Market Commentary - Monday, 26 February 2007

FOREIGN EXCHANGE

EUR/USD closed higher on Friday and above the retracement level of the December-January decline crossing thereby renewing this year's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. The high-range close sets the stage for a steady to higher opening on Monday. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted.

USD/JPY closed lower on Friday as it consolidated some of last week's rally. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. Closes above the 10-day moving average crossing are needed to continue last week's rally.

GBP/USD gapped above the 20-day moving average crossing and closed higher on Friday thereby confirming that a short-term low has been posted. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near-term. Closes below the reaction low crossing are needed to confirm that a short-term top has been posted.

USD/CHF closed lower on Friday and below trading range resistance crossing . The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold and are turning bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing would signal that a short-term low has been posted.



BULLION

Gold closed higher on Friday as it extended last week's rally. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought, diverging but remain neutral to bullish signaling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing would confirm that a top has been posted.

Silver closed above December's high crossing on Friday as it extended this year's rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.




U.S. STOCK MARKET INDICES

DJI closed lower on Friday and below the 10-day moving average crossing . The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought and are bearish signaling that a short-term top might be in or is near.

SPI closed lower on Friday as it extended last week's sideways trading range. The mid-range close sets the stage for a steady opening on Monday. Closes below the 20-day moving average crossing would confirm that a short- term top has been posted.

NDI closed lower on Friday as it consolidated some of last week's rally. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term.



ENERGY

Crude Oil closed slightly higher on Friday as it extended last Thursday's rally above the retracement level of the December- January decline crossing. Profit taking tempered early gains ahead of the weekend and the low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near-term. Closes below the reaction low crossing are needed to confirm that a short- term top has been posted.

Natural gas posted an inside day with a higher close on Friday as it continued last week's rally and remains above the 10-day moving average. The mid-range close sets the stage for a steady opening on Monday. Closes below the reaction low crossing would confirm that a short-term top has been posted.




COFFEE

Coffee closed unchanged on Friday as it consolidated some of last Thursday's rally but remains above the 20-day moving average crossing . The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are still possible. If it extends last week's rally, the reaction high crossing is the next upside target.