A local market maker who shall remain nameless, used to love to come in after a sharp bull move, especially if he was long and enjoying the rally, and yell, “It can’t go any higher!! as he sold off his long position little by little. Very annoying if you happened to be short and suffering losses… But he was consistent. Consistently annoying, year after year. He would also do the same if he was short and the market was breaking..It was his trademark squawk.. It was his way of announcing to the pit that he was the right way and making money…But he was a great trader, people respected him. Last I heard he was retired in Cost Rica..
Which brings us to the wheat rocket, uh wheat market, the USSR Titanic Rally 2010…
It can’t go any higher… Can it? There is absolutely no way to fathom how high we will go. Apparently, seeing as how we are another 49 cents higher as I sit an write this, it seems like Wheat is headed to new heights. All eyes have to be on 1000 or 1031, the old
July 08 highs. Can we get there? I am not sure. After the close, we covered our 600 WZ puts we had paid 19 cents for. I exited at 5 cents. In fact, I exited half of the position and left the other 1/2 on in case we spike down as fast as we spike up.
On the overnight trade, I attempted to pay 35 cents for a Dec 850 call spread. I hope I was able to get it done. We opened 5 higher, and then crept higher. I just turned on the computer and saw that once again we are 50 cents higher in the wheat, while the Corn and Beans are both 3 to 8 cents lower, respectfully.
All I can say is that this is unlike anything I have seen in about the last 10 years. I do know that when it ends, it will end badly for the last bulls. Like a game of musical chairs on the Titanic, it will end the way all vertical rallies end, with a vertical mine shaft lower.
I don’t think I even want to play at these levels. If you are already long and have held on, just move your stop up every 30 cents the wheat rallies. Every 30 cents on a one lot future is $1,500 dollars. Every dollar rally is $5,000.00 dollars.
If you are looking to get long, just pull the trigger and buy it. However, the moment you get long, make sure you have a trailing stop to get you out on a market order. The eventual down move will be scary, but who is to say we won’t rally another 2 or 3 dollars?
Certainly I do not have the psychic ability to predict such a move. I would take a stab at selling when we hit key round numbers, like 900, 925, 950, 975, basically every 25 cents and especially around the round number targets. I think there will be a flurry of selling the first time we get to $10.00 All the usual technical indicators have been ripped through like melted butter.
As far as the fundamentals, they are suspect as well. Two days ago the Ruskies say they will halt exports for inspections. The next day they announce they will meet their exports. Last night they deliver 180K tonnes to Egypt, and then…. wait for it…. Putin says “Niet” to any more grain exports…
Bureaucrats around the world all got a warm fuzzy after that keystone Kopp routine.
I feel like the next time any official from Russia says anything, just totally ignore it. It will change within 24 hours anyhow.
Just remember, bulls make money, bears make money, but pigs get slaughtered. Right not the bull has the market by the short hairs. But this too shall pass. I, just like every one else out there, have been astounded at this rally. I am watching a few key indicators. When they are tripped, I certainly will let you know. For now, they have not materialized. When the do, I will share them with you. Until then, if you are long, stay long and move up your trailing stops. If you are a bear, perhaps consider having sell stops below the market as a means of entering your short position for when the market turns.
In markets that are volatile, a stop order sometimes is the best way to enter into a position. If forces you to pull the trigger on an entry point.
As always, you must have an exit strategy in place for that short once its tripped. Manage the position, don’t get angry, and just look for the next opportunity. Take what the market is giving you.
On a final note, tomorrow is Unenjoyment. I will have a short comment tomorrow after the number is out at CST AM 730.
My guess, is, given the tone of the news conferences lately, that we will be hovering near the 10% level.
However, remember, its August, and a lot of traders and money managers are on vacation.
That will make for some choppy, illiquid markets. My guess is, that we may in fact hold fast to our recent gains, unless the number is surprisingly high. We have been on a 1000 point rally since the end of June. A 25 percent pullback wouldn’t be unexpected on a bearish number. I think you stand back from trading until about AM 7:45. Let the dust settle.
We could have all our business done by Lunch time, as people head for the beaches, or better yet, head home to tear up their lawns and plant wheat.
Like Jackie Gleason used to say in the Honeymooners when he was angry at his wife… ” One of these days, Alice, To The Moon!”
Good Trading
