“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Friday, August 1, 2014

Another Day, Another Sharp Fall in Commodity Prices

The Goldman Sachs Commodity Index is currently down 2.4% on the year. Grain and energy prices are continuing their descent. Meat prices are following. As written many times here over the past couple of months, meat prices will be coming down by the time we reach the 4th quarter. They are already breaking down at the wholesale level.

Seriously, I would like any OBJECTIVE reader to take one look at this chart and then tell me, with a straight face, that inflationary pressures are on the rise as it relates to the cost of tangibles.

If that is not enough, here is a chart of the Unleaded Gasoline.

It has retraced exactly 61.8% of the price move made since late November of this year to the peak near $3.15. You'll notice that it managed to spend about a week consolidating at the half-way or 50% retracement level before it puked lower. If it does not hold here, it should see a further leg lower towards $2.66.

 As a consumer at the gasoline pump, I am delighted to see this chart. It means I have more disposable income with which to buy ridiculously high-priced beef for throwing on my pit smoker the rest of this summer. I am however looking for some good bar-b-q methods for caviar since there seems to be little difference in price between fancy fish eggs and brisket.

Quite frankly, if gold is going to get some help for its upside, it had best not be looking at its fellow commodity markets as they are acting as a weight on it. Gold must function as a monetary metal at this point if it is to trek higher and that means it is going to require geopolitical events or currency distress somewhere to get speculators in a mood to chase it. Today's decent but lower than expected payrolls number, took some of the sense of urgency out of this week's talk that the Fed was going to move on the interest rate front sooner rather than later. That was shelved by the jobs number today and in conjunction with the breaking of the ridiculous cease-fire in Gaza, along with some further tensions tied to Ukraine, there were some safe haven flows back into gold, and into bonds, I might add, in today's session.

The Dollar ran into some selling today when the payrolls number came out for the reasons listed above. The weaker than expected reading took some of the "hike in interest rates" premium out of the greenback. It especially allowed the safe haven bid that showed up today to be seen in the Japanese Yen which once again refuses to move in the same direction for any time frame longer than a couple of weeks.

Equities are currently weaker as I type these comments but are off their worst levels of the session. The Russell 2000 is moving back down to the bottom of its recent range trade between 1210 on the top and 1100-1090 on the bottom. The RSI is at a level commensurate with previous recoveries in price. Only if this index does not bounce off of the bottom of the range can we say that a more substantial break in price is underway. Some are already talking bear market but the index would need to fall below 1090-1080 to have experienced a drop of more than 10% off its best level and provide confirmation for that sort of talk. In other words, it is premature to say that a significant correction is underway. Further price and chart action is required for confirmation. Until then, the odds favor a continuation of the existing trend or price action and that has been either higher or range bound.

There are still plenty of equity bulls around who want to buy dips at this point. Price action will have to prove them wrong. So far, they have been right.

I will go over some of the COT stuff later on today. I am especially interested in seeing whether or not the hedge funds are still net long in the corn market, even after the $1.70 decline since May. I find the fact that they were still on the net long side of this market last Friday almost too much to believe. Talk about blowing a call on market direction!

Wheat prices have steadied as harvest pressures subside somewhat with KC wheat leading Chicago. Beans are seeing more pressure as the benign weather and forecasts calling for more of the same, continues. The market is still being supported only by tight old crop supplies but once harvest kicks in and moves north, basis levels are going to fall apart in my view.

More later....

Thursday, July 31, 2014

Broad Based Selling Sweeping Markets this AM

Not only are equities being pummeled this morning, the commodity sector is also seeing heavy selling pressure. There are some individual markets within the sector that are managing to shrug off some of the selling pressure, ( coffee for instance - that doesn't count anyway since that market was set up by aliens to trap earthlings prior to whisking them away into outer space)  but overall, the entire sector is dropping sharply lower.

The GSCI just notched a brand new 5 month low  this morning, especially with the energy sector dropping as it has. Even the high flying cattle market has been unable thus far to resist the selling.

Once again, the safe havens are back on as the US Dollar and the Japanese Yen are higher with bonds pulling into plus territory after collapsing a full point earlier in the session.

End of month book squaring is further muddying the waters today.

The low reading for initial unemployment claims has spooked gold bulls who are worried that the upcoming payrolls numbers are going to come in stronger than expected. The thinking is that the Fed's hand is going to be forced to raise interest rates sooner rather than later. That remains to be seen but with the sharp drop in equities, that sort of talk is a bit premature. It does however underscore just how sensitive the gold market is to any talk of higher interest rates. Higher rates will act as a headwind to gold, which throws off no yield.

