The weak dollar continues to be the story.. Gold made a new contract high last night at 1072, its currently trading ten bucks below that.. We continue to see that pattern, new contract highs, a flurry of trading, then the pros step on it for a ten to fifteen dollar break/scalp. I would continue to look for that action certainly until we break through the round numbers, being 1100, 1200, 1300.. Don’t see any reason why this freight train will change direction substantially over the next few weeks or months..
Fundamentally, the world does not want US dollars, and the fed is no position yet to raise rates to defend it… Sometime soon they will, and that could put the kibosh on higher commodity prices, but not for the foreseeable future…
Crude oil is sitting at the key 75 dollar level.. It looks like a strong settlement above the 76-77 dollar level opens the door to a leg up towards 85 and 90 and then the key 100buck level.. At that point, look to see the heads of Exxon back on Capital hill defending their ‘record profits’… I wonder if they will explain to Maxine Waters that they are getting paid in dollars which are worth less and less as time goes on…
Most likely not,, And I don’t think the average consumer will like paying 4 bucks for gas again, despite the fact they are paying the same adjusted for the currency devaluation.. At that point, look for windfall profits tax on oil companies, another push for electric cars, a call by some of the left to nationalize the energy system a la their hero in Venezuela, Chavez…. Nationalize everything from health care, to energy, to ….. fill in the blank….
OK, I digress….
Given this scenario, it looks like CZ will push up to 400 and then hit a wall there, SX could see 10.50 as the next resistance, which after the high around 1012 yesterday, is only a hop skip and a rainstorm away…
There are also fresh stories that the delay in harvesting the beans will delay the planting of the wheat..that should be enough bullishness to get us to the resistance in WZ at 540-550…
All in all, I like to be buying dips, and looking for key resistance as these commodities get around their 100 and 200 day moving averages.. You can look those up yourself, but in general, those are good trading pivots to look at..
Finally, with the stock indexes waiting every day through ‘earnings month’ it seems that for now, the much anticipated meltdown in October has yet to materialize, as the economy continues to do poorly, but better than expected..
That seems to be enough to punish bears with short covering rallies, with SPZ now having traded to a high this morning at 1083, and the DJZ at 9935, just 65 points away from the hallowed 10,000 level..Just 2 Friday’s ago we had the SPZ trade down to the 1012 level and the Dow down to 9350 level, on the initial break after the unemployment figure came out at 263 instead of the expected 200…
Go back and look at my posts and I wrote that I thought that people had sold that number in the hole, anticipating more bearish news… These markets climb a wall of worry.. When they are wringing their hands and mopping the sweat from their brows on the cable shows, or on the 10pm news, its a funny thing, but that really is the best time to fade em and get long…
My worry now is that once the Dow gets solidly above 10,000, perhaps to the 10,500 level, and the S&P gets healthier at 1100+, these same pundits will be getting bullish..At THAT point, look for a 38percent pull back… We have come so far since last March, only due to the fact that people thought the world was coming to a financial end…
Resist the temptation as a trader to get caught up in the hysteria of the moment..
I would have to say that CNBC is the most gigantic fade of all time.. They were so bearish heading into ‘earning month’ calling it the most critical earnings period of the history of mankind or some such nonsense…’ that byline alone should have made you bullish.. I would watch those commentators for a good psychological indicator as to what NOT to do..
In the past, usually when a story would hit the WSJ or the wires, talking about ‘now is the time to buy …xyz.. nine times out of ten, that is the key that the bull run is over.. Its uncanny..but accurate.. Back in the drought of 1988, when the pits were still open, the high of at that time was posted the day before NBC sent a reporter out to the fields in Iowa to show the world the parched field.. while he was broadcasting, the skies opened up and it began to rain…
So my point is, use that fact to your advantage… When the whole world wants to own something, think about stepping aside and letting them have at it.. ditto on the down side, if no one wants it, and it probably has the best chance of bouncing in value in the face of ‘popular opinion’
Good Trading