Monday, February 12, 2007

Evening State of Play

Let's talk dollar index first...

Again, so close to a close above the 200 day moving average, yet so far. Remember, "almost" only counts in horsehoes and hand grenades! Maybe tomorrow? Tuesday may be the Dollar Index's best chance ahead of the Bernanke testimony. While Helicopter Ben is likely the continue to hawkish language we heard last week, there will also no doubt be a repeat of concern over the state of the housing market which was included in the FOMC statement after the last Fed meeting and that could very well keep a lid on the buck. Sprinkle in some hawkish comments from the Eurozone and you've got a recipe for another 200 day moving average miss or at most just a brief visit above before it pulls back. We'll see but what I see is a pretty pathetic situation where the 200 dma has been coming to the bulls. Yen futures are up 34; EuroFX unchanged.

It was a big down day for crude oil following the Saudi oil minister's comments, which were thrown up on the blog late last night. I've still got my nat gas short position open. Nat gas is one of my favorites because of the bang for the buck you get with each cent it moves, but you'd better be sure a sizeable directional play is at hand or it can kill you if you get caught in a range bound sitation. Even though it will be bitter cold for a few days after tomorrow's snow in the northeast, IF it warms up as much as preliminary forecasts are calling for late next week, there's no reason to believe we won't see nat gas sink below $7 and very soon.

Gold. Same ol' story with these $5 to $10 stair step trading ranges. There's a lot of money to be made here with the backing and filling, if you're able to do it, but I've been keeping my screens filled with other things lately and opting more to play just the long side of gold of late. IF the dollar were to rally sharply enough, or other factors would align to invite a full fledged $10 to $15 slide, then sure, I would jump in, but the bias to gold remains firmly an upside one - it's just that it's not going to go up every day. Remember, commercials are short only 82k contracts, that is low end and actually sets the stage for a stronger rally in the weeks ahead.

Coffee. Continues to move lower, settling today at $1.1375. So it looks like a run towards support at $1.1250 is on the way... if that breaks... look out below.

Wall Street was running in place ahead of the Ben Bernanke testimony Wednesday and Thursday and ahead of economic data later in the week. We may get a little deal enthusiam tomorrow if the Times of London story about Alcoa has any legs. It seemed to tonight, with a $3 lift to AA.

Another Dow stock, Johnson & Johnson, may get stung by an improper payment broohaha

Subprime carnage-light today as New Century (NEW) fell a mere 5%, Novastar (NFI) sank 2.4% and Fieldstone Investment (FICC) lost another 2.5%. These things have become oversold, but the general atmosphere is one of 'when will the next shoe drop'. I picked up the May 40 puts on Blue Nile (NILE) late today. They lowered estimates, though the stock did little. Even if it rises in the morning, I can be patient with all the time value.

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