Dow Jones is carrying a very short blurb this morning excerpting some comments from the Cleveland Fed's notes in the Beige Book citing, "concern about stress on the freight-transport system from this year's grain harvest, which is expected to be at a historic high". They also cite the Atlanta Fed which noted, "significant strengthening" in grain shipments in the Southeast.
Here is the exact line from the Fed's Beige Book which can be found on their website: This is from the Cleveland Fed:
Contacts from trucking and railroads observed that insufficient capacity is a major issue that is currently confronting the industry and that there is concern about stress on the freight-transport system from this year’s grain harvest, which is expected to be at a historic high.
And now the exact quote from the Atlanta Fed's contribution to the Beige Book:
Overall, transportation contacts reported an improvement in demand since the previous report. District railroads cited increases in total carloads, led by significant strengthening in shipments of petroleum products; grain; and military, machinery, and transportation equipment. Intermodal traffic continued to increase on a year-over-year basis. Ports in the District reported a notable increase in container traffic and substantial growth in overall cargo tonnage in September.
Essentially, the Beige Book is confirming what most in the industry are already well aware of; that this year's massive crop is going to test the capacity of our transportation system as well as our storage ability.
Incidentally, soybeans are trading higher today with the complex being led higher by the meal. That tight carryover from last year's harvest is the reason as processers scramble to secure what is left of available beans in some regions while they wait for the new crop to make its way into the pipeline. With an open harvest window apparently in the forecast for the next two weeks or so, we should see significant harvest progress which will begin to finally remedy that tightness from last year's crop. The beans are transitioning from one of tightness to one of abundance.
gold made a 1 month high yest. right at the option strike 1250... funds that have been movin' it on up don't quit easily, and even though ags have only been going up this week it looks similar in that funds aren't giving up this soon.
ReplyDeletethe resistance (sell) numbers at CZ 360 SX 975 and ZW 520 still look decent.
blurb: Confidence growing in next week's good rains for dry areas of northern Brazil corn/soybean belt.
MN offers to pay farmers to leave corn by the road this winter:
http://www.agweb.com/article/minnesota-will-pay-farmers-to-leave-corn-stalks-as-windbreak/
XLE doing better than crude oil, as XLE is above tuesday high, while USO retreated from tues. high zone.
closn in on TGIF!
Yes Dan, the grain and bean bulls got away with transport issues for the last Brazilian huge crop and ran prices Feb thru March for a couple 3 bucks. Don't think anything close to that is in the cards, but with our algo friends at the wheel, anything goes in our wonderful and completely busted mkts. I would think things start taking gas next week, but what do I know?
ReplyDeleteLast week Wednesday Fed minutes caused a huge rally, the following day there was a huge reversal, and yesterday Yellen came out and made some comments and there after the Equity markets moved up way off their lows . Today those comments were forgotten with dow down on the open, and then on a Bloomberg interview Bullard made extremely dovish comments. The Dow was steadily rising after that. It was quite obvious, in light of the selling pressure, that Bullard was going to be very dovish, whether he meant it or not is irrelevant at the moment. So the FED are very active in these markets and are causing added volatility. This is why shorts and longs are getting smacked around in my opinion, in stead of letting the markets just do whatever they are supposed to.
ReplyDeleteLike I have said for years Janet, audit the Fed and then blow the sonofabitch up. None of those clowns have ever had real jobs and to think that they play such a huge role in today's very complicated world is just criminal.
DeleteFed jaw boning today after equities get into correction territory:
ReplyDeletehttp://www.marketwatch.com/story/bullards-surprising-suggestion-to-continue-qe-lifts-markets-2014-10-16?page=2
Lot of comments on the Fed above.
DeleteFed talking heads have saved the stock markets from huge losses the last 2 days now with their more cheap money talk.
And yes Trinity now Bullard comes out and says QE may be extended at the end of the month instead of ended?!? Looks like desperation to keep the stock markets up.
He might as well just come out and say, if the stock markets keep falling QE will not end.
The perma bulls on F-Tv continue to say buy stocks even if there is no more QE believing there is some sort of real economic recovery going on.
QE is the recovery.
Can't help but wonder if the price of equities and houses are some of the 'data points" the Fed is using in their data dependent world to determine policy action. If the wealth effect of the stock market and housing is not there, it makes the Fed's job to instill confidence that much harder. Rate hike? Not likely with a taper tantrum....
DeleteAnd also if the asset bubbles fall back to earth then there is less money to spend in the economy.
