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Monthly Market Watch
The Future is in Futures
by Pearce Financial, LLC
June 5, 2005

Based on trading activity and reports, the following markets
are setting up for potential trading opportunities. 

Stock indices - The June S&P 500 finds near term resistance at last week's two and a half month high of 1206.80. Further resistance is at the contract high of 1234.10. If the S&P 500 breaks out to a new high it should have no problem hitting the major monthly Fibonacci .618 retracement at 1265.90. After that the market may test the psychological 1300 mark. Near term support is at last week's low of 1191.70 (the June S&P 500 has only broken a previous week's low once in the last six weeks) and the 18-day Moving Average that it has closed above most of the time for the last month. Keep an eye on the 9-day Moving Average as well. The 9-day Moving Average crossed over and closed above the 18-day Moving Average about a month ago. As long as this crossover stays intact consider it a bullish sign. However, if the 9-day Moving Average crosses over again and closes below the 18-day Moving Average it could indicate that the market is headed lower again. If this occurs the market may test the current major daily Fibonacci .618 retracement at 1163.50 or the monthly 18-bar Moving Average near 1151.70. (The S&P 500 has not closed below the monthly 18-bar Moving Average in two years). Bigger support is at the April low of 1136.80. A break below this low could quickly send the market to the psychological 1100 mark. Open Interest is flat. The %R overbought/oversold indicator shows that the S&P 500 is overbought on the daily and monthly charts. Seasonally, the S&P 500 should move in a choppy sideways range in June  Commercials are still pretty bullish. Large traders (hedge funds) are holding the smallest net short position since January. Small traders are still the least bullish since November.

The June NASDAQ 100 surged to the highest level since January. A rally above last week's high of 1572.00 should send the market right on up to the major weekly Fibonacci .786 retracement at 1590.00. Further resistance is at this year's current weekly high of 1643.00. A break out above it would put the NASDAQ 100 on track for the weekly January 2002 high of 1717.00 or the weekly December 2001 high of 1738.00. Near term support is at last week's low of 1540.00 (the NASDAQ 100 has made higher weekly highs and higher weekly lows for five consecutive weeks) and the 18-day Moving Average that it has not closed below for a month. The 9-day Moving Average crossed over and closed above the 18-day Moving Average on May 4th. This is bullish behavior. If the 9-day Moving Average closes back below the 18-day Moving Average short-term traders should abandon long positions and look for further weakness. If this occurs the market may decline the current major daily Fibonacci .618 retracement at 1463.60. Further support is at the daily April low of 1397.00. If this low is taken out expect the market to get hammered down to the major weekly Fibonacci .382 retracement at 1319.80 or last year's low of 1302.00. Open Interest is flat. The %R overbought/oversold indicator shows that the NASDAQ 100 is overbought on the daily and monthly charts. The NASDAQ 100 should spend most of June in a sideways trading range.  Commercial interests are still holding the biggest net long position since mid-December. Large traders (hedge funds) covered a large part of their short position and are now the least bearish since early January. Small traders are holding the biggest net long position since December.

Interest rates - September T-bonds find near term resistance clustered between last week's new contract high of 119-23 on the daily chart, the major weekly Fibonacci .786 retracement at 119-24, and last week's two year high on the weekly chart at 119-30. Further resistance is at the 2003 all-time high of 124-10. T-bonds made a bullish short-term Moving Average crossover on March 31st when the 9-day Moving Average closed above the 18-day Moving Average. Until the shorter-term Moving Average closes back below the longer-term Moving Average the market looks very bullish. Near term support is at this Moving Average crossover level followed by last week's low of 116-10. (T-bonds have made higher weekly lows for nine out of the last ten weeks). If this near term support is violated the market could test the daily May low of 113-05 in confluence with the current major daily Fibonacci .618 retracement at 113-01. Failure to stabilize here could pressure the bonds down to a bigger technical support area between the current major weekly Fibonacci .618 retracement at 109-16 and this year's current weekly low of 109-00. The September NOB spread (T-notes vs. T-bonds) finds near term resistance at last week's new all-time high of 4-15 premium T-bonds. Further resistance is at the psychological 5-00 mark. Near term daily support at the current daily Fibonacci .382 retracement at 2-19 premium T-bonds. Further support is at the current daily Fibonacci .618 retracement at 1-13 premium T-bonds followed closely by the daily March low of 1-06 premium T-bonds. Open Interest is flat. The %R overbought/oversold indicator shows that T-bonds are overbought on the daily and weekly charts. T-bonds have a seasonal tendency to rally in the first half of June and then decline in the second half of the month.   Commercial interests are holding their smallest net long position since mid-February. Large traders are holding their largest net long position since then. Small traders are still holding a large net short position.

