October 3, 2021
We exited all LONG COTTON positions on Friday…and are now temporarily on the sidelines.
I am still SCREAMING
SHORT THE SOYBEAN COMPLEX
Quite often part of this game involves waiting for consolidations…or markets just trading sideways-to-nowhere…to END…But ALL consolidations DO end and Cotton’s recent move was a perfect example of why you pretty much have to be there BEFORE it starts…as, if you are not “in,” there is no way you are going to “know” the anticipated move has actually started, and thereafter, by the time it begins to look “obvious” that it has cranked up, you are then faced with the question of, “Am I too late?”, which often then leads to “I missed it.” That is, you just end up WATCHING IT HAPPEN.
I FIRMLY BELIEVE THIS IS WHERE WE ARE IN MY SHORT RECOMMENDATIONS IN THE SOYBEAN COMPLEX…THAT WITH FRIDAY’S LOWEST CLOSE IN 6 MONTHS IN SOYBEANS, I THINK THE LIKELIHOOD OF AN IMMEDIATE AND RELATIVELY STRAIGHT DOWN MOVE TO THE $10.50 AREA IS QUITE HIGH…
I will remind you, again, that this market MADE ITS HIGH BACK IN APRIL, but ever since, virtually ALL of the supposedly expert opinion out there has been non-stop spouting nothing but bullishly tilted rhetoric…And if you don’t understand the significance of new lows combined with all that STILL bullish opinion, I’d suggest you understand nothing about the way this “game” actually works. This does NOT mean I will be right but I have seen this script 100’s of times…and to me, it is just a CLASSIC BEARISH SETUP.
I strongly recommend buying the puts recommended below…and then forgetting you own them until year end.
As I look at this before signing off, I’d add that it actually looks like this market would break the $10.00 mark…which might sound shocking to some…but would actually look quite normal to me…and psychologically speaking, would almost seem perfect…Think about the farmer selling that would probably be getting done when “$10.00 didn’t hold!” Really, it’s just the way this stuff works…
Hope you’ll pick up the phone guys…Maybe dead wrong but this really looks and feels dead obvious to me.
All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Soybeans