On October 8th , I looked at being short around the 13,500-13650 level with a down side target at 13,200, with a possible flush down to 13,118.
Today we went to 13,208, just one tick below the November 12th low at 13,209. We have since had a nice short covering rally up to 13,362. If you had had access to my real time updates, as opposed to these once daily blogs, you would have taken another 1/3 of your shorts off on the bounce above 13,239. That is where my buy stops had been lowered.
We just may have posted the low for the next 3 weeks as we head into the final Election Throwdown. My guess is that we will climb a wall of worry, in very thin, quiet trade. In all actuality, I am advising folks to head to the sidelines in trading the financials from the short side until after November 15th.
A lot of traders like to be short during the month of October. Because of the historical crashes we had in 1929 and then again in 1987. If you want to play that short, by all means go right ahead. I just don’t see anything dramatic happening, barring another flash crash or a fat finger order, or some other unforeseen horror.
I am still short, but from 13, 500 plus. I am comfortable holding those. I am just not adding to them, and I have buy stops which may over the next 3 weeks, get me out of those shorts automatically.
As for the grains. Last Friday I noted that the grain action was suspicious. We saw limit moves on the last two USDA reports , bullish limit moves, that almost immediately started leaking air. Today, SX fell 30 cents and CZ dropped 15. I believe we will see SX go down and fill in the gap below at 14.78 and that should have CZ test the $7.05 and 7.10 level. This is good b/c i have short dated Nov puts that will expire in 11 days. They were purchased for 5 to 9 cents. They are looking healthy today.
I will admit, after the last USDA on the 4th, I had a bullish tenor to my opinion on the grains. The fundamental numbers on the 4th were very bullish corn and wheat, and neutral to beans. I was in the opinion, based on those government numbers that CZ should have run up to 8.00 and that should have pulled WH up to 9.50 and SX back up towards 16.70.
A perfect case of having an opinion, having it begin to not smell right, and then being disciplined enough to take the $$ loss and move on. I actually was bearish going into the USDA on Thursday, I bought cheep November puts b/c of that opinion. Of Friday, those positions looked horrendous.
However, here we are just 48 hours later and it looks like, with 11 days left to go on those options, that we will have a chance for either 1) a push or 2) a nice profit.
Exports came out supportive, however, the prices collapsed. That’s telling me that maybe the funds are caught long, and the clock is ticking. If they have to sell 150k contracts in the next 11 days, I don’t know how that can be bullish for prices.
That’s about it.