Freaky Friday

Boy, did the markets stall badly yesterday. On Thursday, I showed two levels of overhead resistance on the Dow and the S&P 500. I expected them to push through one, but not the other. Turns out both stalled at the first resistance ...And now we've come to Friday, when traders are nervous about holding over the weekend. Now, to this simmering stew, let's add three pieces of economic data that come out today. All eyes are on durable goods orders (headline number predicted to be up 1.4%) and new home sales (good luck with that!). But I'd also keep an eye on Weekly Leading Economic Index, which comes out at 10:30. If that's bad, that indicates stormclouds of economic weakness. You'd think that would give the Fed more room to cut interest rates, and the market may interpret it that way. But the Fed shows no signs of cutting the benchmark interest rate.

On Wednesday, I said that some in the market were too optimistic about a Fed rate cut. The market acted as if a rate cut was already baked in. That's a recipe for disappointment. Still, in this volatile market, especially with economic news coming out, maybe we'll see a rally today. I'd be more comfortable putting on bearish hedges at the higher resistance levels on those charts. Then the market would be nice and over-extended, and a correction could go for quite a bit. This back-and-forth by dribs and drabs won't help bulls or bears.

And now's where I tell you that I'm still bullish on commodities longer-term, for all the reasons I've been saying all week. While oil is weak in the short term, grains are hotter than hades and metals are in rally mode, too. Look at the CCI, which we've been watching all week ...Interestingly, the stocks that make their money from grains have been sold off along with the rest of the market. Is that setting up an opportunity? I think so.

Check out my new gold and energy blog at MoneyAndMarkets.com