Market Update:February 8, 2012

Buy 23.34 stop. Protective stop 22.28. Potential projection 26.00. Potential risk $1060. Potential reward $2580.
Reasons for the Trade:
1. On the monthly chart cocoa closed back over the 100 day ma last month with follow through this month.
2. On the monthly chart cocoa is back over the 22.00 support.
3. The weekly chart formed a key reversal bottom in mid December that is still intact.
4. On the weekly chart cocoa closed over the downtrend formed since the late August high for the first time last Friday.
5. On the weekly chart, last week's low held at the 22.00 support. That is positive.
6. On the daily chart cocoa appears to be forming an uptrend. The recent sell-off could be the correction to the second wave up.
7.  A buy would negate a sell triggered today.  Normally when a market does so that quickly it follows through in the new direction.
 
Sell March dollar. 
Sell 78.850 limit.  Protective stop 79.650.  Potential projection 77.400.  (Potential risk $800.  Potential reward $1450.
Reasons for the Trade:
1.  The monthly chart is forming a preliminary key reversal top.
2.  The weekly violated the 20 day ma this week.
3.  On the daily chart the dollar violated the 100 day ma and closed below it today.
4.  On the daily chart the dollar closed under the 79.000 support.
5.  On the daily chart a buy signal was negated today.  Normally when a market does so that quickly, it follows through in the new direction.
 
GRAIN COMMENTS:  
 
MAR CORN:   I have tried to buy corn.  The price was reached during the night session but not during the day session.  Its trading pattern is beginning to resemble the same trading pattern that plagued the market in October into November.  At that time it struggled at 675 for quite some time to only fail.  It now seems to be starting the same behavior at 650.  Just watching.  Closed 642 1/4, down 2.
 
MAR MINI WHEAT:  I tried to buy it today.  The price was not reached.  Russia's wheat crop has been damaged by the bitter cold there but the market is not reflecting it.  Instead wheat is starting to form the same trading pattern it did in the same price range last October and November.  Just watching.  Closed 662 1/4, down 6 1/4.
 
MAR MINI BEANS:  Both the long-term 40-year seasonal average and the medium-term 15-year seasonal average forecasts that soybeans should establish an important seasonal low sometime between mid- to late February.
Technically they are in resistance and could sell off from the current level.
The daily chart appears to be forming a double top.  They made a high on Jan. 3 at 1244 3/4.  Yesterday's high was 1244 before they started to sell off.  Just watching.  Closed 1232, down 1.
 
MAR MEAL:  It rallied to the 330.00 resistance on the daily chart yesterday and stopped.  The 150 day ma hovers above that.  On the weekly it is back under the 100 day ma.  The 150 day ma is 2.00 below the market.  Failing that should push meal a lot lower.  Closed 325.40, down 2.10.
 
MAR BEAN OIL:  Open interest has jumped nearly 20% from the low seen a month ago. This suggests that bean oil is setting up for a sizable move.  Watching closely.  Closed 52.17, up .01.
 
MEAT COMMENTS:
 
APR HOGS:  The rally that topped last week reached the 100 & 150 day ma on the daily chart and stopped.   Both those averages intersected at the same level.  Prior to that, the hogs did build a base between 85.75 up to 89.50 approximately.  Last week's rally broke out of that to the upside.  Could this sell-off be a test of that breakout?  On the monthly chart hogs have held around the 20 day ma and are triggering a buy.  The last time they sold off to the 20 day ma was in Nov. 2010.  That was the bottom of the market at that time.  That also suggests that on the monthly chart the 20 day ma is an important support.  On the daily they have been in an uptrend since the Dec. low.  This recent sell-off appears to be the correction to a third wave up.  If that be the case this sell-off should reach for 87.80 down to 87.50 to be comparable to the other corrections.  If they hold there, expect another wave up.  Just watching.  Closed 89.10, up .32.

APR CATTLE:  After they finally rallied back over the 20 day ma on the daily chart in late December, sell-offs have held that average consistently.  They did so again during this most recent correction.  On the daily chart they have been in a near term downtrend since the Jan. 25 high.  They need to take out 129.32 to change that.   Long term they are in resistance but just looking at the monthly chart, they sure suggest higher prices.  Closed 128.57, up 1.15.
 
SOFTS:
 
MAR COTTON:  I tried to buy it today.  It sold off instead and triggered a sell.  It is now back under 95.00 support.  If cotton takes out 92.69 that would be very negative and suggest a target of 90.00.  Long term they continue to do a lot of consolidation.  Normally when a market does that after the considerable major sell-off that cotton has had, it is to set up for a strong rally.  Cotton has yet to have that occur since the high made in March 2011.  It is overdue.  Just watching.  Closed 94.57, down 1.74.
 
MAR ORANGE JUICE:  Today it not only violated but closed under the 20 day ma on the daily chart for the first time since it started its major rally in early January.  That is not good.  The major rally could be over with.  Long term this month's high corresponds with the high made in early 2007.  That was major resistance and last month's rally over that could have been a "blow off" as it is now back under major resistance.  Closed 195.85, down 5.65.
 
