November 29, 2021
This past Friday, fears and across-the-board heavy selling arose in the markets due to global headlines referencing the Omicron Covid variant. As I have previously written, I believe Covid has achieved “critical mass,” and that any virus that can go from non-existence to 750 million cases on the planet in just 1 year, is basically NEVER going away…But I also believe, to some extent, this new facet of our lives has been accounted for in the markets. Of course, there will be surprises, as is the case with the latest variant, but they will come nowhere even close to matching the shock that hit the world in early 2020…and cratered economies and markets everywhere…And therefore I DON’T see Friday’s 1000 point (2.2%) Dow Jones drop as the beginning of some sort of crash in the world’s stocks and economies. BUT…I do view Friday’s $10.24 drop in Crude Oil…down 13% in one day!...as indicating that Crude Oil, and a host of other commodities, after screaming higher for 18 months, are NOT the “Buy” that all the analysts and talking heads are NOW (after the fact) recommending as part of the NOW extremely popular “bet on more inflation” trade. In other words, to me, down 13% in one day is NOT what I would classify as “underlying strength.”
I CONTINUE MAKING MY “SELL EVERYTHING” RECOMMENDATION…AND CONTINUE TO ADVISE OWNING PUTS, AS ONE “UNIT,” IN CORN, COTTON, WHEAT, THE SOYBEAN COMPLEX, AND SUGAR.
Here are a few headlines that are representative of what I am seeing everywhere…that being that Wall Street’s geniuses are now bullish all commodities, and Oil in particular…But with that in mind, I’d ask you to Tthink back and remember April, 2020, when “expert” analysts were telling you that we’d be lucky to ever see even $40 Crude Oil again…and how they were SCREAMING, “Omg! There’s so much we don’t even have anywhere to store it!” Remember all that? And now they’re just blithely adding $30-$60 to the price like it’s nothing?
Source: Marketwatch, CNBC
These are the options I would recommend at current levels…Again, I just think it makes sense to own a little of all of them as one unit…But if you want to pick just one, I still think it’s the Soybean Oil…
To do one put in all 5 markets comes to $6850. If all of these markets stay up, you could lose the entire $6850…If any or all of them work, you can do the math yourself as to where you might be dollarwise.
As always, I might be dead, dead wrong but I would be absolutely amazed if all of these markets just sit here, doing nothing…or all go higher…And if they aren’t doing either of those, I think they can only then be doing one thing. GOING DOWN BIG.
Thanks…Get in touch if you’re interested.
All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Soybean Oil, Corn, Wheat, Cotton, Sugar