Choppy oil price action leads up to a big volatility week. Expect massive selling in the oil sector, natural gas being the lone exception as a breakout rally could be seen as early as Monday.
Stocks and oil show strong similarities and the choppy stock market should end with an abrupt selloff this week. Bonds have already risen on the expectation and a breakout in bonds is not out of the question despite its impressively inflated levels. The dollar is pressing up against the highs here and another bull breakout should start this week, pressuring the euro, pound and Australian and Canadian dollars. The yen is positioned to run to 130 and I continue to stand by my forecast that:
The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.
Calling a top in a weather rally is far from easy, but all signs to a top on Monday, or at latest Tuesday in the grains sector. Beans are the play with significant downside expected as the short covering rally ends and the profit-taking liquidation begins for the bulls.
Meats remain long term bearish, with a critical week ahead for hogs as the market presses trendline support.
Inflation may creep back into the market with the recent commodity rally, but falling oil prices and a deflated global economic outlook should squash those concerns quickly and lead to a sharp selloff in metals.
Coffee is approaching a topping point and a short is recommended. Cocoa and sugar both present bear plays while OJ may have limited upside.
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07-17-2012, 07:06 AM #1
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A Market Review and Opinion Report For July 15, 2012
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