DeleteJust amazing they are already talking about more QE when a month ago they were talking about interest rate hikes.
Perhaps the Fed thought they could end QE using a slower tapering method this time and the stock markets would stay up, unlike the other times when QE has ended all at once and the stock markets tanked.
Looks like same result either way.
Hello,
ReplyDeleteFor the record, I'm out 2/3 of my long position 80.20 on the WTI at 83.60.
It was the area of the previous low, so I'm making most of my profits now with such a volatile market and NO time anymore to monitor / check the situation even once or twice a day.
At least, it's a good consolation on my wallet, after losing the bearish correction on the SP500 and even losing a bit of money by trying to follow the train once it was gone because of the FOMC whipsaws.
If I have a little time this weekend, I'll try to put a chart detailing why I thought that 80+ was a possible area for a short-term bounce, but nothing magic here, still the same indicators, all one has to do is monitor markets and do the same, plus wait a confirmation on the faster time units that the bounce is indeed occuring (this I can't do anymore, so I'm betting "blind", I.e my lines are very small because the esperance of gain is obviously reduced a lot).
Have a nice day, I'm going to bed after 2 days in Milano, Italy, Dan, I don't know if you've ever been there, but you must try their risotto! Absolutely delicious!
P.S : of course my stop loss for the remaining 1/3 is now raised from 79 to my entry level : no loss possible on th remaining position.
DeleteHDH, good for you
Deleteyes, feels good for self confidence.
DeleteI was quite pissed off missing the whole correction on SP500.
Making some money overall is the name of the game.
Great to see there are more and more traders posting on this blog.
Have a nice day :)
CME raises margins on crude oil !
ReplyDeleteCL moved 5 pts today, or $5K usd a contract.
as Dan said, people/funds are getting blow out!
be interesting to see what prospects of
the pre-weekend hedge do to corn-beans friday.
if farmers don't have storage they could sell all then buy some 2015 spring option calls if they believe in this market.
soybeans finally got the 10dma to cross above the 20dma, and they have 'wet feet'.
ReplyDeleteexport sales for the ags tomorrow, delayed due to columbus day.
gold has the 10dma cross above the 20dma as well, and today made a narrow range inside day. one trade setup is to go with a break and hold outside today's range. GC SI HUI have not done well on fridays, can the pattern change!
cocoa pulled back near that support at 3060 that had lows may-june-july on the continuous chart.
sugar had a great up move in sept., be good to watch for the next oversold condition. the sugar fundamentals will improve as brazil won't be thinking ethanol with oil prices so low.
take friday off if you already did well this week!!
Mr. Spellcheck just outdid himself; patted himself on the back for a 1985 call; new subscribers not showing up much lately, Marty???
ReplyDelete"Fed president Bullard urges more communications to satisfy market cravings"
ReplyDeleteCitigroup sees 1.1 trillion stimulus from oil plunge.
ReplyDeleteIs it possible to have a depression with a skyrocketing stock market at the same time? Or a country going deeper in debt with its currency rising in value? Rising tax revenue doesn't necessarily mean Congress has stopped spending the proceeds.
ReplyDeleteTo the newbie that is clueless, don't expect to figure it all out in one day. The Federal Reserve (Feds) doles out bonds to their branches then from there to big banks, which always remain loyal to the Feds, like Chase, Citi, etc., to do the bidding for the Feds in the stock markets and with massaged media releases. Unfortunately for the Feds, cycles are uncontrollable and trends can only be upset for a couple days or weeks at best then back to the trend line it is after which the Feds have to follow and react to the trend. Consumers dictate to the markets, much to the chagrin of governments.
It has all been done before and the results are always the same. Failure with a default. Can happen in different forms all the while government tells you are not bleeding from a mortal wound. Might hand you a band-aid until everything goes dark.
For day trading, today is a buy day according to The Taylor Trading Technique. Meaning we can long or short both hands. At opening, if Sp going up then testing yesterday high, we can short at that high. However an inside day usually leads to breakout. So if Sp going down at the open, looking for long at 75-100% of yesterday true range added to yesterday close. All depends how SP behavior in the first hour of the US session. Other markets got inside days as well so breakout trading preferred
ReplyDeleteDan you often make comments on here about the gold ETF shedding gold and this being bearish for gold. For balance why do you never mention the silver ETF?
ReplyDeleteIf you look at a chart from late 2011 the silver ETF holdings have been steadily increasing and dramatically over the past month. This has been while the silver price has been steadily decreasing.
