MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR FRIDAY, NOV. 6, 2009)
888-301-8120
jcrawford@zaner.com
GOLD & SILVER: In my last Update I had pointed out that several months ago I had compared the current recession to the 1980 one for those markets available. At that time both gold & silver never recovered from their highs (silver: 41.500 & gold 873) made in Jan. 1980. They did have rallies that failed and they continued with a bear market that did not bottom until almost ten years later. This time they are dancing to a different tune.
Both metals duplicated the behavior seen in the 1980 recession until it came to the rally after the first major sell-off. Gold didn't stop and is making new historic highs. Silver cannot reach its high (21.440) made in early 2008.
Gold's move appears to be feeding off the inevitable inflationary outcome of all the money being printed. I felt it would be a couple of years before gold responded to the inflationary forces lurking in the shadows. Historically there is a delay. I felt gold would not take out the high made in early 2008. I was wrong. It took gold seven months to respond but it did. It appears to responding very early to the inflationary potential which usually takes longer. Or is it responding to the public anticipation because the money printing binge has been so huge? I don't know and it doesn't matter because it is reaching new historic highs almost daily.
In spite of that, I have not made any recommendations in gold for three reasons.
1. It has been my experience over the years that anything in this business that seems really obvious usually is not what it appears and catches everyone by surprise.
2. The commitment of traders shows that the commercials are not bullish at all in comparison to the big funds & small speculator. They are virtually the complete opposite. I was very surprised. The funds are extremely bullish and we all know the influence that the big funds have. You do not get in front of them. But when they turn, it is always the small speculator that gets his head handed to him on a platter.
2. Also gold technically is in new territory and your reference points are pretty limited. In spite of that, it is possible to establish some projections to the current fever in gold: near term the current wave up has a potential projection to approximately 1110. Long term the current major wave up has potential projections to 1168. That assumes it makes it there. With the uncertainty of the times and the outcome of anything, expect the same in the market place.
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TRADE ALERTS:
Sell December mini silver. Sell 17.170 stop. Protective stop 17.560. Potential projection 15.500.
Reasons for the Trade:
1. The monthly chart formed a key reversal top last month suggesting a trend change from up to down.
2. On both the monthly and weekly charts, silver is in resistance.
3. The weekly chart formed a key reversal top four weeks ago.
4. The weekly chart has a sell signal.
5. On the daily chart, silver is in resistance. That resistance goes back to mid 2008. It was from that level that it produced an extensive sell-off.
6. On the daily chart, silver appears to be forming a preliminary head and shoulders top.
7. A sell signal would push silver under the 20 day moving average.
8. Today was an inside day that can trigger a signal and market direction.
Sell December mini crude. Sell 78.95 stop. Protective stop 80.55. Potential projection 75.00.
Reasons for the Trade:
1. On the monthly chart, crude has been attempting to rally over the 20 day MA for two months in a row without success. That is resistance.
2. On the weekly chart, crude oil is in resistance for the last three weeks.
3. On the daily chart, crude oil has been attempting to rally over the 80.00 resistance for almost two weeks without success. Normally when a market cannot achieve that, it will sell off and try from a lower level.
4. Today was an inside day that can trigger a signal and market direction.
CHANGE IN OPEN STOPS:
Short Dec 10 year notes from 118.290 down to 118.110.
METALS COMMENTS:
DEC COPPER: It continues to go nowhere. It continues to hold in support but has violated the uptrend formed since the Oct. 2 low. Is it making a top? Longer term it is in resistance and suggests that on the daily chart. Bottom line it has been consolidating between 270 up to roughly 300 since early August and could go either way. Just watching. Closed 295.70, down 3.60.
DEC MINI GOLD: It made a new high yesterday at 1098.50. Today was an inside day. Just watching. Closed 1089.30, up 2.00.
DEC MINI SILVER: The daily chart is either starting a new wave up or starting to form a head and shoulders top. Yesterday's high could be the start of forming the right shoulder. It is stalling out at the same level it did in mid Sept. - assuming that is the left shoulder. It also did a lot of consolidation between 175.00 and 180.00 in the first part of October that could be the head. That is now resistance. A trade could be developing. See Trade Alert for details. Closed 17.410, up .500.
ENERGIES, CURRENCIES & BONDS:
DEC MINI CRUDE OIL: Just looking at the chart it looks like a similar setup that produced a sell-off in August. A trade could be developing. See Trade Alert for details. Closed 79.62, down 78.
DEC MINI JAPANESE YEN: It triggered a sell yesterday. It attempted to rally today but could not get over 111.00. Keep stops at 111.33 for now. Closed 110.18, up 4.
Position: Short 109.95 (11.4).
Projection: 108.00.
DEC SWISS FRANC: It is starting to look like a 1, 2, 3 top formation on the daily chart. It also had an inside day but is sitting right on support. I would lean towards a sell-off because the long term charts are flirting with resistance. Just watching. Closed 98.39, down 26.
DEC DOLLAR INDEX: It is back under the 20 day MA on the daily chart but it is holding in support formed in October. I still see nothing to do. Closed 75.865, up .040.
DEC MINI EUROCURRENCY: It is sitting on support - just like the swiss. The daily charts look very similar and so do the long term charts. Just watching. Closed 148.670, down 280.
DEC CANADIAN DOLLAR: Its monthly chart has this big key reversal top that could almost choke a horse. It rallied up into resistance (97.00) last month and backed off of it as though it was spooked by a ghost. The daily chart completely contradicts that. It has extensive support under it that extends for months. The key right now is holding above 94.00 on the daily. Watching closely. Closed 93.92, down 33.
DEC 10 YR. NOTES: They triggered a sell yesterday and sold off to 117.175. Today they rallied and formed an inside day. Both yesterday and today they were contained by the 20 day MA. Move stops from 118.290 down to 118.110. Closed 118.025.
Position: Short 117.275 (11.4).
Projection: 116.000.
DEC BONDS: The low of their previous sell-off in late October was 117.25. Yesterday's low was 117.29. That 117.25 low needs to be taken out. If they hold here, they may try for another rally. Closed 118.07, up 4.
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. Opinions are subject to change at any time and are not a solicitation or recommendation to buy or sell futures contracts or options on futures contracts. The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness. All known news and events have already been factored into the price of the underlying commodities discussed.
Past performance is not indicative of future results. All suggested trades are based on technical signals/indicators and do not include slippage or cost. Not all trades suggested are taken. Results are based on what the signal indicates not necessarily an actual trade. Actual results may vary.
