Strong Finish in Stocks, as Gold Goes for 1200 an OZ

  • Posted on: November 25, 2009

Gold posted a new record high today at 1,192.80. If you look at my entry this morning, or for that matter for the past 6 weeks, you can see I have been calling for this move. Perhaps there will be resistance at the 1300 level, or more likely the 1250 level. This train just keeps on motoring. This is a type of move where I think to benefit fully from it, you have to buy a dip, put in a judicious stop, and then leave it alone. Have the trailing stop follow the market up, accounting for the 20 dollar to occasional 30 dollar trading range in the contract.

For the Stock Index futures we had new 9-month high settlements in both the SPZ and the DJZ futures. I believe that between now and the end of the year we will hover in the Dow Cash around the 10500 level, with about a one in three chance we will have a Christmas rally push us up to 11000.

As I have written before, I am sure no one in your office pool had picked the Dow to settle at these levels 8 months ago.
I don’t care what the “analyst of the minute” says on the cable shows. To a T, everyone I speak to, rather another professional trader, or your average acquaintance who is concerned with the markets only as to how it has impacted their 401K’s,,,, most people I talk to are still bearish, and looking for the other shoe to drop.

Granted, its not a scientific pole, by any means, but as long as people are still worried, this market rally, as thin as the volume has been, and as weak as the advance/decline numbers have been, this market just keeps creeping higher. There are a million reasons to be bearish, cautious, fearful, what have you, but the market is giving the bears the literal middle finger, and continuing on its way.

In DJZ we had a high today at 10469, just 17 points away from Tuesday’s high at 10486. DJZ settled up 36 points on the day for a new 9-month high settlement at 10,443.
We are just a hop from the 10,500 level, which most likely, will be met by more fresh selling, perhaps a 5 percent pullback, and then a re-sumption of this thin volume rally, which no-one seems to want a part of.

In the SPZ, we saw a high at 1111.25, just a handle below Tuesday’s 9-month high at 1112.25. We settled today at a new 9-month high settlement at 1,108.75

There are still lots of folks holding cash on the sidelines. At some point they won’t be able to contain themselves, and they will pour back in. At that point, we may be set up for a sizable correction.

Basically, when you start seeing news headlines saying “The Bull is Back” or “Which 9 stocks to buy now” I’d be looking to buy some cheap puts as a fade on the emotion of the press, and therefore, the general herd.

I was driving in the car this afternoon, listening to a cable show on the radio. And low and behold, they had two analysts arguing that this is the top, or they suddenly shifted from bullish to cautiously bullish… I mean really, where were these guys 8 months ago when the sky was falling. I definitely didn’t see them on TV or hear them on the radio talking about how bullish they were. Oh, well, just food for thought.

In the grains we had another wild ride. Beginning with the Jan beans, we had an open around 1051, slid down to the 1034 level, then rocketed back higher to the 1055 1/2 high for the day, to have some viscous choppy trade in about a 10 cent range through the rest of the day to finally settle down 7-1/2 cents at 1047. In the Corn, CZ posted an early low at 381 and then rocketed higher up to its high at 393 3/4 and chopped through the afternoon to settle down 1/4 tick at 392 3/4. Finally, in the wheat, WZ posted an early pit low at 535, rallied back up to the 555 area then moved lower to settle at 548 down 2-1/2 cents.

I always am suspicious of trading systems which only take into account the settlements. The highs and lows, in these grains are good for 1,000 dollar moves on one contract, if you were lucky enough to sell the high and buy the low and sit with it, lol. In the mean time there are plenty of five and tend cent drafts from key chart points to give a patient person opportunity.

Friday could be interesting, as it is the last day of the month, but my guess is trading volume will be about 20 percent of usual, due to the Holiday weekend.

Happy Thanks Giving

PS Please feel free to ask questions or post a comment.