3:50 pm ET: Today's mini rally was sparked by a better than expected consuming spending report which gave many retailers a much needed boost to their sagging stock charts. It's nice to see some green but in this market fraught with a lot of uncertainty, it's difficult to make any sort of prediction more than five minutes into the future. There's still the bulk of third quarter earnings to contend with not to mention the uncertainty surrounding the presidential election, the fiscal cliff, the jobs recovery, the Eurozone debt crisis, and the slowdown in global economic growth. I do think, though, that tomorrow's trading action will be muted ahead of the second presidential debate scheduled for tomorrow night. A clear winner in that contest will likely determine who will be elected which could have a major impact on market direction. Should the debate result in a tie, then I would expect the market to continue on in current fashion. We'll know soon enough.
There's just not much to report. Two soft commodity funds--agriculture (NYSEARCA:JJA) and grains (NYSEARCA:GRU)--broke through support levels as the drought rally unwinds. These funds jumped as much as 45% over their early June values as the drought intensified. Although both issues have fallen off their highs, they still have a long ways to go to return to their previous levels. There are options on the GRU but they are very thinly traded. If you're looking to play the short side with stocks, you could try to short these individual issues or buy the double-short agricultural fund (NYSEARCA:AGA). This fund appears to be turning around and is up 3% today. Should you decide to jump on this trade, please be aware of the perils of holding leveraged funds. (See this article for the pitfalls of holding leveraged etfs.)
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