Monday, March 8, 2010

Technically Precious with Merv, March 5, 2010

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Chart of the Day

Corn-Are Bulls on the Horizon?

Last week May 2010 Corn opened at $3.89 and closed the week at $3.75½ which is below the 20 day moving average. Support comes in at $3.71, pivot at 3.79½, and resistance at $3.84. Technically as you will see from the charts below, Stochastics dropped below overbought territory and current ADX numbers are not showing any signs of a strengthening trend either up or down. The dropping divergence in MACD is signaling sideways movement for the near future.

Corn has not been able to recover from the bearish WASDE report that came out on January 12th, Reports of quality problems in US corn have been widespread in recent weeks. Market effects of last year's poor quality crop are not yet fully understood. Livestock feed usage will increase, buy ethanol margins and exports will suffer. The USDA will release the next WASDE report on March 10 and it will include a revision on harvested corn acreage due to last fall's late harvest. We can expect sideways to lower pricing through the month of March into the critical Perspective Planting report released on March 31st. (more)

China ready to end dollar peg

At the annual session of the legislative National People’s Congress in Beijing, Zhou Xiaochuan, governor of the People’s Bank of China, said that the days of the “special yuan” policy were numbered. He described the dollar peg as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy. The currency has been pegged at about 6.83 yuan per dollar since July 2008. (more)

Condition Red: More Hidden Greek Debt Exposure Discovered

According to a report out last week, there is huge off-balance-sheet debt guaranteed by Greece and the other PIIGS, Portugal, Italy, Ireland and Spain. In addition to similar debt guarantees issued by other governments.

Gordon Long, founder of a private venture-capital fund, said in an investor note that there is more than $600 trillion in notational value in the global derivative market, with $437 trillion of it tied to interest rate swaps.

"Any credit event could trigger a cascading event," Long wrote in the report, according to NyPo. "It does not have to be default; it could be a downgrade in swap contracts that would do the trick for a collateral call. Something is going to cause it to topple, whether it's a situation in Dubai, Greece or New Jersey." (more)

How Have U.S. Stocks Defied Gravity for So Long?

This Tuesday will mark the anniversary of last year’s US stock market low. Since then the market has rallied by 70 percent in a recovery only slightly less suspicious than a Madoff hedge fund.

A year ago uncertainty hung over the Dow and S&P 500 with the possibility of an economic depression and the potential nationalization of the entire banking system. But what has happened since then did not fall so far short of this extreme.

The Great Recession

The economy has undergone its biggest post-war contraction and unemployment has soared to 15 percent, including the long-term unemployed. With 36,000 jobs lost last month this rise might be slowing but it is not yet decisively over. (more)

Salbuchi - 2010 Forecast Status Report at 05March10