"Don't Put An Age Limit On Your Dreams" -- Dara Torres

What a great motto! Following a second silver-medal swimming performance during the Beijing Olympics, 41-year-old Dara Torres, when asked what she would tell her two-year-old daughter about the Olympics years from now, said, "Never put an age limit on your dreams." And putting all things into perspective, she also said, "Life revolves around my daughter." As far as I'm concerned, she is the gold medal athlete of the Olympics for her perspective and her outstanding sportsmanship. Bravo, Dara! Bravo!

May we all remember her courage and tenacity.

Eight Is Great!

Wow! Who would have believed it! Michael Phelps accomplished his goal of eight Olympic gold medals in Beijing. Congratulations, Michael! Well done!

So Much for Peace With Russia!

As of this morning, despite signing a treaty agreeing to leave occupied areas of Georgia, Russian troops are instead digging in throughout those occupied areas. They are already in violation of the peace agreement they signed in the past 24 hours, ignoring their own promises! In fact, Russian troops today have instead moved closer to the capital of Georgia, and have set up positions just 14 miles from Tbilisi. Just today, after the agreemeent was signed, they destroyed a key railway and supply link between Tbilisi and the Black Sea. I supposed this means that Russia's leaders can not be trusted to keep their word. So much for trusting Russia! So much for peace!

Grains Near Limit Down Most of Day

Grains not only opened lower, but remained near limit down through the trading session today. Both corn an soybeans traded much lower. I exited my long positions (corn and wheat) last night when trading moved lower after the opened at 7:00 pm EST.

Surprise! The Futures Markets Aren't Picture Perfect!

After spending obscene amounts of money for various trading schemes, coaching, videos, books, etc., I learned that all those various trading programs don't truly match what's happening in the futures markets. How can that be? After all, they demonstrate their systems with screen captures, examples, etc. They explain just how to execute the programs, and they give specific examples when their systems worked. Often, they even give examples of profits made on trades (although they are usually just paper profits, not real ones).

Here's a revelation:
That's because they only choose examples for their products that are picture perfect! Would you expect them to choose pictures and examples of when their product or systems failed? That doesn't meet marketing objectives very well! But traders keep being suckers for these myriad systems that really don't work.

Most of the time, the financial markets, and futures in particular, aren't picture perfect. This is one reason why, after purchasing their expensive programs, most people consistently lose money. The futures markets don't really look like the picture perfect examples they provide. Those videos, books, tapes, coaching, etc. don't show an accurate picture of the futures markets because instead, they show a very selective picture of the futures markets. They are incomplete. They don't ever show the 99% of the time that the futures markets don't match their picture perfect examples.

Hence, people find, after spending hundreds or even thousands of dollars to buy overpriced trading systems with the expectation of easy money and big profits, that their own "commodity bubbles" are burst with the reality that the futures markets are very different from the picture perfect examples they were sold. They find out that, in reality, they were sold a "bill of goods".

There are more people making money from traders than from trading. It's a harsh reality, but it's the reality!

Treasuries Break Out, Interest Rates Lower

The 10 year treasury futures have broken out higher, leading interest rates lower.

Crude Oil Leads Commodities Lower

Crude oil today is leading commodity prices broadly lower, with prices reaching fresh lows.

Dollar Continues to Strengthen, Commodities Sag

Crude oil has given up its gains over the past few days, leading the commodity complex, while the Dollar has continued to strengthen. Despite this, commodity prices appear to be starting to consolidate.

US Dollar Index - 30 min
DJ AIG Commod Index - 120 min

Grains Sell Off Overnight

Following a nice two-day rally in grains that suggested a possible new bull trend, grains sold off overnight, giving up much of the gains in the second day of the rally. A surging Dollar is being given the credit for the selloff. This suggests that a consolidation phase may be more likely for the foreseeable future. This may be a more typical scenario given that physical commodities, as I mentioned a few days ago, tend to have bowl-shaped, flat bottoms, rather than reaching a bottom and then immediately climbing higher again. Remember: spike tops, bowl bottoms.

Corn, Soybeans Plunge as Rising Dollar Cuts Commodity Allure

Looking to Go Long Natural Gas

There are seasonal aspects to the price of natural gas. Right now, natural gas utility companies are buying natural gas for the winter usage of their customers. Prices typically reach their lows about now, so utility companies take advantage of the opportunity to buy and increase their storage of this valuable commodity. This year, the price of natural gas topped out at around $13.75 in early July. Last year, the price of natural gas bottomed below $7.50 in late August '07, moving higher in the fall. It then dipped again and bottomed a second time in early December '07. We're only about 60 cents above that price now. The chart shows a continued downtrend, but the momentum is waning (see chart). In fact, the Klinger Volume indicator (lower panel) suggests that heavy buying is occurring. I will be watching over the next several weeks to position myself for a long trade in natural gas.

