Opening Note:
I have seen some market action over the last twenty four hours that has brought concern to my opinion that now is the time to sell commodities. Yesterday the Fed announced that they would keep rates steady and upgraded their view on the economy slightly. After the report came out the stock market rallied convincingly to new highs while commodities felt very little rally and in many cases closed on their lows. Furthermore, the U.S. dollar rallied to recent highs as money poured in. This reaction is contrary to the prevailing relationship action that has occurred recently as a Dollar rally leads to weaker stocks and weaker commodities, with commodities and stocks heading in similar directions. I was burned a number of times last year selling breakouts and weakness as it appearred large funds were looking for sell signals to enter into large volume long positions with more money returning to the market. With a number of markets appearing to consolidate after sell signals I would caution against becoming too opinionated right now as the Fed keeping rates low could give validation to large volume dip buying, causing a short covering rally in the short term.


Buys to watch:

Dollar Index- After the Fed announcement the dollar index rallied above 7900 and prior to the State of the Union address it surmounted a large spike rally to even higher levels that failed. The dollar has rallied out of a smaller consolidation period after it's breakout but the longer that it stays close to the breakout the easier it is to give validation to the person shorting it so proceed with caution. Second leg projection still from 8050 to 8200.

Sells to Watch:

Silver- The gold has maintained and sat below it's head and shoulders breakout for a full week now but has failed to hold new lows each time it has attempted to break. The silver has grossly underperformed the gold making it the better sell and has had less consolidation time under it's $17.00 breakout. I believe that it needs to create and hold new lows today or tomorrow for me to stay with it. Prior to the State of the Union last night a spike low formed along with gold that did not hold marking the third consecutive day that it was unable to maintain a breakout attempt. Projection still to the the low $14 range.

Euro- The Euro led gold, silver, and the dollar index on their spikes prior to the State of the Union in another failed breakout attempt. I believe the Euro must also hold new low over the next two days for me to stay with it. Second leg projection to 136.50.


Put on the Radar:

Copper- I have talked the last few days about the usefulness of copper as and indicator of market direction and to watch the 325 weekly close level. Yesterday copper was down nearly 5% at one point and closed at 322.25. I would wait for the actual weekly close, as there have been successful attempts such as last Friday to rally copper before the weekly close, but this could soon be a sell in a long covering thin market. Keep an eye on the Friday close as a sign of market sentiment.

Stock Indexes- Despite being down multiple days leading to yesterdays higher close the market range is sideways for the last three days. When money comes into the market this is usually the easiest one to push higher as there appears to be the most computer program and dip buying momentum swings. This is why these are my least favorite shorts right now because there is still a large bullish opinion out there. I am keeping an eye on these as an indicator to cover shorts because if they rally strongly they will take everything else with them.

Euro/Yen Cross- It has had a couple jiggles over the last 24 hours but continues to remain below the last 7 month range and looks to continue downwards on the weakness of the Euro in the currency sector. This is an extremely troubling indicator to a continued overall market rally because it tends to mean business with about a one month lag. The one month lag means there could be a rally left in the market buying the weakness of the first month, but this is a serious move on the chart and should be kept on the radar.


Notes:

To sum everything up, proceed with caution right now because this looks and feels a lot like the situations last year when buying came into the market to take out the shorts and swing to new highs. Because the markets in my buys and sells categories were pretty much the only ones to attempt a continued breakout validates my opinion on them as the best ones to hold a position in.