Wow, the lord giveth to the bulls, and then the lord taketh away. Bearish Hook Reversal formations across the grains, with new highs being slapped away forcefully and then ending lower on the day. Corn, Wheat Beans, Bean Oil and Soybean Meal all collapsed this afternoon and settled on or near their lows.
Jan beans had a 30 cent range. When I wrote this morning that I could see SF going after last night’s low at 1046 1/2, little did I know that it would go another 8 cents to a low at 1038. We just had wave after wave of large selling in the beans, it seemed.
This being a holiday week, I had thought we might see two sided action like this, with heavy trading. Last night and early into the day, it looked as if the bulls would prevail, but as the day wore on, the selling pressure was inexorable.
In the Wheat and Corn, the trade mirrored the beans. WZ had a high trade at 579 3/4, unable to get the 580 print, and then proceeded to melt lower to settle on its low at 556 1/2, 23 cents off its high, but only 3 lower on the day. Again, a bearish hook reversal.
December Corn, (CZ) challenged the 403 level, but then also broke 18 cents to 385 3/4, down 5 1/2 cents on the day.
So far in the Metals and Crude oil and stock indexes, we have also had sellers prevail, and as of 1:30 PM CST, the markets look to have quieted for a bit.
SPZ is trading at 1,104.25 higher on the day, but lower than its 9 month high today posted at 1111.50
DJZ is up over a hundred points currently at 10426, but 50 points away from its new 9-month high today at 10,486.
Crude Oil, finally rounds out the picture, trading at 77.63 down 2.30 a barrel from its session high at 79.92.
For the rest of the day, I would look for sideways and choppy trade, as I am sure a lot of people are leaving for the rest of the week.
On a personal note, I would like to talk about using stop loss orders. No matter what, you have to use them to survive long term in this business. Usually, they save you from riding losers. Sometimes, however, in a choppy market, they can lock in a smaller profit, and make you wish that you hadn’t used one. That is a deadly mistake.
Today, I was trading in the DJZ, I bought just a one lot at 10386. The market was bouncing around, as it always does, I ran up about 15 ticks, and I put a stop in a 10390, just to guarantee a small profit, while trying to let it run. I had a feeling we could pop above the 10400 level and challenge the 10427 area. In fact I had an OCO for that plan. OCO is one order, when filled, cancels the other side of the order.
I then took a break and walked away to get some coffee. I came back about 20 minutes later, and saw that the market had popped up to the 10486 level, 100 points from where I was long.
Of course, I looked and saw I had no position, but I was hoping to have sold it at 10427.
In fact, the low tic of that move was 10390.. My stop order.
The point being, even though it didn’t work out as planned, and indeed, I believe sometimes there are programs out there that are worms for stops on the computers, I can not simply cease using stop loss orders in the future. That same move could have stopped me out at 10390 with a 4 tick profit (40 bucks) while saving me unlimited amounts if the market had decided to take a powder and break 200 points on some unexpected news.
My point is, no matter what, you have to stay with the game plan to limit your losses. even if sometimes your timing is off just a little. Human nature being what it is, you always think you could have done better, if only you did _____ X fill in the blank…
Good Trading
