December Dow Jones - Dow Jones futures traded higher today, adding to the overnight rally that began after the Reserve Bank of Australia surprised everyone when they raised its interest rate from 3.00% to 3.25%. Australia is the first G-20 member to do so. Investors took this as a sign of confidence for an improving world economy.
This price action falls in line with my statement in the last issue when I said the Dow Jones futures would most likely rebound off the descending centerline support (9410) and trade higher on Monday and Tuesday. The corrective rally should take the market up to the 9651 to 9744 price range on or before the October 7th reversal swing day. Her we are, one day before the October 7th reversal swing day, and the Dow Jones futures are trading at 9659 after trading to a high of 9717...right in the middle of the target range. This is a critical juncture for the Dow Jones as it is trading inside the sell window during reversal timing. A trade below 9525 would confirm a major TR (trend reversal) swing pattern and trigger a sell signal.
December Eurocurrency – The Euro rallied to its highest level in eight days after Australia’s central bank unexpectedly raised interest rates. However, the Euro ran into some hard resistance at the upward sloping centerline (1.4761) where it stopped inside the 60% sell window. Tuesday is also a projected reversal swing date so the confluence of Time and Price may begin to affect the market and could put an end to this three-day corrective rally. - A trade below 1.4635 will confirm the TR swing pattern and trigger a sell signal with the stop loss above the (D) pivot high.
December Canadian dollar – The Canadian dollar traded to the highest level this year, spurred on by strong price moves in crude oil and gold. The short position was closed at 9375 for a loss.
November Crude oil – Long from 7098 – last price @ 7095 - Several sources are citing unconfirmed reports that oil producing states, like Saudi Arabia, were talking to their customers about switching payments to a currency other than the dollar, possibly the euro. So far, officials are denying the rumor.
In the last update I said, “the fundamental information is bearish, as jobs losses are mounting and oil supplies are rising. All the recent economic data is undermining the bull's oil case, but the chart patterns are saying something different to me. The market is forming a bullish TR swing pattern at the end of a 5-wave continuation pattern. Crude dipped below the 20-day SMA for a short time during the trading session, but closed above the SMA.” Soon after the news story about the “Attack on the Dollar” cam out and the Crude oil began to move higher. The trigger price was reached to confirm the buy signal. – Hold the long Crude oil with the stop loss at 68.03.
November Heating oil – Long from 1.8225 – Last price 1.8170 – The bullish TR swing pattern was confirmed and the buy signal triggered when the market traded above the 1.8210 threshold. – Hold the long position with the stop loss at 1.7375.
December Silver –Long from 16.65 – closed at 17.39 – Silver surged overnight, after confirming the bullish TR swing pattern. After posting the largest one-day rally (over 80 cents) in quite some time, Silver hit resistance and stalled at the newly established descending parallel reaction line. This line was used as the target level to close the long position and exit at 17.39 for a very nice one-day move. I will look for a short-term pullback to offer another entry level for the Silver.
December Gold –The price of gold struck an all-time high at 1,038.65 dollars per ounce as the dollar fell on a rumored plan to stop using the U.S dollar for oil trading.
I made the recommendation to buy Gold at $1,004.50 or lower. I had the right idea, but I was a little optimistic about getting a slight pullback before trading higher. Instead, Gold open steady and never looked back as left us in the dust and took off and surged over $28.00 higher before taking a breather. I was left with nothing but an unfilled order in hand. What now? The ascending centerline intersects the descending reaction line at $1,060.00 with the next reversal swing day falling on October 8th. This suggests more upside potential for the Gold over the next couple of days.
November Soybeans –One day after reaching the target price on the short position, Soybeans stage a 37-cent rally. Wow, was that luck or good timing…I will take either one!
The one-day buying frenzy stopped when Soybeans reached the 20-day SMA and downward sloping parallel reaction line. I will take a day or two to see whether the market is forming a trend continuation pattern or a trend reversal. Either way, will know very soon and then we can take action, but not until the pattern is confirmed.
December Corn – Long from $3.43 – last price $3.58 ¼ - Yesterday, the chart gave me a buy signal after confirming a bullish TC (trend continuation) swing pattern, and today the weather maps show Minnesota, Wisconsin, Michigan, Illinois and Indiana all getting hit with enough rain to delay the harvest. Also, adding to the bullish pattern was Monday’s USDA Crop Progress Report that showed both corn and soybean harvests were falling behind their normal pace. The USDA also said that only 57% of the corn crop was mature compared to 84% normally at this time of year. – Hold the long position and move the stop loss to $3.48 and use $3.72 as the target objective.
December Hogs – Now that the Swing flu has been changed to H1N1, it is safe to go back into the Lean Hog market. But seriously, the market has formed an A-B-C continuation pattern over the past three weeks. This type of pattern typically appears in the center of a longer-term reaction cycle. In this case, the pattern projects a price move to the 5600 to 5700 price range. – Buy Hogs on a pullback to 48.35 with a stop loss at 47.25.