Dollar confusion and Theme

Percentage of fed hike in December now 50-50,up from mid 40’s yesterday.. Today’s second tier data  showed a down-tick In inflation,Less confident consumers and A PMI reading out of Chicago  that equaled the best month this year.Weak inflation and Month end adjustment weighing on Dollar today,I believe.We have seen a solid move higher in Yuan fixing,EM currencies all higher vs dollar, The Yen higher after no new Stimulus ,New Zealand had best month  vs greenback in 2 years,Indias rupiah 7.2% monthly gain largest in 6 years So quite possible month  end positioning is trying to maintain gains against dollar,and next week the path of the dollar will return higher.96.589  the low print before FOMC statement on Wednesday, should provide support.Monthly London Fix at 11:00 will be watched closely.

Month end flows love that term will dictate the action today.Today and 2 days prior the pit high in Spuz 2086,will be watching that level.

The general consensus is that Crude Oil has been higher on Expectations that Cuts  in R&D   and exploration will eventually reign in supply.Oil and Gas companies have been slashing spending as aggregate amount of $19B in write downs has been announced from companies reporting so far.Chevron cutting 6-7k employees,Exxon cutting production and slashed R&D 22%  Y/Y.

Gold is falling out of favor once again as Investment choice,having its worse week in 9.Copper  set for 5 monthly drop in 6.

Remember  payroll report next week,markets already in holding patter till then.Watching Europe/london close for hopefully some action.

SPX,DJI ,Dax and Bulls

Just a few thoughts on the technical of  The indexes. SPX, DOW and NDX have all been trading above respective 200d MA .The SPX and DOW for about 5 days,NDX for about  10 days.The 200d  is more a of a guide post then a definitive point of ‘ bull or bear’  for the long-term direction of underlying asset.The longer asset stays above the metric the more the slope starts to turn higher which gives confidence that trend will continue higher.Enough of that Mumbo jumbo,Last Thursday ECB hinted at more QE in December,The Indices gapped higher on open   and have  stayed above gap ever since.Powerful combination of a gap and 200d MA to keep Bulls happy.A test of the gap and 200d  will be forthcoming,if they hold could be smooth sailing for bulls into year-end.

Into Europe where the QE impact is felt more directly,The Stoxx50 and Dax have yet to trade above 200d MA,The CAC sits above.If the Dax can   break above and maintain trade above  that level it could  give a real nice lift to all Stock markets as it is a Proxy for exporting countries.A continued weakness in Euro will definitely help accomplish that feat.(11053 is level as I write)

Something to monitor next couple of days

Theme and confusion

Crude Oil continues to shine as it rallies  and outperforms  Brent.Plenty of bearish headlines  for Brent  Iraq  and  Russia  announcing another increase in production.. Crude side of ledger  Small amounts of Oil exported to mexico and japan,Draw at cushing delivery point(genscape announced outflow today as well) .Refinery maintenance  is ending,and demand will pick up as they come back on line.lastly majority of oil related companies will be reporting earning over next week and half,Chatter is that the cuts to production and Exploration will be large and  hence less crude next year.Crude calendar spreads are bid  and CL/CO  spread as well, this does illustrate a bullish outlook,for now.

International grain federation increased size of Worldwide Crops for 4th time this year.Solid export numbers for Soy,Wheat and corn but yet trade movement cash/farmer selling has markets looking for some type of driver.The time for exciting grain trade is nearing the end.Soymeal has yet to break support with any type of momentum.For Wheat Increase in Drought conditions for Midwest and lack of Rain Ukraine for next 2 weeks provide a bid.

Spuz have failed to trade above yesterdays highs and Dollar continues to give back some of yesterdays gains.Strong Dollar= Strong stocks.

Short and long End being sold in Europe and USA as Dovish Fed bets  are being unwound.

Theme  today  is of readjusting to the new fed order regardless what net change of dollar is  .


SMZ5 Comdty (SOYBEAN MEAL FUTR D 2015-10-28 11-19-46

Soymeal starting to price  out any worries concerning  harvest.Cash prices today  are steady to lower.Waiting for a break below 299.80

SMZ5SMH6 Comdty ('SM' SPREAD     2015-10-28 11-19-59

Soymeal  Dec/march spread  backwardation coming out  as it trades below 200d SMA as Supplies should be are cautious though as farmer sales are slow to materialize,but they will come.