Wow, a typical pre-holiday trade today. The grains explored their rather large trading ranges, trading schizophrenically in tune with the gyrations in the Crude Oil Today. The metals fought off some early weakness, but Silver lagged the Gold again, as Gold posted a new all time high settlement at 1167.90, but could not take out yesterday’s record high at 1174… today’s high in gold was 3 bucks away from there, at 1171.70.
Crude oil had a high today at 7780 and a low at 7560. For the time being, it seems we are done flirting with 80 or thoughts of 90 dollar a barrel oil. We have seen moves by the funds with capital flowing out of metals and oil profits, and out of stock index profits, all piling into the grains over the past 5 weeks. It began with the corn, worked into the beans, and helped fuel a nasty short covering rally in the wheat, which forced a lot of options traders who were stuck the wrong way to pay up during the last 50 cent squeeze.
As far as the corn, it still has to deal with terrible weather for harvest. We won’t know exactly how the harvest ended until January, because there is no S/D number in December. Talk in the ag trades is that corn harvest is still way behind, and we are looking at more wet weather here in Chicago, with some snow forecast for Thursday Turkey Day. While corn was un-explain ably lower through most of the day, apparently some traders came to the realization that there may be supply problems in corn, or at the very least quality issues with high moisture content lowering the yield.
All of the grains shrugged off lower pushes and mounted a nice rally late in the day.
Corn ended up 7 cents at 383, after trading through a range with a high at 387 1/2 and a low at 374 1/2. Thirteen cents is a rather good range for the corn.
I can remember in the 80’s and 90’s when corn was lucky to have a five cent range, but that of course, was pre computer volatility.
I’ve said it before, but if a human being tried to bid and offer in the same manner as the screen trades with bids and offers, that human being would most likely have lost his or her mind after about a week of trying to simulate the trading jumps and spikes that the computer has given us.
In any event, computers are here to stay, along with the volatility that goes along with the new paradigm.
In Jan beans today, we really had a wild ride, we thoroughly explored the space, if you will, between 1048 and 1032 to settle up one cent at 1047. The last minute saw the computer try to push below 1040, and then it was Katy bar the door short covering 8 cent bounce in about 20 seconds. Again, that last minute of trade can be treacherous. Great if you are right, but treacherous if you are long and naked without stops.
December Wheat also had a wide trading range, 559 to 531 to settle unchanged at 533.
There may be some issues at hand with rumored planting delays in getting the winter wheat planted, as delays in the corn harvest have a ripple affect on the farmer schedule.
Tomorrow is the day before Thanks Giving, and I would advise you to not really try to do anything. If you do feel an urge to trade, watch for sharp rallies, as most of the locals or pros love to sell it. If the pros all get bear ed up, and there’s no follow through, the rallies could be ugly.
Ditto in the stock indexes… Dow Jones futures only had about a 110 point trading range, with trade spotty and violent. SPZ had a high at 1107 and a low at 1095 or a 17 handled range. As of this writing, both the indexes were unchanged on the day, to slightly lower.
Again, my bias would be to the long side, or at least looking to buy dips, for the same reason I wrote above. Most professional traders love to sell whatever they are trading. The reason is, all markets go lower about 3 times faster, on average, than it takes for the markets to rally. The bulls climb a wall of worry, literally, with fits and starts and retracements… Bears feed off of the fear of longs who are wrong and need to get out. Just the dynamics of those two different mindsets result in trading moves where generally, (not always) but generally markets move lower faster than they rally.
A professional, therefore likes to get paid for his risk, and over time, its a learned response that the payoff is quicker if one is short and correct, vs being long and correct.
Good Trading
