I have not had much to say about the Dow cash in a while. I had thought we would trade sideways to higher in a 1200 to 1500 point trading range. I was very bullish in Late June Early July. CNBC was bearish, they started quoting Prechter, talking about a looming slap down in the markets.
Currently, I would as you to look at a longer term chart. Cash Dow is right up against a 6 month trend line. I would sell it, but keep a stop above to manage the risk. The trendline intersection is 10,536 in the cash Dow.
We have a sweet triple bottom down at 9940. Aug 25, Aug 27 and Sep 1st. Classic example of bears trying to push their late August position further. Now that everyone has returned from Gstaad or the Hamptons or wherever the beautiful people summer…. A bid has returned. We have had a 630 point rally from that low at 9940 up to yesterday’s One month high at 10,570. I like looking for a 38% retracement of that move to 10,330 as a buy, followed by a by at the 50% retracement at 10,255. That level I want to be covering our present short.
We need a significant challenge and settlement above the Aug 9th high at 10719, basically for me to get more bullish. However, that would probably make sense because the whole world will be bear ed up with negativity, as we enter the November Election Funk of Negativity.
For the Corn, as we head into harvest…
5.00 CZ is just 16 cents away. Funds bought another 15K contracts yesterday. Now long 444K contracts. Yields continue to come in lower than expected in many of the early harvested areas. Potential exits for an early frost, which would be more fuel for the bulls.
Longer term I think we will push up to 5.60 CZ. However, I can’t imagine we won’t have a 25 to 50% correction prior to that. That’s my opinion. I also like taking a short position against 4.85-5.00.