Friday, December 10, 2010

Does This Commodity Rally Rely on QE3.....QE4?

At this point traders and investors alike realize that any near term rally in commodities and equities relies fully on the U.S. governments continued printing of money. QE 2, QE 3.....QE 4? But any real long term support of the world economy will be coming from Chinas recent and future increasing import and export numbers. The strong readings should trigger the Chinese government to continue stepping up tightening measures and a rate hike is imminent. This is just one reason our fund has patiently held a position in the Chinese Yuan using ETF....CYB. We have never favored putting our faith in communist governments with our investment strategies but we believe this is one bubble the Chinese cannot control forever. And the Chinese currency will eventually have to be allowed to inflate.

Here's your trading numbers for Friday morning......

Crude oil was higher overnight as it consolidates some of this week's decline. However, stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 85.33 would confirm that a short term top has been posted. If January extends the rally off November's low, May's high crossing at 93.29 is the next upside target. First resistance is Tuesday's high crossing at 90.76. Second resistance is May's high crossing at 93.29. First support is the 10 day moving average crossing at 87.72. Second support is the 20 day moving average crossing at 85.33. Crude oil pivot point for Friday morning is 88.50.

Natural gas was slightly lower overnight as it consolidates some of the rally off November's low. Stochastics and the RSI are diverging and are turning neutral to bearish signaling that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.301 would confirm that a short term top has been posted. If January extends the rally off November's low, the 38% retracement level of the June-November decline crossing at 4.654 is the next upside target. First resistance is Thursday's high crossing at 4.637. Second resistance is the 38% retracement level of the June-November decline crossing at 4.654. First support is the 10 day moving average crossing at 4.369. Second support is the 20 day moving average crossing at 4.301. Natural gas pivot point for Friday morning is 4.494.

Gold was lower overnight and remains poised to extend the decline off this week's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 1376.70 would confirm that a short term top has been posted. If March renews this year's rally into uncharted territory, upside targets will be hard to project. First resistance is Tuesday's high crossing at 1432.50. First support is the 20 day moving average crossing at 1376.70. Second support is the reaction low crossing at 1352.00. Gold pivot point for Friday morning is 1389.80.


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