CRB: Still technically bearish.  Wave 5 downside not yet completed, bearish triangle developing.  Bearish bias prevails as long as price remains under the triangle resistance line drawn from the 1-09 and 2-13 highs (currently @ 192-15).

ENERGY:  Picture continues to evolve. Downside bias increases somewhat. After current murkiness clears, a broad-based energy rally to the strong Apr/May timeframe may be anticipated.

HO: Given mild commercial selling, a re-test of the 50-51 area is the most likely near-term pattern. Such a re-test would put in a major bottom of the long slide from the 11-00 highs.

HU: Developing into a favorite short. Commercials are at levels consistent with recent tops. A final plunge to re-test Nov’s low in the 50 area is most likely.  This would put in a major bottom and setup for a rally to the strong Apr/May season.

CL: The choppy rally from Nov. lows is very toppy as commercials are covering their longs and heading to net short levels consistent with recent highs. Keep very tight stops on any CL longs. Look for a mild break above 1-07 high then a final collapse to re-test the Nov. low and put in a major bottom prior to a rally into the bullish Apr/May season. Probability is increasing that the Nov. low will hold. 

NG: from 1-31 (@2.15):”…Awesome bullish setup…very attractive risk/reward profile.” From 2-15 (@2.20): “…a favorite long for the past 2 weeks”.   Now at 2.357, keep tight stops on longs at 2.28 or higher.  Commercials are moving to neutral from huge net long. Let this rally go as far as it will, cover, then look for re-entry after retracement.

METALS: Approaching seasonal weakness with short commercials.  Longer-term, recent new highs confirm technical bottoms in some markets.

GC: A favorite short on 2-15 (296.70), GC remains bearish with very net short commercials. A pullback to the 270 area may be necessary to generate commercial buying. Look for lower prices as bearish Apr/May lies ahead.

SI: Forming a major bottom in a range-bound choppy sideways pattern. Favor the downside of the range as commercials remain very net short & weak seasonality lies ahead.

HG: From 2-15 (@73.00): “…keep tight stops on any longs as HG is short-term toppy”.  HG collapsed the following day, as commercials were extremely net short at the 2-13 technical and seasonal peak. As a major bottom was likely established in Nov., look for consolidation with downside bias in the weeks ahead. Commercials remain very net short ahead of the weak May/Jun season.

PA: A favorite short situation from 1-31. PA has remained flat. A downside re-test with targets of 271-275 is the best chart interpretation.

PL: The PL favorite short from 1-31 has failed to develop. A short-term blip to 514 is plausible in the days ahead, followed by a selloff.

BONDS/ NOTES:  Extended rallies generally reflect weak economic prospects and low demand for credit.  Generally not great trading patterns at this time.

US: Commercials indecisive. The least informative of the interest rate charts. 

TY: Commercials very supportive.  The elongated rally from the 12-17 low speaks to low credit demand in a weak economy. Not a great pattern for short-term technical interpretation.

FV: Short-term upside most likely. Note the bullish descending triangle on cash $FVX (CBOE 5 year interest rate index). Commercial posture consistent with minor rally.

TU: Commercials hugely supportive of the on-going rally. New high is now technically plausible.  If so this economy is far weaker than generally believed.

CORPORATES: Renewed pressure on lesser-grade corporate yields speaks to the on-going economic uncertainty and continuing relative risk of corporates over treasuries.  As the credit quality spread is at a 3-year high, we still believe this price area is a good accumulation zone for mid-grade corporate bonds (directly and through exchange traded closed end funds).

STOCKS:  The major indices remain a mixed picture in this choppy post-bottom (9-21) environment. The most remarkable feature of the U.S. stock markets is the large number of Nasdaq 100 stocks moving together in a unified final downtrend. There simply is no similar group of stocks moving up on the bullish side at this point.

OTC/ NDX: The OTC composite and the NDX need to take out their 2-22 lows at least marginally in order to put in a meaningful post 1-09 bottom and set up for a summer rally. The ideal timeframe would be in the next 6 weeks, consistent with a taxtime low and the April earnings release season.  The OTC is currently dominated by dozens of “brand name” tech stocks which need to take out their 9-21 lows before the broader index can bottom.

SPX: The 2-20 low is technically acceptable as a post 1-07 bottom. The downside pressure from the OTC increases the likelihood of a test, however. Internally the OEX is in much better shape than the NDX.  We note an increasing number of SP500 stocks setting up for accumulation (SBC, TXN, KO, F, CCU, and even AOL and EK as examples).

