So far most of the reaction to the CPI and housing starts has been basically neutral. The actual numbers were both a slightly off of analysts expectations, but so far, the stock indexes and commodities are holding good bids. The Dollar Index is down about 24 ticks, and that seems to be the focus of the trading world’s attention. So far the dollar is below the 77 resistance on the charts, with support right around the 66.65 level. 35 ticks of trading range to consider.
The stock indexes are all near or at their recent 9 month highs. SPZ ia at 1115, on its high an within a handle of its 9-month high. Ditto for the DJZ, as it sits at 10500. There are 7 trading days left in the year, basically, until next Friday’s Christmas. Certainly it looks like the market will move sideways to higher in typical December seasonal trade.
This afternoon the Fed will release it minutes, and the overall expectations are that the Fed will make no major announcements at this time of the year.
If the housing market begins to re-inflate, and inflation begins to rally, certainly its only a matter of time before the Fed begins on a round of tightening, typically, in the past, under Greenspan, the Fed embarks on a campaign of 1/4 point tightening over a period of 6 to 9 months, until the Fed Funds target rate which they agree upon is finally met.
In the grains, all three are bid, basically on the action off of the Dollar. SF is approaching its resistance on the daily charts at 1070 to 1075. WH is up at the 543 level, perhaps looking at challenging the 450 strike price. CH is up against resistance at the 413 level with resistance at 415 to 420 looming above.
There is still anticipation of the fresh fund longs which will show up at the beginning of the year, if history is anything to plan from. The index funds will come and re-balance their positions. Typically they are buy and hold, long term ‘investors’ as they offer their clients diversification by spreading their assets across the spectrum of physical commodities.
The metals look as if they have found their support and are both rallying, despite the dollar’s recent bounce. This looks like a technical rally after the metals had 9 straight days of lower lows.
Silver is at 1771 and Gold is at 1140. Both look like they could remain bid. I think 1840 is a good upside target in the Silver and 1,170 is a good upside target in the Gold.
Jim Rogers believes that Silver is a better longer term bet, simply because it is farther away from its all time highs, while Gold is right up against it with its recent foray to 1250.
Good Trading
