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Funds Buying Lifts Futures to Recent Highs

Funds Buying Lifts Futures to Recent Highs

After pushing the futures market lower into the weekend, the bears were at it again early yesterday as they ushered the May contract to its lowest level since last Wednesday. But selling quickly dissipated, leaving the market exposed to unchecked buying. The May contract finished up 4.5 cents at $2.169 after notching a $2.18 high.

Floor traders said early selling was dominated by commercial traders who already hold substantial short positions and were looking to keep a lid on the market. Tom Saal of Miami-based Pioneer Futures agreed and added that locals were also seen as contributing to the downward price momentum. That, however was about all the funds would allow, and after being somewhat quiet last week they were seen as active buyers between 11 a.m. and 12 p.m. yesterday, Saal continued. "Once the market moved above unchanged on the day, both commercials and funds began to cover their morning short positions." May rallied from there, continuing higher into the close.

"Funds were relentless buyers today," added Sandy Trot of New York-based Trot Trading Corp. "This was a very good session and even a better settlement for the bulls. [The market] is theirs to take higher [Tuesday]. However, he warned that if the market is not able to sustain the momentum he thinks profit taking could shuffle prices lower in the near-term.

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