September T-notes find near term resistance at last week's new fourteen month high of 114-21. Further resistance is at the major weekly Fibonacci .618 retracement at 116-005. If the market blasts thru this price zone it may be on it's way to last year's weekly high of 117-31 in confluence with the major weekly Fibonacci .786 retracement at 118-08. Near term support is at the 9-day Moving Average /18-day Moving Average crossover level (the 9-day Moving Average closed above the 18-day Moving Average on March 31st and has stayed above it since) followed by last week's low of 112-265. (T-notes have made higher weekly lows for nine out of the last ten weeks). If this near term support fails to keep the bull market intact look for a pullback to the current major daily Fibonacci .618 retracement at 110-105. Further support is at a major double bottom on the weekly chart at this year's current weekly low of 107-265 and last year's weekly low of 107-255. A close break below it could devastate the T-note market and smash it to the 105-00 level. Open Interest is at a five week low. The %R overbought/oversold indicator shows that T-notes are overbought on the daily and weekly charts. T-notes have a seasonal tendency to move slightly higher thru most of June.  Commercials are now holding their smallest net long position that they have had yet this year. Large traders (hedge funds) are holding their biggest net long position since mid-February. Small traders are holding their smallest net short position that they have had yet this year.

International bonds - September 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.  September Euro bunds find near term at last week's new contract high of 123.08 followed by last week's new all-time high on the weekly chart at 123.29. Further resistance is at the psychological 125 mark. Near term support is at last week's low of 121.28 (Euro bunds have made higher weekly lows for eleven out of the last twelve weeks) followed by the 9-day and 18-day Moving Averages. The 9-day Moving Average has not closed below the 18-day Moving Average since March 15th. This indicates strong short-term momentum in the market. However, if these Moving Averages crossover and the market breaks below both of them the party may be over. If this happens look for a drop to the current major daily Fibonacci .382 retracement at 120.57. Further support is at the current major daily Fibonacci .618 retracement at 119.02.  September London long gilts reached a new contract high of 114.06. A break out above it could send the market on up to the psychological 115 area. If the rally does not end here gilts may be headed to the major weekly Fibonacci .382 retracement at 117.16 in confluence with the weekly December 2003 high of 117.40. Near term support is clustered at the lows of the last weeks at 112.27, 112.21, and 112.26. A clean break below this price zone could cause a decline to the current major weekly Fibonacci .382 retracement at 110.63. Further support is located between this year's current weekly low of 108.55 and the current major weekly Fibonacci .618 retracement at 108.43.  September Australian 10-year bonds find near term resistance at last week's nearly two year high of 94.965. Further resistance is at the major weekly Fibonacci .786 retracement at 95.115. Near term support is at the 9-day and 18-day Moving Averages. The 9-day Moving Average has closed above the 18-day Moving Average every day for two months. If these Moving Averages crossover again and the market closes below both of them expect a decline to the current intermediate weekly Fibonacci .382 retracement at 94.565. Further support is at the current intermediate weekly Fibonacci .618 retracement at 94.305.  June JGB's  (Japanese gov't. bonds) find near term resistance at last week's new contract high of 140.61 followed by last week's nearly two year weekly high of 141.18. Further resistance is at the psychological 142.00 mark followed by the major weekly Fibonacci .618 retracement at 142.50. Near term weekly support is at the current intermediate weekly Fibonacci .382 retracement at 139.67 in confluence with the May low of 139.66. A break below this near term support should knock JGB's right down to the current intermediate weekly Fibonacci .618 retracement at 138.73. Further support is at the current major weekly Fibonacci .382 retracement at 138.12.

