The risk trades are back in vogue today. The catalyst? Apparently the data out of China was so bad that traders are just certain that there will be some sort of stimulus effort from the Chinese government forthcoming as a result.
That has gotten the shorts in the commodity markets spooked so up we are going. About the only commodity not moving higher today is sugar and feeder cattle as the latter are being pressured because of the big surge in corn prices. Soybeans have left an island gap pattern on the chart early in the session.
Here we go again… more market madness. The worse the data gets the worse the bonds do and the better the commodity sector does. It is all about stimulus, stimulus and more stimulus. In all fairness to the grains, they are moving higher because of short covering ahead of a major USDA report and a shift in the weather forecast. The rest of the commodity sector however is simply a reversal of the risk off trades that have been dominating of late.
This is the reason that trading in size or holding large positions overnight is a surefire method to financial ruin as a trader.
In all my years of trading, I have never seen such schizophrenic, chaotic and unpredictable markets. Be very, very careful out there trading.