Bottom line, Dow cash has trouble breathing above 12,400. I continue to be short here, looking for a correction own to 12,100 to take some profits, and then again at 11,800 on a flush lower. Time will tell.
In the grains, I am wary of being long going into Friday’s Supply and Demand.
After corn has had a $1.00 rally after last Thurdays’s USDA planting number, the market looks over done. Corn stocks lost 200 Million bushels, but the market rally has adjusted for that with the sharp rally.
Corn has gained $1.00 on soybeans in 3 days… Goes to show the pro’s lose money too.
The general feel was to be short corn and long beans going into that number. The resultant flip on the spread was fueled by large spec funds taking their medicine and bailing on a losing position.
Now that they have bailed, a good short term play, in my opinion, is to fade them.
Sell corn and buy beans now as a spec going into Friday’s number.
If you don’t want to get nailed w/ margin calls, try buying a bean call and buying a corn put.
That limits your potential downside to the price of the options.
A longer term trade I like is buying wheat. Wheat is going to be looked at as food source instead of corn as livestock producers look to feed cattle.
Take a look at the wheat corn spread in the past month. That’s a trend I think has some more room to grow.
The high in cold was 1,440. I am patiently waiting to sell 1450 gold. I am patiently waiting to sell silver at 40.00
That is all for today.
Look for a turn around Tuesday in the grains. In other words, sell rallies today.
Make sure your use your stops and respect the risk.
CER
