Brace yourselves. Just as every tv commentator fell in love with the phrase “sub-prime crisis” over the last 2 years, that is giving away to a new story du jour. All TV personalities are now budding forex trading experts, talking about “the dollar carry trade”. Thank god its kind of an esoteric topic for most people, but believe me, a year from now, everyone from President Obama to the dumbest of the dumb in Jay Lenno’s audience will be able to explain it to you.
Today’s 2 month high in the dollar index at 77.09 according to one reporter, “spooked the market”. Really, a 50 point move lower is the market spooking? Hardly. This is just a case of the commentators trying to make boring choppy holiday markets interesting.
We won’t really know what is ahead of us until January, where we see where the fund money is flowing.
For today, aside from the dollar action, it was surprisingly boring trade. DJZ had a very small trading range with a high at 10509 and a low at 10459. Barely 50 points.
SPZ had a high at 111410 and a low at 110550, again an 8 handle range? Crickets…
Tomorrow, all we will hear about is the FOMC meeting at 115 PM CST. I think it will be a giant buzz kill. The Fed’s not going to change course 9 days before Christmas during a retail season which is flimsy at best.
And I’ll say again that most people would love to see some inflation in the value of their real estate. Not to mention municipalities and counties who are looking for the real estate transfer taxes the way a first grader looks at the ice cream cone which just melted onto the concrete. So the Fed Chairman has a fine line ahead of him.
The grains failed to hold on to their afternoon highs. With the exception of SF, which ended at 1055, unchanged after challenging the 1070 level with a high at 1068 1/2 with a low tick at 1049 1/2. In any event, we had the most action of the day in the beans, with a nasty sell off after looking bullish through the morning. Wheat and Corn both ended lower on the day. WH posted a high at 547 and settled at 536 3/4. CH posted a high at 410, a low at 405
and settled down one cent at 407 1/2.
Tomorrow, I would look for the market to be trading the dollar index via the grain markets once again. If the dollar goes bid, hit the bid in the grains, and vice versa. I still like the 82 level as a target for this dollar rally. Maybe CNBC will give the dollar its own banner and theme song.. DA DA DA…. The Dollar…. WOW how high will it go?… DA Da Da….
Get used to it. Its all you will be hearing about over the next six months.
Good Trading
