A Stronger Dollar and Rumors of more Bank Problems fueled a sell-off

Grains today luffed off bullish fundamental issues, with all of the rain impacting harvest and quality of the corn and beans coming in, and decided, int stead to focus on the rebound in the US Dollar…The commodity funds took their cue and put on their selling hats today, selling thousands of contracts of Corn and Beans and Wheat…

Only once or twice was there a small 5 or 8 cent rally in the beans today, just enough to suck in some bottom pickers before returning to the sell mode…Beans Wheat and Corn all settled lower, with SX down 19 1/2 cents at 986 1/2, CZ down 19 1/2 cents at 378 and WZ down 20cents at 527.

Nov beans had traded as high as 1019 1/2 over night, with a day session high at 1013 posted on the opening before the avalanche of selling came in pushing the trading range today to 31 cents, with a low at 982…In Dec corn, we had a 23 cent range with a high at 400 and a low at 376 3/4, and in Dec Wheat an impressive high at 558 and a low at 526 gave us a 32 cent range. Again, all these grains settled within one or two cents of their day-session lows.

Tonight’s trade should be interesting, as we will see if there is a second wave of selling on the horizon…
Markets always go down 3 times as fast as they go up, and trying to pick buy points in a sell off is like trying to catch a falling knife, with the same risk rewards…

We saw a similarly large trading range in the Dow index with a 200 point trading range, with the market settling “only” 90 points lower on the day…
There were rumors floating around today of another big bank perhaps needing a fresh round of TARP money, along with another rumor that S&P was going to downgrade the debt status of some more banks…

For all you doom and gloom’s out there, this may indeed be the “other shoe” waiting to drop, if there is another round of bank credit related messes on the horizon…

In any event, all these factors resulted in the dollar strengthening, and with it the Metals fell, in lock step with crude…

We saw a low in the top Dec Gold option of 1038 today, after trading to new contract highs just 7 days ago up at the 1070 level…In fact we almost had a high print there again last Friday…So today’s low at 1038 gives us a 32 dollar haircut in the Gold..

Crude oil fell back below the 80 dollar a barrel level today as well, posting a trading low today at 7797 in the face of a high at 82 dollars posted 4 sessions ago, with a high this morning at 81.58…

All in all, it was a day where you should have sold the commodities early in the day, placed reasonable stop loss orders for protection, gone for a walk, and then returned several hours later to take your profits..

The intra-day gyrations were choppy and made it difficult once again to stay short if you were watching the screen all day.

For the rest of the week, we will have to see how the dollar holds up…
Continued Strong Dollar will lead to lower prices in grains, metals and crude, regardless of the fundamentals… We rallied on the weakness of the dollar, will will continue to break on its strength…

Good Trading

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