April 26, 2006
I have returned to doing commodity futures brokerage on a full time basis. After working for years totally on my own, which I always wished to be otherwise, I have joined forces with Benchmark Financial Services, Inc. here in Atlanta and will be operating as a branch office with them. As I have mentioned in previous newsletters, I have known the three brokers there (Tom Stafford, Rick Sitten and Willie Adams) for virtually the entirety of my career, going back to when we all worked together at Merrill Lynch 25 years ago and really look forward to doing so again. Between the four of us, we have a cumulative 112 years of experience and I see the opportunity to interact and exchange information/perspective with them as a major plus in my own trading.
Several months ago, after having suffered almost a year with three losing positions (copper, cotton, bonds), I confess to having exhausted the mental fortitude this business often requires and seriously considered finding another profession. I did some looking around and even very briefly went to work as a mortgage loan officer with one of my longstanding clients...The bottom line, however, is I missed the markets and also found it difficult to just toss all my commodity experience out the window. I had always imagined myself as never retiring, as wanting to be in this business until either my brain ceased to function or I kicked the bucket...so that's the way it looks like it will be...As tough as futures brokerage can be, it also can be thrilling, is never uninteresting, and, I guess is just in my blood now....So I am back.
As you are certainly aware, there is a LOT going on in the commodity markets ...Here are some some charts of what a number of markets look like with a few comments as to how they might be viewed. If you have a different opinion or have your own ideas about how any market is going to play out, give me a call and I will do whatever I can to help you with it.
One of my intentions going forward is try to stick with trades that follow one of my personal reminders on the wall of my office:
The Best Way Is Going With It.
The idea here is the "easiest" money is made in being able to identify the direction a market is moving and then to position with it. This implies that one should generally stay away from top or bottom picking (although I do believe there are exceptions at times when it comes to market bottoms). While no approach to the markets is infallible, one of the best tools I know is a simple moving average crossover system. On the charts that follow, many, if not all of them, will show the 12-48 day moving average system I have occasionally used for almost 25 years now. Moving averages systems can chop you up (like anything in the futures markets) but if you want some mechanical approach to "confirm" your opinion, I think there is nothing better. Not only will such a system help keep you out of directionless (or wrong way) markets, they can also serve to keep you on long term moves when you begin to get impatient or fearful of a market reversal against you.
Crude Oil is into new all time highs. If you think the energy problem is not going away, you might want to look at the Corn, Soybean Oil and Sugar markets. The Biofuel Industry is growing dynamically and the supply-demand equations for all three of these commodities is changing dramatically as more and more plants are being built to produce alternate sources of internal combustion energy.
All three of the following markets could be directly impacted by persistently high (or higher) energy prices....
The Metals have all continued to push higher....
That's enough for one day....Give me a call if you have any bright ideas...I'd love to hear what you think...
Please note my telephone numbers have changed:
Toll Free - 866-578-1001 (new)
Direct - 770-425-7241 (new)