LET’S LOOK AT THE S&P 500 INDEX FUTURES

On Monday the index opened with a big gap up.  Most counter trend end in bear trends by exhausting into their highs.  So Monday exhausted something but I doubt it was a counter trend so I’m not looking for the index to resume the downtrend trend even though that is the risk from the daily exhaustion.  Seasonally it is not unusual to find a high the by the 9^th of December and trade sideways into the end of the months.  This appears to be the case now, with a low for December possibly 800 and the high not to exceed 950.  The only turning point in time is the 15^th.  But the first week in January around the 8^th could be very significant.  The risk is to the downside with the gap up but I doubt the index will get legs in either direction this month. 

NOW LET’S LOOK SOYBEANS

The agricultural commodities are in capitulation moves down and the next two days will tell us if they have exhausted down or will continue.  The bean chart is representative of what is going on in the agricultural markets.  There was an exhaustion style of low with a big gap and an island at the low but whether that exhaustion was temporary or more significant will be clear by the end of the week.  While in an exhaustion phase of a trend markets seldom rally more than 4 days and this is now up two days.  So exceeding four days up and getting back above the last low will indicate this has likely exhausted what has been a record move down in commodities.  If not, then the trend will resume with the same speed that brought it here. 

NOW LET’S LOOK AT THE CRB INDEX

This is shocking; the past 5 months have taken back 90% of a 7 year bull campaign.  This is deflation as we have never seen before.  You can be sure this is causing huge problems in corporations and on farms.  The speed of this decline has not occurred at anytime in history.  This will be known as the great deflation of 2008.  And as far as I can tell very few people even seem to be aware of the carnage.  This past year has bee a huge destruction of wealth around the world and this will take some time to repair.                               

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