That’s it, the high is in, today’s 200 pt break is the beginning of the end. Fire and Brimstone, plague, disasters, tidal waves, cats and dogs living together… GOOD GOD these commentators make me want to scream. Every down move we have is broken down, “the biggest one day down move since…. fill in the flippin blank”. Bulls, you should be ecstatic. This is exactly the kind of panic reaction we need to keep this rally going.
I am more convinced than ever that we will see 11000 in the Dow and 1250 in the S&P in the next few weeks. Most likely after the first Friday in February. That will be the next unemployment release. What I think we may see is basically unchanged to slightly worse, which will be met by a rash of short covering once again.
It will be interesting for us all to see if I am right or wrong. Unlike the talking heads on TV, every word I say is down here for prosperity, for better or worse. Honestly, the only people who tape the daily financial shows are 1) the networks, 2) the talking heads themselves, and 3) the immediate family members of the talking heads.
Other than that, there is no one in a position to point out to them just how regularly wrong they are on just about every call they make. Although they stay away from specific calls. Trying to get a succinct opinion from them is like trying to walk on cat excrement or wet clay. No way to really get any traction, and in general when the experience is over, you are not in any hurry to repeat it any time soon.
On to the ags.
I think today looked like a dead cat bounce. The funds still are trapped in the corn. Everyone is hanging fire waiting for them to pull the emergency chute and bail. Today was a fitful attempt at a short covering rally. Beans opened up at 950, rallied 9 cents or so, melted back down and then settled 1/2 way back..
All eyes will be on March Corn. We still haven’t seen those 80K longs which piled on between Christmas and new years think about getting out yet. No matter how deep their pockets, eventually they have to cry uncle. If it were their own money, the fund managers would have bailed the day of the USDA number. But since its not theirs, and they will still get their 500K base plus a huge bonus no matter what happens, it is OK for them to wait a little longer before they pull the rip cord.
However, with the Dollar Rally back on, that can mean only one thing, our crops are more expensive for the rest of the world, and given the fact that the world is awash in grain and we just posted a record 13.1 billion bushel crop for corn, we’d have to open ethanol plants like Starbucks coffee stands to eat into this supply.
I spoke to some farmer clients today, and they are convinced that there will be more and more reports of rot from the corn which is sitting in the fields under all this snow. There are possibly another 500 million bushels left out there currently. For the bulls’ sakes, all of those bushels had best be damaged either by rot, fungus, too much moisture, or contamination by the jolly green giant. Other wise, we’ll still have a huge carry over.
If the farmer wants higher prices, they will signal the bottom when they have sold their last bushel of corn in the bin. We are not there yet for corn. So, fundamentally, I am bearish corn until that is addressed.
Not to mention the crop coming out of Argentina presently. Its just too much supply, being made worse by a stronger dollar. I just don’t see how that can support higher prices yet.
Tomorrow is Friday. I think the bears come after it again just like last Friday and attempt to dress the charts for the weekend.
Of course, if I am wrong, I’ll get stopped out. Have your stops in place the same time you put in your shorts. An opinion plus a plan plus stops is the best way to trade.
Good Trading
