930 is the long term trend line in SH

Did you buy against 930 today in SH? That was my idea yesterday. I can see us absolutely tearing through that level, however if it does not hold. Perhaps even a gap lower on an opening basis. That longer term, old low down at 887-884 looks like where we’ll find real value. And that level just might bring in some fresh shorts into the beans.
I still want to be bullish going into the State of the Union Address. The level of bearishness is palpable right now, and that can only mean a surprise short covering rally.
Obviously, you have to have protective sell stops below these levels, but I think the odds are better for a bullish surprise than a continuation of the melt-down.
But you’d better be prepared for both instances.

The Silver either had a bad tick today, or someone tried to get a settlement below the the 16.80 level. We either had a bad tick, or the market tried to set off some stops down below the 16.40 level, and then snapped back smartly in the face of the move.

The US dollar looks poised to go up to the 80.00 level from the current 78.45 area. Again, the temptation of the round number at 80.00 most likely will prove to be a magnet and self-fulfilling move on the part of the cash DXY. Watch for that move. Hence the potential weakness in commodities. If the dollar strengthens, China continues to pull in its reins on lending as well as purchasing US Beans, then we could be in for a short-term flush.
Perhaps the Senators and Congressmen will then be attacking the “Chinese” bubble as the real woe facing the US.
It won’t be a good thing if the Chinese have a real hick up. They won’t want to be buyers of last resort for US commodities, much less the ever increasing US Debt.
6 Trillion going to 13 Trillion is a hard pill for any lender to swallow. The projected deficit under Obama is approaching 13 Trillion.

There are three ways to address that debt 1) inflate it away, paying the debt back with paper worth less tomorrow than it is today 2) renounce it, Ala the Soviet Union in the Mid-90’s which caused the long-term capital debacle (which would pale in comparison, obviously) or 3) grow the US economy so much that 13 trillion in debt is a small part of GNP.
The third would be the best, but the most difficult. However, I am certain, that no matter what, there are only those 3 options. If history is any teacher, those are the only three choices I am aware of.
If one of you readers feels differently, then start typing a response now. 🙂

Good Trading

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