Week of Dec 4th, S&P 500 & Coffee

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Stock Index Corner: Emini S&P 500
The weekly chart above show that the index is now hovering just above the uptrend resistance line. The daily shows the first lower high since the recovery and rally which started in end July this year. The lower high may signify potential downtrend in the daily short term trend. The traditional strong Dec seasonal may offer potential support for the decline.


S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideway to Moderately Bullish
Short term (daily): Sideway to Bearish

Fundamental:

The S&P 500 index is consolidating mildly below the recent 6-year high. The US stock market is carefully watching the weak economic data but has so far been able to hold its gains based on continued optimism about lower interest rates and expectations for slowly improving US GDP growth next year. The stock market is also wary about crude oil prices which have rallied sharply by $5 per barrel in the past 2 weeks. The stock market is also carefully watching the US holiday shopping season, which has so far only seen strength in sale-priced items and electronics. The main issue, however, is how earnings will hold up in the face of continued
weak US GDP growth in the mid-2% area through 2007.


Major World Indexes
Medium term: FTSE (Down), Nikkei (UP), ASX (Down)

Commodity Corner: Coffee
Technical:
The coffee has finally broken one of the major downtrend line as of last friday's close. The next upside target is 135.

Fundamental:

Dec Nybot Arabica coffee prices have extended the Oct-Nov rally to a new 6-month high. Bullish factors sparking that rally center on a dry flowering season in Brazil which, along with the biennial cycle, may cut the Brazilian 2007-08 coffee crop by 28% to only 30 mln bags from 41.5 mln bags in the just-harvested 2006-07 crop. ICO is forecasting the current 2006-07 (Oct-Sep) world coffee crop at 122 mln bags against demand of 117 mln, leaving a small implied surplus of 5 mln bags. However, a coffee deficit may emerge in 2007-08 due to the small Brazilian crop. Large specs had a large long position of 20,029 as of Nov 21.


Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: OTM Coffee Puts
Futures: Long Orange Juice
Stock Options: Long NTAP puts, Long Affx Puts