Weekly Market Summary For Week Ending June 1, 2007
By Al Martin

(6-04-07) Trades for week of May 29 - June 1, 2007

In Tuesday’s trade, we were S-4 CTN 50.95 C 50.62, S-4 CTN 50.95 C 50.65.

In Wednesday’s trade, we SS-5 SBN 9.47 C 9.37, S-4 USM 109.12 C 109.08, L-4 WN 4.9325 S 4.9575, S-4 LBN 286.20 C 283, SS-4 CTN 50.90 C 50.60.

In Thursday’s trade, we went L-6 CCN 1884 S 1894, L-4 USM 109.06 S 109.10, L-9 CCN 1884, L-4 USU 108.22 S 108.26.

In Friday’s trade, we went L-5 CCN 1861 S 1871, SS-4 CTN 51.20 C 50.80, SS-2 HGN 3.41 C 3.40, L-5 CCN 1869 S 1879, L-4 USU 108.23.

Overview:

Continued, good & consistent short-scalping in the 109.08-12 area in the USM contract, covering on 4-to-8-point dips, was available throughout the week, as generally stronger ECR’s continued to weigh on prices for the 4th week, with the USM contract exiting the week around 108½, or about ½ point under fair value, the steepest discount in 4 weeks, making the contract vulnerable to a short-covering rally back to the 109 area, which may occur prior to the onset of the coming week’s ECR’s, beginning on Tuesday.

Good & consistent shorting on rallies to 82.40 & better, covering on 10-to-20-point dips, continued in the DXM contract for the 3rd week. Continue shorting as above, unless 82.60 is breached on a closing basis.

Good, long-side scalping action in the SIN, as the contract broke above resistance at 13.31/33, fueled by renewed end-of-month fund buying, which forced floor shorts to scramble, with the lift above 13.60 being fueled by ‘a Joe 6-Pack’ retail sucker buying, with the SIN exiting the week at 13.74, or about 20 cents overbought on a technical basis. Trade accordingly, with stiff resistance showing above 13.80.

Continued good, 2-way scalping action in the HGN contract, which held the test of the 3.26/27 area, to rally back up to the 3.40/45 shortable zone. Continue to short rallies up 1-2 cents, unless 3.4590 is breached on a closing basis.

Lovely, 2-way trade action in the SN contract, as the contract moved higher on the back of good ‘backing & filling’ trade action, breaking above the 8.12/14 resistance zone by week’s end, with next resistance showing at 8.20/22. However, beans traded tired to the up side, effectively being dragged up by trade action in the rest of the grain complex. As such, we prefer shorting rallies, as opposed to buying dips, in that, despite a 5-cent week/week gain, selling volume exceeded buying volume.

Volatile trade action marked the CTN contract, providing consistent shorting opportunities on rallies above 51.00, with consistent ‘shill bids’ appearing at 50.00, preventing a further decline. However, we feel the CTN contract will retest the 48.70 area in the coming week’s trade.

Good shorting action in the LBN contract off the 293 spike high, leading to a series of secondary short scalps on rallies back to 283, after the initial pullback was established. With the seasonal rally period usually topping out in the 290's, we like shorting the contract on rallies back above 280, with lumber demand now at a 16-year low.

Lovely shorting action in the SBN contract, shorting on rallies to 9.45 or better, & covering on 10-to-20-point dips, scaling down to shorting at 9.30 & better by week’s end, as the recent ‘bogus rally’ began to unwind. We expect the contract will pull back to the 8.90's in the coming week’s trade.

Good, 2-way scalping action in the 1.1020-1.1270 area, in Monday-Thursday’s trade, in the KCN contract, with Friday’s ‘engineered’ counter-fundamental rally successfully squeezing out 86% of the 30-day cumulative shortages, leaving the coffee, where bearish fundamentals still dominate, vulnerable to a retest of 1.1350. Trade accordingly.

Superb, 2-way scalping action persisted in the CCN contract for the 2nd week, with the contract trading down to an 1855 intra-day low in Friday’s trade, before mounting a $30. reversal. We continue to like scalping from the long side, as we expect 1980 will be revisited, on increasingly bullish supply/demand fundamentals. Trade accordingly, mindful of a building book of buy stops above 1903.

Great shorting action in the OJN, as the contract was turned back on rally efforts to 1.60, as we suggested would happen in our prior week’s summary. Continue to short rallies above 1.57, unless 1.60 is breached on a closing basis.

Good, 2-way scalping action in the CLN contract, which managed to hold a close above $65. in Friday’s trade, suggesting a retest of $66. may be in the offing. Look for initial rallies to 65.50, for 25-cent short-scalps.

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