Corn - Uptrend Confirmed

My new long corn position today was also confirmed. After yesterday's limit up, I knew it was time to look to position myself for a new uptrend in corn. When prices dipped early in the day, I took a long position as soon as it was clear that the low had been reached. The left chart shows this turning point about 10:45 am MST. Prices then closed higher for the day, providing an excellent position to be long if the price of corn moves higher throughout the fall and winter. The daily chart on the right shows this new emerging uptrend on the daily chart. As this trade progresses, I may reinforce it with add-ons later.

Wheat -- New Uptrend

This chart shows a confirmed T1 and T2 per the Cahen method of trading as explained in this book, Analyse Technique et Volatilite. It was somewhat more difficult to position it than the corn trade (next post), but is already in the profit. I consider this a long-term trade. For the first few days, I will manage it with great attention, possibly exiting and repositioning over the next few days, until the uptrend is confirmed. Quite remarkable given the tremendous strength the Dollar showed today!

Treasuries Headed for Breakout Soon

The daily chart of the 10 year treasuries shows a steady upward-sloping flag (outlined here with a light blue line) that should break out soon, despite very firm resistance that has held steady for two months. According to the charts, this breakout is more likely to be to the upside. However, look what happened to the previous flag (the earlier light blue line). It broke downward, albeit temporarily. In an environment where both the financial markets, and the Fed, are ignoring inflation risk to try to stimulate growth, even lower interest rates may be on the way soon!

Strong Dollar Resumes Upward Rally

Another Oil-Fueled Rally

After a strong surge in oil prices yesterday, based upon reduced inventory data from the U.S. government, oil has sold off somewhat today, fueling a stock market triple-digit rally on the Dow. Today's natural gas storage figures showed increased storage as forecast, leading to falling prices that have also affected the crude oil markets. However, crude oil prices are still higher than they began the day yesterday. Georgian officials have indicated this morning that Russian missiles struck the BP oil pipeline yesterday.

Crude Oil
Dow

CPI Ignored, Considered Passe

Despite that consumer prices rose last month at the fastest pace in 17 years, the financial markets are ignoring the CPI today because the retracement in commodity prices over the past 4-6 weeks is considered to have tempered the effects of inflation in recent weeks. However, the market often overreacts to such data because most traders don't consider that past commodity price rises take about 6-9 months before they show up in consumer prices.

We are only now beginning to see the effects of wholesale inflation on consumer inflation. This fall, we will begin to see significant price increases for food products at the grocery store, including 20% price increases from many major food manufacturers like Kraft, Sara Lee, Hormel, Kelloggs, General Mills, etc.

The Fed is betting on reduced demand for many products that contain commodities, in order to dampen prices. They are also betting that while prices have risen substantially over the past year, prices won't rise any more, thus bringing future inflation down. What does it say that the Fed must count on a poor economy and pain for consumers to reduce demand and control prices? And what does it say that the Fed intentionally creates inflation with the hope that we will soon forget it when prices stabilize -- at a much higher level? What cruel torture! And assuming that the economy rebounds, then what should we expect from inflation as demand increases again? The Fed will have to raise interest rates substantially to bring down inflation at that time. Thus, the Fed constantly perpetuates boom and bust cycles of inflation and high interest rates, alternately creating bubble, boom, and bust cycles. Again, what cruel torture!

S&P Moves Into Positive Territory

Remarkable considering that crude oil is about $3 higher today!

Crude Slugs Its Way to $117.50

Crude oil pushed more than $5 higher from Tuesday's lows before retracing back to the $116 area.
The daily chart (above) is showing more and more signs of a bottom and a consolidation. With lower prices, demand has begun to increase again, and that's why inventories dropped unexpectedly over the past week. We're buying more gasoline at these prices, folks!

Partial Rebound After 200 Point Plunge

The Dow rebounded after plunging 200 points, but now begins to show signs of weakness again. It is still down over 100 points. One must remain fleet of foot on days like today. I've been both long a short.

Grains All Limit Up

All the grains reached limit up today by 1:00 pm EST. It looks like the downtrend is almost certainly over! Additionally, the Deutsche Bank Agriculture Commodity Index has continued to move higher following the close of the grain markets, suggesting additional buying pressure that may continue after hours. The daily chart for the DB Ag Commodity Index is below, showing a very powerful resurgence today. In fact, commodities broadly are showing tremendous price strength today. Has the commodity correction bottomed out?