Currencies - The US dollar index traded just above the intermediate weekly Fibonacci .618 retracement last week. If the market can clear last week's new daily contract high of 88.15 and last week's nearly eight month high on the weekly chart at 88.34. Further resistance is at the psychological 90 cent mark. If the greenback pushes past this mark it may test last year's high of 92.50. Near term support is at last week's low of 86.74 (the US dollar index has made higher weekly highs for five consecutive weeks and higher weekly lows for six consecutive weeks) and the 18-day Moving Average that it has closed above almost every day for nearly a month. A break below it could start a short-term correction to weekly support at the February and April highs of 85.46 and 85.31 (old resistance) in confluence with the current major weekly Fibonacci .382 retracement at 85.34. Further support is at the current major weekly Fibonacci .618 retracement at 83.48. Open Interest is almost at a three month high. The %R overbought/oversold indicator shows that the greenback is nearly overbought on the daily and weekly charts. The Seasonal index shows that the dollar should decline in June.  Commercial interests are holding a record size net short position. Large traders are holding a record size net long position. Small traders are holding their biggest net long position in a year.

The Canadian dollar finds near term resistance at the May high of .8107 in confluence with the current major daily Fibonacci .382 retracement at .8111. A rally above it could allow the market to make a run for the current major daily Fibonacci .382 retracement at .8258. Further resistance is at the current major daily Fibonacci .786 retracement at .8362 in confluence with the daily March high of .8370. Near term daily support is at the May low of .7875. A break below it could smash the "looney" down to the intermediate weekly Fibonacci .618 retracement at .7668 or the major weekly Fibonacci .382 retracement at .7628. Open Interest is flat. Seasonally, the Canadian dollar has a tendency to rally in June.  Commercial interests are holding the biggest net long position since October 2000. Large traders are holding the biggest net short position since then. Small traders are the least bullish since January of 2002.

The Australian dollar finds near term resistance clustered between last week's high of .7564 (the Aussie has made lower weekly highs for four out of the last five weeks), the 18-day Moving Average that it has closed below for the last month, and the current major daily Fibonacci .382 retracement at .7596. A break out above it could send the market a penny higher to the current major daily Fibonacci .618 retracement at .7705. After that expect technical resistance clustered between last month's high on the daily chart at .7743, the April high on the daily chart at .7757, and the current major daily Fibonacci .786 retracement at .7782. If the Aussie breaks past this barrier it could easily hit the contract high of .7881. Near term support is at last week's multi-month low of .7420. A break below it could send the market down to the intermediate weekly Fibonacci .618 retracement at .7212. Further support is at the psychological 70 cent mark. 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 move sideways for the first part of June and then surge in the second half of the month. Commercials are holding their smallest net short position since September. Large traders (hedge funds) are holding their smallest net long position since then. Small traders are the least bullish since September.

The March Canadian dollar/Australian dollar spread finds near term resistance at last week's nearly two month high of .0591 (about six cents) premium Canadian dollar. Further resistance is found at the current major daily Fibonacci .618 retracement at .0739 (about seven and one third of a cent) premium Canadian dollar. After that the spread could test this year's high on the daily chart at .0799 (about eight cents) premium Canadian dollar. Near term support is at the current daily Fibonacci .618 retracement at .0354 (three and a half cents) premium Canadian dollar. Further support is at the spread contract low of .0208 (two cents) premium Canadian dollar. If the spread breaks down to a new low it could collapse to the psychological even money mark.

The British pound finds near term support at last week's new multi-month low of 1.8004. A weak close below it could murder the pound and send it to last year's low of 1.7436 or even the major monthly Fibonacci .382 retracement at 1.7266. Near term resistance is at last week's high of 1.8185 (sterling has made lower weekly highs for six consecutive weeks) and the 18-day Moving Average that it has closed below for the last month. Further resistance is at the daily March low of 1.8477 (old support). If the pound can press past this resistance point it may rally to the current major daily Fibonacci .618 retracement at 1.8712. Open Interest is at the highest level since mid-March. The %R overbought/oversold indicator shows that sterling is oversold on the daily chart. The pound has a seasonal tendency to decline in the first week of June and then move sideways for the rest of the month.  Commercials are holding the biggest net long position since March 2002. Large traders (hedge funds) are holding the biggest net short position since January of 2002. Small traders are holding the biggest net short position since April 2003.

