Wow, a 15 month high settlement in the crude. Ditto for the stock indexes. Dollar can’t pop above 78 and moves lower again. Once again, the popular opinion is punished, lol.

Several weeks ago we were looking at the dollar index looking like it wanted to retrace a chunk of its 9 month down move. Now its looking like a sick puppy which can’t get above the 78 resistance level. On the daily charts, 78 is starting to look like the Great Wall of China, (pun intended)… Each time we test and fail to breach that 78 level significantly builds on itself. IF and when we settle above that level, the move will be that much forceful. Its still early in the year, and time will tell what will happen with the dollar. Its still sitting at a 4 month high at these levels. So a significant breach above 78 could open the doors for a much more impressive move.

Crude oil is looking surprisingly bullish. Only a year ago we were below the 50 dollar level on the monthly longer term chart. Crude’s foray above the 84 level on Wednesday and today’s 15 month high on the monthly charts is impressive. Where are the crude oil bears now? And more importantly, what is this move telling us? It looks like there’s underlying inflation or an anticipated supply disruption being factored in. All in all, it will be interesting to see at what point crude oil bears throw in the towel and cover any remaining shorts.

The metals moved higher in response to the weaker dollar today, as is to be expected.
Gold looks primed to push up to test the 1,150 level, while silver looks poised to test 18.60 with today’s new 6 week high. Again, we need a much higher close in order to shift the intermediate term for metals to any thing stronger than cautiously bullish. Silver needs to take a fresh run at the 19.50 level, and gold would need to re-test 1250 in a significant manner, other than just touching it and immediately retreating.

In the stock index futures, we had an impressive continuation of the rally today, in the face of worse than expected US unemployment data for December 09. SPH posted a new 15 month high and 15 month high settlement, at 11430 and 114160, respectively. The March Dow posted a new 15 month high at 10570 and high settlement at 10566. Again, very impressive strength, given the fact that I distinctly saw tears on the face of one of the CNBC reporters this morning when the jobs data was released. I think you could write a program which faded CNBC reporter’s emotions and it would probably generate 100 percent returns through the end of time. Honestly, these people need to just get a grip.

The slightest hick up in the market and they are out on Wall street, by the statue of the bull, pointing their cameras up at the office buildings hoping to ‘accidentally’ catch a falling broker. And the next bullish report, will be met by the same reporter popping champagne in celebration. I wish they would do me a favor and just keep the camera rolling all day on one of their hottest female reporters. At least that would be pleasing to watch.

Finally, we have to look at the beans. I wrote before that the funds were conspicuously absent. And after the mini melt down, along with the comments by the Chinese on Thursday, the whole thing was beginning to smell fishy. The buying finally showed up late in the day. After waiting all week for any hint of buying, it showed up at about 1:12, 3 minutes before the close. In fact, a request was made in the pits for an early closing range. If that wasn’t a tip off that there was a boatload of buying to get done, I have no idea what else would have been more of a tip off.

March beans were able to rally from 14 to 23 in the last half hour of the day. Nine cents. That’s all this massive buying was good for? Either there is underlying weakness, or perhaps the funds have 2 more days left of buying on the close to try to average their position. Unfortunately, for the bulls, SF was unable to settle above the 1025 level, and now there is major resistance at the 1030 to 1034 level to get through to pull the trend back to bullish. On the daily charts, we do have a nice bull trend line though. Today’s low at 1013 went down and just kissed that trend line.
I would hate to see the follow through to the down side if that 1013 level did not hold and SF settled below that trend line. It would open up the doors to a quick test of 1000 and then 985 once again, and would be a huge blow to any weak longs who got long looking to ride the coat tails of the funds.

March Wheat continued its rally in the face of bearish fundamentals, which is the markets way of telling us that there is underlying bullish strength that is being discounted. At this point, its looking more interesting than just selling beans and buying wheat. Perhaps the wheat market has something in store for us in 2010 which is unfolding currently.

On a disappointing note along with the beans, has to be the action of CH. Once again it was unable to settle above the 425 level. On the charts it looks like it may be stalling. Again, it is looking like something more than just wheat longs being off set with corn shorts. Perhaps the market is anticipating heavier than normal corn planting this 2010. We wont’ know for sure until July rolls around, but right now, this corn market is looking a little suspect.

Good Trading