The grains were unable to hold onto early gains this morning, as hedgers used the higher prices to lock in profits. We had another afternoon buy program, evident if you look at the 5 minute charts. Around 1145 we had a bounce in all the grains, most likely due to more index fund buying, in sympathy with gold’s strong finish, and the continued weakness in the dollar.
Apparently the whole world is now short the dollar, so it seems to me that while they may be right, that market is ripe for an ugly correction to punish shorts who have come to the game late on the recommendation of an article or two they have read in the paper. Six months from now they may be right, but with the dollar at these levels, the only surprises will be short covering rallies, which can be costly to weak shorts.
For the day, Gold posted a new all time high at 1119.10 with a new all time high settlement at 1118.30.
Silver is the weak sister, unable to challenge it October 14th highs at 18.20.
Crude Oil still can’t get above 80 dollar a barrel, so it seems that the October 5th highs at 81.99 are safe for now. WE have support in crude oil at the 76.60 level if you look at the last 15 days of trade data.
The stock indexes jammed higher earlier, then had some profit taking in the middle of the day… SPZ was able to post a new 9 month high at 1,103.25 and high settlement at 1,096. DJZ posted its 9 month high at 10,309 and settled at 10,258.
My only caveat for these stock indexes are that its very close to their half=way back points if you take the all time highs in Oct 07, subtract the March 09 lows, divide by two and then add that number to the March 09 lows.
Half-way back points in large moves typically give a short to intermediate term pause in the overall trend. So basically you have to watch out for a correction now, more so than before, since we are approaching the half-way back point in the stock debacle.
As for the grains, fundamentals seem to be by the wayside. We are trading gold and the dollar, while the commodity funds seem to be betting on a January Surprise in the final Corn Production Numbers… We don’t get a USDA number in Dec, that is why we will have to wait until Jan… It could make for an interesting first quarter, if those funds are wrong, and there’s plenty of corn… Right now they are backing up the truck and getting long, long, long.
Good Trading