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December E−mini S&P Trading Lower but Remains Range Bound

James Hyerczyk from ForexHound.com at 11/17/09


  Equity markets are trading a little weaker at the mid-session. Investor demand for higher risk assets is down today which is leading to the weakness. Traders are also beginning to question the valuation of equities at current levels given the state of the economy. Technically, the three main indices may have all hit overbought levels. So far there is no indication of a change in trend, but a correction seems likely. This morning December E-mini S&P briefly touched 1100.00 and rallied. Despite this action, the market remains lower and range bound.

Treasury futures are trading weaker this morning. Yesterday’s rally may have been over done. With Bernanke reiterating the Fed’s stance on interest rates, the December Treasury Bonds and Treasury Notes are likely to find buyers following a short-term correction.

The stronger Dollar is helping to pressure December Gold. Today’s weakness is most likely profit-taking and position lightening. Today’s U.S. economic reports were treated as neutral by gold traders. Gold bugs are still using the weakness in the Dollar as their catalyst while they wait for signs of inflation.

The U.S. Dollar is trading higher versus all major currencies this morning. Comments from Bernanke yesterday and the European Central Bank’s Trichet this morning are helping to boost the greenback. Just the fact that these two central bankers are paying attention to the Dollar has been enough to trigger the start of a short-covering rally. Lower crude oil and equity markets are helping to pressure the December Canadian Dollar.

January Crude Oil is trading slightly lower. Pressure is coming from a stronger Dollar and weaker equities. Speculators seem to be backing off from the long side following yesterday’s short-covering rally. January Heating Oil and Unleaded Gasoline are trading higher. These markets seem to be holding up crude oil at the mid-session. Weakness in these two markets should trigger a hard sell-off in crude oil.


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