The Swiss franc finds near term support at last week's nearly eight month low of .8004. A clean break below 80 cents could allow the Swissie to go right to the intermediate weekly Fibonacci .618 retracement at .7729. If the market does not stabilize here it could plummet to the major monthly Fibonacci .382 retracement at .7592 or last year's low of .7566. Near term resistance is at last week's high of .8162 (the Swiss franc has made lower weekly highs for six consecutive weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day for the last month). A break out above last week's high in addition to the 9-day Moving Average closing back above the 18-day Moving Average could indicate that the severe sell off is over. This could allow the Swissie to climb back up to the current major weekly Fibonacci .382 retracement at .8307. Further resistance is at the current major daily Fibonacci .618 retracement at .8501. If the Swissie can clear 85 cents it may gain another penny and test the daily April high of ..8597. Open Interest is at the highs level since mid-December. The %R overbought/oversold indicator shows that the Swiss franc is still near oversold on the daily and weekly charts. The Seasonal index shows that the Swiss franc usually moves sideways in June.  Commercial interests are holding a record size net long position. Large traders are holding the largest net short position since July 1999. Small traders are holding the largest net short position in four years.

The Euro currency finds near term support at last week's multi-month low of 1.2205. Further support for the Euro is at the $1.20 level. If the market does not hold near this price it could hit last year's low of 1.1745 or even the major monthly Fibonacci .382 retracement at 1.1608. Near term resistance is at last week's high of 1.2597 (the Euro has made lower weekly highs and lower weekly lows for six consecutive weeks) and the 9-day Moving Average /18-day Moving Average crossover level. (The 9-day Moving Average has closed below the 18-day Moving Average every day for the last month). If the Euro closes back above last week's high and the 18-day Moving Average and if the 9-day Moving Average closing back above the 18-day Moving Average expect short-covering to propel the market up to the weekly February low of 1.2735 (old support) in confluence with the current major weekly Fibonacci .382 retracement at 1.2744. Further resistance is at the current major weekly Fibonacci .618 retracement at 1.3104. Open Interest reached a new high for the year. The %R overbought/oversold indicator shows that the Euro has been trading in oversold territory on the daily and weekly charts. Seasonally, the Euro should move sideways in June.

The Japanese yen finds near term support at last week's multi-month low of .009279. A break below it could allow the market to test last week's low on the weekly chart at .009194. If this low doesn't hold the yen should drop right to the psychological .009000 mark or even the intermediate weekly Fibonacci .382 retracement at .008928. Further support is at last year's low on the weekly chart at .008710. Near term resistance is at last week's high of .009399. (The yen has made lower weekly highs and lower weekly lows for the last four weeks). A strong close above it could allow the market to test a big gap on the daily chart between .009523 and .009558 in confluence with the current major daily Fibonacci .382 retracement at .009556. Further resistance is at the daily May high of .009710 in confluence with the current major daily Fibonacci .618 retracement at .009727. Open Interest is at the highest level since the March peak. The %R overbought/oversold indicator shows that the yen is recovering from the oversold level on the daily chart. The yen has a seasonal tendency to get stuck in a choppy sideways trading range in June. Commercial interests are net long over 50,000 yen contracts. They were only this bullish in April and back in August of 2003. Before that they haven't been this bullish since early 2001. Large traders are holding one of the largest net short positions in years. Small traders are neutral to bearish.

Metals - August gold looks as though it has posted a temporary bottom. The market triggered a Gap & Fill weekly buy signal when it open below the previous week's low and then rallied back above it. Also, after breaking the contract low by only a dollar, the market quickly reversed and took out a two week high. This created an outside reversal up on the weekly chart. This is all bullish price action. A rally above last week's high of $427.00 could easily send August gold up to the major weekly Fibonacci .618 retracement at $438.50 or the daily April high of $441.70. Further resistance is at this year's current high on the weekly chart at $448.00. Near term support is clustered between last week's new contract low of $415.80, last week's low on the weekly chart at $413.20, and this year's current weekly low of $410.10. A break below it could send the market plunging to the major monthly Fibonacci .382 retracement at $378.30 or even last year's monthly low of $372.00. Open Interest is almost at a four month low. The Seasonal index shows that gold should rally right at the beginning of June and then drift lower for the remainder of the month. Commercials are holding the smallest net short position since the low was made in February. Before that they haven't had this small of a net short position since the low was made in May of 2004. Large traders (hedge funds) are holding the smallest net long position since mid-February. Small traders are neutral.

