CRB: A number of significant breakouts from energies to metals to grains, even coffee have combined to generate a technically important breakout in the CRB.

ENERGY:  With recent breakouts, major bottoms are confirmed and longer-term substantial upside is likely. Near-term these symbols are generally toppy with commercials moving to neutral and net short from recent huge net longs.  Long positions should generally have extremely tight stops, looking for a brief pullback followed by further upside heading into the peak late April/May season.  The recent impressive breakout of Energy Stocks lends further support to the bullish case for energy.

HO: The 3-05 breakout above .60 confirms a major 5-wave bottom in place as of Dec. 01. Short-term commercials are at net short levels consistent with recent tops. Keep very tight stops on any longs. If hit, look for bullish re-entries as HO is likely to angle higher into May/June.

HU: A short setup never developed and the upside breakout on 3-01 seals the Nov 01 lows as a major bottom.  Short-term, HU is very toppy with commercials moving net short. Keep very tight stops on longs. Energy pullbacks are likely to be shallow buying opportunities heading into May/June.

CL: From 3-01: “…Keep very tight stops on any CL longs. Look for a mild break above 1-07 high…” We got a strong break instead, underscoring the basic strength of energies and the likelihood that the Nov. 01 lows will hold in any re-test. CL is now very toppy short-term and commercials are further net short. Look for a brief pullback (probably in concert with a stock market breather) then higher highs heading into the seasonally strong late Apr/May timeframe.

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”.   From 3-01: …”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.”  Now at 2.92 (having broken 3.00), NG is short-term toppy.  Longer-term NG remains very bullish.

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 short-term bearish.  Commercials are still net short, GC is falling vs. all major Forex and the weak Apr/May metals season lies ahead.

SI: From 3-01: “…Forming a major bottom in a range-bound choppy sideways pattern.”  This view still holds. Commercials are very net short so don’t expect much on the upside of this range.

HG: A favorite short situation. The recent blip on 3-07 took out the 2-13 high and completed a 5-wave Uptrend from the 11-07 low. HG is now at a short-term top with very net short commercials. See also the toppy LB contract.  Longer-term the bullish news is that recent breakouts confirm Nov. 01 as a likely major low.

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.  A likely selloff in PL would reinforce bearish tendencies in PA.

PL: From 3-01: “…A short-term blip to 514 is plausible in the days ahead…” The blip hit 527 and may yet have one final brief upside leg short term. HOWEVER, commercials are at their largest net short position in over 12 months.

BONDS/ NOTES:  What a difference 2 weeks makes!  Economic reports have generally been supportive of the view that the economy is strengthening and our “leaders” in Washington managed to pass a fiscal stimulus. Add to that the CRB uptick and a stalling DX. With this combination the toppy bond and note charts backed up easily.  Where from here?

US: Target 93.50 to 94.50 basis June by early April. However, Treasury yields $TYX have already hit post-October highs and recently took out the Dec high, completing an Elliott 5-wave advance from October 01. We note also the ominous Head & Shoulders pattern developing (Oct ’01 as the Head) longer-term.  Commercials are flat with low open interest but lower prices should attract commercial buying.

TY: Note the huge textbook H&S pattern developing longer-term. Commercials more supportive of TY than US.  A potentially interesting message from the markets: 1) Further yield curve steepening  2) Huge commercial shorts in energy, metals and lumber 3) Commercials net long Notes.  Is the bullish economic consensus on Wall Street suspect?  While we think 2002 will be as strong or stronger than 2001 it will likely be more anemic than generally believed.

CORPORATES: 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 recent rallies from the 2-20 and 2-22 lows have accomplished several things:  1) More bottoms are being put into NDX stocks, especially larger caps  2) The major indices are behaving in greater synchronicity than in anytime since the 9-11 disaster.  In hindsight we will likely find the 1-07 and 1-09 highs to be a major Wave 1 top, followed by a major Wave 2 bottom on 2-22.  The current rally is likely to top soon, followed by a pullback into seasonally bearish April. However, this April pullback, if any, is likely to HOLD above the 2-22 lows.  Very importantly this pullback would be the first post-bottom test of many important marquee tech stocks.  Assuming they pass the test such a pullback would set us up for a strong Summer rally on the back of the introduction of single stock futures.

OTC/ NDX: Commercials are supportive of higher highs short-term. Currently targeting 1800 to 1850 on the Nasdaq 100 by late March.  Note the number of larger-cap NDX stocks rotating from “final downturn” to “bottoming” including: CMVT, PMTC, ATML, NXTL, SANM, JNPR, QCOM, VRSN, CTXS, JDSU, HGSI, DISH, LLTC, MOLX, NTAP, YHOO, CNET, AMCC, and ITWO.  While numerous NDX stocks are still in downlegs, because they tend to be smaller-caps their weightiness on the index is lessened.

