The Dow Jones Industrial Average finished the day with a strong close. Monday's settlement was at 9265, up 413 points on the session. As stated in Friday's commentary, a solid close above 9000 could begin to add confidence to equities and commodities, but Allendale would like to see the Dow maintain 9000 for the week before getting too excited.
Crude oil finished up $2.40 for the session Monday, which brings Crude to $74.25. This strength was in the face of a new contract high for the December Dollar Index futures. The OPEC meeting this week seems to be giving traders reason to buy as an output reduction is expected. What is not evident is whether or not we will continue to see buying come into this market if OPEC does cut production. Could we see a buy the rumor, sell the fact type attitude? This makes sense as it maintains the current down trend on the chart. Or will this be a turning point at a time and price in many markets where traders are looking for a bottom? Allendale feels this question is powerful enough to wait for an answer without jumping in to buy or sell based on chart points and will pull the current recommendation to sell at a higher price. Should Crude make a new low for the move, Allendale will still look to sell that weakness and will keep this recommendation.
Technically Crude Oil posted an inside bar on Friday's session. Then on Monday Crude Oil traded above last Thursdays highs, which seemed to trigger stops as Crude accelerated into new highs afterward. Nearby support is seen at $74.15. Thursday's lows of $68.57 will be the next level with further support at $68, $66.65, and $60.70. Resistance can be found just near $77, $80, and just below $88. Technically, the market is still in a downtrend and rallies are to be sold.
Metals settled higher on the session Monday as Gold and Silver seemed to piggyback on strength from Crude Oil even as the Dollar Index made a new contract high. Some bargain shopping may also be taking place as we have seen Gold drop roughly $70 week-to-week on some profit taking and margin call selling. The metals will most likely continue to trade with a high level of volatility as the market decides between safe haven buying, long term buying as a hedge against inflation, margin call selling, and profit taking to invest in other relatively low-priced commodities. December Gold settled at $790, up $2.30 on the day. December Silver was $0.355 higher at $9.690.
Softs traded weak Monday led by the large reversal in the Cotton market. December Cotton traded as much as 2.2 cents/lb higher early in the day before finishing near the lows, which was down 3.26 cents/lb on the session. This makes a test of the contract low of 45.66 look a lot more likely from a technical standpoint. Only FCOJ and Lumber settled higher on the day.
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