The US Dollar has not yet been able to convincingly push past 81.60 basis the USDX. If it does, look for more selling across the gold market especially with commodity prices heading lower, especially crude oil and its products.

It is going to be interesting to see whether or not the equities experience one of those famous last hour recoveries today.

Gold has fallen back below the 45 day moving average and looks to be setting up a test of the support zone noted on the chart near the $1280 level.

Crude oil lost its chart support this morning but thus far has managed to find a floor above the $98/barrel level. There looks to be some better defined support near 97.60 - 97.50. the ADX is rising but does not yet indicate a trending move. That suggests the market will find some support sooner rather than later. If the secondary support level does give way however, crude could retrace towards 96. That would put it at the lowest level since early February.

Wednesday, July 30, 2014

Strong GDP reading Fans Fears of Interest rate move from the Fed

Today's stronger than expected Q2 GDP number ( 4% compared to expectations of 3%) has ramped up selling in the longer dated section of the curve. The long bond is down over a full point as I type these comments. The Dollar is also benefitting, particularly against the Yen today, as forex traders are buying it and selling the rest of the majors. Talk has now shifted ( at least for today) firmly in favor of higher interest rates coming to the US before any of the other industrialized nations.

Take a look at the daily chart of the US Dollar ( USDX). Note that the greenback has run right into the zone of heavy chart resistance pictured on the chart. That resistance zone is a function of a downside gap made all the way back in September of last year. The gap has served to cap the Dollar's upward movement for nearly a year. Seeing it challenged today is therefore something that should not be ignored. If the Dollar can punch through this level on a closing basis today, and then repeat it tomorrow, we should see some additional buying come in.

The ADX is showing a decidedly bullish chart picture with the bulls firmly in control of the market. The indicator itself is above 30 and rising - evidence of a strong bullish trend. If that resistance zone does give way as noted above, this thing could turn into something stronger on the intermediate term charts. Above 81.60 there is resistance at 82 and again near 82.50.

Here is the chart of the long bond. It seems to have reached its zenith near the 139 level. Today's GDP number was simply too much for the market to extend any higher. We have a ceiling now at this level for the time being meaning it will take some sort of safe haven event to kick the ceiling down or some very bad economic news from somewhere. The indicator is turning down and getting ready to confirm the negative divergence that was created recently. We'll have to see whether the bonds are setting up a range trade or whether this is the start of a longer lasting downtrend. It is far too early to assert the latter with any dogmatism.

Copper is benefitting from the stronger GDP number.

Hog prices continue to reel from traders reassessing the overall impact from the dreaded PED virus. Record heavy weights are offsetting most, if not all, of the impact of the disease on the slaughter numbers. I mentioned repeatedly over the last few weeks for hog producers to get some hedge protection on expected Q4 and Q1 2015 production while record prices were being seen. I hope some of you hog producers out there took that to heart. I have similar concerns about the cattle at this point. Cattle producers are basking in record profits right now but these things do not last forever. Do not be penny wise and pound foolish. Get some hedges in place on expected future production while you can. Do not wait until you HAVE TO get the protection. Speculators - I am speaking to producers right now.

Bean prices are giving up the gains from their recent rally that was due to heat and dryness talk. Bulls talk that up every season so that is not new. The forecasts however are showing some rain entering the mid-West next week and with no searing hot temperatures anywhere in there, growing conditions remain very good for the majority of the crop. Yes, there are some areas where the crop deteriorated slightly ( I noted that on my Monday  take on the USDA Crop Conditions ratings) but those small pockets cannot detract from the fact that the majority of the crop is still in very good shape.

Look at what continues to happen in the overall commodity sector...

It is showing a loss on the year at this point. Simply put, those investing in commodities as an asset class this year, particularly those looking for inflationary pressures to show up, have been on the wrong side of the complex. Now of course that could change but the fact is that while overall economic growth globally has been okay, it has not been strong enough to power the sector higher. Demand is not there as it once was. We'll have to see if growth can pick up from current levels.

A stronger Dollar threatening to move into a sharper uptrend and falling commodity prices do not augur well for higher gold prices. As stated here yesterday, it is geopolitical events that are keeping gold above the $1280 level right now.

