a weekly Fibonacci .382 retracement at $45.45. If crude oil does not stabilize here look for it to plunge to the weekly December 2004 reaction low of $40.25 in confluence with the major monthly Fibonacci .382 retracement at $39.92. Near term resistance the May 6th reaction high of $52.25. This was the high of the week that ended up turning into a Gap & Fill sell signal. If the market can overcome it look for a rally to the current major daily Fibonacci .618 retracement at $55.23 or even the daily April 22nd reaction high of $55.90. Further resistance is at the all-time contract high of $59.20. Open Interest dropped from the all-time high to a two month low. The %R overbought/oversold indicator shows that crude oil is nearing oversold on the daily chart. The Seasonal index shows that crude oil should move higher in May.  Commercial interests are holding the biggest net long position in nearly four months. Large traders are holding their smallest net long commitment since the beginning of the year. Small traders are neutral.

June Unleaded Gas tested support at the weekly 18-bar Moving Average that it has only closed below once this year. If the market takes out the May 4th low of 142.20 look for a decline to the daily February low of 131.30. Further support is at the contract low of 117.96. Near term resistance is at the current major daily Fibonacci .382 retracement at 155.23. Further resistance is at the current major daily Fibonacci .618 retracement at 163.27. Failure to yield here could drive gasoline prices up to the daily April 25th reaction high of 168.00 in confluence with the current major daily Fibonacci .786 retracement at 169.00. Open Interest recently dropped to the lowest level since early December. The %R overbought/oversold indicator shows that gasoline is nearing oversold on the daily chart. Seasonally, gasoline should rally in May.  Commercials interests covered some of their huge net short position but they are still very bearish. Large traders are selling out of their record size net long position. Small traders are neutral on gasoline prices.

June natural gas finds near term support at the May 4th reaction low of 6.450. A break below it could send the market plummeting to the psychological 6.000 mark or even the contract low of 5.800. Near term resistance is at May 6th reaction high of 6.750 (natural gas has made lower weekly highs for four out of the last five weeks) in confluence with the 18-day Moving Average that it has not closed above for the last month. A rally above it could trigger some short-covering buy stops and send it up to the current major daily Fibonacci .618 retracement at 7.377 in confluence with the daily April 25th reaction high of 7.385. If the market does not slow down here expect it to hit the current major daily Fibonacci .786 retracement at 7.629. Open Interest is flat at a high level. The %R overbought/oversold indicator shows that natural gas is oversold on the daily chart. Natural gas has a seasonal tendency to move higher in the first half of May and then sideways for the rest of the month.  Commercial interests are holding the smallest net short position since mid-February. Large traders are holding the biggest net short position since then. Small traders are still holding a very large net long position.

Meats - June live cattle find near term support at the May 5th reaction low of 84.65. Further support is at the April low of 83.40. This will be an important level to watch. June cattle has not broken a previous month's low since November. 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 found between the daily April high of 87.35 and the contract high of 87.70. A break out to new contract highs could send June cattle up to this year's current weekly high of 92.75 in confluence with the weekly December high at 92.95. Open Interest is flat. The Seasonal index shows that cattle should move sideways in the first week of May and then decline for the rest of the month.  Commercials are neutral. Large traders (hedge funds) are still holding a large net long position. Small traders are still holding their biggest net short position in several years.

August feeders find near term resistance at the current contract high of 110.00. Further resistance is at the major weekly Fibonacci .618 retracement at 111.32. If feeders do not stop here look for a stampede to last year's all-time high on the weekly chart at 118.70. Near term support is at the May 2nd low of 107.75 (August feeders have made higher weekly lows for nine out of the last ten weeks) in confluence with the 18-day Moving Average that it has not closed below for over two months. Just below it is the April 29th reaction low of 107.50. If all of this short-term support is violated look for a decline to the current major daily Fibonacci .382 retracement at 105.00. Further support is at the current major daily Fibonacci .618 retracement at 101.90. Open Interest is at a two month low. The %R overbought/oversold indicator shows that feeders are overbought on the daily chart. Seasonally, feeders should have an upward bias in the first half of May and then decline during the second half of the month.  Commercial interests are finally starting to increase their net long position again. Large traders are holding a very large net long position. Small traders are still holding the biggest net short position since September of 2003.

