Tomorrow we will get October Unemployment data, expectations are for 175K…The number comes out at 730 CST…
Today we had a short covering rally, recapturing much of yesterday’s end of day losses, with the Dow cash flirting with the 10000 mark… For a number that some traders profess is meaningless, it certainly gets a hell of a lot of attention.That in itself is one reason it attracts a lot of trade…Buyers and sellers congregate around round numbers in all markets… be it ten dollar beans, 10000 in the Dow, 1100 in the S&P, I can remember 5000 being close to the all time high in NASDAQ back in the day…Round numbers get folk’s attention and attract business on both sides… Very often that is what will push trade to those numbers…They are self fulfilling prophesies,,, bulls are interested and bears are interested in the action around those numbers.
On a cautionary note, I read an article today pointing out that last March, at the bottom of the US equity Melt-down, a survey at that time of traders/money managers had just 2 percent of them bullish, right at the bottom, in effect the “pros” couldn’t’ have been more bearish… which brings me to the frightening part, that same survey company, sampling the same group of money mangers and traders posted a bullish percentage at 91%… HMMMMM… Makes one wonder if its not time to think about buying some puts for protection on the downside…
This could have been the mother of all bear market rallies, now just about to suck in the last of the converted bears who totally missed the 3500 point rally in the Dow since last March…That missed opportunity is just the thing to force the hands of the public… The greater fool theory prevails, so often in investing… Bottom line, I would look for a tasty retracement sometime in the next 3 months, this level of bullish-ness is a warning sign, just as last March you couldn’t find a bull on the planet, that was the near term bottom…
The Dollar Carry Trade=== what it it? in a nut shell it is the following:
The carry trade is a strategy in which an investor sells one currency with a relatively low interest rate, then uses that money to purchase a different currency that’s yielding higher. The investor then pockets the difference between the rates.
This is all well and good as long as the borrowed currency stays cheep… But if there’s a rally, everyone heads for the exit at the same time, exacerbating and exaggerating the short covering rally…We saw a little of that last week in the Dollar, but the downward pressure continues on the Dollar for now…
All I can say is you have to watch the dollar while you are trading any commodity.
In the grains today, we had pressure again as harvest continued with dry weather this week. Farmers have been willing sellers for the last 60 cents in the beans…
Today’s low in SX at 967 is approaching the Oct 28th low at 959 3/4…Below that there is support at 941, 934 and then again at 920…
In the Corn, there is support at the 360 level, and resistance up at the 390 level as we bounce in this 30 point range…Below 360 there is good support at 348…
In the Wheat, WZ has resistance up at 574, then support at 488 and then again at 453…
In the stock indexes today we settled at 1063 in the SPZ, 36 handles below the Oct 21 high at 1099… Again with the round numbers… 1100 in the SPZ is key, as is 1030 support on the charts.
In the Dow, we still have some work to do in SPZ with the Oct 21 high at 10070…Today SPZ settled at 9956, just a hope skip and a jump away from that level…
In the Metals, both Gold and Silver took a breather today, with Gold posting a high at 1095.20, 3.30 below yesterday’s all time high at 1098.50…
Silver settled at 17.50, 65 cents below its October 14th high at 18.15…
On a cautionary note, I saw an article today talking about 1500 and oz Gold and 20 dollar Silver…
I say cautionary, because generally when its being written about, its already factored in and may in fact be an early sign to fade that trade for a bit…
All in all, look for some action tomorrow on the Unemployment figure… Today’s action suggests to me that it may indeed be a bullish number… Watch out for the old buy the rumor sell the fact… WE could post our high in the indexes tomorrow shortly after the number, even if its bullish, as some traders may look to take profits or push out weak longs in the face of a bullish number
Good Trading
We’re in a scary place right now!
Scary yes, but with lots of opportunity if you stay disciplined and catch the good trend, be it up or down…