First off, too bad no one actually reads this thing. I wrote just last night that it looked like old crop beans SN would go test 1020. We did just that, traded there and then broke hard right after. Resting order to sell there worked well, especially if you bought the dips on the way up. However, currently my readership is about negative 3, so it doesn’t really help anyone but me.
Tomorrow we have USDA out.. It will most likely be bullish in tone. However, I am anticipating a spike higher and then a correction lower on a “buy the rumor-sell the fact” trade.
We’ve come so far in the past 6 trading sessions. Dec corn rallied 50 cents from its contract low before the acres report. Funds have now gotten net long wheat, after riding a monster short for months. An 80 cent rally on high protein wheat, combined with weather issues around the world, and the situation which settled out in France spurred by massive short covering. AS of this morning, the funds were estimated to be slightly long (about 3000 contracts). Will they get whipsawed here a bit? I am thinking yes. Longer term, we are looking at a possible nice Summer rally in the grains. Will the weather co-operate? What will the yield look like? I saw a picture on July 5th of ten foot high corn in central IA…
In the meantime, I want to buy dips. Resist the temptation to chase this market. We’ve had a 50 cent rally in CZ since the last number… I would look for a 20 cent breather, to chase out the new, fresh, weak longs. When they lose their 20 cents a contract, and puke out, be willing to step in and take the other side.
We have a long growing season ahead of us. Buy dips and sell rallies. Dec Corn has resistance at 400, 406 and then most likely every dime up to 450. Pro’s will be trying to pick tops to sell, to catch the short term wash-outs.
I like the beans to rally another dollar, maybe up to the 11.00 level I am not so sure about a rally up to 12 or 13, but it sounds like enough beans are not liking being too wet so far this year. That will be enough to warm the hearts of the bulls.
It July 8th. We can kill this bean crop 5 times between now and the end of August.
Boil it down to this. Buy dips, but don’t forget to be disciplined in your loss taking. If you get a good profit, lock it in with a trailing stop. Better yet, scale out along the way, while keeping a trailing stop..
Now for the stock indexes.. Cash S&P looks to be drawn back to 1,100 level, while the Dow, I believe will rally back up towards the 10,450 level. Why? Because the negative news is out. CNN and CNBC had a ton of articles this July 4th weekend talking about 9800 being a key point which “failed to hold”.. Good Lord, fade popular opinion on a regular basis if you want to be on the side of profitable trading. Robert Prechter was at it again, saying it was time to buy a coat because winter was coming. The only thing that is coming is a nice fat check to him from his loyal fan base of subscribers who pay him to make them feel bad with his bearish doom and gloom. Prechter has been predicting the dire end over and over again, with his super cycle analysis, Gann Wave, etc. etc. etc. A bearish report from him should be an automatic key to buy a cheap, out of the money call.
Will he be right eventually? Absolutely. And then he will use that one right prediction to sell more newsletters and books to his fan base. Some readers are natural bears, some bulls. Each has their favorite analyst. However when a perma bull start talking about Dow 30,000 a few years ago, that was a sign of “irrational exuberance” to steal a phrase.
The same holds true, for when things look their worst, the bearish commentators are getting the print and screen time. Its just human nature. Bulls should hope for more analysts to get on CNN talking about Dow 150… That will be the nail in the coffin of the bears.
I believe, for what its worth, we will continue to have sideways to higher chop in a 1000 to 2000 point trading range, all the way through the coming elections, and further more through the coming Presidential Election Cycle.
However, each 300 point up move will bring out the bulls, while 300 to 500 point sell offs, will bring out the guys wearing the sign boards reading, “The End Is Near…Repent”…
Both extreme camps are groups to fade.
Good Trading
