HELPING FUTURES TRADERS SINCE 1997

Crude oil retreated from six week highs as the fear that Iran would block the Straits of Hormuz diminished. Crude oil had been up six straight days for the longest run of advances since November of 2010. Via random news agency cited the vice president of the country stating that the country would attempt to bar shipments through the Straits sanctions imposed on its exports are not lifted. Many market observers believe that Iran is attempting to deflect attention away from its nuclear program. Of course for Iran to actually close the Straits could be termed a self- inflicted wound of the first-order. But certainly prompt a response, probably a military response from the West. It may also jeopardize its backing from China and Russia. About 15.5 million barrels a day of oil or six of global consumption passes through the streets from Otis on a daily basis. Freshly 75% of the oil or passes through the Straits are destined for China Japan India and South Korea. Players are looking for a further contraction in crude stockpiles as refiners are taxed on inventory at year-end. Oil is up 11% for the year. The weekly supply data both from the American petroleum Institute and the Department of Energy were delayed by the holiday on Monday. Money flow and heating oil gasoline and crude oil all remain positive.

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Gold sold off sharply on Wednesday, chiefly thanks to a stronger dollar. Over the past several sessions, gold has experienced its worst price deterioration since October 2009. Fears that the Euro Zone debt crisis could worsen drove traders away from risk and into the dollar and US debt intruments, at least for Wednesday. Gold failed to reflect generally higher prices for grains and oil over the last several sessions, choosing instead to focus on its currency component and how it will often trade reciprocally to the dollar. Trading conditions are also thin at year end with many, serious players abstaining from trading helping to exaggerate and exacerbate price moves. Most large traders have closed their trading books at the end of last week. The euro dropped to an 11 month low against the dollar which encouraged silver to trade at a three month low. Platinum approached its lowest valuation since November 2009. Gold has declined in price for five straight sessions and is approaching an oversold RSI reading which currently stands at 29.18. A rally from this level could kick in as gold retests and rejects the flash low of 1543.3 from September 26th. This type of price action could take gold back towards 1614 before heading lower again. Gold is poised to experience its first quarterly decline since September 2008. Silver fell by over 5% on Wednesday and is 45% below multi year highs seen last April 25th, News that the European Central Bank’s balance sheet soared to record levels gave many the idea that the Euro Zone will contract economically and dampen the demand for metals. Money flow for gold remains negative as it does for silver. The advance back to 1614 will be based on short covering.

As for the charts, gold needs to see a test and rejection of 1543 basis February.

Coffee futures actually rallied on Wednesday by 1.8%. Still coffee is down 5.7% for the year and is poised for its first annual loss since 2008. On the other hand, sugar fell by 2%. This market is down 28% for the year, its biggest annual decline since 1998.

Corn continued to build on its longest rally in a year on the odea that US demand will increase as weather related concerns should reduce the crop size in South America. Argentina’s top crop producing area will be dry for next week and a half. Temperatures are expected to be above normal during this time as well. Corn was higher in price for the eigth straight session.

Soybeans decreased in price as farmers moved quickly to hedge product.

Wheat rallied as the marked settled higher for the eight consecutive session. This rally is the best since October 2007. Even as soybeans fought to maintain gains, wheat was greeted with very little selling pressure.

Chuck Kespert from NY/NY

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.