FOMC Pronouncements Roil Markets
BY AL MARTIN

(6-28-09) Markets were roiled across the board by the FOMC statement on Wednesday (June 24), which contained nothing of what the markets were looking for. No exit strategy and no increase in the quantitative easing program was announced. The only thing they did was not use the word "deflation" anymore, which is in fact the word they probably should be using, particularly if they’re going to print a lot more money. The FOMC statement cracked the equities and the commodities.

Bond Rally Gives Up the Ghost Late Week,
As Coming Week's Treasury Calendar Looms
BY AL MARTIN

(6-21-09) This week there will be auctions for $104 Billion of fresh Treasury paper, a record one-week calendar. Therefore, look to short the Treasuries late week. As we said last week, that was THE trade.

When the Sep. long bond contract started to run out of gas at the 116.24 area in Thursday's over-night trade, that was the time to sell them because you knew that the bonds had to come down, i.e. give up the ghost, going into this week's heavy calendar offerings. Indeed that trade produced a 80 tick profit.

On Friday, we saw the bonds bid back up a little and that's because they dropped them more than they should have in Thursday's session, but those who missed the trade should be a seller of the Sep. bonds come Sunday night at 115.00.

Short Dollar/ Long Commodity Trade Begins to Unwind
BY AL MARTIN

(6-14-09) Last week, on CNBC and Bloomberg, we heard unprecedented coverage of the unwinding of the short dollar – long commodity trade with many of the Financial Media Shills actually suggesting that equities should be sold short, commodities should be sold short and the Dollar should be bought. In fact the markets are already ahead of them…

Market Sends Signals: Time To Withdraw Fiscal Stimulus Spending
BY AL MARTIN

(6-7-09) Once again we saw the long Bonds come under pressure late week. We were sellers of the USU contract above par 14 in Thursday's trade -- and simply hung on to them. We see the bonds traded down to 113-1/4 in Friday's trade. Although the bonds are cheap, it is obvious that they are going lower, coming into next week's heavy Treasury auction calendar.

Late Week Volatility Across the Boards (As Promised)
BY AL MARTIN

(5-31-09) On Friday morning in our special note, we had warned of potentially excessive and severe volatility in Friday's session -- during the so-called Last Day of May Trade phenomenon. We warned that the Shills would keep their powder dry until the end of the day and try to drive equity prices higher, which is precisely what happened in the final five minutes of trade. We also warned early on of a potential short squeeze coming in the Treasury Long Bond contracts, which is precisely what happened, in that Thursday night's pronouncements by the Fed that made the Fed seem incompetent were actually a positive for the Bonds, when the Fed said it would not attempt to target rates. We had been warning that the Bonds were deeply oversold, and this oversold condition is now being rectified.

Natural Market Relationships Continue to Break Down
BY AL MARTIN

The following is a FREE Sample Column of Al Martin's prescient market recommendations published every week. When you subscribe now, you will have Real Insider Intelligence. Please use the SUBSCRIBE Button above...

(5-24-09) We have seen the Obama/ Biden Regime’s fiscal stimulus program continue to cause a break in the natural sympathetic/antithetic relationships between the Big Four Pillars, i.e. Bonds, Dollars, Gold and Equities. This has become strictly a day traders’ market. We now have so many professional traders out of the markets that volume and liquidity is diminishing and the market is simply becoming the domain of the Colored Light People (CLPs, pronounced CLIPS, i.e. those who buy when the light goes green and those who sell when the light goes red.)

The only thing we can say is that the Treasury Bonds are now severely oversold. Classically in a falling GDP/ consumption environment, interest rates should not be rising. This concept that supply alone can cause interest rates to rise has no validity in economic history.

In fact, a 3-1/2% yield on a 10-year instrument is a helluva good return in a deflationary environment. We are not frightened of the bond calendar next week and indeed are expecting the auctions to go pretty well, particularly at the long end. Therefore we continue to believe that the June Long Bond contract is cheap.

The Dollar contract came under pressure which is becoming increasingly a loss-of-confidence trade. However we have reached major Fibonacci Wave completion numbers in both the Pound and the Euro. The same numbers were reached in the DXY contract on Friday’s low. We would look for short-covering lifts in the Dollar index.

