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Crude oil broke through the $80 a barrel ceiling repeatedly during the week but kept falling back as hedge funds placed big bets on the Euro's decline.

The fiscal drama in Greece held global markets hostage much of the week as worries about the impact of the Greek crisis on the euro outweighed comments from Federal Reserve chairman Ben Bernanke about continued low interest rates in the U.S., pushing the euro down against the dollar and damping crude prices.

The euro recovered some ground on Friday amid new reports of European aid for Greece after falling to a nine-month low of $1.3440 on Thursday. Germany's state-owned bank KfW may take part in a planned Greek bond offering next week, according to market reports.

The Wall Street Journal reported on Friday that a small group of elite hedge fund traders have concluded that the euro could be headed to parity with the dollar and their bearish bets are increasing the downward pressure on the 16-nation currency.

The Journal compared the situation to the hedge fund attack on the dollar in 2008. However, the trades are not expected to lead to a collapse of the currency as the attacks of George Soros on the British pound did in 1992, the paper said.

Positive U.S. economic data on Friday, including a revised fourth-quarter GDP annual growth rate of 5.9%, help crude oil futures claw back some of Thursday's losses and near the $80 threshold again. Nymex's benchmark West Texas Intermediate settled at $79.66 on Friday, after topping $80 earlier in the week.

In spite of crude's difficulties in staying above $80, some analysts issued bullish prognoses for energy futures. Goldman Sachs forecast a new trading range of $85 to $95, up from the $70 to $80 of the past several months, amid supply disruptions from the North Sea and Venezuela and the impact of the Total refinery strike, which was resolved earlier this week.

Other analysts, too, looked for fundamental supply and demand considerations to reassert themselves amid the currency turmoil and lift crude oil futures into a higher trading range. Oil futures prices gained more than 9% in February but remained below January's highs.

By Darrell Delamaide of OilPrice.com who focus on, Fossil Fuels Metals, Crude Oil Prices and Geopolitics To find out more visit their website at: www.oilprice.com

Today's Gold Session Settled $22.00 Lower... ($1129.40)

Today's Gold trade could not maintain early gains as world economic data pressured the
allure to the "precious metals". China unexpectedly raised Reserve Interest Rates (50 Basis points) starting January 18th. This move by the central bank of China is in
accordance to their commitment to slow down rising inflation as well as tightening their monetary liquidity. Today's action by the China Central Bank created a late session sell-off in the Gold market resulting in a $22.00 Lower session. The trading range for Comex Gold today had a range of $23.60 consisting of a High of $1152.30 and a Low of $1128.70. This is kind of a 'win"-"win" situation for China because their action today sent the price of gold lower and as they are seeking to build their bullion reserves the raising of rates makes Gold more affordable.

Early in the session we received data revealing India's gold volume under ETF's (Exchange traded Funds) rose 55 percent on the year. The seasonal The recent bullion buying surge from India is attributed retail customers and jewelers for festivals like "Makar Sankranti" which is certainly one of the auspicious occasions for Hindus (a Harvest festival) in which the sharing of gifts is tradition... (Gold is the gift of choice) as well as the last days of the 'wedding season". **Makar Sankranti begins January 14...**

My Swing Numbers 1/13 ....February Gold

Resistance # 2............$1171.00
Resistance # 1............$1150.00
Pivot..........................$1137.00
Support # 1.................$1116.00
Support # 2.................$1103.00


Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
312-775-3014
877-294-4669
312-563-8029

** There is extreme risk trading futures,options,and forex" **

Do hedge funds have an impact on energy trading?

While the answer might seem intuitive, the debate as to whether they actually do has come to resemble the medieval theological dispute about how many angels can dance on the head of the pin.

Because, like angels, many trades in energy futures are invisible, and it is often not possible to pinpoint where they take place.

And yet, for most of us, including lawmakers on Capitol Hill, it seems obvious that when hedge funds buy and sell billions of dollars worth of oil and gas futures, it must be having an impact on energy prices. While hedge funds and other speculative traders would never dream of taking delivery of a barrel of oil, their trading activity affects the prices for actual consumers of oil and gas and their downstream customers - or so it would seem.

When Gary Gensler, a former Goldman Sachs banker and Treasury Department official, was nominated last year as chairman of the Commodity Futures and Trading Commission - the chief regulator for energy futures trading - he reversed the CFTC party line that speculators don't have an impact on energy trading.

"I believe that excessive speculation in commodity futures can cause sudden or unreasonable fluctuations or unwarranted changes in commodity prices," Gensler said in a written response to lawmakers' questions ahead of his nomination hearing.

Gensler went on to pledge that if confirmed, he would have the CFTC guard against such speculation.

While he stopped short of saying that excessive speculation had taken place in the run-up of energy prices in 2008, he did express the opinion that the rapid growth of commodity index funds and increased hedge fund allocation to commodity assets contributed to the "bubble in commodities prices that peaked in mid-2008."

