Well since we did not learn from our past as I mentioned last week, we are now about to repeat it. By that I mean it looks like we are going to see a global correction, even deeper than we have already seen. The fact that the FOMC is becoming the largest mortgage holder in the US is no small thing and only serves to worsen our overall fiscal health. But had they done nothing things would be worse…or so they like to tell you. We will never know who is right or wrong on that one but what we do know is that the FOMC is willing to sell all of our children’s futures short to save the stock market for one day. Sounds like a great plan. Mr. Bernanke studied the great depression so much I guess he now wants to test his theories about how he alone can do what no other Central banker has ever done…rescue crooks from themselves. I am trying not to go on another rant but this is shameful. Duping the public into thinking the Fed. can control this is the greatest lie ever told. They have as much control over the markets as a driver does when his car is on ice. No amount of rate cutting can make people able to pay the mortgages that they should have never been approved for in the first place. We see dark clouds forming and just like all other financial storms the public will be the last to know and the one who pays the most, both in market losses and then in all of these bailouts. The really bad news is that with all this additional junk on our books foreigners will be even lass apt to buy dollars and US Bonds. Think about it…if all of these “bad loans” are being absorbed by the government do you really think that our government will be able to maintain its credit rating? I hope they can pull the wool over the eyes of the Chinese and Saudi’s and convince them to keep buying our bonds. But for how much longer is the magic question? I wish I had better news to report but at this time this is the good news.
Energy:
Crude oil has put in a near term high and we expect to see it fall back below the $100 level later this month. We have solid support near the $85 level so any break in price would likely find support near that support level. Distillates will also see a pullback with heating oil falling the most.
NG:
Natural gas dropped and broke trend sharply. Last week we suggested selling a break in trend below 9.50. We have now seen that order filled and remain short from that price with our stop working a breakeven. We are looking for this market to slide as far as 8.50 before finding support.
S&P 500:
Our 1300 call that we suggested buying last week are back to looking good again. We continue to say we are in a range between 1250 and 1400 and are now poised to run back up to test the upper end of the range now that the test of the lower end has held. Buy pullbacks this week and look to hold into April.
Bonds:
Bonds have run to 120 as we forecasted last week and are now holding ahead of the Fed. We expect the market to begin its next leg up on the back of the FOMC meeting. We continue to buyers of major dips and are now targeting a retest of the highs just below 122 by months end.
Metals:
Gold did push though the $1,000 level and is now trying to consolidate those gains. We are still looking for gold to pull back to about 950 at which point we suggest buying the dip and hanging on as we then expect to see a push towards at least $1,200 by the summer. Silver too should see a pullback in the days ahead that finds support near $18.00. Copper did see the break that we called for last week and we are still targeting a pullback below 360 before a major bounce.
Grains:
Wheat continues to hold support near 11.00 we are still looking for a break in the daily trend line on a closing basis to signal new short entries. Longs can look to buy this support with stops just below it. Our bias remains short. Corn has been trending down and we remain short, looking for a test of support near 5.00. Soybeans have also trended down nicely and we are still targeting a test of support at 12.00 before any major bounce.
Softs:
The third time was not a charm, we were stopped out of our long OJ finally but made enough on the first two trades to more than cover this small loss. We will look to rebuy OJ once it turns back up but for the week we see little here worth chasing. Cocoa did rally to new highs only to fall dramatically we are looking for this pullback to take us back near the 2400 level before consolidating. Coffee collapsed and we have sold our calls for a loss and will stand aside until support holds, we see strong support near 130 holding. Sugar is also pulling back with the rest of the complex and we see support at 11.00 being a good bottom in the near term. Cotton is also still pulling back and we are still targeting a move to 70 before the next bounce.
