After trading nearly a dime higher for most of the sessionMonday, the futures market collapsed during the last 20 minutes oftrading amid a flurry of selling that was set in motion bysell-stops and wide cash-futures basis. By the time the dust hadsettled, December’s $2.442 close was 11.1 cents off Friday’s leveland nearly 20 cents from session highs. Estimated volume was arobust 76,481.

A California marketer said you can chalk yesterday’s meltdown tothe inability of the December contract to break resistance in the$2.63-64 level. “December’s $2.63 high from Oct. 26 and trend-lineresistance slowed the buying momentum considerably which left themarket susceptible to selling pressure.

“The tone may now be set for the market to test the downsidethis week,” he continued. The first test will be the $2.44-45 area,but Monday’s price action may have been too catastrophic for pricesin the near term, and the $2.335 level may only be a pit stop forthe market on a move to $2.12, he said.

Ed Kennedy of Miami-based Pioneer Futures has remained unbiaseddespite the market’s constructive action last week because of thehuge cash vs. futures differential. “There were times [Monday] whenDecember futures were trading at a 40-cent premium to Novembercash. Something had to give in order for the market to get back tosome reality. However, Kennedy was surprised to see the largevolume of sell-stops in the $2.57-55 area. “It was no secret therewere stops in the low [$2.50’s], but the roar of activity on thefloor when the market touched the $2.57 level made it clear therewere big sellers waiting up there as well.

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