Last Friday I wrote how the movement in Wheat had finally hit the national media. CNBC, forever perma bulls, ran a story which could only be described as “friendly” wheat..
The suggestion was to look favorably on the High protein wheat in Minneapolis and KC…. 1) FACT this report came ONE DAY AFTER Minneapolis posted its contract high at 10.78 last Thursday… Last Friday, the high was 1972- 1/2. Today’s low was 10.17-1/2. From tip to trough, that’s 60 cents of downside risk in 72 hours… 60 cents on a one lot is 3K.. On a typical 10K spec account, if a customer had a 3 lot on, he has now lost, essentially 90% of his value. All while following the “suggestion” he or she saw on a financial show..
Quite frankly, I would not want to buy Minneapolis wheat until it fell down to 9.90-9.85.
In the end, the TV pundits may be right. After all, they have a 50/50 chance.. However, its important to be selective about when we get long these contracts.
In general, I will continue to sell any “buy” recommendation on TV and I will look to be a buyer when an analyst comes on TV with a bearish opinion.. Long run, that is a basic strategy for success.
Ok, enough about that ..
Trade I like.. the Dow index has moved above a resistance level today. If the mini contract can settle above 12,600, then a test of the 12,700 or 12,850 highs may be in order.. Quite frankly this is a lot of risk for not much reward. If you do get long here at 12,570 area, make sure you have a sell stop below to protect you from a bull head fake. Better to take a definite pre determined loss than to sit and hope the market comes back.
I’d watch the S&P 500 cash level as well.. I’d be long against 13.40, but if we can’t go up and conquer 13.60 in short order, this long position could crash and burn.
Best
Chris
