July 17, 2008
I know I keep pounding on this but experience has taught me how quickly bull markets can collapse once they finally "flame out". I think this is absolutely the case with Corn and the Soybean complex. The flood is gone. The sun is out. There's plenty of moisture in the ground, and the crops that DIDN'T get washed away are growing full speed ahead...Rain Makes Grain...and as we now start down the back stretch towards harvest, I believe there is big, fast (maybe devastatingly so) potential on the short side of these markets but think positions need to be established immediately (look at what has already happened in wheat and corn). Maybe I'm wrong, and if I am these are all money losing ideas, but if I'm right I believe it will be very much so.
Give me a call...Put something on one or both of these markets...Doesn't what is here make a lot of sense?
I'm short, and adding every chance they give me...
Let's start with a look at how the Wheat sell off developed...Again, I am using this example (and it is not the only one by any means) to make the point that bull markets most often end with that commodity slapped all over the media...I am sure you had to catch some of the headlines and hair pulling back in the spring when analysts everywhere were screaming the world was going to run out of wheat...Well, we obviously did not and wheat dropped 40% in price in less than three months, which on a futures contract represents a lot of money, whatever the commodity.
Anyway, this first chart is a close up look at how that decline took place...This is not to say it has to happen at all the same way with the Corn and Soybean markets (or even happen at all for that matter) but I do think it is a very strong possibility...And I can also add, virtually every Corn, Wheat or Soybean bull market I've ever witnessed has pretty much ended by going straighter and faster down than anybody could ever imagine.
This chart only includes the period between Wheat's contract high in early March and its low since then in late May. I have noted all of the "up" days (higher closes) as the market was rapidly sinking more than $5.00...
Here's a close up of what we have witnessed so far in Corn...