Trade Alert

THE 64 DOLLAR QUESTION:  The following markets have not taken out their 2008 highs this year.  They are:  All the grains, all the energies, the interest rate futures.  Of the currencies, the dollar, eurocurrency and canadian.  Of the softs only OJ.  Of the meats just cattle.  Of the metals only platinum.  I find that interesting since historically platinum was considered the leader of the metals.  That is not the case this time around, because gold and silver are considered a store of value.  In 2008 all three traded together.  The next obvious question is whether these markets will finally take out their 2008 highs in 2011 or even try to test them.

The grains are pushing ahead with the same aggression that they did in 2008 and with fundamentals that justify such a move more so than what was the case in 2008.  For example, China's importation of corn is expected to increase 500% in 2011 to 7.4 mmt.  Their importation of beans has already doubled.  They will be soon consuming half the world's soybean production (mcmaster).

The energies - they are as far behind as the grains are - but have recently gotten over some critical resistances but they are plagued by a sluggish economy.

The interest rates (bonds & notes) have failed miserably for lack of a better word and they sure do not look done yet in their sell-offs.

And of the currencies the eurofx has been in a major downtrend since 2008 and if it continues to follow through, could take out 120.000.

The dollar continues to give strong indications of a major bottom.

Bottom line, a lot hinges on the dollar.  If it is truly bottoming (which interest rates and the eurofx are insinuating by their actions) many of the over inflated markets will top and the potential for those that have not taken out their 2008 highs weakens - unless there are some very strong fundamentals behind them.  That is what occurred in 2008 but will it happen in 2011?

 

FOLLOW UP TO GRAIN POTENTIAL PROJECTIONS:

In my Nov. 4 Update I had the following projections for the Grains.  The price in parentheses is their high today basis the front month:

Beans - 1400 (1383)

Bean oil - 60 (57.30)

Meal - 400 (370)

Corn - 700 (624)

Wheat - I had a question mark after it in Nov. since it was stuck in that trading range at that time.  All that has changed and it now could try for 950 - 1000.