Corn, Wheat, Beans are all higher so far tonight. In sympathy, apparently, with higher gold prices, as Gold pokes up to a new all time high at 1127.90… While the night is still young, and as Europe wakes up to a Monday Morning bullish momentum, I would be surprised if traders don’t push to get the 1130.00 if for no other reason than to hit that nice round number. If the pattern holds, however, once that print is posted, look for a 10 to 15 dollar down draft. All the way up, we have seen new all time highs met with sharp corrections… Its a pattern, and something to watch for again.
DJZ is flirting with the 10300 mark, as the S&P500 also enjoys a bounce up to the 1099 resistance area. 1102.25 is the most recent high for the SPZ to focus on,and looks as if it will come into play today.
Beans are up 11 cents, Corn is up 6 1/2 cents and Wheat is up 7 1/2 cents, as we see some more slippage in the dollar index.
I just read another article about the potential risk in the dollar carry trade, especially after the Fed has indicated that they will remain accommodating with low interest rates for the foreseeable future. The fear is an asset bubble fomented by people borrowing cheap dollars to invest in other assets, in effect chasing returns. If the curve shifts back, the correction may be constituted as another asset bubble, hence the concerns.
In the mean time, it most certainly will follow that a cheap US Dollar will make US grains and all commodities experience price rally as a function of the currency weakness…
If we really start to see inflation come back, you can anticipate fed raising rates, and in effect, bursting the bubble of the the assets which are being inflated now due to our very low interest rates.
SF has resistance at the 1009 level from last Friday’s high,but more importantly there is trend line resistance at 1015 1/4. Pull up a daily chart and plot the bear trend line I have written about for the past week…That area will come into play today or tomorrow if the bulls get a run at it… and with a high at 1001 1/4 so far, its easy to see a run up to either last Friday’s high at 1009 or the trend line intersection at 1015 1/4 during the overnight trading, as prices are spurred by European and Asian Traders.
Good Trading