Beware WOPR

You know, sometimes the charts can only take your so far. You shut down on Friday and all of the charts look great. Go back and look at my post from Friday afternoon. I was really excited to get back to work on Monday. Then, here comes the old PIIG boogeyman out of the closet and down goes everything. If you know what you’re looking for, there are definitely times when the charts can predict the future. Unfortunately, in an era when computer algorithms can be tripped and swayed by simply managing the headlines, you’ve got to learn to take your lumps and be patient. Today is such a day.

I guess if there’s a fundamental “rationale” for today’s trade it’s this: The global currency structure is going to be dramatically changing. The economic disruption caused by this will be significant. Therefore, sell commodities such as copper and crude but buy gold as a “safe haven” asset. Sounds nice, doesn’t it. Sounds perfectly rational. Too bad that’s not what’s going on. Instead, mindless computers which have been programmed to “buy X and sell Y” at the push of a button are in charge and moving markets. As an example, last evening the grains were all UP about 10 cents on supply and weather concerns…real fundamentals. But that doesn’t matter to WOPR. Nope. WOPR see rising dollar. WOPR sell everything.

For today, let’s see if humans intervene and begin buying back what the computers sold. IF there is genuine (non-artificial) intelligence in the trade today, established support levels will hold once again and the commodities should turn. Crude looks very firm at 96. DrC should be well-bid between 393-395 and silver should not trade below 34.

Eventually, perhaps even in the not too distant future, today’s euro is going to be replaced with a new “Nordic” euro. Then the East Asian nations will all combine to sponsor their own, regional trading currency and the dollar will be left for dead. WHEN this happens, gold and silver will be much, much higher in price than they are today. That doesn’t matter much to WOPR, though. WOPR only knows today and, today, WOPR is selling.

More after the close. TF

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