Today we have seen most of the action coming off of the Dollar Index jump higher. Crude Oil and the Metals moved lower as the dollar moved higher. Surprisingly the grains held their bids in the face of lower crude prices and the higher dollar.
That suggests underlying strength. Perhaps the market is telling us something different than the fundamental supply demand picture is showing.
Running the numbers:
March Wheat has a high of 541 3/4,a a low at 532 and a last trade at 537, unchanged on the day. March Corn has a high at 406, a low at 390 1/2 and a last trade at 405, sitting on its highs. 8 days ago CH0 had a high at the 420 level, fell to its support 3 sessions ago at the 380 level. This 40 cent move has seen its 50 percent pop, and now looks towards a 62 percent move. This looks like resistance at the 411 to 413 area.
SF posted a high at 1039, a low at 1020 (again testing that area of support from Thanksgiving sell-off).. SF is currently trading at 1034. I don’t see any reason we can’t rally up to the 1040 level, which is half way from the recent high resistance at 1060 and the low at 1020. 1043 looks like a good target, if we continue to have strength. However, we are moving into a weird time of the year with Christmas just 2 weeks away. I wouldn’t be surprised to see that 40 cent range in the beans explored once or twice during the rest of the month.
The stock indexes continue to be surprisingly bid. We had the surprise I wrote about anticipating last night. Retail sales were better than expected and the consumer sentiment was better than expected.
SPZ is in a narrow range with a high at 110880, a low at 110150, currently sitting up 5 handles at 1107. We have chart resistance all the way up to the 10116 level.
DJZ has a narrow range as well with a high at 10465 and a low at 10415. A 50 tick range signals ‘time to stay away’. Currently we are at the highs at 10465, with resistance at 10500 looming above. Generally, I would avoid trading this now. Its too narrow of a day, and we are waiting for the FOMC and more economic data next week.
Finally, in the Crude Oil, Gold and Silver. WE continue the retracement or retrenchment, depending on your perspective. Crude oil dropped below the 70 dollar a barrel level. A key support. Just 2 months ago we tested the 82 dollar level in the crude. Now on the charts, there isn’t good support until the 66 dollar level. It looks like, with a stronger dollar, we may see a race down to that support. This is what the ‘dollar carry trade’ looks like when it unwinds, apparently. Of course, perhaps the world woke up to the fact that it is awash in oil. And isn’t it ironic that the secret talks the OPEC nations had with our ‘friends’ Russia, China, and France about dumping the dollar for a new currency of choice for oil settlement seemed to close to the highs for the rally in crude? I think its interesting.
In the metals, its mostly re-action from the stronger dollar as well. Gold has now come off from its highs at 1250 and ounce down to 1110.80 in Dec Gold today. A look at the charts has the first good support down at 1070. Wow. The first quarter of next year will be interesting to see if the correction continues, or if the dollar weakens again, and we are able to re-challenge our October Highs.
Silver’s chart looks the same, with its highs in march silver at 1950 just 7 trading days ago a distant memory with today’s low at 16.90. The November lows at 16.20 look inviting on the chart, and the first real support silver has to lean on.
If this keeps up and the housing market rebounds, it might very well spring into ‘irrational exuberance’ territory again. At that point the Fed would have to tighten. As strange as that seems, at this point, what would really shock any of us?
Good Trading
