Odd Start

Well, the week started out with a strong number out of China Sunday evening, the PMI showed its first gain in seven months. The markets reacted positively with having the Dow futures trade more than 50 points higher. During the overnight hours the rally did fade and we had a dull Monday to say the least! Stocks were down as much as 40 points and finished the day down less than 10. This should show as a sign of fatigue as far as the equity markets are concerned but we will see what Tuesday brings. Usually a number like that out of China, especially on a Sunday to start the week, the bulls would have been able to run with that and we could have easily seen triple digit gains in the Dow, I am almost shocked that the scenario above did not play out.

While we really did have a quiet Monday with the markets, one other market that caught my eye was Crude Oil. Oil did close near the highs last week and looked pretty strong. To start the week, however it moved to the downside closing just above $106. The price action was not all that bad but I did not see anything in the news to take my guard down about the ISIS situation in Iraq. Monday evening Oil did have a quick technical breakdown to drop almost $1 down to $105.30 on comments made by John Kerry saying how committed the US is to Iraq. As I currently write this Oil is trading exactly $1 higher at $106.30. Buying opportunity? Let's see if we can get back above 107 today, I would say that as long as oil holds above $105, you have to take a bullish stance and play for $110.

As for Gold, we had a quiet day but again holding all of last weeks gains, trading between 1311 and 1319 for the past couple of sessions. Encouraging action if you are looking for strength and now we do enter the NY session above 1320 around $1325, let us see how today plays out! Really would like to see it hold above 1320 for the day and that could set up a run towards 1350 by the end of the week? That is of course if we can add to the gains of last evening.

The one thing that I watch closely and that is encouraging is the US Dollar index. Here is a chart at the close of yesterday.

Currently, it is trading a few points lower at 8030 and it looks to me, a bit heavy! If the Dollar should fall back below 80, I believe it will have a tough time trading significantly back above it for some time. I'll have more on the currencies later today! If your trading remember to be quick and nimble!

TraderMartin