SPX: Currently targeting 1200 by late March/ very early Apr.  This would be the early phase of a large Elliott 3-wave heading into the Summer Rally.  Look for this rally to then selloff into mid April with the 2-20 low holding and breadth improving.

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.”  From 3-01: “…Today the Dow pattern remains very much to the short-term upside with a target above 10,400 by mid March…  Today the DJIA has likely one final blip rally left to take out the 3-08 high and hit, say 10,700 plus by month’s end.

RUT:  From 3-01: “…The Russell 2000 has an orderly Elliott pattern with a clear turning point bottom on 2-22.”  Currently targeting the 514 to 530 range by early April.

            SPECIFIC STOCKS SHORT:  Our short sale selections over the past several months were largely stopped out for good profits in the recent rally.  (entry price, current price, % profit, current stop) from 1-18: TLAB (15.95, out 3-04 @ 11.75, 26%) BRCD (35.36, out 3-04 @ 25.50, 27%) JNPR (17.00, out 3-04 @ 10.75, 36%) JDSU (8.18, out 3-04 @ 5.55, 32%) AMCC (10.41, out 3-04 @ 9.00, 13%) CIEN (13.54, out 3-04 @ 8.88, 34%) VRSN (33.95, out 3-04 @ 27.20, 20%) from 2-15: ICOS (44.70, out 3-04 @ 46.25, -4%) BEAS (16.00, out 3-05 @ 14.70, -8%) CHKP (29.80, out 3-04 @ 31.70, -6%) MOLX (29.04, out 2-27 @ 30.16, -4%) CNXT (11.38, out 3-04 @ 11.30, 0%) NTAP (18.84, out 3-04 @ 18.50, 0%) CMVT (17.46, out 3-06 @ 17.50, 0%) ADLAC (19.97, out 3-04 @ 23.50, -18%) RFMD (17.50, out 3-04 @ 17.15, 2%) SANM (12.60, out 3-04 @ 11.25, 10%) SUNW (8.90, out 3-07 @ 9.40, -6%) MOT (12.74, out 3-04 @ 13.90, -9%) INFS (17.00, out 3-04 @ 18.65, 10%) RSH (27.59, out 3-04 @ 28.60, -4%) HWP (20.36, out 3-04 @ 21.30, -5%) CPB (26.58, 26.29,  –1%, 26.84).

SPECIFIC STOCKS LONG: The recent stock rallies have lifted our long selections as follows: from 1-25: MO (49.90, 52.39, 5%, 51.40) LTD (17.16, out 3-07 @ 17.25, -1%) SBUX (22.88, 23.72, 3%, 22.35) from 2-15: SBC (37.12, 39.09, 5%, 38.12) TXN (31.50, 33.95, 7%, 31.70) CCU (48.90 out 2-27 @ 46.30, –5%) XRX (10.00 out 2-20 @ 9.49, -5%) NSC (21.30, 24.01, 13%, 22.70) UIS (11.95, 12.30, 3%, 11.60) G (33.23, out 3-06 @ 33.35, 0%) DD (44.90, 48.39, 7%, 46.69) HD (50.52, out 3-04 @ 49.50, 2%) INTC (32.29, out 2-28 @ 29.17, -9%) IDTI (30.88, out 2-27 @27.42, -11%) AMZN (13.41, out 3-14 @ 14.70, 9%) ADBE (35.69, 39.24, 10%, 36.59) AMAT (47.20 out 2-21 @ 43.72, -7%) OPWV (6.21, 7.00, 12%, 6.30) SEBL (32.86, out 2-22 @ 28.71, -12%) SRI (8.40, 10.49, 24%, 9.70) ABAX (6.34, out 3-05 @ 6.10, -4%) CDMS (10.75, 11.30, 5%, 10.85) VVI (25.33, 26.95, 6%, 25.60) WDC (5.98, 6.01, 0%, 5.60) LION (7.45, 7.75, 4%, 7.30) OS (6.05, 6.68, 10%, 5.90) ROC (5.16, 4.87, -5%, 4.65) FPF (3.38, 3.27, -3%, 3.17) TTF (4.85, 4.93, 0%, 4.58) TRF (20.00, 23.35, 16%, 21.80) EWS (5.61, 5.78, 3%, 5.50) EWJ (7.27, 8.47, 16%, 8.00) EWA (9.68, 9.68, 0%, 9.50) IFN (10.82, 11.00, 1%, 10.82) HIS (3.70 out 2-21 @ 3.45, -7%) COY (9.04, 8.90, -1%, 8.65) KYT (8.13, 7.96, -2%, 7.83) DSU (6.56, out 2-28 @ 6.53, -1%)

FOREX: 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: Getting very toppy in this approaching peak season. Commercials getting very net short. The DX will likely struggle to barely take out the July 01 high on any seasonal peak rally here.

