Wednesday, July 09, 2008

The dollar moved lower against the euro and metals rebounded as oil climbed $1.27 to $137.31. Traders were awaiting inventory data for the latest week and some forecasts called for a drawdown on crude as oil companies were cutting back purchases of crude at these high levels.

Iran test-fired a long-range missile that is able to reach Israel, adding to some firmness in crude and the metals. The news also led to traders to pressure equities lower after yesterday’s 150 point gain. Some traders feel stocks are in a bottoming-out phase and could rally by year’s end.

The overall short position in stocks is at one of the highest levels ever and when investors reverse those positions out, equities should push higher.
Hedge funds had their worst first-half performance in 18 years, falling 0.75%.
One analyst said that he expected gold to continue to outperform oil as oil has well surpassed its inflation-adjusted high of $100 while gold is at less than half its inflation –adjusted high it traded at 28 years ago.

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