He noted that non-commercial investors sometimes account for up to 90% of open interest in a contract. (Open interest is a calculation of the number of active trades for a particular market, and is used as an indicator whether trading is becoming more or less active.)

Gensler's answer, enshrined in draft legislation currently before Congress, is to make trades more visible by requiring all over-the-counter derivatives to trade through an approved clearing house. While the thrust of new legislation is to get a better handle on financial derivatives such as credit default swaps, it will give regulators a better picture of all derivatives trading, including energy contracts.

At the same time, the CFTC and the Securities and Exchange Commission both are beefing up their ability to monitor hedge fund activity. The SEC for the first time will require hedge funds to register as investment advisors, and Gensler has pledged closer oversight of the funds that it supervises as commodity pool operators.

The industry, predictably, is pushing back. In congressional testimony on the new legislation, the Chicago Mercantile Exchange, the largest futures exchange in the world, and other exchange operators presented studies based on CFTC data to show that large positions held by index funds and other managed money were not "routinely detrimental" to the commodity markets in the period January 2005 to June 2008.

"All of the trader groups displayed instances of non-optimal behavior (including small traders), but none were consistently harmful to the studied markets," they said.

A task force of the International Organization of Securities Regulators (IOSCO) released a report last March that came to a similar conclusion.

"While reports reviewed by the task force concluded that fundamentals rather than speculative activity was the plausible explanation for price changes, the task force has made a number of recommendations to improve the transparency and supervision of these markets," IOSCO said.

These included suggestions regarding information about the underlying commodities, access to and sharing of information about trading positions, beefing up enforcement powers, and improving global coordination.

The spectacular collapse of the Amaranth Advisors hedge fund in 2006 when it lost $6 billion on natural gas futures did pull back the veil on hedge fund activity in energy markets. Amaranth built up its huge position in natural gas futures through OTC contracts that exactly mirrored the contracts on the New York Mercantile Exchange but remained hidden from regulators, who were unable to enforce position limits designed to rein in speculative trading.

In hearings about Amaranth before various House and Senate committees as well as at the CFTC itself, it became clear, at least to many lawmakers, that contracts on unregulated trading venues can influence prices.

The case was so straightforward that it prompted the Federal Energy Regulatory Commission to flex its new post-Enron mandate to stop manipulation of energy prices by pursuing disciplinary action against Amaranth.

This led to a turf war with the CFTC, which claimed exclusive jurisdiction over futures trading and argued that FERC's mandate extended only to spot trading. FERC countered that when activity in the futures market affected spot prices, it was authorized to act.

Those proceedings ended in a joint settlement last August, before either CFTC or FERC held their administrative hearings and before an appellate court could decide the jurisdictional issue.

But the Amaranth case remains as a reminder of what a hedge fund can do in energy markets if these trades are not more transparent. Legislation bringing more visibility to the market and strengthening the hand of regulators will ensure that hedge fund activity in the energy markets will be more closely monitored and limited.

This article was written by Darrell Delamaide for OilPrice.com who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

We have said in previous newsletters that Treasuries tend to rally during November and much of December regardless of fundamentals and that seems to be the only factor keeping bonds and notes above water. On a day in which fundamentals seemed to be decisively bearish in long-term interest rates, the market held its own.

All of the inter-market relationships that traders tend to rely on for guidance have all but vanished into pixie dust. Dramatically higher equities in recent days might have had something to do with the lack of upward momentum but it clearly hasn't triggered the aggressive selling that one might have expected. Similarly, the weak dollar should be a bit more of a drag on Treasuries than it seems to have been as of late.

Although the CPI and the PPI have shown signs of inflation, the commodity markets are flying high. Many of them are trading near multi-month, or even year, highs. In fact, one of the most widely tracked commodities, gold, is trading near an all-time high and seems to be propelled solely by expectations of inflation; yet Treasuries have failed to budge.

Other than the other financial and commodity markets moving, there was little news for the bond market to digest. However, there was a 3-year note auction which was absorbed relatively well. The U.S. government issued $40 billion in 3-year notes at a rate of about 1.4% to a 3.33 bid to cover and an indirect take of 68.5%. The market still maintains a healthy appetite for the Treasuries risk averse, light yield securities.

Perhaps some of the lack of direction has to do with the auctions on tap. The market is said to be expecting a little less demand for the record $25 billion in 10-year notes on deck for tomorrow and the $16 billion in 30-year bonds on Wednesday.

We have been patiently awaiting better levels to be a bull, preferably a bit under 117 (maybe even closer to 116) in the long bond but the opportunity has failed to materialize. We aren't comfortable buying into such quiet markets with either futures or options because the one thing that I have learned is that quiet markets don't stay that way for long.

I prefer waiting for something better, but if you have to be in the markets...the best play might be a long strangle using (cheap) out of the money puts and calls. For instance, you can buy the December 121/116 strangle for about $400.

