Hanging Fire

  • Posted on: June 24, 2011

Gold Has 80 to 100 bucks down side risk if 1500 does not hold. There is no support until 14.70 and if that fails 1420 is the next stop down on the liquidation band wagon of commodities.
I recently read in the WSJ how India and other central banks have been actively buying gold.
I have said it before and I will say it again, central bankers have not been right about any major moves in the last 80 years.
But, I am if nothing else, a contrarian. So accept my bias as well.

Corn broke below a major weekly support trend line. We should rally back up to it.
There’s another 30 to 40 cents down to go test the 6.15 low from March.

Wheat has another potential 1.50 to the downside, but that being said, after this break, I think you have to buy it. WN should bounce back to 7.00 or 7.35. If it keeps melting, there’s no real support until 6.00 and then 5.50. Yikes.

Technically the November Beans there is only about 2 dollars upside potential but about 3.50 down side risk. Trade accordingly.

I have a queasy feeling that the funds are on the verge of cutting and running. One more leg down and they might just do that.

ANY ATTEMPT TO BUY DIPS IN CORN WHEAT OR BEANS MUST HAVE SELL STOP PROTECTION BELOW IT.

As of this writing 11,900 is still holding in the Dow Cash. That’s the 50% retracement of the year long rally we had in stocks.

Both bulls and bears are sitting on a teeter totter here looking each other in the eye. Whoever has a bigger weight gain over the next 10 to 20 trading days may tip the scales in their favor. Right now we are hanging fire. That was the expression Revolutionary war era soldiers used when firing the cannon.
They would pack the barrel, light the fuse, and then wait. This waiting for the powder to ignite and then sent the cannon ball flying was known as “hanging fire”.

Unfortunately, when a cannon mis fired, some one had the fun job of walking in front of the barrel and looking down to see if there was an obstruction.
Periodically that guy came to a messy end, if the cannon decided to fire just as he was gazing down the barrel.

I use this analogy with trading. Right now, in the stock indexes, we are hanging fire at these levels.

If the funds decide to sell it, it could be a scary ride down.

That is all
Have a great and safe weekend.
CER