DOW: From 2-15: “…the Dow Industrials and Russell 2000 are in positive patterns vs. the less clear S&P 500 and OEX. The NDX and OTC are most bearish of the lot.”  Today the Dow pattern remains very much to the short-term upside with a target above 10,400 by mid March. 

RUT: The Russell 2000 has an orderly Elliott pattern with a clear turning point bottom on 2-22. The upside probability of testing the 1-09 high in the near-term is not nearly as strong as the Dow, however, with slightly less than 50-50 likelihood.

            SPECIFIC STOCKS SHORT:  Our short sale selections continue to perform very well as follows (entry price, current price, % profit, current stop) from 1-18: TLAB (15.95, 10.26, 36%, 11.58) BRCD (35.36, 21.97, 38%, 25.14) JNPR (17.00, 9.32, 45%, 10.50) JDSU (8.18, 4.85, 41%, 5.35) AMCC (10.41, 7.69, 26%, 8.88) CIEN (13.54, 7.76, 43%, 8.75) VRSN (33.95, 23.73, 30%, 26.26) from 2-15: ICOS (44.70, 42.90, 4%, 46.00) BEAS (16.00, 12.71, 21%, 14.60) CHKP (29.80, 27.92, 6%, 31.45) MOLX (29.04, out 2-27 @ 30.16, -4%) CNXT (11.38, 10.24, 10%, 11.20) NTAP (18.84, 15.99, 15%, 18.41) CMVT (17.46, 15.65, 10%, 17.45) ADLAC (19.97, 21.95, 10%, 23.41) RFMD (17.50, 15.64, 10%, 17.00) SANM (12.60, 10.15, 19%, 11.15) SUNW (8.90, 8.51, 4%, 9.37) MOT (12.74, 13.00, -2%, 13.80) INFS (17.00, 17.36, -2%, 18.45) RSH (27.59, 27.44, 0%, 28.50) HWP (20.36, 20.12,  1%, 21.21) CPB (26.58, 26.74,  –1%, 27.40).

SPECIFIC STOCKS LONG: In this whipsaw market environment our long selections have less consistent than our shorts: from 1-25: MO (49.90, 52.61, 5%, 51.40) LTD (17.16, 18.01, 5%, 17.31) SBUX (22.88, 23.01, 0%, 22.20) from 2-15: SBC (37.12, 37.84, 2%, 36.80) TXN (31.50, 29.35, -7%, 29.60) CCU (48.90 out 2-27 @ 46.30, –5%) XRX (10.00 out 2-20 @ 9.49, -5%) NSC (21.30, 24.32, 14%, 22.10) UIS (11.95, 11.10, -7%, 10.76) G (33.23, 34.19, 3%, 33.44) DD (44.90, 46.84, 4%, 45.80) HD (50.52, 50.00, -1%, 49.70) INTC (32.29, out 2-28 @ 29.17, -9%) IDTI (30.88, out 2-27 @27.42, -11%) AMZN (13.41, 14.10, 5%, 12.95) ADBE (35.69, 36.38, 2%, 34.50) AMAT (47.20 out 2-21 @ 43.72, -7%) OPWV (6.21, 5.59, -10%, 5.00) SEBL (32.86, out 2-22 @ 28.71, -12%) SRI (8.40, 8.60, 2%, 8.25) ABAX (6.34, 6.60, 4%, 6.10) CDMS (10.75, 10.95, 1%, 10.45) VVI (25.33, 24.90, -2%, 24.40) WDC (5.98, 5.81, -3%, 5.30) LION (7.45, 7.20, -3%, 7.15) OS (6.05, 5.85, 3%, 5.50) ROC (5.16, 4.80, -7%, 4.46) FPF (3.38, 3.32, -2%, 3.10) TTF (4.85, 4.95, 2%, 4.58) TRF (20.00, 19.80, -1%, 18.90) EWS (5.61, 5.51, -2%, 5.28) EWJ (7.27, 7.47, 3%, 7.30) EWA (9.68, 9.53, -2%, 9.38) IFN (10.82, 10.86, 0%, 10.74) HIS (3.70 out 2-21 @ 3.45, -7%) COY (9.04, 8.82, -2%, 8.65) KYT (8.13, 7.99, -2%, 7.83%) DSU (6.56, out 2-28 @ 6.53, -1%)

FOREX: Note that we are leaving the Nov/Dec timeframe that is typically WEAK for the U.S. dollar and heading into the Apr/May period where products invoiced in dollars (Oil, Grains, etc.) rally, pushing up demand for the greenback.  Numerous currencies (JY, AD, CD, etc.) likely forming major bottoms.