July silver finds near term resistance at last week's two and a half month high of $7.63. Further resistance is just beyond it at the daily March high of $7.74 and the major weekly Fibonacci .786 retracement at $7.795. If the market can clear this barrier the next objective may be the psychological $8.00 mark or even the weekly December high of $8.19. Near term support is at last week's low of $7.16. (Silver has been unable to break a previous week's low for the last four weeks). A close below it could bring the market back down to the daily May low of $6.81. If last month's low is broken silver could be on it's way to the contract low of $6.44. After that look for a decline to the intermediate weekly Fibonacci .786 retracement at $6.085 in confluence with the weekly September low of $6.065. Open Interest is at a six month high. The %R overbought/oversold indicator shows that silver is overbought on the daily chart. Seasonally, silver should move slightly lower in June. Commercials are neutral. Large traders (hedge funds) are neutral. Small traders remain neutral as well.

July copper finds resistance at last week's new contract high of 156.80. Further resistance is at the all-time high of 161.40. This high was made on May 26th when the futures contract expired and caused a price spike. If this high is exceeded, the market could be headed to the psychological 170 area. Near term support is at last week's low of 142.60 followed closely by the current intermediate daily Fibonacci .618 retracement at 142.10. A break below this price level could send copper back down to test the daily May low of 133.00 followed closely by this year's low on the weekly chart at 132.35. Open Interest is almost at a four month low. The %R overbought/oversold indicator shows that copper is overbought on the daily and monthly charts. Copper has a seasonal tendency to decline in June.  Commercials are holding the smallest net short position since June of 2004. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are the most bearish in nearly a year.

Energies - July crude oil finds resistance at the major daily Fibonacci .618 retracement at $55.25 in confluence with last week's high of $55.40. Further resistance is at the April 25th reaction high of $57.20 in confluence with the major daily Fibonacci .618 retracement at $57.21. If the market makes it past this price level it will find technical resistance a buck higher at the all-time high on the weekly chart at $58.20. After that July crude oil could test the daily contract high of $59.70. Near term support is at the daily May low of $48.05. A break below it could allow crude oil to slip down to the weekly May low of $46.20 or even the 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. Open Interest is at the lowest level since the beginning of March. The %R overbought/oversold indicator shows that crude oil is back up near overbought on the monthly chart. The Seasonal index shows that crude oil should move lower in the first week of June and then sideways for the rest of the month.  Commercial interests are holding the biggest net long position since September of 2003. Large traders are holding the largest net short position since September of 2003. Small traders are neutral to bearish on crude oil.

July Unleaded Gas finds resistance at last week's one month high of 156.20. Further resistance is at the major daily Fibonacci .618 retracement at 161.37. If the market can drive past this price barrier it should be on it's way to visit the major daily Fibonacci .786 retracement at 167.58 in confluence with the April 25th reaction high of 168.00. Further resistance is at the all-time high on the weekly chart at 174.80 followed by the daily contract high of 175.50. Near term support is at the daily May low of 138.50 followed by the weekly May low of 137.70. A break below this price zone could send gasoline down to the major weekly Fibonacci .382 retracement at 126.29. If the market does not stabilize here expect it to challenge this year's current weekly low of 109.80 or even the weekly December low of 103.50. Open Interest is at the lowest level since January of 2004! Seasonally, gasoline should decline in June.  Commercials interests are holding the smallest net short position since January. Large traders are holding their smallest net long position since then. Small traders are neutral.

July natural gas made quite a reversal last week. On May 26th the market hit a four and a half month low. Four days later it had broken thru a down trend line on the daily chart and rallied to a one month high! The 9-day Moving Average is close to closing back above the 18-day Moving Average for the first time since April 13th. If this occurs it will be a confirmation of bullish price action. If July natural gas can exceed last week's high of 7.020 it could go right to the major daily Fibonacci .618 retracement at 7.310. Further resistance is at this year's current weekly high of 7.850. Near term support is at the daily May low of 6.130 followed by the weekly May low of 6.030. A break below it could send the market down to test the contract low of 5.840 or this year's current weekly low of 5.710. Open Interest is flat at a high level. Natural gas has a seasonal tendency to move sideways for most of June and then drop sharply during the last week of the month.  Commercial interests are the biggest net long position since January. Large traders are holding the biggest net short position since then. Small traders are still holding a very large net long position.

