The Dow futures finally got the 10505 print out. When we couldn’t explode higher above that round number, that was the first sign that the rally was a head-fake. In the SPZ contract, we printed a high at 1115.50. We then promptly broke 11 handles back down to the 1104 level. The DJZ also melted almost a hundred points lower, as the bears took profits after selling into the new highs.
In the metals, the day is still young, and while there has been some profit taking, they remain higher on the day. Gold spiked to a high of 1217.30, and then moved back to the 1208 level, currently. Silver posted a new high at 1942, and retraced to 1920, still higher on the day.
In the grains, we had another head fake to new highs, followed by massive selling. SF broke from its high of 1061 1/2 all the way down to 1036 1/2. The market had bids on the way down, but we never saw more than a 5 cent rally during the melt down. SF looked like it might make a stand at the 1050 strike price, but then the market gave way to the bears. Corn and wheat both moved similarly, making new highs early and then going sharply lower through the morning. Right now there is about an hour left of grain trade, and honestly, it looks like anything could happen today. I think the funds are discovering just how illiquid these grains can be if they need to move size.
Currently, SF is down 16 cents at 1043, bouncing some off of its low at 1036 1/2. CZ is down 5 cents on the day, and wheat is down 10 cents.
The expression, ‘don’t get married to your position’ holds true in these grain markets. Volatility is a double edged sword.
Good Trading
