"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


Monday, March 31, 2014

Gold Nearing an Important Inflection Point

Gold was once again knocked for a loop in today's session as Ukranian issues continue to fade from traders' minds. There is not much to add to my weekend post noting the various time frames on the gold charts but suffice it to say for now, that gold is nearing an important inflection point centered around the $1280 level.

The market is working lower in the range noted within the rectangle with the -DMI back above the +DMI indicating the bears are back in control of the market. The daily chart is not, as of yet, reflecting a trend lower, just a move back down within a broad range.

The stochastics indicator is down in the oversold region so if this market is going to bounce, it had better do so now. If the bears can take it down through $1280 and hold its head down under the level, they run an increasing chance of dropping it back down to another test of $1200. They will first have to crack the $1260 level however as support is layered in approximately $20 levels from $1280 on down.

For the bulls to have a chance at salvaging this mess, they need to recapture $1320 at a bare minimum, especially with the mining shares signaling no help whatsoever at this point.

The grains got a shot in the arm today from the USDA numbers which got corn bulls all revved up on ideas of less acreage going to corn this planting season and more going to soybeans. That and they found some more critter mouths to feed. That did not bother the beans one bit however, ( old crop ) as it was off to the races with them to the upside. USDA found some more export business and plugged it in drawing down that carryover even more.

There is already talk of cooler, wetter weather putting a crimp on the field work and resulting in some delays in certain areas of the Corn Belt. That should tend to push more acreage to beans, especially with soybean prices refusing to break down. Corn (old crop ) topped $5.00 once again to the dismay and frustration of cattlemen and hog and poultry producers who cannot seem to get a break when it comes to lowering their feed costs. Blame it on that damned ethanol, which I am coming more and more to despise. When 4 out of every 10 rows of corn ends up getting burned in our gasoline tanks, no wonder livestock and poultry producers are angry. No worries however, we all end up paying for it at the meat counter. Yep - whatever makes the environmental whackos happy in their quest to counter their boogieman of global warming.

Yellen made some comments today which were in line with her dovish views but traders are convinced, whether rightly or wrongly, that the economic data is going to improve with the warmer weather and that the Fed will remain on track with its tapering plans, her comments notwithstanding.

Hogs did what I expected them to do and that was to believe the Hogs and Pigs report. They did come off the limit down move however so there might be a contingent who are skeptical of that Friday report. I am one of those. We will be back to watching slaughter data and other fundamental inputs to gauge whether or not the pencil pushers over at USDA got it right or not. I am convinced that they will have to issue a revision to the numbers at the end of June when the next quarterly report comes out to bring it into line with the weekly slaughter data.