Tuesday, July 29, 2014

US Dollar Moving for a Test of Resistance

Since November of last year, the US Dollar has been thwarted from beginning any sort of upward trending move by the region near 81.50 on the USDX. It is once again moving towards a showdown with this critical chart region. Can the Greenback blast through and start a stronger trending move or will it merely bounce off and move lower once more? Stay tuned.

Seeing that the Euro comprises over half of the USDX, we are keeping a close eye on the currency. Ever since Draghi began his campaign of talking it down when it was near 1.40, the Euro has struggled to maintain any sort of bullish momentum for long. The reason has to do with interest rates - traders are convinced that the next move by the Fed in raising rates will be well ahead of any move by the ECB to raise rates in the Eurozone.  Simply put, while the Fed is talking about curbing monetary liquidity measures over here in the US, the conversation in the Euro zone has been whether to become more aggressive over monetary liquidity measures over there. Such sentiment favors the Dollar over the Euro.

The currency is approaching a psychological round number support zone near 1.340. Failing to hold here would set it up for a further drop down towards 1.330.

The ADX is above the key 30 level and is continuing to rise indicating the presence of a strong trending move lower at this time.

One has to wonder if gold would be able to hold $1280 should the Euro fall accelerate. In my view the only thing currently holding gold higher is geopolitical tension. Were it not for those events ( and who knows how all this is going to end) gold would be lower, especially with the Dollar strength we are witnessing. Those events should continue to bring some safe haven buying into the yellow metal for the time being which will work to mitigate any sharp drops in price that could occur.

Meanwhile, the commodity sector ( overall ) continues to display weakness. Falling crude oil prices ( it has been unable to break out above former resistance near $105), falling grain prices ( for today), and weakness in some of the softs and hogs, are pulling it lower. Silver is bucking the lower trend in commodities today for some reason. Frankly, I do not know why nor do I care. That metal tends to live it in its own little world. There might be some copper/silver spreads being unwound which is benefitting it today at the expense of copper.

Monday, July 28, 2014

Corn and Bean Ratings see Slight Decline

This afternoon's USDA Crop ratings showed a slight bit of deterioration in the crops this week. Coming from the incredible conditions that they have held for much of this growing season, it is not unexpected to see some slight degrading of the crop at this point. None of it is serious however.

Corn rated in the Good/Excellent category fell 1% to 75% from last week's 76% - hardly a devastating decline. The rating decline came not from the Excellent category which remains the same as the previous week at 22% but from the Good category which gave up 1% falling to 53% from last week's 54%. The Fair category remained the same at 19% while the Poor category rose that same 1% to 5% from 4% the previous week.

My viewing of the report shows that the big three ( the "I's" as I prefer to call them - Iowa, Illinois and Indiana ) actually improved this past week or remained the same. Iowa index increased to 109 from 108; Illinois increased to 112 from 111 while Indiana remained the same at 108. Minnesota actually improved as well to 103 from 102. Nebraska dropped a point to 107 from 108.

The slight overall deterioration in the total index seemed to come from Kansas which fell to 100 from 103 and from Wisconsin which fell to 106 from 108. For the purpose of repetition, a rating of "100" is normal. As you can see, most of the big producing states still have some outstanding corn crops at this point.

As far as crop progress goes, 78% of the corn crop is in the silking stage compared to 67% last year and the 5-year average of 75%. 17% of the crop is in the dough stage compared to a mere 8% at this time last year and the 5-year average of 16%.

Switching to soybeans, 71% of the crop is rating Good/Excellent compared to 73% last week. In the big three, the Illinois crop improved to 109 from 108; Indiana lost a point to 105 from 106 and Iowa remained the same at 107. Minnesota and Wisconsin remained the same as the previous week.

As with corn, Kansas saw some deterioration of the crop falling to 102 from last week's 104 reading. Nebraska and North Dakota each lost a point to 105 and 107 respectively.

As far as crop progress goes, 76% of the crop is blooming versus 62% last year and the 5-year average of 72%. 38% of the crop is setting pods compared to only 18% last year and the 5-year average of 31%. As you can clearly see, the bean crop remains well ahead of schedule, something which is a positive given the recent talk of drier weather ahead.

I am not sure how much of this is already in the market after today's 20+ cent gains in the beans. Weather forecasts at this stage will have much more of an impact on the bean market than the corn market although the trade will still prefer to see some timely rains. From what I can see of the longer range forecasts, I do not see any intense heat at this point. It does look dry for the next week but without any severe heat. That will allow for corn to finish up pollination without any undue stress at this juncture.