Support in the 30 year bond lies in the mid-117's then again at 116'30...there is some chance of a temporary, yet swift, slide closer to the 116 area. If this happens, it should be a great place to be a bull.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

October 15 - Yesterday afternoon, our clients were advised to sell puts against a possible Thursday plunge. We recommended to sell the December T-bond 112 and 113 puts for 20 and 26 ticks respectively, or about $312 and $406 before commissions and fees.

October 20 - Our clients were recommended to exit the 112 puts near 6 ticks and the 113 puts near 8. Fills on the 113 puts were coming in at 9, we recommended to make the 6 tick buyback on the 112's GTC. Those that still have a short 113 put open, we recommend a GTC order to buy it back at 9 or 10.

· These orders have all been filled, you should be out of this trade.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
www.DeCarleyTrading.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

As we move into the last week of October remember, not only is it Halloween, but it is the seasonal time when mutual fund managers take loses for the year, that is if they have any. Then we have portfolio dressing and undressing. So, get your trick or treat candies ready for the goblins and witches that visit your doorstep.

As we enter into November, we are in the last two months of the year, which, if you went long in March of 2009, has been a good year. Had you not gone long and left your portfolio alone for the entire year, it seems as though you would be approaching even for the year. For those of you who sold out at the bottom of the market and ran into cash, you are watching this rally, anticipating the next retreat for a buy. This has been the general behavior of the market, short shallow retreats leading to up thrusts in the market. While we believe that the market is not cheap, if you invest in stocks paying a good dividend and position options as a conversion, you can reap the dividend without much risk. Sometime, a conversion is called a collar. Remember if you do put this strategy into effect, sell the call for after the time the dividend is due. You must take care to collect the dividend or, that strategy will be a bust.

The trashing of the US Dollar has an immediate effect on those companies that export around the world, that is, they make money on the increased trade attributed to the declining dollar. As the US dollar drops in value, our merchandise becomes cheaper and cheaper, thus we attain a competitive advantage. Our trading partners don't like that and will likely try to support the US Dollar rather than losing sales because of the weak dollar. It is likely that either our trading partners will support the US Dollar or trash their currency. Interesting thoughts. Another interesting thought is that insomuch as foreign funds own a great deal of US Dollars, it is likely that they will buy stuff with the US Dollars rather than sitting with low interest rates on a depreciating currency. Perhaps they will buy our stocks which will compensate them for the risk.

As we continue on in earnings season, much of the gloom and doom is being removed from this market. The companies are, for the most part, reporting better than expected earning and they are looking forward to improvement in the economy. Companies have done well during these difficult times, watching their bottom lines, and working at high efficiency. The only thing that doesn't look good, right now, is the employment market. So far, sales jobs have returned to the market but little else is opening up. We need to see an improvement in temporary help and hours worked before we see some improvement in the job market.

When I started working in commodities, almost a decade ago, they were considered a dirty word and certainly not a place for the average Joe to invest. Within the last few years, thanks to investors becoming more open minded, the overall performance of commodities and other asset classes, commodity futures and options are quickly becoming a respectable asset class. Case in point, over the weekend while reading the WSJ there were 3 different scenarios and portfolio allocation suggestions, regardless of the scenario all 3 had a place for commodities. One that fears inflation should have as much as 25% allocated to commodities, one fearing deflation only a 10% allocation, with the middle of the road being 15%. While we agree with the percentages we suggest investors get more informed on trading futures and options not just commodity ETF's.

March 18, 2009 - New York , NY - The Hennessee Group LLC, an adviser to hedge fund investors, believes silver is currently underpriced relative to gold and is therefore advising clients to accumulate positions in the precious metal.

Charles Gradante, Co-Founder of the Hennessee Group, stated

"While we see both gold and silver as safe haven investments, particularly as a hedge against the longer term risk of hyper-inflation, we believe gains in silver will outpace gold." Gradante added, "The gold to silver ratio has reached elevated levels in recent months due in large part to gains in gold. And while we expect gold to continue experiencing gains, we anticipate silver to outperform on a relative basis and lead to a reversion in the gold to silver ratio."

For all you superstitious traders we are Friday the 13th and also the last trading day before the Ides of March (15th). It doesn't get and more spookier than that. Yesterday's huge up move was a continued combination of short covering and sideline cash that does not want to get left behind. The question one has to ask is how much father does this move have to go?

We continue to be long the market medium term as we believe there is still pent up buying. Given the strong gains over the last three trading days the prudent trading strategy is to continue to trade with a trailing stop. We have option expiration next week which will add to the volatility as a huge Index Arb Fund that is currently frozen will have to be unwound before next week's end. Expect more back and forth action today with the possibility of profit taking going into the weekend.

As a trader, one must control that little voice inside that is saying you have missed the bottom and the Stock Market freight train is now quickly leaving us behind so we had better buy. Expect at some point a retest of the Market low (on the S&P that is 666 just to add to the superstition of this market).