The Oil, Gold and most of the fungibles continue to respond to strictly equity-led markets, despite continued deterioration in supply/ demand fundamentals. Oil is now $30 overbought, yet will continue to move higher -- as long as equity markets move higher.

The June Gold contract did pick up late week finally on the back of Dollar weakness. However Dollar weakness alone would suggest that the price of the contract should be $150 higher. Therefore there is some reality in the Gold in terms of falling commercial and industrial demand.

Indeed, commercial and industrial demand for gold has fallen to levels not seen since the Great Depression of the 1930s. Investment demand alone cannot sustain apickup in thegold without a commensurate rise in inflation. Although we have been trading Gold on the long side, late week on the break-out above $940, the previous recovery high, we would be cautious up here at the $960 level.

Sugar, Orange Juice, Lumber, Cocoa, Coffee and Cotton are all in similar “unnatural� situations where supply/demand imbalances continue to grow, yet prices continue to rally as the speculative bubble increases.

Sugar should not be concerned about so-called reduction in new harvest Indian crop. In fact India is going to look at 43-44 million tons. There is some selling coming in to Orange Juice, and there was an effort to break down the sell-stops in the July contract below 89 cents on Friday

The shill in the Lumber continues to be unsustainable. The CLPs who had bought the Lumber in the 180s and better are now holding a loss. They are now upside-down in the Lumber, as Lumber appears to begin to trade back to reality a little bit.

The Grains continue to be in a world of their own, although we would note that the July Beans closed on their lows Friday and looked weak all session. With South-of-the-Border Nations unable to sell cash Beans at $9.66 or $2 lower than the July closing and with global demand for grains falling, as was noted by China, Brazil, India, Russia, and Australia last week and old-crop inventories, although declining, still ample, we still continue to scalp the Grains on the short side on rallies.

The Copper which picked up a little Friday is still under-performing and therein lies one of the keys. Look at the Copper, which despite the shill has been unable to lift back to the previous highs. The industrial metals continue to be under pressure, since they are the most difficult to shill in a falling-economic growth environment. We continue liking to short the Copper on rallies, and in fact we did short the July Copper at 210 in Friday’s trade.

Coffee continues to be in La La Land. We did take on a spec short at 1.37 in the July contract, looking for 4 cents out of the position.

July Cocoa continues to simply hang on through the action of the rest of the boards, but wants to look lower to retest the 2200 area.

The Cotton shill is increasingly being broken under the weight of surplus inventories globally. Note that the Cotton has been unable to pick up again while other commodities have been able to do so. We continue to look to sell the Cotton on a retest of the 60 cent area, as we have done before.

'Sell in May and Go Away' — Don't Discount Old Adages…
BY AL MARTIN

Preview for the Coming Week
BY AL MARTIN

(5-10-09) Both equities and futures markets continue to reach levels of historic over-valuation never before seen -- far beyond what underlying supply/demand equations of fungibles justify. This again has left the June Long Bond contract cheap. We have traded the Bond contract more than a dozen times since Thursday night on 8-point scalps from the long side. With no supply in the coming week, there will be little upside resistance in the bonds. We expect the June Long Bond contract to trade back to 123 soon.

Both Record Overbought and Oversold Readings Reached Across the Boards
BY AL MARTIN

(5-3-09) The June Long Bond contract fell back again late week, as both the 10 and 30 year issues breached the 3% and 4% yield levels respectively, bringing in fresh stop-loss selling from the pits. However we would note that the professional short interest in the June Long Bond contract has reached levels only seen once before in December 1982.

Indeed the Bonds are now dynamically oversold and with the Fed signaling that it will defend yields on the long end, we like the buy on dip trade in the June Long Bond contracts even more than usual.

Technicals Move Equities from "Extremely Overbought" to "Dangerously Overbought"
BY AL MARTIN

(4-26-09) As we expected, the June Long Bond contract actually traded rather well throughout the week with no supply to speak of and continuing good demand in the corporate-muni calendars throughout the week. Friday's draw-down in the June contract was expected, given next week's supply. However, we feel that the Treasury Bonds have reached a level where good demand is going to be seen. We like trading the contract from the long side at current levels.