Shore Capital Management LLC

As everyone has been following the July soybeans contract from $9 to almost $13 in the past few months, there has been a widening of the July November spread from about $1 to $2.

On 6/12/09 November beans topped at $10.9950 and the market began to consolidate. On 6/15/09 we received a sell signal and the market has fallen about a dollar since topping in mid June. Our initial target of $9.90 was reached.

There is major support in around $9.80. If this level holds, the next resistance level is $10.02 to $10.10. If the market should break above $9.96 we could see at least a short term bounce up to $10.10 to $10.16.

If the market doesn't hold the recent lows, the next support level would be $9.70 to $9.60. If that level is taken out, the next support level would be $9.40 to $9.15.

From a fundamental standpoint, recent talk over the weekend of China's
economy growing by 9% and discussions last night of Japan's potential to have passed the worst of the recession, may cause the grain markets to rally, at least in the short term. Thus causing commodity related currencies to also rally. Exports have always been a strong inducement for the grain markets to rally and this time would be no exception. However, if the dollar should have a strong appreciation in the near future as some are expecting, it could slow or cap the upside potential of the grain markets.

In the month of June the S&P 500 futures contract (basis Sept) has been caught in a trading range. For the last few trading sessions, the market has tried to push to the upside, but keeps falling back. There is strong resistance between 917 to 920 and strong support in the 910 to 905 area.

If the market should break above 926, there is a strong possibility the market will try to test the highs of early June. There is resistance at 929 to 933. If the market continues past this point, the next resistance level is 945 to 960.

If the market does not hold the recent support of 905, the next support level is 900, followed by 884 with a target down to 877.

As we noted in our last DJ comments; we received a sell signal on 6/16/09. Since that time the market (basis Sept contract) tried to rally and hit a resistance level of 8566 on 6/19/08.

Today the market continued to sell off and settled in a strong support range of 8300 to 8270. This range is just above our target of 8240. If the market continues to fall, we see the next leg of support around 8170 to 8090. This would be a major support level and test the lows of May. If this was to be broken, we would be looking at 7840 to 7970.

There is a possibility we could get a short term bounce from today's settlement. If so, we would be looking at resistance of 8310 to 8356.

After a week of the market flat lining and moving sideways it finally broke to the downside on 6/15/09. The following day we received a sell signal in the DJ futures contract (basis the September contract). Many on the street have been seeking a consolidation over the past month as  the equity markets have had one of the best rallies in a very long time. This may be the beginning of some downside consolidation. Although, one could argue that the consolidation may be one of time and not of price. Meaning it may go sideways for a long period and not really sell off.

On 6/16/09 the market fell to a support level around 8424. It could hold at this level for a minor move to the upside. If the market moves higher, there is resistance between 8491 to 8561.

If the market continues to fall, the next support level is 8300 to 8270  and ultimately the market could move down to 8050 to 8000 in this consolidation.

The equity markets have had a great ride for the last three months. So the question everyone keeps asking; have the equities moved too far too fast?  In March it was easy to find cheap stocks, but now many portfolio managers are finding good deals more and more difficult to obtain. As more data is released each week, the evidence is mounting that we are stabilizing, but we are still in a recession. If the recent increase in interest rates hold, could that slowdown the real estate purchases and refinancing and choke the stabilizing economy?

Basis the June contract, we believe the DJ futures contract may still reach 9,000 in the near future. However, once it does, the market may not sustain itself and finally correct, if the correction doesn't happen first.

Our first support level is the lows from 6/5/09 around 8700. If this support level is broken, the next leg off support is 8665 to 8600. The resistance is 8910, thus testing the highs from 6/5/09. If the market goes higher, the next level of resistance is 8960 to 8990.

Today Australia reported their Q1 GDP as an unexpected increase of 0.4%. According to a Bloomberg survey, economists were expecting a decline of 0.2%. If the GDP would have been negative, Australia would have technically fallen into a recession with two consecutive negative quarters.

 A major increase of GDP came from exports.  China is Australia's largest trading partner. Its important for China's economy to stay strong. In recent weeks the AD has increased along with commodity prices. Some of the growth also came from household spending due to the government's stimulus policies. It is uncertain how well the Australian economy will grow in the second quarter as the stimulus policies may not have  the same impact. There is talk that rates will still decrease in Australia.

However, business investment is still declining and unemployment has increased to 5.4%

Now Australia can join the elite club of countries that have not fallen into a recession such as China  with a 6.1% Q1 GDP and India with 5.8% GDP. Perhaps this will be the beginning of a trend for other countries to improve their GDP's. As the emerging markets grow and become wealthier, Australia maybe well positioned to enjoy some of that growth for years to come.