Meats - August live cattle find near term support between last week's low of 82.77 and the daily April low of 82.62. Further support is at the current major daily Fibonacci .618 retracement at 81.20. If the market does not stabilize here look for a decline to the current major daily Fibonacci .786 retracement at 79.65. Further support is at the daily February low of 78.55. Near term resistance is at the current daily Fibonacci .618 retracement at 85.30. A strong close above it could allow this market to challenge the contract high of 86.85. A break out to new highs could drive cattle up to the current intermediate weekly Fibonacci .618 retracement at 90.25. Open Interest is flat. The %R overbought/oversold indicator shows that cattle is near oversold on the daily chart. The Seasonal index shows that cattle should establish an important seasonal low at the end of June. Commercials are neutral to bearish. Large traders (hedge funds) are holding a large net long position. Small traders covered a small amount of their biggest net short position that they have had in several years.

August feeders find near term resistance at the current contract high of 113.50. Further resistance may not be found again until last year's all-time high on the weekly chart at 118.70. Near term support is at the May 25th reaction low of 110.10. A break below it could cause a decline to last month's low of 107.75 (August feeders have not broken a previous month's low since December) or the current major daily Fibonacci .382 retracement at 107.15. If August feeders do not stabilize here they could fall to the current major daily Fibonacci .618 retracement at 103.25. Open Interest is at a four month low. Seasonally, feeders should move slightly higher in June.  Commercial interests are neutral on feeders right now. Large traders are still holding a very large net long position. Small traders are still holding the biggest net short position since September of 2003.

July lean hogs made an outside reversal down on the weekly chart when it rallied above the previous week's high and then reversed to break below the previous week's low. This is bearish price action. July hogs are now at the lowest price since late December. Near term support is located between last week's low of 67.80 and the daily December low of 67.65. If hogs do not stop here the next downside target may be the major daily Fibonacci .786 retracement at 64.85. Near term resistance is located between last week's high of 72.25, the 18-day Moving Average that it has not closed above for the last month, and the current daily Fibonacci .382 retracement at 72.62. If the market can overcome these technical obstacles it may indicate a bigger rally to come. This could send the market on up to the current daily Fibonacci .618 retracement at 75.60. Further resistance is at the daily May high of 79.20. Open Interest is flat. The %R overbought/oversold indicator shows that hogs are oversold on the daily chart. Hogs have a seasonal tendency to establish an important seasonal low in mid-June and then move higher in the second half of the month. Commercials are holding a new record net long position. Large traders (hedge funds) are holding their biggest net short position since January 2004. Small traders are still holding a very large short position.

Grains - July soybeans finds near term resistance between last week's high of $6.90 and the contract high of $6.96. If July soybeans close above seven dollars they could quickly trade in the $7.50 area. Further resistance is at the psychological eight dollar mark. Near term support is at last week's low of $6.644. (Beans have made higher weekly lows for three consecutive weeks). A break below it could send it back down to last month's low of $6.064. If this low does not hold look for 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. Open Interest is at a two month high. The %R overbought/oversold indicator shows that soybeans are overbought on the daily and weekly charts. The Seasonal index shows that soybeans usually move sideways for the first half of June and then make a brief rally near the end of the month. Then the beans usually get crushed during the last few trading days of June and the first couple of trading days in July. Commercial interests are holding the biggest net short position since June 2004. Large traders are holding the largest net long position since May 2004. Small traders covered more of their large net short position.

July soy meal finds near term resistance at last week's new contract high of $217.80. A break out above it could indicate that July meal is headed for the major weekly Fibonacci .382 retracement at $235.20. Further resistance is at the psychological $250 level. Near term support is at last week's low of $210.60. (Meal has made higher weekly lows and higher weekly highs for three consecutive weeks). A break below it could send it back down to the major daily Fibonacci .382 retracement at $192.70 or even last month's low of $187.50. Further support is at the major daily Fibonacci .618 retracement at $177.10. After that look for a decline to the major daily Fibonacci .786 retracement at $166.10. Open Interest is at the highest level since mid-March. The %R overbought/oversold indicator shows that meal is overbought on the daily and weekly charts. Seasonally, soy meal should rally until late June and then get severely beat right at the end of June.  Commercials are holding the largest net short position in eleven months. Large traders (hedge funds) are holding the largest net long position since May 2004. Small traders are holding the largest net long position since July 2004.

