"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


Tuesday, August 21, 2012

Grain Prices Remaining at Lofty Levels

Word out of the crop tour this AM has sent both corn and soybean prices strongly higher dragging wheat along for the ride.

The supply seems to keep shrinking as each successive yield estimate comes in with a lower number. Once the market comes to grip with the actual supply number for this year, the focus will shift to the demand side of the equation and whether or not the market is doing its job of rationing supplies.

One thing is for certain - we, the consumer, are going to be reeling at the grocery store very soon.

Take a look at my Grain Composite Index - if you thought grain prices were high back at the peak of the commodity bubble in 2008, you ain't seen nuthin' yet! The Index is firmly above that level.

The strong day in the grains, combined with big moves in both gold and silver and another bullish call on oil from Goldman Sachs, has sent the CCI, the Continuous Commodity Index, through the top of its recent trading range. If the CCI does not surrender its gains before the end of the week and remains above that resistance level, from a technical analysis perspective, the trend in commodities will have shifted to UP.

Note how the top of this recent trading range has been in the same zone as the 61.8% Fibonacci retracement level. That makes today's move even more significant. I do not see much in the way of overhead resistance past this point until we get closer to 582 - 585 in this index.

Shifting a bit to the mining sector stocks - the HUI has pushed past 440 and is maintaining its gains as of this hour. It is on course to make a try at heavy resistance centered near 460. If the HUI closes a week above this level, it portends a trending move to the upside which would initially target 540 -555.

Silver has cleared heavy resistance at 29 and is closing in on the last level of chart resistance between it and a handle of "30". If it does that, look for the momentum funds to come piling into this market.


  1. Thanks for your updates - wow you are so generous with your expertise.

    These days that is so nice. I do taxes for a living Dan and if you ever have a tax question feel free to email me - no charge of course. Geez, I owe you. I just have to figure out how to give you my email address without the whole damn world knowing it?

  2. Lisa - thanks for the kind words.

    Managing Tax Liability is a big issue for any trader.

  3. Dan any chance these rallies in the metals are bear traps because it sure seems that way. A friend of mine who runs a jpm desk said the fomc is very possibly going to buy mbs in sept to push yields down below 3%. He also said that if Obama doesn't get reelected then he's out. These markets are doing exactly what I thought they would a break out into jackson hole and then waterfall when they only promise to print later on next month....any thoughts?

  4. Dan,
    I have always appreciated what you do and especially what you do not DO. For example "it" is here. Your analysis is clearly pointing in some direction,and if observant, provides historical, mid term, and short term implications. (Ah a trader at his best. Trader Garrett, Sinclair, Toby, Edelson, all seem to indicate that over 1 year from now,a longer horizon, indicates, we are going much much higher. "Most" mid term other seem to indicate similar conditions. Shorter term, opinions, vary. I am going with Turd on this one, at least based upon the last pop, I am not selling winning positions. I may sell, but not yet, I think we have a R A L L Y, based on a whole lot of crazy, crazy, events occuring. Thanks DAN. Your insight, TA, and commentary is what I enjoy the most. Especially when you weigh in on politics.

  5. Dan,
    Thanks for all that you do!
    Is the open interest in the silver market shifting at all?
    CIGA Eric


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