Volatility, anyone? Take a look at the one minute chart after the Fed Announcement yesterday. Cash Dow Broke from 11,226 down to 11,097 in about 2 minutes and then rebounded the 100 points back to the 11,215 level. A good scalping opportunity. In the cash S&P, the action was 1196 down to 1183 (13 handles) followed by a snap back HIGHER to 1197. A strong reaction after an initial panic.
As of this writing, 755AM Thursday 11/4/10, futures are 11.20 higher and Dow futures are 100 higher. Although I was looking for a correction, lower, the sharp snap back in response to the Fed’s action gives me pause. The last 2 weeks have witnessed a sideways chopp up against the old highs on the charts.
The move above, rather than a sharp correction, suggests that the market has a way to go higher. I would want to see how the cash markets open. In the Dow, I would want to sell the first cash print up at 11,350, with a stop above. If we settle higher than that tomorrow for the week, that would be impressive and an indication that the market has legs higher. I would watch that level closely.
Upside target on the Dow Cash 11,800. Anything above the 11,250 level is going to be celbrated in the national media. I would not be surprised to see both political parties trying to take credit for the market rebound. Certainly, politicians like to always take credit for higher closes, but run away from ownership of major new lows. These 2 year highs should attract attention, plain and simple.
A settle above 1220 in the S&P cash opens the door up to 1275 and potentially 1300. Devaluing the dollar makes our market’s a blue light special. Attention world shoppers: The US markets are on sale today…
In the grains, it looks as though the trade is going to finally go and get that 6.00 print in the CZ contract. That should be interesting. I read an interesting statistic about world wide food prices. In the US, the average person spends slightly less than 10 percent of income on food. In China, the average is closer to 40%!! Imagine if that was the case in the USA..
If food inflation is truly on the horizon, it will be checked only by higher prices in corn wheat and beans. The fresh 10 month low in the US Dollar, with the dollar looking like it wants to test the 75.00 level, and then perhaps the 72 level longer term, suggests we will have higher prices.
If China needs food, and our dollar is now de valuing once again, its like our entire crop production (the one thing the US has not been able to outsource) is on sale. Our saving grace as a nation, in the long run, may be our incredible production capability agriculturally. Less than 300K farmers or less than 1% of our population, feeds the world. You don’t get a help desk answer from Mumbai if you want US corn. You gotta come here.
Good Trading