Euro: A developing favorite short situation. Currently in a Wave 4 blip rally from the 1-28-02 cash lows. Commercials moving very net short. Targeting .8500 short-term. 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: Commercials supportive.  The June 01 lows now more likely to be a major bottoming price level despite the technical pattern that still says “test the lows”.

SF: Commercials moved up to net long to support the recent 2-26 low.  Look for this rally to continue, perhaps to test or takeout the 9-21 high.

            JY: A favorite long on 3-01 (cash .7509). Now at .7749 the JY is short-term a mixed picture. The technicals are short-term toppy with the bearish Apr/May season ahead (however JY has poor seasonal reliability). A re-test of the Feb low is plausible on short-term charts. However, the strong commercial levels and supportive weekly bar chart indicate that JY is definitely forming a major bottom. We’ve pointed out for several months the linkage between JY and the Nikkei. Note the on-going strength in EWJ (the Japan WEBS), which definitely appears to have bottomed.

ME: From 3-01: “… Our best guess is that 2-13 saw the high in Peso cash. Commercials go further net short. Very bearish…”  Well the 2-13 11.064 cash high is still holding.  If the commercials go any further net short the chartbooks are going to have to re-calibrate the scale!!  One final blip rally (in conjunction with DX?) might still be left in this thing but it’s as toppy as ever.

            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: A major bottom in sideways pattern continues to evolve.

MEATS:  The peak Feb/Mar season is behind us.

  LC: A favorite short situation on 3-01 at 74.67 basis Apr (now 72.35) From 3-01 “…substantial downside is likely given the very short commercials and the bearish seasonality ahead….” Bearish May/June remains ahead. Favor the downside with fits and starts along the way.

LH: Commercials flat with bearish seasonality ahead. The length of the selloff from the 2-05 high basis April makes the downside more likely from here.

GRAINS:  Bullish seasonality ahead.

W: Commercials are net long, supportive of the rally from the 3-11 low. Technically look for the current May Chicago W rally to hold under 295 then selloff into a May/June bottom.

            S: A favorite long situation on 1-04 and 2-15 (441 basis May).  From 3-01 (@ 451) “….forming a major bottom… commercials very supportive… bullish Apr/May season ahead….” Now at 468, keep very tight stops on longs. I expect a brief pullback then a final rally into Apr/May.

C: A favorite long situation with a nice 5-wave bottom from the July 01 highs, basis May. Very bullish commercials are net long ahead of the Apr/May peak season.


            CO: This favorite short from 1-04 (1386) is looking like it belongs in our Hall of Shame for bad calls. But we’re still bearish. The current move from the 1-15 Wave 4 bottom is predictably less powerful than the Wave 3 move from the Oct 01 Wave 2 low. Commercials remain hugely short and the peak Feb season is behind us. Very bearish.

            SB: A favorite long on 3-01 (@ 5.97), now at 6.27, keep very tight stops. While SB is rallying from a bounce assisted by momentary commercial net longs, the bearish June/Jul season is still ahead. The commercials are selling this rally and moving to neutral. Also, the plunge from the 1-09 high looks like it has one more Wave 5 downleg with a major bottom target in the 5.25 area.

OJ: Maintaining our technical target zone of 99 to 102. Keep tight stops on longs. Bullish peak Apr/May season is still ahead.

CT: Looking better. Reliably bullish Apr/May lies ahead. Commercials are moving to neutral from net short to support the 2-21 low. Favor the upside short-term. Longer-term, one final plunge to test the Oct low may still be in the cards.

KC: From 3-01: “….Setting up for at least a brief rally. Commercials going net long with chart at a technical bottom….” More short-term upside is likely in this bullish peak Apr/May KC season.  We look for a few days of pullback to the lower 50’s followed by some higher highs. Commercials are moving to neutral however so keep tight stops on any longs. The real key is the appearance of a major rounding bottom and the 3-11 breakout above resistance. This sets the stage for powerful upside moves in KC in the coming year.

LB: The reliable peak lumber season (Feb/Mar) is passing. Commercials are net short ahead of a likely impending top. One final blip is likely on a technical basis to suck more long specs in. May soon become a favorite short situation. Keep extremely tight stops on any longs.