July bean oil finds near term resistance at the daily May high of 23.86. The next resistance level is not far away between the March 31st reaction high of 24.15 and the major daily Fibonacci .786 retracement at 24.23. After that July bean oil just might test the contract high of 24.88 or the major weekly Fibonacci .382 retracement at 25.07. A break out above this price barrier could allow bean oil to run to the weekly August reaction high of 26.82. Near term support is at last month's low of 21.86. If this low is broken expect a drop to the major daily Fibonacci .618 retracement at 21.35. Further support is at the major daily Fibonacci .786 retracement at 20.39. Open Interest is still sitting flat near multi- month lows. Bean oil has a seasonal tendency to move lower for the first half of June and then move higher in the second half of the month. Commercial interests are neutral to bearish on bean oil. Large traders are neutral. Small traders are neutral to bullish.

July corn finds near term resistance at last week's two and a half month high of $2.274 followed closely by the current major daily Fibonacci .786 retracement at $2.304. If corn can pop above this price zone it may test the contract high of $2.38. A break out to new contract highs could allow the market to test the major weekly Fibonacci .382 retracement at $2.462. Near term support is at last week's low of $2.16 followed by the daily Fibonacci .618 retracement at $2.122. Further support is at the contract low of $2.03. If July corn establishes a new contract low expect it to hit last year's weekly low of $1.91. Open Interest reached a new all-time high. The Seasonal index shows that corn should rally thru most of June and establish an important seasonal high right at the end of this month.  Commercials are neutral to bullish. Large traders (hedge funds) are neutral. Small traders covered more of their large net short position.

July rice finds near term daily support at last week's nearly two month low of 7.16. Further support is at the current major daily Fibonacci .618 retracement at 7.06 in confluence with the daily April low of 7.03. If the market does not stabilize here it could drop to the current major daily Fibonacci .786 retracement at 6.83. Near term resistance is at the current daily Fibonacci .618 retracement at 7.62. Further resistance is at the May 5th high of 7.90. If July rice takes out last month's high it could make a run for the major weekly Fibonacci .382 retracement at 8.165. After that the market could hit the psychological 8.50 mark. Open Interest is at the highest level since January of 2004. Seasonally, rice should move slightly lower in June.  Commercial interests are holding the biggest net short position since May 2004. Large traders (hedge funds) are holding the biggest net long position since January 2004. Small traders are back to neutral on rice.

July oats made an outside reversal up on the weekly chart. This is all bullish price action. If the market can exceed last week's high of $1.42 and the current daily Fibonacci .618 retracement at $1.43 it could climb back up to the current major daily Fibonacci .618 retracement at $1.50. Further resistance is at the current major daily Fibonacci .786 retracement at $1.552. Near term support is at last week's low of $1.336. A drop below it could allow the market to test the contract low at $1.314 or even the weekly May low of $1.27. If these lows do not hold look for the market to challenge last year's low on the weekly chart at $1.204. Further support is at the psychological $1.00 area. Open Interest is at a six week high. Oats have a seasonal tendency to move higher thru most of June.  Commercials are holding the smallest net short position since December. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are liquidating some of their large net long position.

July wheat finds near term resistance at the daily May high of $3.41 in confluence with the intermediate weekly Fibonacci .618 retracement at $3.412. Further resistance is located a few pennies higher at the current major daily Fibonacci .618 retracement at $3.48. After that wheat could climb to the current major daily Fibonacci .786 retracement at $3.604. Near term support is at the current daily Fibonacci .618 retracement at $3.172. A break below it could send July wheat down to the daily May low of $3.024 in confluence with the contract low of $3.022. If this double bottom is violated it could kill the bulls and send the market right down to this year's weekly low of $2.87 or even last year's weekly low of $2.824. Open Interest is at a two month high. The Seasonal index shows that wheat should move higher thru most of June and then drop at the end of the month.  Commercial interests are holding a near-record size net long position. Large traders are holding a huge net short position. Small traders are still holding a sizable net short wheat position.

Softs - July coffee finds near term daily resistance at a down trend line drawn across the March and April highs. Just above it lurks the major daily Fibonacci .618 retracement at 130.70. If the market can get past this price point it may find technical resistance at the April high of 135.00 in confluence with the major daily Fibonacci .786 retracement at 135.55. After that July coffee is free to test the contract high of 141.75. If July coffee breaks out to new contract highs look for a quick rally to the 1999 high of 145.00 followed closely by the major monthly Fibonacci .382 retracement at 147.15. Given the fact that London coffee (LIFFE Robusta) has surged to new multi-year highs every week for the last five weeks, it seems likely that New York coffee is poised for a price spike. Something is brewing in this market! Near term support is at the daily May low of 116.00. Further support is at the daily April low of 112.75. If July coffee trades below these lows it could pressure the market down to the major daily Fibonacci .618 retracement at 100.45 in confluence with this year's low on the daily chart at 99.35. Open Interest is sitting pretty flat at multi-month lows. The %R overbought/oversold indicator shows that coffee is near overbought levels on the monthly chart. Seasonally, coffee should move lower in June. Commercials are now holding the smallest net short position since early November. Large traders (hedge funds) are holding the smallest net long position since mid-November. Small traders are neutral.

