Hot Rolled Futures: MONSTER Month

In my last ditty, I mentioned we were likely headed to the 1775-1800 area on the S&P 500. Well yesterday we reached 1775. However, the Fed statement from their October meeting yesterday had just enough language changes from the September meeting that some felt nervous and got out of some of their positions and the market retraced back down to the 1755 area. I still think we are headed higher solidly into the 1775-1800 zone before any real correction can occur. Heck, what am I talking about? This market hasn’t seen a real correction since October 2012! It is Not going to start now. Not while their foot is still on the peddle. Buy em! Despite some traders worries that they may start to taper in December, this market is headed higher until that becomes a reality.

This exuberance does not translate to commodities. Crude has been the clearest manifestation of this. As I mentioned last time, we needed to hold $100/bbl or else we were headed to $90-92/bbl area. Well, we closed today just below $96/bbl, and are likely headed at least to the $94/bbl mark where there should be some support. The monthly crude chart is not pretty. This rally we had end summer during the Syria crisis failed to produce a higher high from the May 2011 high. This leaves crude still in the upper quadrant with deteriorating fundamentals making it look expensive. Inventories are building in various locations in the world basis the latest data. Looking more likely that crude will test low 80’s before this chapter is closed sometime in the early part of 2014 if not sooner, unless we see improving global demand in the immediate term.