Traders have used yesterday’s strength in the Stock indexes as a means to 1) take profits and 2) initiate shorts in the face of potentially errant, albeit emotional, longs..
I was scanning the radio and TV yesterday listening intently to the rave reviews the commentators were giving to the GDP numbers, Obama’s stimulus package and the market’s positive 200 point rally in the Dow…Almost a certain sign to fade those commentators, and low and behold we are 100 points lower today, and the grains are following suit.
I had a side by side chart of the Dow and the soybeans, and the Dow would break 30 points, and two seconds later, the grains broke 2 cents, this repeated itself about 5times while I was watching.. Perhaps there is a computer program designed to do this..
For now we are having sleepy choppy trade as we end the month of October.. The volatility is such that it makes decision making difficult at this point. I would wait til Monday and the start of November to think about where we may be headed…I still think we are due for a bounce up to get us to the 50 percent retracement levels in the grains.. Look at yesterday’s post and you will see the numbers I picked for corn, wheat and beans.
Fundamentally, it continues to rain, heavily… That will keep farmers out of fields for a few more days… What condition will the crops be when the harvest them? We won’t have a handle on that til after Christmas…I think all in all, the odds are better for a bullish surprise, but that depends on the currency issue.. If the dollar weakens, we will have to rally.. If the dollar strengthens, we will have pressure on prices in the grains..
As far as the stock indexes go, we could chop between 9500 and 10000 for a long time on the Dow charts, until we get a better handle on 1) unemployment, 2) real industrial growth *not just cash for clunkers: and 3) The impact on the currency if the fed does not raise rates eventually…