April 29, 2015
Euro is lifting off?
The Euro and Cotton appear to be on the move…I am sitting tight on our positions in both that have now moved into positive territory.
Still long Cotton
The fundamentals are supposedly so INCREDIBLY BEARISH in Cotton that NOBODY seems to want to own it. And from various conversations with farmers and brokers, I am pretty sure that as Cotton has wallowed sideways for the past 9 months, farmers everywhere have been handing everything they grew last year over to the merchants...particularly during the recent trips up to the 65-66 area…and NOW THAT MOST FARMERS NO LONGER OWN THEIR CROP, I SUSPECT THAT COTTON IS READY TO MAKE A TRULY DYNAMIC MOVE ON THE UPSIDE.
Still think Feeder Cattle are a monster SHORT.
During the past six months I have repeatedly stated that I think the Cattle market is going to suffer the same sort of large percentage collapse we have seen in recent years from just about EVERY major commodity we trade…with one of the most recent examples having been in the Lean Hog market.
Tops are difficult in that they can be quite volatile AND they can take MANY agonizingly bumpy months to form…which was pretty much the case in the above mentioned Hog market (chart follows) that rocked back and forth for almost 9 months before it finally started the type of non-stop crash that I think we are now also approaching in the cattle market…
So…I may be dead, dead wrong…maybe Cattle are going to stay up forever…but I think the next 3-5 months are going to look something like I have drawn it below…that, at some point (quite soon or quite immediately is my guess), Feeders will have seen their LAST rally and WILL start a protracted move down, in which, as is sometimes the case (like the hog market above), there really are NO rallies.
I CONTINUE TO RECOMMEND SHORTING THIS MARKET. I REALLY DO THINK THE TARGET IS IN THE 150-160 AREA…AT A MINIMUM.
These are, I believe, letter perfect 1 & 1’s
I LOVE Long Soybeans
As I have been writing for several months, I cannot recall when everybody was as bearish row crops as they are now…And in fact, similar to the Eurocurrency, SPECULATIVE TRADERS ARE MORE CUMULATIVELY SHORT THESE THREE COMMODITIES THAN THEY EVER BEEN…
Here are positions that I would recommend immediately taking…and I DO absolutely believe it makes sense to own all three…I may be dead, dead wrong but I really think there is NO WAY that Soybeans, Wheat and Corn are all just going to sit here dead in the water for the next 4-5 spring and SUMMER months…especially with everybody so short.
In each of these markets, the most important thing I would have you note is how relatively small a move in THE WRONG DIRECTION it would take to be able to recover the initial investment…and then…be able to establish totally new positions with the same money…AT BETTER PRICE LEVELS.
I THINK THESE MARKETS ALL BOTTOMED LAST FALL…AND ARE NOW READY TO DO SOMETHING BIG ON THE UPSIDE.
Total for all three is $6916...It should go without saying but if all three markets do just go dead sideways, you could lose the entire $6916…
My opinion, however, with history as a solid reference, is that nothing even close to that will happen. I FULLY EXPECT TO SEE ALL OF THESE MARKETS DO SOMETHING RELATIVELY BIG ON THE UPSIDE AS THERE ARE JUST TOO, TOO MANY PEOPLE WHO THINK THE OPPOSITE…but at any rate, if I am wrong, and we do go down, using the strategies shown here, I think I will be OK.
If you do have the money to risk, you really ought to give me a call…These ARE great ideas…and great numbers…
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Eurocurrency, Cotton, Feeder Cattle, Soybeans, Wheat, Corn