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Bears Win Small Victory, Hold Bulls at $2.58

Bears Win Small Victory, Hold Bulls at $2.58

Following two days of nearly unchecked buying last week, bulls were quick out of the chute again yesterday as they bid the August contract higher in early trading. However, the same profit taking which capped gains Friday thwarted the buying again yesterday when prices could not break above the $2.58 level. The August contract spent the rest of the session chopping sideways before eventually finishing up 1.4 cents to $2.542.

With only two days until the August contract expiry, traders remain divided on the market's direction in the near-term. While some think it would be crazy to sell this market now that the speculative fund have obliviously began to reestablish long positions, others look for a price correction to usher prices lower.

"Right now, utilities are kind of shell-shocked," a Gulf Coast marketer noted. "Just last week they were hearing prices in the teens, and now they are seeing offers in the $2.50s. Because the first is on a Sunday and the second a Monday, they might hold off on August purchases in the hopes of getting lower prices after bidweek."

And according to New Mexico-based Kase and Company a brief correction-possibly down to $2.40 for the front months-is likely at least in the short-term. However, once that down move is complete they favor a move past minor resistance at $2.645 to the $2.75 level. In the long-run they maintain that a close above $2.80 leaves the market vulnerable to an additional half-dollar of upside.

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