November beans traded to 1012 1/4 over night, Dec Corn traded to 383, and Dec Wheat flirted with the 500 level, posting a high at 498.. Technically on the charts, especially on a weekly chart, it looks like we may have gotten slightly ahead of ourselves on the bull side.. We now are looking at two weeks in a row with gap higher formations..
Typically, these gaps serve as support/targets on the bottom as markets correct.. I am not saying we cant continue to roll higher, but usually there will be a correction down to fill these gaps, at which point, either its a good place to re- own speculative longs.
Overnight we saw a new contract high in the top step gold futures contract at 1069.97… Silver saw a high tick as well over 18 cents at 18.075…
The story remains, weaker dollar, and some indication that China may be returning to buy US Beans at these levels, due to the currency devaluation in the US Dollar…
The second story, remains the impact of the freeze.. Most services agree that around 200M bushels of corn were lost, with about 50M of those in Illinois alone… That still leaves us with a 13BB crop… This weather may delay harvest of Beans, and at this time, it looks like that is the more likely scenario. However, the Beans have now rallied over a dollar in the last 8 sessions, which may be a signal that perhaps we are due for a bit of profit taking and re-trenching, with 980-975 being a new floor of support for SX.
There is an expression ‘turn around Tuesday’ and that is what we may have today…
We opened on our day session highs at 1001-102, and already have a low of 993..So the action so far has been typical of a turn around Tuesday… Take a look at the charts and you can see where the gaps are below the market.. At some point we will go and fill those gaps.
As far as the US stock indexes, the Dow still has to bounce through 10,000 and the S&P needs to settle above 1075.. We are close to both those levels, but one should be cautious due to the large rally we have seen since last March…
I was watching the talking heads this morning on the cable shows, and its amazing how bullish they now are.. These are the same people who six months ago were sending cameras out to the financial district hoping to see bodies falling out of windows during the crash… All in all, with the exception of about a half dozen of the TV pundits, I would argue that their bias is best faded.
Good Trading