Yesterday I was able to post a chart of the Russell 2000 noting that today's close was going to be a big deal in regards to its overall technical condition. Would the index be able to find enough willing and able buyers near the support zone that has served to hold it for over a year now or would the bears finally be able to break the back of the bulls.
I guess that questioned was answered today.
Take a look at the extremely poor WEEKLY close on the chart. Note that it fell well below the support zone and in the process confirmed a DOUBLE TOP on the chart.
The question is now what? Here is my read on this. The bulls must immediately, before the end of trading next Friday recapture the broken support zone near and just above 1080 or the bears will have them.
Downside - there is some light support near 1040 that might spark some short covering but stronger support does not show up on this chart until closer to the 1000 mark, which I might add is a big psychological number. It also happens to correspond to the 25% Fibonacci retracement level of the entire move off the 2009 low and a band of horizontal support that comes in closer to 1012-1008.
Suffice it to say that the close today does not bode well for early next week. The mantra of buying the dip in equities looks like it is going to be tested.
One quick thing and I am done for just now as this has been one of the busiest days I have experienced in some time what with a MAJOR USDA Supply and Demand report for the Grains, ( and the livestock markets I might add), as well as some wild swings in wheat, etc. I will get some stuff up about these later on as my schedule permits.
For now, I am also noting that once again, gold was saved by its safe haven status as the metal began recovering from its worst levels by the swooning equity markets and the bonds which once again SOARED higher as money went rushing into US Treasuries. Also, right on time, as if clockwork, the Yen scooted higher as more of the risk trades were taken off and that particular carry trade was unwound.
The Euro however did not fare so well as once again it was "let's beat the snot out of the Euro" trade resumed. As said yesterday, FOMC (Central Banks) can only talk up currencies so much or talk them down before fundamentals take over. All the Fed did was give those who were looking for a lower level at which to buy the Dollar or a higher level at which to sell the Euro a huge gift to do just that.
Sadly for the bullish cause for gold however, the HUI and the GDXJ continue to go "Kerplunk!" along with the rest of the equity markets. The latter actually held up a bit better than the HUI did as it was down only 1.22% today compared to a loss of 2.44% in the HUI. Both charts are not especially promising; however, at least they remain above the lows made on the FOMC day this week ( Wednesday). Bulls might take some consolation in that but a mere 5 points off a multi-year low is not exactly a lot to crow about right now. That level is going to take on a lot of significance as we move forward. If it fails, another leg lower is coming. Let's hope for the long-suffering bulls that is not the case but with deflationary concerns rapidly rising, it is certainly possible that those lows will not hold.
Also, while crude oil was able to bounce somewhat off its overnight lows, near 83.50, it still looks iffy. Gasoline was trounced and beaten with an ugly stick today as it made yet another fresh 4 year low in price. I am quite happy with that to be honest.
Cattle rebounded when news of firm cash hit the market which saved the complex from the beating it took earlier but USDA also showed an increase in red meat production for next year and for poultry, something which I have been saying for some time now.
What that tells me is that red meat prices are coming down for sure. I had expected beef prices to start coming down by the 4th quarter as well as pork. Beef is holding better than I expected thus far but pork looks like it is beginning to weaken. There is going to be too much competition from pork and poultry in 2015 for it to stay up here in the stratosphere.
With the combination of cheaper gasoline and falling red meat prices, it looks like more Bar-b-Q is on the menu at my household once more. Then again, the way things are looking with this cursed Ebola virus, maybe all of us will be scared to death to even venture out of the door so cheap gasoline will not matter much!
I will get the grain stuff up later as there is a lot to cover....\
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