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Rev can talk about something other than gold? Yes, yes he can… When’s the last time you looked at lumber prices and their implications on interest rates? There’s a correlation? Yes, there is.
First, let’s take a long term look at lumber prices. Below is a ten year chart of lumber prices. From their early 2009 bottom at 137.9, lumber prices rose steadily, but not dramatically for the next few years. However, after their 2015 bottom, lumber would start a three year rise that would culminate in their 2018 blowoff top at 648.5.
It’s going to be a strange two weeks ahead. On the one hand, portions of it are going to be like watching paint dry, as market participants cling to the sidelines, afraid to make any kind of commitment ahead of binary events. On the other, when those events take place (or not), all holy hell will break lose. What is it they say about battle? “Long periods of boredom punctuated by brief moments of terror.” Something like that.
As of this writing, gold is continuing to slip lower. The only options position I have at the moment is GDX puts, so that’s fine by me. I’d say medium-term support is around 1325.
Is it Miller Time yet? I’ve been going since 4 a.m. and have had enough! Ah, well. The show must go on! I’ll just jump in here for a moment and say that commodities, which has been an important weight dragging the market down, seems to be pretty badly battered. I wouldn’t mind seeing a bounce here to make things more shortable.
In case you had any doubts as to the overwhelming wealth of information that is contained in the new Economic Data Panel in SlopeCharts, just take a look at this (and this isn’t even all of the items in this single tidbit):
If you read my post on Friday talking about the rising channel on SPX that could deliver an all time high retest within weeks, then you know what I see as the key support level on SPX and that is of course that rising channel support trendline, now in the 2750 area and rising at about 42 handles per week. Until that breaks there’s really not much to talk about on the short side on equity indices.
I would note the resistance area above that is the last really significant resistance area before a retest of the all time high. That area is the ceiling established by three rallies Oct-Nov last year and those three highs were all in the narrow range 2800-17. A break and conversion of that area clears the way for the possible all time high retest that may be coming soon, and SPX is now getting close to retesting 2800.