The market looking for a robust stimulus program by the Fed

11.03.10 Filed Wednesday 3:20 pm

ALL CHARTS THIS WEEK ARE Hourly Bars

Last Last Week

December Crude 84.90 81.85

December Heat 233.15 225.50

December Gas (Blended) 213.80 207.18

Oil was higher in front of the Federal Reserve’s Open Market

Committee meeting. The market is looking for a robust stimulus

program to be announced by the Fed and that this may in fact help

drive prices higher on increased demand.

In terms of supply and demand considerations, gasoline inventories fell

by 2.69 million barrels to 212 million barrels for the latest reporting

week. Distillate stocks fell by 3.57 million barrels to 164 million barrels.

Distillates include heating oil. Against this, crude stocks rose by 1.95

million barrels to 368 million barrels. This was slightly more than the

median expectation of 1.5 million barrels.

The Fed was expected to announce a buying program of $500 billion in

government securities to stimulate the economy and add liquidity to the

financial system. The market will also be looking for economic strength

or weakness as reflected by Friday’s unemployment numbers. In point

of fact, the Fed announced a $600 billion dollar buy back program or

$75 billion a month through the end of the second quarter of 2011.

Money flow remains positive in crude oil.

Support Resistance

December Crude 81.50 87.00

December Heat 2.25 2.40

December Gas 2.05 2.20

***********************

METALS

Last Last Week

December Gold 1344.00 1325.60

Dec Silver 24.70 23.59

Jan Platinum 1702.40 1680.70

In front of the Federal Open Market committee meeting, gold was

under profit taking pressure. Traders had been buying gold running up

to this meeting in the belief that the Fed will conduct another round of

quantatative easing which would continue to weaken the dollar and

make gold attractive as a non interest rate bearing asset. Now traders

are beginning to question the size of the program or if there will be a

round of profit taking in the wake of the announcement. Money flow

remains positive in gold and silver. The Fed still wants short term rates

at basically zero and may be underestimating eventual inflationary

pressures from this monetary policy.

Support Resistance

December Gold 1338.00 1372.00

Dec Silver 24.10 25.50

Jan Plat 1690.00 1737.00

*********************************

SOFTS

Last Last Week

December Coffee 196.15 199.35

March Sugar 30.15 28.59

Sugar traded near a 29 year high on the fear that shipments form India

may be delayed. Indian surplus available for export may be 20% less

than just recently forecast, Stockpiles stand at 4 million tons while the

preferred level is 10 million tons. India also doesn’t want to be seen

flooding the market thereby depressing prices. If they are going to

become an exporter they want top dollar for their product. Sugar

output in key growing regions of Brazil fell by 30% in October. Money

flow in coffee and sugar remain positive.

Support Resistance

December Coffee 194.00 205.00

March Sugar 28.00 31.50

*****************************************

Last Last Week

January Soybeans 12.374 12.42

December Corn 5.81 5.772

December Wheat 6.902 7.026

Money flow in wheat is negative. Modest dollar strength in front of the

Open Market Committee meeting was a negative. The price has been

lower by over 3% over the three past sessions. In a bigger time frame,

wheat has been up 45% since the end of June based on concerns over

Russian drought conditions. Rain forecasts in key growing areas in the

Midwest are going to receive more than adequate rain over the next five

days and this could depress prices.

Corn will maintain it positive trend with a higher close today as will

soybeans.

Support Resistance

January Soybeans 12.23 12.47

Dec Corn 5.66 5.87

Dec Wheat 6.79 7.19

Chuck Kespert from NY/NY