The Dollar and the grains de-coupled last night. In prior weeks, we saw lower dollar as supportive for the grains. As of the overnight session, it seems that that trend has run its course. Perhaps a case of buy the rumor/sell the fact.
Overnight saw Nov beans down 20 cents, trading as low as 971, a definite rejection of the 1000 level for now, CZ was down 10 cents at 372 1/4 and WZ also fell 10 cents trading as low as 504 over night.
Crude oil remained above the 75 dollar mark, but the metals both remained below their recent contract highs..
We were over-due for a correction, plus there were the gaps below the market on the weekly charts which as I said before, act as magnets during corrections.. Demand issues and the fact that the new crop in corn and beans is expected to be so large, continue to weigh on the fundamentals. I would look for choppy trade today, with the grains possibly setting up for a 38 percent retracement of the recent bull run.
Those levels are easy to pull up on a chart and I recommend taking a look at those levels…Certainly the 940 to 950 level will be a good support level for SX…
As far as the Stock indexes go, I am cautiously bearish…I was watching the cable show this morning, and they were pretty much singing happy days are here again, it seemed to me..
On an interesting note, Mr. Cashin pointed out that the first time we were at 10000 was in march of 1999. At that time, gold was at 280 and ounce and oil was at 20 or 30 bucks a barrel… So in effect, he was advising that the rally to 10000 should be taken with a grain of salt. The fact remains, we rallied on a wall of worry off of last march lows at 6500.. 3500 points in 8 or 9 months…History has shown us that at some point we will have a correction…
I think the 8,700 level looks like a reasonable target for a pullback in the Dow, although how quickly we get there is any one’s guess. It could be a flush, or a slow grind down…There are more earnings numbers coming out, Google and Citibank should be interesting and provide a potential catalyst for some gyrations…
Good Trading