July cocoa finds near term support at last week's new contract low of $1,392 in confluence with the weekly October low of $1,390. Further support is at the 2004 double bottom on the weekly chart at $1,299 and $1,300. Near term resistance is at last week's high of $1,445 (July cocoa has made lower weekly highs for eleven consecutive weeks) in confluence with the 18-day Moving Average that it has not closed above for two and a half months. Watch the 9-day Moving Average /18-day Moving Average crossover level as well. The 9-day Moving Average has closed below the 18-day Moving Average every day since March 24th. If the Moving Averages crossover again it could be a good clue that the sell off is completed. If this happens cocoa could easily rally back up to the current major daily Fibonacci .382 retracement at $1,573. Further resistance is at the current major daily Fibonacci .618 retracement at $1,686 in confluence with the daily April high of $1,688. Open Interest is at a two month high. The %R overbought/oversold indicator shows that cocoa is nearly oversold on the daily, weekly, and monthly charts. Cocoa has a seasonal tendency to establish an important seasonal low in early June and then move higher for the rest of the month.  Commercial are holding the smallest net short position since October. Large traders are holding the smallest net long position since September. Small traders are neutral.

July sugar finds near term daily resistance at last week's high of 8.92 in confluence with the current major daily Fibonacci .382 retracement at 8.92. Further resistance is at a daily chart gap between 9.10 and 9.19. After that July sugar could challenge the contract high of 9.40. If July sugar breaks out to new highs there may be nothing to stop it from hitting the ten cent mark. Near term support is at last week's low of 8.59. (Sugar has made higher weekly lows for the last four weeks). A drop below it could allow the market to test the current daily Fibonacci .618 retracement at 8.43. If sugar does not stabilize here it could easily hit the daily May low of 8.21 or even the daily April low of 8.13. Further support is at the psychological 7.50 area. Open Interest is flat. The %R overbought/oversold indicator shows that sugar is overbought on the daily chart and nearing overbought on the monthly chart. The Seasonal index shows that sugar should decline into an important seasonal low in mid-June and then move higher in the second half of the month.  Commercials are holding the largest net long position since the spring of 2004. Large traders (hedge funds) are holding the biggest net long position since then. Small traders are bearish on sugar.

July orange juice spent ten consecutive trading days trading on both sides of the major daily Fibonacci .382 retracement. If the market can close above the daily May high of 96 cents it could gain another two cents and test the major daily Fibonacci .382 retracement at 98.10 or the 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 catapult July OJ to the weekly 2002 high of 106.00. Near term support is at the daily May low of 90.35. A break below it could cause the market to slide 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. Open Interest is flat. Seasonally, OJ should decline sharply in June.  Commercial are holding the smallest net short position in just over a year. Large traders are liquidating a lot of their large net long position. Small traders are the least bullish since August of 2003.

July cotton spent the last three trading days hanging out on either side of the current major daily Fibonacci .618 retracement. This market is just hanging by a thread. A break below last week's low of 47.45 could cause a decline to the current major daily Fibonacci .786 retracement at 45.81. Further support is offered at the daily February low of 45.28 and the January 28th reaction low of 44.95. Near term resistance is at last week's high of 49.95 (July cotton has made lower weekly highs for five consecutive weeks) followed closely by the 18-day Moving Average that it has closed below most of the time for the last month. Further resistance is at the current major daily Fibonacci .382 retracement at 51.45. A strong close above it could encourage the bulls to run this market up to the current major daily Fibonacci .618 retracement at 53.79. Open Interest is at a three and a half month low. The %R overbought/oversold indicator shows that cotton is oversold on the daily chart. Cotton has a seasonal tendency to move sideways to higher in June.   Commercials are holding the smallest net short position since February. Large traders (hedge funds) are holding the smallest net long position since then. Small traders are neutral on cotton again.

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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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