July 30, 2020
It absolutely does NOT mean I will be right but I could not ever be more bullish these two markets than I am right now. And I cannot say it enough, that I might be dead, dead wrong, which can mean losing every dollar you invest, but I think both of these situations represent opportunities to make truly BIG hits in the markets.
They are both what I consider to be the highest percentage chart formations and setups that my 40 dumbass years in this business have taught me to look for…and I am personally in both of these markets…looking to hit grand slams…I am going with my perspective that both markets may be launching into strong, essentially non-stop, very large moves to the upside…and thinking in terms of how to own them here (there are various strategies, more and less aggressive), as well as figuring out how and when I intend to add IF I am right (and again, I might not be).
Don’t ask me for reasons why…I have them…but I will reiterate that both of these markets are on their highs, with, from what I hear and read, nearly unanimous analytical sentiment that they are going lower…NOT higher. And if there is one lesson I’ve learned in this stuff, it’s that tops are generally NEVER accompanied by hordes of analysts advising everybody to, “Sell! This market can’t possibly be going higher.”
Enough talk…It’s really about the numbers. The bull moves I’ve drawn for both markets ARE what I think we are going to see…As always, this does NOT mean they will move like this, but this IS what I am expecting to happen…Both of these markets do have histories of making moves very much like what I am predicting.
FEEDER CATTLE – a market that I have often observed making just crazy sized one way moves…
Here’s the 2 &1
The 1 &1
And I am also looking at something like this…as maybe a second position…Kind of an all or nothing thing…And to be honest, if this move were to start happening as I have drawn it, I have no idea if I would have the nerve to just sit tight all the way…More than likely, I would at some point start taking them off in pieces…And to be clear, this is a VERY long shot sort of idea. Regardless of my opinion that we are going to see a 20-25 cent lift off from here, and that I am taking positions with that sort of objective in mind, it certainly does NOT mean we will see it happen…or maybe anything even close to it. Nevertheless, here it is…
And I think Cotton is almost the identical setup…And am taking the same approach here as well…looking for a LARGE percentage bull move…But before the charts, take a look at this headline that was all over the media yesterday…
So OK…The gist of the story (originating with Bloomberg) is, “HOW could Cotton possibly be going up if China is up to its eyeballs (supposedly) in Cotton they’ve already bought…My God! How could they possibly need anymore?” And if you don’t think that all of the STILL bearish (after a 15 cent rally) analysts in this business didn’t jump all over this idea as confirmation of their bearish posture, I’d suggest that you don’t know anything about how the markets work…And maybe I don’t either…But for the umpteenth time, I will say that I have yet to see a market turn down from a bull move when just about every industry “expert” out there was calling for the top…And I therefore cannot help but take this story as MY confirmation that the bull market is STILL fully underway (just getting started really)…that this is just CLASSIC news that tells the masses, “Don’t buy this!”, when that is exactly what you should be doing. I AM JUST AS BULLISH COTTON AS I AM FEEDER CATTLE.
Two possibilities here…
I’d also add that yesterday’s “bearish” news sold the market off only briefly…and then maybe again this morning they suckered in some sellers…but I think today’s sharply higher reversal may have been the beginning of the next surge…And I would also note the same in Feeders, which have rallied 5 cents ($2500 per futures) in the past 3 days and had their highest close in 5 months today…And believe me, according to virtually all of the pundits, this is NOT supposed to be happening.
And of course, you can just buy the calls…which is not the smart way to go…but at any rate, I SAY BUY THEM BOTH…
And I do think they need to be bought here and NOW…Like I said, and believe, these last few days of strength could be the beginning of something much bigger…
DO give me a call…
All option prices in this newsletter include all fees and commissions. All charts are from Aspen Graphics.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Feeder Cattle, Cotton.