            DX: Further blip upside is likely to narrowly take out the July 00 high with a target in the 121 to 125 range by mid to late April. Commercials selling short into this rally, keep tight stops on any longs.

Euro: From 2-15 (@8736): “ … a favorite short…we resume our downside bias with current targets of 7900 to 8170 going into the bearish Apr/May season.”  Now (@ 8656) we look for EC near term to break the Jan cash low of 8578 with a short-term target in the 8540 range. Over the next few months the EC continues to look vulnerable to a test of the 7-01 and even the 10-00 lows.

BP: Look for immediate blip down to the 1.400 area. A re-test of the Jun 01 1370 cash low is appearing more likely over the next month or so with ultimate bottoming targets in the 1300 to 1310 area.

            JY: From 1-31:”… Look for a final bottom plunge to 7380 – 7390.” JY looks very close to a major bottom. Multiple 5-wave technical chart completions are possible in the 7340 to 7375 range in the days just ahead. Commercials are supportive. Note the synergy with the Nikkei pattern. From 1-04: “…Look for a rally in the Nikkei to precede any stabilizing in the Yen”  and from 1-31: “…the Nikkei bottom is overdue. Note the bottom reversal bar in EWJ (Japan WEBS) on 1-30!”  And from 2-15: “…EWJ (the Japan WEBS traded on the AMEX) completed a weekly, daily, and 60-minute bottom on 2-05 and 2-06 at 6.71”. The Nikkei is now rallying smartly with the JY likely not far behind. We’re putting it on our Favorite Long watchlist, a bit prematurely but well worth watching.

ME: An on-going Favorite on the Short-Sale Watchlist. Currently the world’s most toppy chart. The ME makes a new 10-day intra-day and closing low on 2-28. Is this the beginning of the collapse? Time will tell. Our best guess is that 2-13 saw the high in Peso cash. Commercials go further net short. Very bearish.

            AD: The rally from the Sept lows is very much a mirror of the Sydney stock exchange. We’ve highlighted the on-going rally in Aussie and Asian stocks and the apparent major bottoms forming in many of these markets. While Australian stocks look short-term toppy (EWA, Aussie WEBS), the AD congests sideways.

            CD: Blip rally from 1-18 cash low is stalling in a choppy/sideways pattern as commercials move off of net longs.  Technically a major bottom is developing.

MEATS:  In the peak Feb/Mar season.

  LC: From 2-15 (@ 7370): “…at a short-term top...a final blip rally should present good short-side opportunities.”  LC sold off the following day. Both Apr and May cattle are now poised for a final rally to a Feb / Mar peak season high.  Likely to take out the 2-11 high short-term.  Longs should have initial stops at the 2-26 lows. After any such rally substantial downside is likely given the very short commercials and the bearish seasonality ahead.

LH: A final blip rally to the Mar / Apr peak hog season is technically likely. Keep tight stops on any longs, as commercials are very net short at this point.


W: A favorite short on 1-17 (W @ 300.75) “…beware the toppy Chicago W charts“. We continue to tighten stops on this short sale. From 2-15: “…keep tight stops on shorts as commercials are moving to flat from net short.”  Stop at 269 basis March to capture profits. Commercials are moving further net long in setup for a rally.  

            S: Along with the CRB, SI, CL, etc., beans are forming a major bottom with a choppy sideways pattern. Commercials are very supportive and bullish Apr / May planting season lies ahead.

C: A poorly defined pattern. All short-term bullish: Wave count completion from the Jul high to the Feb low, commercials net long, positive Apr / May season ahead.


            CO: An on-going favorite on the Short Sale Watchlist. Commercials hugely net short at a technical chart top in the peak season. Very toppy.

            SB: A favorite short from 1-17 (SB @ 7.48),  From 2-15: “…keep very tight stops on shorts…”  With the plunge on 2-28, exit shorts on very tight target and trailing stops. One blip down may remain in the days ahead but commercials are moving to setup a significant rally.

OJ: A favorite long from 1-31 (@ 86.4) “…hitting the Dec / Jan low on an Uptrend correction…look for a rally beginning in the days ahead. Target high: 95 to 102”. From 2-15 (@89.90): “…a favorite long situation”. Now (@ 92.55), current upside targets are sharpened to the 99 to 102 range.

CT: A favorite short from 2-15 (@ 35.57): “… a final plunge to test the Oct 01 low”.  Now (@ 33.70), CT continues to look like further downside ahead.

KC: Setting up for at least a brief rally. Commercials going net long with chart at a technical bottom. Don’t expect more than a blip (like the Oct, Nov, and Feb head-fake rallies.