Saber Rattling

Iraq flew planes over Kuwait in violation of a UN-imposed
no-fly zone and accused its southern neighbor of extracting oil from a
border region that Iraq claims as its own. Crude oil is rallying out of a
Cooper 1-2-3-4 Pullback From Highs
setup and is trading above $35 a barrel again. From the Momentum-5
List
, November heating oil
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, unleaded gasoline
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and natural gas
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are also up nearly 3% on the day. The
energy contracts are also getting a boost from a weather pattern that is
developing into a tropical cyclone and is headed to the Gulf of Mexico.

The first drop in the
Consumer Price Index (CPI) in 14 years appears to have bond traders convinced
that the Fed is out of the picture in terms of interest rate rises for the
near-term period.
December T-bonds
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are tumbling for a second
day, following Thursday’s nearly one-point decline with nearly another one-point
drop Friday. With the Fed out of the way, traders find better value in the short
end of the yield curve. Tony Crescenzi also mentioned that a famed investor
“from Omaha has been selling U.S. Treasury strips this week. This investor
has been an astute market timer in the bond market in recent years.”

The dollar remains on a tear and is making good on its Momentum-5
List
reading in a move to new contract highs. This move was prompted by the
day’s dis-inflationary data.

Sugar dropped out of its consolidation on high pattern
and is down sharply nearly 5%, or .51 to 9.85. 

Cotton is making good on its Turtle Soup Plus One Buy
setup and is trading at the top of its range, up .32 to 64.80.