May 8, 2012

I have a number of opinions out there, but these two are absolutely my favorites. As always, I am obligated to say, no matter how strong my opinion, it does not mean I will be right…and when I am not right, or “early”, it will generally mean losing money…With that being said, there ARE times when I look at the way a trade has developed, and the longer I watch it set up, the more “certain” I become about the idea. To me, this stuff is all about making educated guesses, with calculated risks…and specifically looking for situations that appear to have heavy leverage. These two trades are exactly that…I love them. I advise doing both of them. I recommend putting your bucks on the table (AGAIN if this is the case) and then just let it happen. In my two bit opinion, both of these are immediately about to turn into BIG WINNERS…N-O-W.

 TREASURY BONDS ARE GOING DOWN

I have been screaming “Sell Bonds!” for months now, describing this as a trade that has monster potential.  In mid-March, it “finally” started breaking, with a 6 point down move in 4 days, leading me to more-firmly-than-ever believe the collapse was 100% underway…But it was NOT, and Treasuries have now rallied 10 points back up to the highs, the result being this trade has cost many of you, and me, a lot of money…Another result of this rally has been my questioning the intelligence of this idea…asking myself if my logic and instincts are just wrong…and considering the possibility of giving up on this trade.

NO.

I have been here before, at that point where nothing more than the pain of being wrong and losing money induces you to toss out everything you truly believe about a market, and therefore buy into the “It can’t go down” story so widely accepted by the masses…to just say, “Oh Hell. Can’t take no more. Everybody hates me and this trade”, and throw in the towel. Move on to something else.

In the past, when this thought process has occurred, my experience has been:

If you do get it out, a month later you are kicking yourself---usually BIGTIME.

Or if you stay in, you end up being right, but you have such a severely depleted position as to make no real difference at all when the trade, INEVITABLY, starts to work…precisely when you are basically ready to give up.

As I have said many times before, Bonds are here on “safe haven” fears totally dependent on the idea Europe could collapse, and with a 3% yield for the next 30 years, they are NOT what I would call an investment…Europe is NOT going under. Yes, there is some “reshuffling” going on over  there but they are no more facing collapse than we are…and OVERNIGHT, I FIRMLY BELIEVE THE SAFE HAVEN BID IN BONDS WILL EVAPORATE…AND BONDS WILL INITIALLY DROP 8 TO 10 POINTS FASTER THAN ANYONE COULD EVER IMAGINE POSSIBLE…I MEAN, POSSIBLY, WITHIN A MATTER OF WEEKS.

If you have been in this trade, you have been losing. If you take the trade again, now, though I still might be wrong, I believe the potential gains could be enormous.

I CONTINUE TO SEE BONDS IN THE MID 120’S, AND IF THIS PAST HAS ANY RELEVANCE AT ALL, EXPECT THE MOVE TO TAKE PLACE WITHIN A MATTER OF MONTHS.

STAY SHORT THIS MARKET. SELL IT NOW. DO NOT BE OUT OF THIS TRADE.

CORN IS READY TO COLLAPSE

Short and sweet. Farmers are sitting on what are probably record on-farm Corn stocks. Having already not sold when the market was $2.00 higher, they are still (ALL TOGETHER) waiting on higher prices. Meanwhile, anybody who uses this grain has long ago been scared into buying everything they need for the coming year. In other words, this is a market, in my opinion, with NO BUYERS AND A WHOLE COUNTRY FULL OF SELLERS.

July Corn is dead on its lows for the past year. According to maybe 99% of the analysis out there, it is NOT supposed to be here. We are “supposed” to be in danger of “running out” of it…and therefore, a LOT higher…However, to the contrary, Corn is sitting on a big cliff here at $6.00, and I believe about to make a move STRAIGHT DOWN (which is not uncommon) to $4.50 (or worse) BEFORE July Corn goes off the board.

Big USDA report out tomorrow morning…The talk is, it will be bullish (what else would they think?)…But I don’t care what it is. For months, every report we HAVE had was also classified as “bullish” but look where the market is…

NO BUYERS AND A WHOLE COUNTRY FULL OF SELLERS. Farmers cannot sit on their stocks forever…especially with the very distinct possibility of a record harvest coming this fall.

July Corn is a sale. Be short now.


 

I think these are both fantastic trades…and these are not just empty words.

Get on. Pick up the phone. To me, they really don’t get any better than this…But you do have to put the trades on…and write the check.

Thanks,

Bill

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