LET’S START WITH WHEAT

The commodity markets could be at the brink of another fast trend down and if so will likely take stocks with them.  For the past two week I have been warning about these markets resolving these struggling little patterns down to the downside which would infer a continued fast move down.  The break yesterday was a wide range day that closed on the low may need to be consolidated with an inside day or a rally day but if it cannot get back above the low is just broke below quickly, within days, the market could repeat October. Notice how small the rally has been considering the huge decline from the last high.  This is an indication of a strong trend, the smaller the counter trend the stronger the trend and this situation is true of most agricultural and commodity markets.  These are record moves down in agriculture commodities and oil.   

NOW LET’S TAKE A LOOK AT COPPER

This is showing same pattern of trending as Wheat with a struggling move down and now a break away from that pattern.  If there is a rally and it can only go one day and not move above the last low then this could also repeat the panic move down that occurred in October.  Remember each move down in a bear campaign is as fast or faster than the previous move down.  

NOW LET’S LOOK AT T-BONDS

The 3 month notes is yielding zero, the central banks are on their way to putting their rates at zero just as it happened in Japan in the 1990s.  The 30 year bond (the chart) is at record low yields and indicate a panic out of all assets but the safest as is characteristic of DEFLATION.  The move is of blowoff nature as it is almost vertical.  Last year when the ECB was talking tough on inflation I said their big problem was going to be deflation and they may have just recognized it.

NOW LET’S TAKE A LOOK AT THE S&P 500 STOCK INDEX

Two weeks ago I said the November low was an exhaustion and was going to produce a rally to 950.  Last week I said I lost my confidence concerning that low and I wasn’t sure what was going to occur.  Keeping in mind that the normal counter trend in a bear trend is one to four days and seeing a possible 2 or 3 day rally below a high presents some risk for another spike down.  Please understand I do not know what is going to occur but the moves in commodities present a risk to stocks over the next week.