Here we go again, with the Dow making a fresh run above the 12250 level in the cash. 12,500 should be resistance. However in the broader S&P 500, we have a ways to go to challenge 1292 which was the October 4 month high. Currently trading at 1265, we have 30 handles to go to challenge that level.
I think we just might challenge that old high in the S&P by the end of January. This week of trade will be suspect. IN fact, I recommend not trading this week due to the thin markets. If I had to trade, I’d be on the bull side, however.
In the grains, as usual, I was about 2 or 3 weeks early on the buy rec. Some things never change. I typically am a little early on ideas. Fortunately, last Friday I finally pulled the trigger and instead of being long futures, I bought call spreads. Those so far have just about doubled. That’s a good way to end the year. Hopefully, I will be able to pull out the initial cost of the trade and then just have a free bee on in front of the Jan 12th USDA. That number, quite frankly, could go any way. For now I like the bullish side though..
1) funds are short beans and wheat 2) we’ve just moved off 14 month lows in beans, 16 month lows in wheat and 9 month lows in corn. 3) non professional retail small traders sold those contracts at the recent lows. Given that dynamic, I see no reason to be any way other than long grains now.
Finally, I am always a contrarian, if nothing else. This morning Business section in the Tribune was a bearish outlook for 2012. On that story alone, I want to be a buyer of US stock indexes and US stocks. In 45 years, I have never seen a prominent news story that I did not want to fade. This article reflects the continued bearish sentiment amongst money managers and retail investors. This has to be a buy signal. Fade the herd.
CER
