Gold and Silver have bounced to new highs so far in overnight trading. Gold has a new high print at 1,144.70 and Silver has a new high print at 18.51. I imagine European and Asian Traders will take this bullishness and run with it overnight, with resistance in these metals spotty at best. I would also look for sudden down drafts if any bears can get a handle on things. It wouldn’t be surprising to see ten or even fifteen dollar down drafts in the face of new highs. That has been the pattern over the past 5 weeks with each new record high.
Looking at the Grain action, it still is impressive how the fund flow took control of the perceived undervaluation of the grains in comparison to crude oil, gold and other physical commodities.
If these fund masters keep the flood gates open, certainly we could have some large up moves waiting in the wings as they fuel each new rally with more and more supportive investments as they continue to add to their winning positions.
On a separate note, there is a rumor that the rally in the Chicago Dec Wheat in part has been spurred by options traders who sold calls for the premium, but now find themselves chasing each other to the fire exits on this rally. Look for an exhaustion pop sometime soon, after this short covering rally has run its course, and all the shorts have puked their losing positions.
As far as the Stock indexes are concerned, the market continued eking out new 13 month high after yesterday’s 13 month high settlements. While not bearish, I think it may be getting late in the day and we may be due for some profit taking.
I am not talking about bloodletting, per say… Just a healthy down move.
Good Trading