How can gold holdings decreasing be bearish for gold yet silver holdings increasing also be bearish? It doesn't add up does it? This is one reason why gold bulls suspect GLD has been "raided" so to speak on order to supply physical in too the market.
Whether you believe this or not it begs the question how can SLV holdings increase so much in the face of a falling price if there is this relationship which you often comment on?
Dom:
DeleteI have answered this many times here on the blog but I guess you have missed it.
It is all about demand and supply. Silver supply is increasing faster than silver demand as measured by the SLV.
Most silver is mined as a by product of mining copper. When copper prices soared abov $4.00 some years ago, an awful lot of copper miners really increased production. The result was an increase in the supply of silver as well.
Prices can fall in several ways... supply increases at a faster pace than demand can increase.
or
demand can fall at a faster rate than the supply is decreasing.
It doesn't matter which... the result is prices move lower.
The former is the case with silver... it is that simple... it has nothing to do with monetary authority control of the gold price or "raiding" of GLD... those are fabrications
Dan, thanks but according to the following statistics the supply of silver has been decreasing since 2010 (by 10%) over this period while demand for the most part has increased (by 5%) and there has been a continual deficit in supply vs. demand.
Deletehttps://www.silverinstitute.org/site/supply-demand/
In terms of the supply vs. demand gold fundamentals I've yet to see anyone anlyse the fundamentals and come up with a better explanation of where the physical demaind has come.
Articles like this one that give an in depth anlysis of global gold demand vs. supply.
http://www.peakprosperity.com/blog/83626/there-too-little-gold-west
It was the fictional character Sherlock holmes who famously said:
‘Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth’.
An annual deficit in physical gold supply amounting to many hundreds of tons could only be supplied from ETF's or central banks.
I don't see why people class all this as a conspiracy. If someone can provide an analysis and actually make the sums work without the afformentioned supplies of gold then I'm all ears.
I do take the point about the metals being in a bear market but I think it is important to bear in mind the physical fundamentals before declaring advocates of the above theory as crazy. If they are correct there will come a tipping point and the price will rise significanlty. Who knows when this will happen? The market speaks loudest and right now it doesn't care about theories such as these but I do find the debate interesting.
Dom;
DeletePlease do not take this personally but I put no credence whatsoever in any data coming out of the silver institute. Keep in mind, that OBJECTIVITY is essential with data.
The price action in silver tells me that there is more supply available than is able to be consumed at current demand levels. Same is true with copper, or crude oil, or gasoline, or heating oil, or hogs, etc... in other words, most of the entire commodity market sector is seeing demand unable to keep up with supply. that is why prices are falling. It really IS that simple.
'
My advice is to stop looking for reasons for silver to go higher and just accept the fact that it has been moving lower just like nearly every other commodity out there. When it reaches a level where demand comes into balance with existing supply the price will stabilize, no sooner, no later.
Dominic, I am looking for a study on the supply and demand of rabbits. The fed have pulled so many out their hat that you would expect supply to be diminished by now. Maybe the rabbit institute have an answer for me:-)
DeleteIf you want a better understanding of the gold market i.e how supply and demand effect the price and the effect of the dollar on the gold price, visit Paul Van Eeden's site and read the articles on the gold.
Deletehttp://www.paulvaneeden.com/Gold
Dan
DeleteI'm simply being objective and I write how i see it. If the silver and gold markets were purely physical and short selling was banned then I'd agree with you whole heartedly.
I think the point here is that you're a trader and have a very much shorter perspective o these things. Your job is to read the markets (putting aside any bias you may have) and make quick decisions as to which way it's going to go. When you take a more longer term perspective like i do, all the questions above are more important.
Ever since the LIBOR scandal my confidence in the system is, shall we say limited. The points about the physical demand supply discrepancys don't sound crazy to me. They semed well thougt out and logical... In the short term the market is always right but what about the 2008 crash? I didn't hear many poeople predicting it and the people that were, were classed as lunatics very much like the peopple on here seem to call anyone who has a bullish longer term view on precious metals.
A lot of my friends here in the UK have bought houses, but I haven't as i fully expect governments to lose control over interest rates at some point and when this happens I see an even bigger crash coming in the housing market as the government here is subsidising many mortgages and many people can only just about make repayments with interst rates at 0.5%!.
I look like an idot right now as housing prices continue to rise and interest rates and inflation continue to fall, but I'm a patient man...
