The past 2 sessions, we have seen the markets take a decided breather. Yesterday and today, across the board, it seems that the world is taking a minute to think. The lone exception would be cotton, which ended the day limit bid old crop here, once again moving to historic highs. Read your history books, and you will learn how cotton once was the backbone of the US farm economy. The civil war, in part, was a war between the industrial north and the agricultural south, which was built around slave labor.
China, it seems has its own story, and maybe one of these days I will write more about it. For now, my advice is to not be stepping in trying to pick tops. In a thinly traded market with bad liquidity, that can be a painful experience if you are caught the wrong way. Trying to exit a position on anything other than a limit order is a prescription to have your abdomen cut open before your very eyes.
Today was options expiration for November options. The closes in the corn and beans were suspect, with both months settling at the strike prices with the most open interest. That was 560 corn and 1200 beans. Whoever exercised options today on the close could be in for a rude awakening come Monday. I have seen it before, and I am sure it will happen again in the future.
Corn may be running out of steam for now. Bullish rumors of Chinese buying were met with yawns, and actually lower movements. Is corn setting up for a correction to punish all the johnny come lately longs, ala the break we had in the wheat after the August 2 year high? It took wheat 6 weeks to rally 3.85 and 5 sessions to lose half of that rally..
Beans continue to be bought at every turn by the Chinese. As we move to the last week of the month, it should be an indication of where we will be headed through the last 2 months of 2010. New highs posted next Friday could be tell tale signals of more underlying strength in the grains, especially beans.
The stock market settled up 7 points for the week, but posted a 6 month high and 6high settlement, bouncing up to the April 2010 levels. Still, there has not been a challenge of the April 26th 2-year high at 11206. Maybe next week?
All in all the market has been trending higher, quietly climbing the wall of dread and fear, from our July 1- year lows at 9506. Yesterday, Thursday the 21st, the Dow eked out a high print at 11,164, a 6-month high, going back to the April 2010 highs.
At 11,200, the Dow is 800 points above its 1/2 way point of the BIG SLIDE. ( The move from our Oct 11,2007 2007 highs at 14,267 to the low in March 6, 2009 at 6460.) As we move towards Halloween, thought it would be a good time to scare the readers with memories of where we were 17 months ago….Have a great weekend.
