Although U.S. equity markets closed higher, today’s day session was one of the choppiest seen in some time as traders seemed reluctant to print the high tick. Today’s trading action is a sign that these indices may be getting tired at current levels and may have to break to attract more aggressive buyers. Technical traders should begin to watch for a daily closing price reversal top.
September Treasury Bonds and Treasury Notes finished lower today but off their lows. As long as equity markets continue to rally expect pressure on the Treasuries. Last week’s reversal bottom was expected to be an indication of a possible top in stocks, but so far there has not been a confirmation of the bottom. Look for sideways to lower trading unless the equity markets make a dramatic move down.
The September Canadian Dollar posted a closing price reversal top. This could lead to a 2-3 day break if there is a follow-through move to the downside. The rally in this currency is most likely overbought as traders may have become concerned that high prices may have a negative effect on the Canadian economy.
The weaker Dollar helped rally December Gold and September Silver. Upside momentum is building as precious metal traders are now more confident that the U.S. government wants to see a cheaper Dollar.
Traders continue to support the rally in September Crude Oil. Signs of an economic recovery are encouraging traders to take long positions in anticipation of greater demand. Tomorrow’s energy report is expected to show lower crude oil inventories and higher gasoline stocks.
November Soybeans and December Corn traded mixed. Traders are watching both the weather and the U.S. Dollar. The dry weather in the Midwest may force the USDA to lower production estimates in its next report later this month. The weaker Dollar is encouraging traders to cover shorts and go long in anticipation of greater foreign demand.