Bullish Cattle on Feed Report sends Cattle Futures Lower

Yes, you read that headline correctly - we do not call it the "Cattle on Fade" report for nothing. Cattle launched out of the session open on the heels of a bullish report indicating fewer cattle in cattle country than the market was originally expecting; however, in spite of the friendly report, futures could not hold their gains made early in the session as sellers began showing up.

Simply put, the supply shortage of cattle is not "new" news. We all have known about it for some time now. It is a given that we are going to be tight on supplies for a while into the future. What is also a given is the fact that many traders are doubting the ability of beef demand to sustain itself given the record high prices for beef. Any of you who do the shopping know full well what I am talking about if you have taken a recent trip to the meat counter.

After plunging earlier this month, cattle regained all of those losses and then some after beef prices continued working higher reaching new all-time highs day after day and surprising the trade. Apparently grocers have been able to move the stuff even after passing on the big jump in wholesale prices to the consumer. However, the market appears to be re-evaluating beef demand given the time of the year and the continued surge higher. At some point the consumer is going to balk at paying these kinds of prices. When they do, traders fear that cattle prices could take a dive.

This uptrend has been surprisingly strong however meaning that the volatility can be expected until one view or the other is confirmed.

Here is a look at the chart to note the price action. The uptrend remains very much intact but today's response to the bullish COF report is a warning sign.

Shifting gears to the grains, and particularly to the beans - Bulls are talking up increasing demand for beans, especially from China for the new marketing year, as reason that prices have fallen far enough for now. Also, the usual ( we get this talk every time, every year without fail ) hot, dry weather for August has some shorts covering positions and waiting and watching to see what the longer range forecasts might show for the upcoming month. Beans are typically made in August so any change to hot, dry weather will bring some weather premium back into the beans although my view is that they already have a weather premium in them at current levels. We'll see.

What is really at work here is the lack of aggressive selling the past few sessions, unlike that which we have seen over the last few weeks more than anything. Some consolidation is therefore due while the market adjusts to the new and lower price level to build some sort of base. Traders will be closely watching the weekly conditions report on Mondays as we move forward to see if there is indeed any weather-related stress for the beans or if it is just the usual chatter stirred up by the bulls to try to salvage what has been a horrible last few weeks for them. In actuality, some heat for the beans will be beneficial provided that we do not see any lack of rainfall extended out beyond more than a week or so.

My view is that foreign buyers of US beans are taking some JUST IN CASE, the forecasts change for the worst. They want to get some needs covered. We will be approaching harvest in the Southern part of the US very soon and that is going to bring some new crop supplies into the pipeline. If these foreign buyers get the sense that any weather scares are overblown, they will back away from the market and wait for lower prices.

Corn is being dragged higher by the beans if you want my honest opinion although bulls are talking increasing demand at these lower prices also. Short covering among speculators is behind today's gains.

Not much to say on gold - even with the slightly weaker dollar it is struggling to do much of anything. As said in previous posts - gold is boring right now and a waste of time until it decides to make a strong move in one direction or the other. For the time being it is just being run back and forth with no clear direction outside of the shortest of term charts.

Thursday, July 24, 2014

Weak Chinese Demand news undercuts Gold

The Chinese trade group, China Gold Association, issued a report noting that total Chinese gold demand for the first half of 2014 fell by 136.91 tons to 569.45 metric tons. That is down 19% from the previous year same period.

It seems a dueling bit of data in the sense that while gold bar and gold coin demand fell off ( down 62% for the bars and 44% for the coins), gold jewelry and gold industrial demand picked up ( 11% increase in both of these categories).

The drop off was rather precipitous to the point that it had some questioning whether China would be able to remain in first place behind India in terms of total gold demand. We'll have to see about that however especially as concerns grow that India is not going to lift that import tariff on gold.

Either way, it was not good news for the friends of gold who need both China and India to remain very strong buyers in the face of what has been rather moribund Western-oriented investment demand. While the recent data from the giant gold ETF, GLD, has been positive, ( as it has shown increasing reported tonnage ), the fact remains that the total amount of gold in this particular ETF is up a mere 7 tons since the beginning of this year - not exactly a barn burning rate of increase especially given all the geopolitical tensions that have arisen thus far this year.

The news dropped gold back under psychological round number support at $1300. It also lost moving average support for the moment however the session is not over yet.

