THE WORLD JUST CHANGED
The story of the day had to be the meltdown in metals and oil, yet nary a word on it tonight on the news. This is the beauty and the challenge of the COT report. It was telling us that without a doubt a huge selloff was coming in Crude Oil, yet we never know exactly when these things will kick start. Well I would have to say it got kick started today. At one point we were down over $11 a barrel, just incredible volatility. The Silver wipe out has begun, down now 30% off the highs already. What next?
In this wacky world one never knows, but it certainly does appear that we have had big picture trend changes in two very in vogue markets to be long. We also had a monster rally in the dollar today. I have been in here talking about the DX and that I was looking for a rally. I quit probing with my logic I discussed the day I told everyone this. I am waiting for the first pullback trade in that market, there will be one if this is a real trend change beginning here. I sure with I could be a fly on the wall in the meeting that is taking place where they are determining how to alter the NFP report tomorrow. With stocks on eggshells here, I doubt very seriously they are going to release a report that is really negative. It could spurn a big rollover here. Many big stock declines have taken place on Fridays historically. However, we are very short term oversold so we could get a down and big snap back reversal due to that. I passed on a few new stock short setups I had for today just thinking I did not want to get more aggressively short after we had already declined into a short term buy zone. Rallies are being sold at the moment and that is what you have to follow until we get back into declines being bought etc..
None of the things I watch are telling me to buy the Bernanke Indexes here, but I am also aware we are due for a bounce at the very least. Generally the way to play the report is to fade a big initial reaction but I do not trade that way. Overall we have moved down so much in so many places here that the trends have changed and we need to look to short the first bounces.
Here is the Dollar Index, the Fed has to be pissed off about this move. The good news for them is that it is still in a well established downtrend, so this could just be another selling opportunity. I am hoping to get a buy signal somewhere over to the right as I have written on the chart. If it just takes off without me I don't care. I know some readers here got long this market today from some emails I got, so as they say in Canada, "good on you." One day does not a trend make so I am waiting here for what I think will be a better place to get in.
In general although we never know what will happen, it does appear we might be in the process of putting in a commodities top that will be the million dollar trade of the year. The only market I really missed a trade in was Heating Oil, there were sells there I passed on. In the others that turned on a dime, there were no signals in my world. If you remember recently I mentioned that Silver and some of these markets were likely to turn just out of the blue, and this is what we have seen. You cannot just fade fade fade trends like these hoping to catch a top. You will be cleaned out before you hit it. Be content to trade the first retracements it is the higher probability way to trade.
Good luck trading Friday to everyone