The futures market continued to trade sideways to finish out theweek on Friday despite the large bearish sentiment, underpinned byfundamentals, that continues to dominant the market. The Septembercontract may have slipped only slightly to settle at $1.947, but itwas not for a lack of trying. Friday produced very choppy tradingthat had the prompt month bouncing between the $1.90 and $2.00.

Tom Saal of Pioneer Futures in Miami was quick to note theintraday volatility on Friday. He expects it to continue this weekahead of the September expiration on Wednesday. “We will see wavesof liquidation from the longs and position-covering by the shorts.The question is will either of those forces be enough to initiate alarger scale move.” Saal feels the wildcard in this market is stillthe non-commercial fund groups. “They have been rolling andcovering their September short positions all [last] week, now weneed to keep an eye to see whether they buy or sell into theOctober contract.

A New York area analyst agrees, adding that we are beginning toflirt with a technically significant moving average. “If we areable to posts gains Monday, the 40-day moving average in the2.07-08 area could start to become a factor. Funds look at thataverage with the intention of buying or selling through it. I wouldnot expect funds to go long September at this late stage but ifthey build positions in October, September would be along for theride,” he offered.

As of 5:00 P.M. EST Friday, Tropical Storm Bonnie was locatedabout 295 miles east southeast of the Turks Island and travelingwest northwest near 17 mph, the National Weather Service said.Bonnie is gathering strength with maximum sustained winds of 65 mphon Friday. The NWS calls for the storm to reach hurricane statusFriday night or Saturday morning and possibly threaten the EastCoast of the U.S. in the next few days.

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