The ADX is falling indicating the lack of a clear trend although short term indicators are now pointing lower. We'll have to see how the metal handles the support zone near its old friend, the $1280 region, should prices dip that low. Gold bulls will not want to see it breach that level. Given the remaining geopolitical tensions, one would expect that level to hold it. If it did not, I am not sure what the bulls are going to be able to seize upon next to support their claim that higher prices are inevitable. The more talk of rising interest rates takes hold, the more headwinds gold will encounter.

It is going to take a severe undercutting of the US Dollar, a sharp rise in the commodity indices which have fallen rather sharply over the last three weeks and/or renewed geopolitical events to undergird this market and propel it sharply higher as some are hoping.  

by the way, as a side note - this is why I am personally disgusted whenever I read that claptrap that poses for analysis which is centered around permanently spinning ( read that as conjecture based on nothing of substance ) the COT reports for Gold to be perennially bullish no matter what the damned thing shows us. The COT is NOT THE HOLY GRAIL of trading and those who peddle subscriptions and newsletters claiming that they have some sort of esoteric insight into it which gives them a unique ability to predict future price action based upon their mystical interpretations of it are frauds. How is that for clarity?

As noted yesterday, sentiment can change so swiftly and so rapidly in today's markets that one had best be careful about being dogmatic about much of anything these days. Again, if trading were easy, if investing were simple, everyone who attempted it would be richer than Croesus. The truth is trading is an extremely trying profession which keeps those who are successful at it doing large amounts of research and spending long hours studying the actions of various markets in an attempt to understand what drives them. Wouldn't it be just peachy-keen if all one had to do was pull up a COT report and start loading up on positions in the market while they waited for their ship to come in!

Copper was marked up last evening on Chinese manufacturing data that showed greater than expected strength. It not only held that strength heading into New York, it added some. It looks as if the Chinese data outweighed the US new homes sales data. Copper looks as if it is headed for a test of strong overhead chart resistance beginning near $3.29 and extending to $3.31.

New Home sales data was out from the Commerce Department this AM noting a fall in June sales and a sharp downward revision to the May data. The June number was 406,000, down considerably from expectations of a 475,000 number. The big deal to the market was the downward May revision however. The previous number was 504,000. The new number was 442,000. That is significant to say the least!

Here's another tidbit from the data - the supply of new homes rose to 5.8 months at the end of last month. That was up from a 5.2 month supply at the end of April.

It is also interesting to note that the pace of sales varies considerably among the various states. Texas was big as it is having remarkably strong job growth while some other states are lagging.

Once again the data suggests an economic recovery that continues to be very slow.

I hope some of you hog producers out there took advantage of the rally to get some Q4 and Q1 2015 hedge coverage. If not, you missed a very good chance to lock in some of the best profits in a lifetime. You cattle guys might want to start thinking about doing the same on some expected production. Prices are high but they are not going to stay this high forever and the market will give little warning when it decides to turn. Prudence dictates taking some risk off of your table and locking in a portion of those profits for your ranch/operation.

I am noting that the S&P 500 notched yet another new all-time high. Simply amazing... Traders will tell you that nothing goes up forever but I am starting to wonder if the world has found an exception to that axiomatic truth.

More later... as time permits...

Wednesday, July 23, 2014

Thoughts on Wild Swings in Price

It is both amusing and saddening at the same time to read the continued comments from the perma bulls in the gold community who bemoan every sharp fall in gold as the work of some sinister force working to deliberately keep the price of their beloved yellow metal god from reaching its ordained higher price level. We have all seen it often enough to know it by now.

Never you mind that perceptions and sentiment shift nearly daily in our modern markets, especially during a time in which so many are unsure of what is coming our way next. Is it inflation? Is it deflation? Is the economy growing? Is it falling back into mediocrity? Are big foreign banks in danger of failing? Are they okay? Does China have too much debt? Is it nothing to be concerned about? Is the employment situation in the US improving? Is it mired in part time work? Are events in Ukraine serious dangers to world equity markets? Are they limited to the locale? I could go on and one but the reader no doubt gets the point already. Questions abound and answers are uncertain as players constantly repositioning themselves according to the perceived answers on any given day.

We witness these rapid shifts in perception not only on an almost daily basis, but also, in many commodity futures markets, in an intraday basis.

Computerized trading merely amplifies the shift as rapid fire orders, either to buy or to sell, overwhelm the orders on the other side. Huge buy orders gorge on the offers above the market in such speed that the market seems to catapult higher in a maddening frenzy only to give way with as much alacrity to the downside as avalanches of sell orders wipe out the pool of bids completely overwhelming the buy side of the market.

Back and forth it goes, where she stops nobody knows.

