The Chicago PMI was a complete disaster today, coming in at 56.6 on expectations of 63. The drop from the prior report at 67.6 was the worst month over month decline since October 2008, and we all remember what was going on at that time. How stocks are even positive right now is a complete mystery. The Euro spiked on rumors that Germany is going to bail out Greece, which may be pushing a risk-on.
We have a lot more data to look forward to this week. The ISM comes out tomorrow, and traders may be taking today's PMI with a grain of salt while waiting to see how the big report comes out. The consensus estimate is at 57.5. I'd take the under based on the regional reports, but we'll probably still remain above 50.
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| ISM Manufacturing Index vs. Federal Reserve Regional Reports |
We also have the ADP report tomorrow, jobless claims on Thursday, and the monthly big jobs report on Friday.
The Euro is being particularly stubborn, and we're up in the area I originally wanted to see from a correction before we moved down. There is a telling difference between the corrective overlapping nature of the up moves and the steeply impulsive down moves. The pattern is yet another expanded flat. There is a lot of resistance in the 1.44 area, so it should be stopping soon. Another high would paint a nice divergence.
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| EUR/USD Hourly |
Somewhat disconcerting is the way that the Euro speculators have completely dropped out of the market in this correction. I was really counting on their exits to put some wind in the dollar index's sails. But it does beg the question: just who in the Hell is buying the Euro then? I suppose this might have something to do with it.
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| Foreign Currency Commitment of Traders |
The stock markets are aligned with the Euro chart and looks just as ready to move down again after a correction. The Russell is touching the broken trendline for the entire move since August and is right at the 62% retracement off the 870 top in late April.
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| Russell 2000 Daily |
The grain markets didn't feel the heat the same way the rest of the commodity markets had because the rainy weather in the Spring had traders worried about the corn crop. But we Iowans are lucky to have a front row seat for growing conditions. It doesn't take a long memory to know what a real flood looks like. While we had a wet Spring and corn might have got in a little on the late side, the only washed out fields I see are the ones right next to rivers.
So I'd been looking for reasons to short corn and now looks like the time to do it. We're going to have some beautiful weather for growing grain very soon, and all the bad news has been digested by the market already.
So I'd been looking for reasons to short corn and now looks like the time to do it. We're going to have some beautiful weather for growing grain very soon, and all the bad news has been digested by the market already.
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| Corn Hourly |