May 6, 2011
I have a lot to say but both my arms are on fire due to an encounter with poison ivy and I can barely sit still to write this…So I’ll just pop out some charts which I think tell the story as I see it.
This is Silver…until a week ago, the darling of the “inflation is coming!” crowd. I have often commented that when this market falls apart, it would be nastier than anyone could ever imagine…
Dropping $17 in a week was not what any of those $100 Silver guys were looking for…
Several months ago, Cotton was just as hyped up as Silver…to the extent I actually saw some commentary that “there isn’t any cotton left in the USA!”, which combined with what is now being called a 100 Year Drought in Texas (big growers), should NOT have meant Cotton was about to nosedive…
But look what happened...
No cotton left in the USA but somehow we’ve dropped about 60 cents a contract in since early April?
Which brings me to the Corn and Soybean Oil markets, which have also both been all over the news in recent months with all sorts of ultra bullish fundamental reports and analysis…inclusive of, most recently, the flooded acreage along the Mississippi…YET NEITHER OF THEM HAS GONE ANYWHERE..
I see NO reason why Corn will not do what Silver and Cotton (and countess other markets) have done...I am immediately looking for a 30-40% sell off in Corn...down to the $4.50 area minimally...and think it will have done so before Labor Day.
And a quick word on Bonds…Commodities have been flying, stocks have been flying, and our Treasuries have recently been threatened with a downgrade…all of which “should have” pushed Bonds big time into new lows…The fact they are making new highs for the year speaks volumes I think…They’ve been inching higher (grinding through massive selling), and to me, look like they are immediately ready to start moving more sharply, dynamically higher…
That’s all I can manage…Give me a call if you are interested…Been waiting a while on Corn and Bean Oil, but like the Silver, more often than not, when this stuff starts down, you need to already be on it, as, when they do go, it’s usually pretty fast and pretty big and you don't want to be "chasing" them.
It ‘s the right time of the year…Crops are going in…Now we point toward harvest when ALL of the “tight stocks” and “shortages” will be no more and prices will probably be a hell of a lot lower…like anywhere between 30 and 50 percent so in my opinion.
Thanks…GIVE ME A CALL AND LOOK AT SOME NUMBERS. THERE IS SOME POTENTIALLY MONSTER LEVERAGE IN THESE TRADES.