Thursday, October 13, 2011

Adam Hewison: Here’s the Bottom Line, Nothing Has Really Changed

The light volume rally that exceeded everyone’s expectations in the equity markets has finally come to an end. We were surprised, like many traders, just how far this rally extended. The major trends always win out in the end, and the major trend for the equity markets, the oil market, the silver market, and the Reuters Jefferies CRB index are all still negative longer term. The long term trends came into play and proved how important they are in the scope of trading.

This morning I saw that Wall Street insider Raj Rayaratnam was sentenced to 11 years in prison for his insider trading. I’m all for putting people behind bars that break the security laws of the United States. The security markets have no place for individuals like this.

I’m also for putting incompetent politicians who waste our money behind bars. There should be consequences for their actions. When you have Senator Dick Durbin go on the Senate floor and say to everybody to pull their money out of Bank of America, it is an irresponsible statement and very dangerous for our fragile economy.

The reason Senator Durbin said what he did on the Senate floor, is because he cannot be prosecuted. Had he made that statement in a town hall meeting or any kind of public meeting, Bank of America could and should sue him. You can’t have politicians denigrating businesses who are elected officials. Unfortunately, most of these officials have zero shame and certainly would not resign over something like this.

Here’s the bottom line, nothing has really changed, the country and the world is in a heap of trouble and that just can’t be swept under the rug and forgotten about.

Let's look at the crude oil action for Thursday.....

The action in crude oil today signifies that we have more than likely put in an interim top for this market. A close in the December contract below $84 a barrel would be viewed as negative, indicating a move back down to the $80 a barrel level. Last Friday, December crude oil closed at $82.97. Let’s see how it closes this week. Intermediate and Long term traders should continue to be short the crude oil market.

November crude oil closed down $1.16 a barrel at $84.41 today. Prices closed near mid range today and profit taking from recent gains was seen. Bulls still have some upside technical momentum. The bulls have the slight overall near term technical advantage.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 55

Please note that we are switching to the December contract for crude oil.

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