June lean hogs find near term support at the daily April low of 74.40. A weak close below it could slaughter the market and send it down to the major daily Fibonacci .618 retracement at 70.65 in confluence with the daily December low of 70.57. Near term resistance is at the current daily Fibonacci .618 retracement at 79.22. Further resistance is located between the contract high of 82.20 and the 2004 weekly high of 82.70. A strong break out above this barrier could catapult hogs to the 1997 weekly high of 86.60. Open Interest is at the highest level since early March. The %R overbought/oversold indicator shows that hogs are overbought on the weekly and monthly charts. Hogs have a seasonal tendency to move higher in the first half of May and then decline during the second half of the month.  Commercials are holding their biggest net long position since February of 2004. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are still holding a sizable short position.

Grains - July soybeans have spent several weeks chopping around in a trading range either side of the major daily Fibonacci .382 retracement at $6.232. A break below the daily April low of $6.104 could cause a decline to the major daily Fibonacci .618 retracement at $5.784. Further support is at the major daily Fibonacci .786 retracement at $5.464. Near term resistance is at the April 25th reaction high of $6.566. A strong close above it could allow the market to challenge the contract high of $6.914. If July soybeans break out to new contract highs they very well could be on their way to the $7.50 area. Open Interest is declined to the lowest level since mid-January. The Seasonal index shows that soybeans usually move sideways in May.  Commercial interests are holding the smallest net long position since July. Large traders are holding the largest net long position since June. Small traders covered some of their large net short position.

July 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.

July bean oil finds near term support at the May 2nd low of $189.80. Further support is at the daily April low of $183.00. A break below this low could cause a drop to the major daily Fibonacci .618 retracement at $173.30. After that look for a decline to the major daily Fibonacci .786 retracement at $163.90. Near term resistance is at the April 25th reaction high of $204.70 followed closely by the contract high of $207.80. A break out to new contract highs could send July meal on it's way 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 May. Commercial are holding the largest net short position since last summer. Large traders (hedge funds) are holding the biggest net long position since July. Small traders are still the most bullish since October.

July corn broke down to a new contract low of $2.044 on May 3rd. If the decline continues the market could easily hit last year's weekly low of $1.91. Further support is at the 2001 low of $1.84. Near term resistance is at the current daily Fibonacci .382 retracement at $2.172. Further resistance is at the daily April 25th reaction high of $2.236 followed closely by the current daily Fibonacci .618 retracement at $2.252. If the rally does not terminate at this level July corn may run to the daily March high of $2.38. Open Interest is near 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 move sideways in a choppy fashion during the month of May.  Commercials are holding the largest net long position since mid-February. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are still hanging on to a huge net short position.

July rice finds near term resistance at the May 5th high of 7.90. Further resistance is at the major weekly Fibonacci .382 retracement at 8.165. After that the market could hit the psychological 8.50 mark. Near term support is at the current major daily Fibonacci .382 retracement at 7.38. A drop below it could allow the market to pay a visit to the current major daily Fibonacci .618 retracement at 7.06 or the daily April low 7.03. Further support is at the contract low of 6.54. Open Interest is at a one year high. The %R overbought/oversold indicator shows that rice is overbought on the daily and weekly charts. Seasonally, rice should move sideways in May.  Commercial interests are holding the biggest net short position in a year. Large traders (hedge funds) are holding the biggest net long position since last Memorial Day. Small traders are holding the biggest net long position that they have had since then as well.

July oats made a new contract low on May 5th at $1.362. If the market continues to decline from here it may hit last year's low on the weekly chart at $1.204. Further support is at the psychological $1.00 area. Near term resistance is at the May 3rd reaction high of $1.41 (July corn has made lower weekly highs for four out of the last five weeks) followed by the gap on the weekly chart between $1.41 and $1.426. If the market can close above this gap area it may set it's sights on the current daily Fibonacci .618 retracement at $1.52. Further resistance is at the daily March spike high of $1.614. Open Interest is at a six week low. The %R overbought/oversold indicator shows that oats are oversold on the daily and weekly charts. Oats have a seasonal tendency to move higher in the first half of May and then decline during the second half of the month.  Commercials are holding the smallest net short position since the beginning of the year. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are still holding a large net long position.

July wheat finds near term daily support between the May 6th low of $3.12 and the daily April low of $3.11. Further support is at the contract low of $3.022. If July wheat A breaks to new contract lows it may slip to this year's weekly low of $2.87 or even last year's weekly low of $2.824. Near term resistance is at the daily April 25th reaction high of $3.40. Further resistance is at the current major daily Fibonacci .618 retracement at $3.512. If the market does not slow down at this level it should test the current major daily Fibonacci .786 retracement at $3.622. Open Interest is now at a four month low. The %R overbought/oversold indicator shows that wheat is oversold on the daily chart. The Seasonal index shows that wheat should move sideways in May.  Commercial interests are holding the largest net long wheat position since mid-February. Large traders are holding the largest net short position since then. Small traders increased the size of their biggest net short position in years.

