The ADP reports a loss of 39 thousand jobs and the IMF reports their world growth forecast to 2.6%, down from 3.23%

10.06.10 Filed Wednesday 6:50 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

November Crude 83.12 77.80

November Heat 2.3085 2.2135

November Gas (Blended) 2.15 1.9827

Crude oil was primarily influenced by the release of the Department of

Energy report detailing weekly supply and demand. At first, the market

weakened when it was learned that crude stocks rose by 3.09 million

barrels to 360.09 million barrels. The trade was looking for an increase

of 413,000 barrels. Another negative for the early market trade was the

release of the ADP private job forecast which showed a loss of 39

thousand jobs. Another early negative was news that the International

Monetary Fund reduced their world growth forecast to 2.6% from

3.23%. Obviously, contracting economies reduce energy demands. By

the end of the day, momentum players returned to the market and

leveraged the weakening dollar into a rationale of taking crude oil to

new five month highs on the belief that the Federal Reserve will

continue to pressure interest rates towards zero by attempting to revive

the US economy by buying assets. The US dollar traded at a fresh 15

year low to the Yen while the yield on the 10 year note traded as low as

2.359%. Commodities as an asset class continued to rally on the weak

dollar and Gold traded at new highs. Gasoline stocks fell by 2.65 million

barrels to 219 million. Distillate stocks fell by 1.12 million barrels to

172.5 million. Refiners cut back operating rates by 2.7% to 83.1 % of

capacity. Money flow for crude and its products remain positive.

Support Resistance

November Crude 80.50 84.50

November Heat 2.25 2.45

November Gas 2.05 2.25

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METALS

Last Last Week

December Gold 1349.70 1310.40

Dec Silver 23.17 21.23

Jan Platinum 1717.00 1651.90

Gold continues to work its way up on the charts. New record highs

continue to be achieved without difficulty or much fanfare. Buyers

believe that government spending will continue to erode the value of the

dollar to inflate the economy and boost exports. The dollar traded at its

lowest level since January when the ADP private job survey showed job

contraction. Weaker economic figures suggest that the Fed will be

prompted to continue a program of economic easing. Gold is up 22%

for the year. To bolster economic activity the Fed has kept interest rates

near zero while simultaneously purchasing 1.25 trillion dollars in

mortgage backed securities. Some observers have described the current

economic cycle as a “race to zero” as central banks look to keep rates as

low as possible allowing their economies to export their way out of

current woes. One problem seems to be that everyone has the same

plan. As the only competition for gold is interest rates, current central

bank policy is a signal to gold buyers to keep buying. For instance, the

BOJ cut nominal interest rates recently while Australia refrained from

raising rates. No economy wants a stronger currency. Silver is trading

at the best levels not seen since 1980. Money flow continues to be

positive.

Support Resistance

December Gold 1309.00 1375.00

Dec Silver 21.70 25.00

Jan Plat 1630.00 1740.00

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SOFTS

Last Last Week

December Coffee 176.50 185.50

March Sugar 23.45 24.95

Support Resistance

December Coffee 165.000 184.00

March Sugar 22.00 24.00

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Last Last Week

January Soybeans 10.72 11.08

December Corn 4.884 5.05

December Wheat 6.582 6.834

Soybeans fell in price as improving weather will facilitate the harvest

and increase yields. Warm and dry weather over the next 10 days will

allow crops to fully mature and allow heavy machinery to work

efficiently in the fields. Grains had surged across the board on Tuesday

flow in soybeans is negative.

Corn fell by 11% as the USDA say that carry over corn stocks were at

the highest levels since 2006. Money flow in corn is positive.

Money flow in wheat remains negative. The weakening dollar should

increase export demand for US grains. The high for the wheat trade

coincided with Russia curtailing exports due to shortages.

Support Resistance

January Soybeans 10.47 11.03

Dec Corn 4.55 5.11

Dec Wheat 6.35 6.82

Chuck Kespert from NY/NY