Erich's Update for Thursday, February 3, 2005

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Market Update for Thursday, February 3, 2005
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Hot off the commodity presses to you!

Erich
http://www.supportandresistance.com

"Pessimism ought to be considered a sin." - Conrad Hilton
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1: MARCH CORN
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CH5 O=196 HI=196 1/4 LO=195 CL=195 1/4

My fears were confirmed today when the bottom fell out
of the corn market. Not a real surprise however as buying
the market was a riskier countertrend trade...and I knew
I shouldn't have done it...but it was worth the risk.

The "good" news is that we're back to solid support and
a break below 195 should see prices continue lower to the
next weekly support at 191 and 184. 191 is obviously too
close to work, so we'll have to be a little more aggressive
and try and sell it to 184.

*SELL March Corn at 194 1/4
*Stop 196 1/4
*Approximate Risk Exposure: $100 per contract
*Profit Target: 184 3/4
*Approximate Profit Potential: $475 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate

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2: MARCH COTTON
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CTH5 O=4400 HI=4450 LO=4375 CL=4427

Okay, close enough. I don't think we're going to see
a test of 4500 as RSI is currently at a test point and
as such we could see a reversal as early as tomorrow.

If you wanted to be really aggressive you could sell
the market in anticipation of the resistance holding. If
we saw cotton open 4500 - 4500 you could sell it with
stops above 4500.

A more traditional sell would be to short below today's
support at 4370 - 4375. Covering the trade above 4400 would
place less than $200 at risk, which is good for cotton.
Profit target is 4250, but prices could go lower still.

*SELL March Cotton at 4367
*Stop 4402
*Approximate Risk Exposure: $175 per contract
*Profit Target: 4251
*Approximate Profit Potential: $580 per contract
*RRR: 3:1
*Degree of Risk: Moderate

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3: MARCH BEAN OIL
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BOH5 O=1910 HI=1915 LO=1892 CL=1894

"Annoyed" is the word that best describes my attitude
towards bean oil right now. Each market has it's own
personality, and bean oil's personality is to try and
whipsaw you out of the trade before it makes a break
for it. This market has more moves than Shaq, Kobe and
Jordan combined.

Just sitting and stewing more tomorrow.

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4: ARPIL LIVE CATTLE
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LCJ5 O=8865 HI=8875 LO=8817 CL=8825

Cattle ran headlong into the resistance at 8870 - 75
and put on the brakes. Obivously I was hoping for a
stonger session so we could move our stops to break
even for tomorrow, but right now things aren't looking
so good.

We've got support at the 8815 area - I just hope it's
enough to hold the market up, otherwise I'm going to bail.
You can leave exit stops where they are, or bring them
just under today's low.

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5: MARCH COCOA
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CCH5 O=1575 HI=1606 LO=1575 CL=1603

Doesn't that just frost your cookies! This is the fifth
time (yes, I've counted) that we called cocoa beautifully
only to have the market gap our order and keep us out
of the trade. I'm beginning to think I've got to buy the
market on the open in order to have a chance at getting
into this market!

Sadly I expect cocoa to head higher tomorrow as well;
however there's not enough profit potential left to make
a trade worthwhile.

Sitting this one out.

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6: MARCH WHEAT
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WH5 O=291 1/2 HI=291 1/2 LO=287 3/4 CL=288 1/4

Got the bounce we were looking for in wheat today when
prices tested the RSI trendline. You would have easily
gotten filled if you were more aggressive and shorted
below yesterday's low; however it was hit 'n miss if
you got filled from the weekend order as prices only
made the low in the closing moments of today's session.

If you didn't get short today you can sell the market
again tomorrow; however I'd recommend giving prices a
couple of ticks before placing your order. First target
is 278 3/4.

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7: MARCH CANADIAN DOLLAR
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CDH5 O=8100 HI=8101 LO=8053 CL=8080

Yet another good bounce off the 8100 resistance line
today. You could place a buy order above the 8100 line
and look to trade the CD to 8200, which is the likely
target if the market advances; however I'm sticking with
the short side for now.

Friday's US interest rate report is likely to have some
effect on the CD as well.

*SELL March Canadian Dollar at 8014
*Stop 8037
*Approximate Risk Exposure: $230 per contract
*Profit Target: 7916
*Approximate Profit Potential: $980 per contract
*RRR: 4:1
*Degree of Risk: Moderate to HIGH

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8: MARCH SILVER
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SIH5 O=673.5 HI=682 LO=672 CL=675

Silver continues to tease as prices test resistance and
support. No doubt traders are watching the US dollar to
see whether they need to buy silver as a hedge or put
their money elsewhere. Silver's likely to remain choppy
tomorrow as well in anticipation of Friday's report.

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9: DECEMBER EURODOLLAR
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EDZ5 O=96.30 HI=96.31 LO=96.245 CL=96.25

Today's drop in the ED was a bit of a surprise as the
market broke mild support at 9629 in advance of Friday's
interest rate report. I want to sell the market tomorrow
however today's large-ish range is making it difficult
to get a decent RRR before encountering support.

Maybe we'll get lucky and rates will stall tomorrow
so we get another chance.

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10: WILD CARD
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No wild card market tomorrow.
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