Markets as I see them – February 10, 2010

OK, so the move up in Nov/Dec fell drastically short and actually turned negative after January 10^th before the reports. The USDA is still hedging its bets by resurveying some corn areas in the March report. Did get a couple things right – the Dow seems to have topped at the 10,700 area (above my 10,500 prediction) and crude oil has retreated from its perceived high of 84.00 on the lower end of my 84-91 range.

SOYBEANS: Currently looking for a nearby top in beans in the 10.00 area in late February before turning lower to the 6.50-7.00 range later this spring/summer. Still depends on the Chinese buying on how fast and far . Although the South American crops look big they may be slightly over-inflated. Even so the big South American harvest will put pressure on prices to take them to the $7.00 range.

CORN: Ok now looking for a nearby top in the 3.90-4.10 area in the next week or two to probably fill the daily gap at 3.92. If the market can move sharply up from here could revisit the $4.50 area but likely will turn back from 4.00 to test the $3.00 to 2.75 area later this spring until a possible wet planting time frame could put some bullish sentiment back into the market

Crude Oil: Since we have in my mind passed a top of $84.00 we should be headed lower holding in the $60-70.00 area for spring and then collapsing below $40 for the summer. Possibly looking for crude to get below $30 later in the year. That would kill the ethanol market and corn as well – which is all possible and likely in my estimation.

DOW: Pretty sure we have seen the top in the Dow for the year at 10,725 in January. Looking for a fairly large decline to below 9000 within a month and possibly revisit last years low of 6400 this spring. If you are really bearish it is possible to chart out the DOW to take out that low and get to the 2000 point area and even lower by 2012, especially if you believe we are in a Grand Super Cycle degree wave down.

We’re talking Depression as bad or worse than 1929-1935 crash – and yes world wide. The default in Dubai and now Greece – every one is carrying or creating more debt to service with bailouts of more fiat or make believe money that will not be paid back – it will all deflate until it is manageable again. These along with the first of the housing market crashes – yes we will see more deflation in housing- will only increase in intensity until everyone realizes we must pay the piper. Getting back to reality hurts. Evidently the bankers don’t seem to see this yet. Over inflated earnings and huge salaries and bonuses will be gone just like $16 beans and $7.50 corn. It’s just that they have been getting them since 2005 and seem to think they are deserving of them even when they loose other people’s money in the process of “investing” it for them. Problem is that when it happens all of us will feel it.

I hope we don’t see that bad of an outcome but with all of the easing of financial restrictions during the Bush administration – restrictions put into place during the 1930’s- along with the easy credit, money expanding philosophy pushed by the big banks, we can only head to a lower reality. If we could face it sooner than later we might still have a chance to soften the blow- its just not looking good now.

Gerry

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