Take a look at the cattle market today. I have included a 15 minute chart to note the huge swings in price occurring within rather brief intervals during the session. Just looking at the chart does not capture the wild surges in emotion that result because the swings in price are so intense that the dollar extent of the movements can be enormous. Traders are more often than not unclear as to the "WHY" behind a sharp move in price and as a result, panic/fear/greed etc. soar as the players run here and there trying to protect themselves from ruin or to capture something that they "just know is the big one".

Early in the session the price moved from near 158 to 159.25 or so, a $500 move per single contract. Then price abruptly reversed dropping the equivalent of  LIMIT DOWN move as it fell 300 points off the high of the session in a matter of 45 minutes or so. IT then abruptly reversed higher moving nearly 200 points off the worst level of the session. The former down move is the equivalent of $1200 per contract while the latter is $800. Throw in 10, 20, 30, 40, 50 contracts or whatever, and you can see the extent to which losses can arise lashing, and slashing and mangling anyone of the wrong side.

As I have said many, many times here already, those who keep regaling us with this claptrap about "gold price smashes" and gold takedowns by the feds", etc., as if somehow gold is the only animal out there that experiences wild swings in price are merely displaying their ignorance of the nature of modern futures trading.

No one knows exactly when a large order is going to move prices higher or lower. What they do know however is that if they DO NOT REACT to it, they run the very real risk of getting steamrolled. One can argue for example, "Who in their right mind would sell so many cattle contracts in such large size that they are guaranteed to knock the price lower rather than being able to obtain the best possible price for those contracts that they are wishing to sell".

Does this mean that the price of cattle is being suppressed by sinister forces working at the behest of the government in order to keep the consumer happy with cheaper beef? Of course it does not. What it means is that the days of scale up selling programs or scale down buying programs have been replaced by "All-In" or "All-Out" computerized buys and sells. Hedge funds and other large speculators have moved primarily to technical based system trading. those few discretionary traders such as myself and some of my other companions are firmly in the minority in this new age.

Commercially oriented firms, who seek to hedge, understand ( or at least they should by now) that these antics by the large speculators and their computers provide them with big distortions in price at times due to the excessive nature of their buying and/or selling. They will not hesitate to take advantage of these distortions/opportunities  by selling large amounts of contracts if they feel prices are overextended to the top or buying large amounts if they feel price is undervalued based on their analysis of the market. Were it not for the actions of these commercial firms, there is no telling how whacky some of these markets could become if they were utterly at the mercy of the hedge funds and their computers.

I shudder to think what I would have to deal with as a trader if the markets were to become the arena of nothing but hedge funds. Those guys pay no attention to anything fundamental and what is even worse, they don't even care. If it moves, they chase it. It is that simple. If it stops moving, they get out and go the other direction.

By the way, on a slightly different note, have any of you readers out there who follow the Commitment of Traders reports but more particularly the breathless analysis that we are subject to nearly every Friday afternoon when those reports hit the internet, noticed how they are almost ceaselessly being spun as bullish for gold and silver. It is exactly like a "Head's - I win; Tail's - You lose" excerpt. Commercials are on the long side - wow - it's bullish. Commercials are on the short side but not as much as they were before - wow - it's bullish. Hedge funds are short - wow - it's a guaranteed short squeeze and is bullish. Hedge funds are buying - wow - they want to own gold again - it's bullish. Swap dealers are long - wow - it's bullish...etc, etc,. etc.

Moving only briefly to the grains - reports this AM of a big soymeal order and the usual chatter about heat in August sparked a round of serious short covering the beans. That pulled corn higher as well. Enough of this chatter was around that bulls were able to make use of it to spook some bears and take prices up. After the sharp fall in the price of beans over the three weeks, it was a given that at some point we would get a temporary bottom in this market. Maybe we got one today. Who knows? What we do know is that price stopped going lower today on ideas that beans and meal were cheap and that keep the sellers from being too aggressive. Bulls were then able to push price high enough to catch some upside stops. Looks like it back to watching weather forecasts once again.

The S&P 500 notched yet another brand new all-time high today. Absolutely nothing seems to faze this thing. Meanwhile the yield on the Ten Year is stuck below 2.5%. It is currently a tad lower today ( in spite of the higher equity markets) at 2.464%. The VIX is also lower. No fear anywhere once again it would seem in spite of the Gaza chaos and Ukraine.

The Dollar is a bit stronger and the Euro has now completed the second close below a significant chart support level. I will try to get some more up later with some charts if my schedule permits...