3.5 percent growth thanks to cash for clunkers

Third Quarter GDP rose 3.5 percent, the first rise in 2 years…Econ 101 teaches that is the first sign a ‘recession’ is ending…Initial Unemployment claims were another 500K though, leading me to repeat what Hank Cashin said a few weeks ago, sooner or later there won’t be anyone left to lay-off, so of course that number is going to stop accelerating to the down side..

We have seen a bounce in all the markets today as a result…Crude has bounced 2 bucks, gold 7 dollars, beans are up 12 cents and corn and wheat have followed with 5 cent and 8 cent bounces as well…The fund ‘re-balancing’ is done… Their 3 and out strategy has held again, they do what they do for 3 days in a row, then sit and watch…

Nov Beans now could and should have at least a 30 cent bounce, retracing at least half of the down draft between 1020 and 960… that’s 50 cents divided by 2 giving us a target of 85 on the bounce, with another 5 cents thrown in to suck in new longs. I wrote 3 sessions ago about the likely hood of this whipsaw… After 17 years, even I have learned a thing or two… However, anticipating the move and profiting from it are often two different animals..

That being said, I think we an all exhale, as we have escaped a Dow Jones October Surprise… CNBC touting earnings as “the most critical in the history of mankind, etc etc” should have been a fade for all of us…They were so bearish you could smell the stench of their bear skin rugs….

For the rest of the year, we will have choppy, crappy trade, with the indexes flirting with 10,000 level in Dow and 1100 in the S&P….A lot of funds are closing their books for the year over the next quarter, planning for 2010….
As far as the grains go, we still have wet weather on the horizon which means another week of harvest delays, and more possibilities for Murphy’s law to affect the moisture content, mold, crude, ad naseum…

We won’t know how badly the crop has suffered, or whether it is enough to impact the gigantic yields we were predicting in Sept…
For the time being, as the dollar goes, the grains will go inversely..
Good Trading.

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