MAR COFFEE:  The 40-year seasonal average indicates that coffee normally strengthens throughout the month of February. However, the shorter 15-year seasonal average indicates that coffee normally plunges in the first half of February and then recovers in the second half. Therefore, the odds of a rally are much better for the second half of the month than the first half.  As of now, the monthly is triggering a preliminary sell signal while the weekly already has one.  On the weekly coffee is trying to get back over the 100 day ma.  But the 20 day ma has put a lid on rallies on the weekly since coffee violated it in September.  Right now that average intersects up at 227.50 approximately.  So if the market can get to that area, its reaction could be critical.  On the daily it violated the Dec. 19 low but did not follow through immediately.  It could try for 230.00 before resuming the downtrend.  Those two numbers are areas to watch.  The market still suggests 200.00 longer term. Closed 223.65, up 1.95.
 
MAR COCOA:  I have tried to buy cocoa.  It triggered a sell today instead.  It still appears to be basing and possibly starting a third wave up.  If it can negate that sell signal tomorrow that would be very positive.  I'll try again tomorrow.  See Trade Alert for details.  Closed 22.73, up .10.
 
MAY SUGAR:  Switching to May.  It triggered a buy today and rallied to 23.87.  Keep stops at 23.20.  Closed 23.58, down .16.
Position:  Long 23.85 (2.7).
Projection:  25.00.
 
METALS & ENERGY COMMENTS:
 
MAR COPPER:  It continues to hold above the 150 day ma on the daily chart.  It also has the support of the 20 day ma.  To turn negative at this time it needs to 374.00 on a closing basis with follow through.  The long term charts are supportive too.  Copper still suggests an attempt at 400.00.  Closed 387.60, up 1.15.
 
APRIL GOLD:  Switching to April.  It triggered a sell yesterday but did not follow through.  It started to consolidate on the inter day chart and got back over the 20 day ma.  I exited.  Gold normally sets its February high in the first couple of trading days of the month and then declines until at least mid-March, according to the 40-year seasonal average.  With that in mind it will be interesting to see if it takes out the high made Feb. 3 at 1765.90.  That is the area to watch.  Closed 1749.60, up 24.70.
Position:  Short 1724.50 (2.6).  Exit 1725.30.  Loss $81.40 (+comm/fees).
 
MAR MINI SILVER:  It looks headed for 35.000.  It has been consolidating since Jan. 26.  The key will be 35.000.  That is where it got into trouble in early November.  Just watching.  Closed 34.194, up .444.
 
APRIL MINI CRUDE OIL:  In spite of today's strength it continues to look like it is forming a huge top.  It violated the uptrend formed since the October low in late January.  Numerous attempts to get back over it failed.  It finally sold off to 95.81 last week.  It now appears to be trying for 100.00 again.  Just looking at the monthly chart, crude suggests higher prices.  But the weekly has a sell.  Bottom line, this market could probably go either way.  Just watching.  Closed 98.08, up 1.67.
 
CURRENCIES & FINANCIALS:
 
MAR MINI JAPANESE YEN:  The recent sell-off stopped at the 100 day ma on the daily.  It also closed back over the 20 day ma today.  Did it change anything long term? Not yet anyway.  About the only negative is that it is struggling at resistance on the monthly and is starting to back off.  The weekly chart isn't showing anything.  Closed 130.34, down .28.
 
MAR SWISS FRANC:  The daily chart suggests that the swiss is primed for a good rally.  It has a lot of consolidation under it and is trying to get over the 100 day ma.  If it can break out over 110.00 it could go to 112.00 for starters.  On the weekly it is finally getting over the 20 day ma for the first time since the complete collapse under it in September.  The monthly has a key reversal bottom.  Closed 109.53, up .65.
 
MAR DOLLAR INDEX:  It triggered a buy yesterday and that was quickly negated today.  In doing so, it failed to hold the 100 day ma.  The follow through on the downside has started.  As mentioned in an earlier report, if this sell-off is comparable to the previous major sell-off that started in early October, this sell-off could reach 77.000 at least.  A trade could be developing.  See Trade Alert for details.  Closed 78.675, down .511.
 
MAR MINI EUROCURRENCY:  It triggered a buy today with follow through.  It also closed over the 132.00 resistance.  That is positive.  Keep stops at 130.27.  Closed 132.48, up 1.23.
Position:  Long 132.22 (2.7).
Projection:  136.00.
 
MAR CANADIAN DOLLAR:  Stops were reached on January 25.  It was also an outside day and the CD triggered another buy the following day.  It has continued to rally since.  The current high is 100.63.  Closed 100.36, up 8.
Position:  Long 99.13 (1.19).  Exit 98.44 (1.25).  Loss $745 (+comm/fees).
 
MAR AUSTRALIAN DOLLAR:  An inside day yesterday triggered a buy today.  It also made a new high for the move at 107.72.  Long term it is in resistance but it could try for more.  The reason being the monthly triggered a buy just last month and looks like it might try for 110.00.  Closed 107.42, up .60.
 
MAR E-MINI S&P:  As pointed out before, the monthly has a buy and looks headed for the 1373.50 high.  If this is a third wave up since the March low, it has a potential projection to 1440.00.  Watching closely to buy.  Closed 1344.75, up 5.75.
 
MAR 10 YR. NOTES:  An inside day yesterday triggered a sell today.  They closed under the 20 day ma.  That is the second sell since the Jan. 31 high.  They have a potential projection to 130.150 near term.  Closed 131.050, down .165.