Softs - July coffee finds near term daily support at the May 5th low of 119.75. Further support is at the daily April low of 112.75. A break below this level could elect a whole mess of sell stops and cause a waterfall decline to the major daily Fibonacci .618 retracement at 100.45 in confluence with this year's low on the daily chart at 99.35. Near term resistance is at the daily April high of 135.00 in confluence with the current major daily Fibonacci .786 retracement at 135.55. Further resistance is at the contract high of 141.75. A break out to new contract highs could immediately send July coffee to test the 1999 high of 145.00 or the major weekly Fibonacci .382 retracement at 147.10. Open Interest is at multi-month lows. Seasonally, coffee should move slightly higher in May.  Commercials covered more of their record net short position to be the least bearish since mid-November. Large traders (hedge funds) are now holding the smallest net long position since Thanksgiving. Small traders are neutral.

July cocoa finds near term daily support at the May 6th multi-month low of $1,455. Further support is at the weekly October low of $1,390. Near term resistance is at the May 2nd high of $1,520 (July cocoa has made lower weekly highs and lower weekly lows for seven consecutive weeks) in confluence with the 18-day Moving Average that it has not closed above since mid-March. A rally above it could weaken the grip that the bears have on this market. Bigger resistance is at the current major daily Fibonacci .382 retracement at $1,612. Further resistance is found between the daily April high of $1,688 and the current major daily Fibonacci .618 retracement at $1,710. If the market can break down this wall look for a run to the daily Fibonacci .786 retracement at $1,779. Open Interest is flat. The %R overbought/oversold indicator shows that cocoa is oversold on the daily chart and nearing oversold on the weekly and monthly charts. Cocoa has a seasonal tendency to drop in the first week of May and then rally for the rest of the month. Commercial are holding the smallest net short position since late January. Large traders are holding the smallest net long position since then. Small traders are neutral.

July sugar finds near term support clustered between the May 6th low of 8.21, the major daily Fibonacci .382 retracement at 8.14, and the daily April low of 8.13. Further support is at the psychological 7.50 area. Near term resistance is at the May 2nd reaction high of 8.70. Further resistance is at the current major daily Fibonacci .382 retracement at 8.92. After that July sugar may attempt to fill a daily chart gap between 9.10 and 9.19. Open Interest is flat. The %R overbought/oversold indicator shows that sugar is nearing oversold levels on the daily chart. The Seasonal index shows that sugar should move higher in May. Commercials are holding the largest net long position since February 2004. Large traders (hedge funds) are holding the biggest net long position since then. Small traders are holding the smallest net long position since November of 2003.

July orange juice has tested the major daily Fibonacci .382 retracement several times. A break below the daily April low of 91.60 could undermine this support area and send the market down to the major daily Fibonacci .618 retracement at 86.25. Further support is at the major daily Fibonacci .786 retracement at 81.70 in confluence with this year's current daily low of 81.10. Near term resistance is at the current major daily Fibonacci .618 retracement at 98.60 in confluence with the daily April 26th reaction high of 98.60. Further resistance is at the contract high of 102.90. A break out to new contract highs could take July OJ up to the weekly 2002 high of 106.00. Open Interest is at a two month low. The %R overbought/oversold indicator shows that OJ is nearing oversold on the daily chart. Seasonally, OJ should rally during the first half of May and then decline in the second half of the month. Commercial are the least bearish since February. Large traders are still holding a large net long position. Small traders are the least bullish since August of 2003.

July cotton finds near term support at the current major daily Fibonacci .382 retracement at 51.86 in confluence with the daily May 4th low of 51.80. A break below this level could cause the market to decline to the current major daily Fibonacci .618 retracement at 48.33. Further support is at the current major daily Fibonacci .786 retracement at 45.81. Near term resistance is found between the daily April high of 57.59 and the daily September high of 58.10. Further resistance is at the weekly April high of 60.50. If cotton can make it past this high it may be headed to 65 cents. Open Interest is at a two month low. Cotton has a seasonal tendency to rally sharply in the first half of May and then turn choppy to sideways in the second half of the month.   Commercials are holding the largest net short position since January of 2004. Large traders (hedge funds) are holding the largest net long position since then. Small traders are increasing the size of their 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.

© 2004 Pearce Financial, LLC
Archived Editorials

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

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

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