We'll see how thing play out in the next 5 years Dan won't we. Either way it's going to be very interesting and I personally am not hoping for $10,000 gold due ot the implications it would have on the Global economy although i am anticipating a 1980's style spike at some point.
Interestingly there was an article in the Telegraph over here today (popular newspaper in the UK), that essentially said the Fed may be trapped into 0% interest rates and QE for ever. First time i've seen any mainstream publication come out with something like this. It'll be interesting to see if they delay the taper.
It because of trend not just ETF holding or TIPS SPREAD or COT report. ETF holding and TIPs confirmed trend of gold not other way around. ETF silver holding can increase but silver and all commodities in a down trend
DeleteDom, there is no shortage of physical gold. That is a lie that keeps getting repeated on the bug sites. It is estimated that no more than 5% of the gold supply ever sees the light of the market, so when you talk about "shortages", it is merely referring to the gold that get passed around like a hot potato from sovereign to sovereign, from exchange to exchange, bank to bank, or any combination of the above.
DeleteAny of that that disappears into the 95% that isn't traded gets replenished by mining. As you may know, this is not exactly a growth industry, as demand for their commodity is dismal.
Don't make the mistake of thinking the gold supply is "disappearing". It is in robust abundance--you just don't understand where it is.
Rico I don't think anyone understands where it is. The Getmans think theirs is stored in the NY Fed but they can't get it back. Why is this do you think?
DeleteThe point is that the 95% is held by "strong hands" ie central banks as reserves, individuals for things like jewellery, wealthy individuals for investment purposes etc etc.
I'm fully awake that unlike most commodities gold is never used up. The point is it will take much higher prices for most of the 95% to be available supply. A lot of central banks are active buyers, not sellers.
The remaining 5% (mostly gold mined) is mostly eaten up by Chinese and Indian imports. Go look at the link above and you'll see this. That excludes Chinese and Indian buying in foreign lands. So where is the supply coming from to satisfy the demand from the rest of the world and Chinese and Indian overseas demand?
The figures don't add up.
And that's because those silver and gold sites a feeding you a line of BS that you would like to be believe.
DeleteKnow one knows who is buying what. Watch the charts to see the truth and quite trying to find reasons for PM to go up.
It will be years at best.
Mike of course you can know. Annual mine production vs. gold imports in to India and China are not made up.
DeleteCharts are reactive, I'm looking at a much longer time frame. They are just one tool of many you can use. It's a mistake to discount everything else, surely it makes you as biased as the gold bugs.
Dominic;
DeletePlease explain to us how an objective and hard-nosed reading of a price chart makes one "as biased as the gold bugs".
That is what is referred to as a "non-sequitor" conclusion. In other words, it is foolish.
Apparently you do not believe that the price movements of a stock or of a commodity, such as gold or silver, reflect the actions of all buyers and sellers in the market. The information you are citing is already in the market.
I have lost track of the number of times in my career that I have read or heard comments from those on the other side of a trade I was taking telling me how such and such information was the reason that they were taking a trade from the same side that I was. I also have lost track of the number of times such wanna-be traders have lost money.
Arguing with a market is a surefire recipe to become poor very quickly. I would suggest you rethink this. There is nothing wrong with researching and doing analysis on markets that you are interested in. The thing to remember however is that if the market does not respond in the manner in which you believe it should, based on your analysis of the data, then your analysis is wrong and needs to be shelved until at such time the market DOES respond to any particular information or data.
Understand also, if you have been reading at this site for any length of time that while India and China are key gold buyers, both of them cannot substitute for Western-based investment demand. That continues to be disappointing.
Closed out a bond fund trade today. Used HDH rules. Bought low at support and lower bollinger band.
ReplyDeleteTook partial profits at mid point and moved stop to break even.
When it broke upper bollinger band I moved stop to support level. Stop triggered this AM.
Nice profit on small position in a very volitile market.
Shaking my head over the Ebola news. Tighter restrictions on healthcare workers who use PPE than on air travelers who wander the streets unprotected. Venial politicians.
Your first duty it the protection of your citizens!
The market rallied much before US open so SP doesnt have much room to go further. If you long after the first 30 min red candle, you get 15-20 points. Not bad for Friday which usually get a narrowest range
ReplyDeleteSilver is first and foremost an industrial metal. If the world is in an economic downturn then demand for silver will be low. If silver bumps up to $50 an ounce, it may not be because photo cells need more silver but because confidence in some major currencies is waning and safe havens are being sought after. After the dust settles, it back to paper or, in this point in time, electronic money.
ReplyDelete