Gold shot up to a new record high at 1226.40 I keep seeing this pattern, as we move up the line. It looks like every 25 dollars there will be a “new” target hit, followed immediately by a ten to 15 dollar retracement lower.
SPZ also defied logic and the bears arguments and posted a new high at 1116.80. Again, there is no justification for this rally, yet it keeps creeping higher. December in general is a month where the seasonal trends predict a rally. The market is vulnerable to a sharp correction at any time, which is why we are creeping higher. Traders sell new highs, look for a break, then cover. They may be wrong 50 times before they are right. The only thing one can know for certain is that this market has a mind of its own and wants to go higher. You can postulate as to the reasons, but until the trend turns, if you are a trend follower, you are long. You must use a trailing stop however. And the stop should be a stop market. You might get left behind if its a stop limit and the market really hits a mine shaft.
The grains had some overall bearish news, with exports being right in the middle of expectations across the board. A report from Canada showed that the wheat supply increased by 2MM tonnes, a bearish fundamental item which may or may not play into the pricing today.
So much of what’s going on in the grains is a function of funds monetizing a relatively small cash market in the grand scheme of things. Grain open interest reflects more the inflow of capital as a hedge against other commodities, rather than simply a supply/demand equation.
The presence of the funds exacerbates any move due to the monetization of these crops into an “asset class”.
On the charts, SF has support at 1021, but must break above the 1068 area to resume its uptrend. CH has support at the 400 level and must break above the 425 strike price to have the trend return to bullish. WH has support at the 560-565 level, and must break above the 605 area to move to bullish on its trend.
We have had some strengthening in the US Dollar, and that should be watched closely while trading all these markets.
In the stock indexes, DJZ is flirting with resistance at the 10500 level. A large push up would most likely have resistance at every 100 point milestone, up to the 11000 level.
Good Trading
