The Wizetrade Commodities Blog

For those who it hasn’t occurred to yet, the markets have rolled over into a bear continuum. It’s the same story we saw in 2000 and 2009 when the indexes were way over valued as to P/E ratios and Dividend to Earnings, so we should expect the same results as in those years.

If ever there was duplicity in conspiracy, the poster child is the Federal Reserve Bank Corporation. Sometimes I forget the fact that the controller of the “of the people, by the people, for the people” economy (recently confirmed chairman Bernanke has told Congressional Oversight Committees that the Fed is not accountable to the United States Government for expenditure of its money) is a corporation acting on behalf of its shareholders, whoever they may be.

The violations against its charter are innumerable. The latest one, Central Bankers are secretly meeting (the last time I heard, that was considered conspiracy) at the North Pole/South Pole to do what we have only one conclusion at which to arrive…replacement of all reserve currencies with a new one. Finally, the Central Bankers will have one currency whose distribution is totally up to the discretion of the Central Bankers. Hallelujah, I thought this day would never happen!

Now they can be totally private with our currency. Of course, it isn’t our currency because our currency, the “of the people, by the people, for the people” currency doesn’t exist according to the guidelines of the US Constitution, which was the CB’s intention all along. They made us debtors by burying us under social welfare program after program. Then they made a very handsome profit from the usury from giving us their currency to fund the programs. Old News!

Dow could retrace below 6400 by this time next year. Crude Oil could rise to $95 in May after this pullback, but the prospects of having any demand for it in a year from now doesn’t fit with a 5000 Dow. The Euro will find parity with the US dollar (Fed Reserve Note) because Europe’s socialist programs debt (coupled with shrinking US military occupation forcing them to provide their own defense) will break them. Small country’s economies (Poland, Greece, Portugal, and Spain) like Ireland’s and Iceland’s will falter with whatever currencies they use becoming worthless against the Euro and Dollar reserve currencies.

Commodities, because of shrinking US dollar value will skyrocket for a while in a crippling effect on household incomes vs. expenditures. If that scenario follows course, Gold would be at $1,600 to $2,000 by this time next year, but Silver would be a better investment. Gold is money; Silver follows.

This cycle we are entering is larger than anything I have seen in my lifetime. For this reason, the timing is harder to figure than in normal times. However some things are glaringly apparent. Our real national debt is $52 Trillion Federal Reserve Notes. It cannot be sustained in the near term or long term. The era of credit expansion has ended.

Timothy Geithner today stated “the US will never lose its AAA credit rating.” If that is true, as in a matter of a known and accepted worldwide fact, why bring it up? Why have to state it? Statements like that usually mark the end of the era.

Indexes: Monday’s and Tuesday’s lack of volume rally coupled with the small decrease in the USDX value gave a warning as to the strength of the upswing. Today’s action in premarket gives rise to the belief in Friday’s Non Farm Payroll Report being ineffective in causing a major change in trend direction. Volatility in the market will no doubt cause a wide swing in both directions, but at the end of the day I see the market coming back into the trend it was in before the report.

Metals: As with the Indices, the lack of volume and Tuesday's decrease in strength in the Gold rally without significantly inversely affecting USDX now becomes the factor in resuming the seasonal downtrend in metals. Copper closed yesterday at a 12 week low and below the 15 week moving average for the first time in a year.

Energy: Crude Oil has the same story as Indices and Metals as the seasonal downtrend continues through February into the first week in March. In my interview with Alan Farley yesterday on Trader Views Network revealed, if the trend for the last 25 years holds true, we could see lower prices in almost all commodity futures until early March.

Grains: Surprisingly, Wheat and Soybeans closed up in the overnight session, but with USDX rising, the open of pit trading could see a massive downturn. Look out below!

Financials: Interest rates pushing up from the 30 Year US Bond above the current 4.65% level would break its 29 year trend line and bode for increasing interest rates for a long time to come. Oddly enough, the increase in interest rates could spur some retail home buying as people try to take “lock in” before last remaining low interest rates disappear.

Currencies: Obviously, with a Rising USDX almost all currencies with falter against it especially the commodity based Canadian and Aussie dollar.

Meats: Live Cattle’s major downtrend resumes with some power in the charts. Lean Hogs sellers are trying to push prices lower, but the buyers haven’t let the market penetrate the 65.85 low set Monday on high volume.

No buy-hold-sell intended in these observations, but I can absolutely positively recommend “Don’t trade without a stop loss in place,” because trading is risky business.

Last week both March Soybeans and March Wheat closed on the daily and weekly lows. While this would appear very bearish to most traders, the signal set up a major COT buy signal. This is not my recommendation as I never trust signals given by anything but the charts. What I want to see is a key reversal day in which the market gaps down at the open and then retraces to close at least above of Friday’s high and preferably last week’s high of 488.5 in Wheat and 936.75 in Soybeans. This may not happen as it would be ideal, but I’ll take a “close as in hand grenades” to see if the market has increasing potential to the upside.

What normally happens (if anything is normal anymore) is a surge off the bottom with a pullback to test the low. This is when the charts come into agreement and there is a fresh cross on the Daily chart. This is what I am waiting to see. The move following this change in direction surge can be the strongest and fastest moving of all the moves. The risk can be a little easier to calculate, and I think it is worth the wait.

As I am watching, the market in Wheat has bounced up 17 cents…….