Good Morning Traders!

The ES hits 2800, another record milestone and the USA trading has not even started. YM over 26000. NQ made new record high.  It is amazing the reasons attributed to the drop in US dollar (Washington turmoil over immigration, potential government shut-down at the end of the week, etc.) has done nothing to the stock market bulls.

 

Everyone knows the US government will not shut down, but financial writers are forced every single day to write about markets. The easy article is playing up the fear of a US government shut-down, when the majority of citizens have no idea of what that means. 

 

Stock bulls have reason for joy…the new tax reform will help underwrite corporate profits. This is a corporate/share-holder guarantee courtesy of the US government…AFTER any one time hits for over-seas profits.  Also, the lower the US dollar falls, the more competitive USA manufactured exports.

 

Wall Street Journal reports: At least nine out of ten stocks within six S&P 500 sectors (consumer discretionary, health care, materials, energy, industrials, telecom) last week coasted above their 50-day moving averages, another rare show of strength, according to Bespoke Investment Group.

 

And this…

 

The Dow Jones Industrial Average gained 507.3 points last week, the second week in a row that it gained more than 500 points. The last time it did that was in March 2000.

 

Herd behavior in equity index futures as the only consistent perceived “low risk” game in town, folks.

 

US dollar is testing the September 8, 2017 low trying to stay above this level. No doubt the avoidance of government shut-down will likely cause a US dollar knee-jerk higher when the dust clears.

 

Gold is falling as bulls took advantage of yesterday’s very low holiday trading volume for a push higher. Profit-taking underway as US dollar holds the September low.

 

Bitcoin and other crypt o-currencies crashed 20% overnight. Fun and games in this un-regulated market. Smart money getting out? Last week South Korea threatened to ban trading and China is increasing its crack down. Read more here.

 

Crude managed higher in low volume holiday trading thanks to bullish determination. Crude lower today testing 64.00 as support. Our important line in the sand remains 62.00. By the way…not that this matters…rig count from Baker Hughes shows more North American production added increasing supply.

 

Euro on holiday Monday, hit a high of 1.23425. We have a line at 1.21815, then 1.1990. Traders have record Euro long bets according to the latest CFTC reading. ECB discusses monetary policy next week. We assume they will “talk down” the currency…ANYTHING can happen during the Draghi press conference.

Economic Events – Econoday.com

 

Empire State Mfg Survey
8:30 AM ET

The Federal Reserve Bank of New York said that its general business conditions index fell to 17.70 this month from a reading of 19.60 in December which was revised from an initial reading of 18.00. Analysts had expected the index to hold steady at 18.00 in January. A reading above zero is considered improving conditions, so the report should not cause panic.

 

3-Month Bill Auction
11:30 AM ET

 

6-Month Bill Auction
11:30 AM ET

 

4-Week Bill Auction
1:00 PM ET

Markets

Bonds moving higher for a test of our 151.05 line. The move higher is all about the testing of October 27 low last week, which held.

 

Equity index futures – Up up and away in Asia, Europe, and USA.

 

Crude incrementally lower as US dollar moving higher. Bulls will have to engineer new buys (which are simply rolled over and never taken for delivery) in order to keep the dream alive.

 

Gold lower in potential whack. We’ve seen the whack already occur in Silver overnight…volatile. Basically all metals lower as US dollar moves higher. Copper very volatile.

 

Traders are pushing Soybeans higher after the USDA report…which was bearish. Renegade traders attempting a short-cover rally. So we expect eventually cooler heads will prevail and Soybeans…after kicking higher in knee-jerk and short-cover, will resume lower. USA Weather market based around the corner, but I think we have another down move possible. Weather in Brazil and Argentina…gloriously bearish. Monitor.

 

Cotton is tricky. Blow-off top potential.

 

Coffee drop continues, Sugar and Cocoa lower.

 

Euro whack taking place. All currencies green except Euro.

Think About This!

I want to alert I will take a vacation departing January 20 for Peru. I am heading for the Amazon jungle after a few days in Lima and will also visit Chachapoyas, which has the “Machu Picchu of the north,” called Kuelap, which was 1000 years before the Incas. This is my second trip to Peru, where outside Lima is like walking through the pages of National Geographic magazine. Therefore, I will not publish Rooster Call from January 22 through  February 2.

 

Have a great trading day! 

 

Martin

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