December Dow Jones - Long from 9960 - Dow Jones futures fell, erasing an early rally, on concern the government will phase out a tax credit for homebuyers. The market was also pressured by news that Bank of America Corp. will have to sell shares to pay back its government bailout. The early session rally quickly vanished and the market turned red as massive profit taking sent the Dow Jones futures to a low of 9793. The long position was closed at 9825.
December Eurocurrency - Long from 1.4825 - The euro reached a new high against the U.S. Dollar, but fell 38 points short of the 1.5100 target objective before heavy profit taking caused the market to reverse sharply. Monday's sharp reversal validates the October 22nd reversal swing day high. The long position was closed at 1.4890 for a small gain.
Up until the day Lehman Brothers collapsed in September of last year, it took the Fed 5,012 days - 13 years and 8 months - to double the cash currency and reserves in the coffers of U.S. banks.
In contrast, after the Lehman Brothers collapse, it took Bernanke's Fed only 112 days to double the size of those reserves. He accelerated the pace of bank reserve expansion by a factor of 45 to 1.
December Japanese yen – Short from 1.1045 – Hit the Target! – After a weak early session rally, the Yen drifted lower and reached the 1.9010 target objective to close the short position. The next reversal swing day fall on Tuesday, October 27th, so I will stand aside and wait to see if a new pattern develops.
December British pound - The British pound was the strongest of all the major currencies today and managed to be the only one closing in positive territory. Currently, the pound is trading at the cheapest level against the euro in a decade. However, the price action over the past two the consolidation pattern appears to have formed a longer-term 5-wave continuation pattern, similar to the pattern formed in Crude oil before the latest rally. If confirmed, the continuation pattern portends a new bullish leg that could send the pound up to 1.8500. – Buy the British pound at 1.6425 stop with the stop loss below the swing pivot low.
December Gold –Short from $1,048.00 – last price @ $1,039.40 – Gold posted a secondary high after a failed attempt to test the prior high of $1,072. This price action has formed a short-term sell pattern that could send the market lower over the next several days with a target objective of $1,035.00. The dominant trend is still bullish so this should be viewed as a short-term swing trade. – Hold the short position and lower the stop loss to $1,060.50.
December Soybean oil – Long from 35.59 – last price @ 37.63 – The three-day correction is testing support from the lower parallel line. Grain traders will be watching for news from the Monday afternoon Crop progress report to see if the adverse weather is still slowing harvest. - Hold the long position and move the stop loss to 37.05.
December Soybean meal –Long from $301.80 – last price @ 294.80 – Soybean meal found support at the 20- day SMA after heavy selling pressured the market though out the session. The market needs to post a strong close on Tuesday in order for the bullish swing pattern to remain valid. - Hold the long position with the stop loss at 289.00.
November Soybeans – Long from $10.13 ½ - last price @ $9.86 - Soybeans have been climbing on speculation that rain, snow and cold weather may have delayed the U.S. harvest, threatening to damage crop yields. The rally paused and corrected on Monday as many traders covered long positions and moved to the sidelines to wait for new information from the Monday afternoon Crop Progress report. Traders were expecting the report to show that 50% of the harvest is completed, but the report stated only 44% of the crop is harvested. This number is considerable lower than the 5- year average of 80%. - Hold the long position with the stop loss at $9.75.
December Copper – Long from 288.75 – last price @ 298.30 –Copper imports to China#, climbed for the first time in three months in September as increasing demand outweighed the higher costs of overseas material. According to the Beijing-based customs office, 29% more Copper was imported during September over the month of August. Copper futures closed lower after reaching a new 13-month high of 306.90 on Monday. The market appears to be taking a breather and could trade down into the Tuesday, October 26th reversal swing day. Even though the overall trend is still bullish, Copper could pull back to the 20- day SMA (285.60) and ascending lower parallel line before resuming the upward trend. It may be a good idea to cover the long position and take the gains. – Exit the long position at the open.
December Cotton – Long from 65.60 – last price @ 67.41 – Heavy rain continues to fall on the Mississippi River Delta, causing problems in the cotton harvest. The recent rally paused today as cotton was pressured slightly by the higher dollar. This pause will be short-lived as the market is forming a bullish swing pattern and appears poised for another upward swing into the October 30th reversal swing date. - Hold the long position with the stop loss at 66.25.
December Wheat – Long from $5.29 ¾ - last price @ $5.27 –Wheat formed a bullish reaction swing pattern on the descending median line. After a two-day pullback to test the 20-day MA, wheat surged higher and triggered the buy signal. Thursday’s higher close is the second consecutive closes above the (C) pivot and portends a price move to the ascending (blue) median (centerline) line. – Hold the long position with the stop loss at $5.12.
December Lean Hogs – The second largest U.S. pork producer told a House of Representatives subcommittee that the USDA must make funds available immediately to save hog farmers from bankruptcy. Looking at the price chart, I see Hogs are still in a newly formed upward trend. The market did trade lower on Tuesday, but found support at the 20-day MA and appear to be forming a possible bullish swing pattern. – Buy Hogs at 54.27 stop with a stop loss at 52.05.
March Sugar – Sugar is in the final stage of completing a 5-wave continuation pattern. If you are not familiar with this pattern you can see that same type of pattern in the Heating oil and Crude oil, just before the latest rally. The current pullback could reach the 60% buy window (22.55) before turning higher. Even with the pullback, the market is still within the parameters of the bullish pattern. – Buy Sugar at 23.90 stop with the stop loss below the pivot low.
December Crude oil – A bullish TC pattern (trend continuation) pattern has formed at the crossing point of the descending reaction line and the ascending median line. The market closed lower on Monday’s projected reversal swing day forming a possible bullish “setup”. – Buy Crude oil at 81.85 stop with the stop loss at 79.75.