"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, October 6, 2014

Macro Trade Reverses from Friday

This set of comments will be brief as I am extremely busy today.

Friday's jobs numbers sent the Dollar soaring and the commodity complex reeling. Today, that trade is being reversed with the Dollar sinking sharply lower and the entirety of the commodity complex is now soaring.

If you ask me the reason for this you will get a simple answer: "Beats the hell out me". I have no idea what is going or why but that does not matter as the funds are covering shorts or buying like mad in the commodity complex for today.

In looking over the Board, the only commodities I see in the red today are natural gas and feeder cattle. Everything else if going mad.

What we get tomorrow is anyone's guess but larger scale traders are more than likely looking to sell rallies.

Tuesdays are famously called "Turnaround Tuesdays" in this business. We'll see if it lives up to its reputation tomorrow.

One big short covering squeeze day does not reverse a trend.


  1. As of right now, this is the biggest daily range in Soybeans in 51 sessions.

    Funds have bought 10-11,000 contracts of corn, 8-9,000 soybeans, 4,000 wheat, 6,000 soyoil and 3,400 soymeal.

    with the algos and hedgies markets move to levels much faster, like corn 332 and beans 940..

    this is great getting movement like NQ up to 4040, down to 3997, now 4007. looked like a very poor last hour in europe set SPX down, and of course the high was a SPX 50-day MA test.

  2. Settlements Cattle: V 163.05 up .065: Z 166.30 up .425: G 166.10 up .55: J 165.075 up .775
    ..contract high perhaps in july
    Settlements Hogs: V 107.175 up 1.575: Z 95.875 up 2.85: G 92.75 up 2.10: J 93.00 up 1.70

    SI needs to 'regain the range' above 9/22 low 17.34... stops at 17.14 for longs.
    GC stops under 1204 or if willing to take more heat under the 1200 round number.

    GC SI seasonal down this month, but they didn't do the usual up last month.

    1. 77; AT this point you are beginning to annoy me. We all know how to read various wires and so forth, and I for one do not need to read whatever you lift from whatever sources, so kindly cease cluttering up this fine blog unless you have some personal input or thoughts on the mkts. Otherwise, give it a rest. Thank you.

    2. i appreciate your posts. folks who don't can scroll down. no problem.

  3. I think this is the ideal day for Bo Polny to send a new newsletter "I told you so!!!" claiming that he called the bottom and it held lol.
    Have a nice day,

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    2. This comment has been removed by a blog administrator.

  4. There is no real sanity in any of these markets and once a correction begins it will take them all down big time. Then the penny will drop and anything tangible, like land, commods, PMs etc will rise a considerable amount. We will then no doubt get the I knew this was coming comments from a few, Mark will disappear and will never be heard from again and some level of sanity will be restored to the markets. Rates will rise as they always do in the end and we will start the whole process again!! Mind you this time it will take a long time for confidence to be restored as the drop will take place in stages as it has with the miners until no one is left standing. A few will become very rich as always. History repeats and if we do not learn from it then it will keep doing so.

  5. David B, you are right I think about rates and you do not make mention of it, but I personally think the debt mkts are far smarter and thus more important than the pm's, commods in general, and finally stks. As far as the rest of your thoughts go, well, I just do not know, as I fear a big time train wreck coming and with it, a huge deflationary puke, but what do I know?


    surely to be posted any minute by Wild Turkey Bill Murphy

  7. The Tulip Bubble.

    In 1593 tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.

    The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!

    At the peak of the market, a person could trade a single tulip for an entire estate, and, at the bottom, one tulip was the price of a common onion.

    As it happens in many speculative bubbles, some prudent people decided to sell and crystallize their profits. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. The price began to dive, causing people to panic and sell regardless of losses.

    Dealers refused to honour contracts and people began to realize they traded their homes for a piece of greenery; panic and pandemonium were prevalent throughout the land. The government attempted to step in and halt the crash by offering to honour contracts at 10% of the face value, but then the market plunged even lower, making such restitution impossible. No one emerged unscathed from the crash. Even the people who had locked in their profit by getting out early suffered under the following depression.

    The effects of the tulip craze left the Dutch very hesitant about speculative investments for quite some time. Investors now can know that it is better to stop and smell the flowers than to stake your future upon one.

  8. Or there is the South Sea Bubble of the 1700's. Any of the following sound familiar?

    For the British, the eighteenth century was a time of prosperity and opulence, meaning a large section of the population had money to invest and were looking for places to put their money. So, the South Sea Company had no problem attracting investors when, with an IOU to the government worth £10,000,000.00, the company purchased the "rights" to all trade in the South Seas.

    The few companies offering stock at that time were all solid but difficult investments to buy. For example, the East India Company was paying out considerable tax-free dividends to their mere 499 investors. The SSC was perched on top of what was perceived to be the most lucrative monopoly on earth.

    The first issue of stock didn't even satiate the voracious appetite of the hardcore speculators, let alone the average investors who were assured of this company's coming dominance. The popular conception was that Mexicans and South Americans were just waiting for someone to introduce them to the finery of wool and fleece in exchange for mounds of jewels and gold! So nobody questioned the repeated re-issues of stocks by the South Sea Company--people just bought the expensive stocks as fast as they were offered. It didn't matter either to investors that the company wasn't headed by experienced management. Those who lead the company, however, were born public relations directors, who set up offices furnished with affluence in the most extravagant quarters. People, once they saw the wealth the SSC was "generating," couldn't keep their money from gravitating towards the SSC.
    Not long after the emergence of the SSC, another British company, the Mississippi Company, established itself in France. The company was the brainchild of an exiled Brit named John Law. His idea wasn't so much based in trade, but in switching the monetary system from gold and silver into a paper currency system. The Mississippi Company caught the attention of all the continental traders and gave them a space to put their hard-earned dollars. Soon the worth of the Mississippi Company's stock was worth 80 times more than all the gold and silver in France. Law also began collecting defunct companies to add to his massive conglomerate.

    This success on the continent stirred British pride, and, believing that British companies could not fail, British investors were desperate to invest their money. They were blind to many indications that the SSC was run too poorly to break even (whole shipments of wool were misdirected and left decaying in foreign ports), and people wanted to buy even more stocks. The South Sea Company and others made a point of giving people what they wanted. The demand for investments caused IPOs to sprout out of everything, including companies that promised to reclaim sunshine from vegetables and to build floating mansions to extend Britain's landmass. They all sold like mad.

    Eventually the management team of SSC took a step back and realized that the value of their personal shares in no way reflected the actual value of the company or its dismal earnings. So they sold their stocks in the summer of 1720 and hoped no one would leak the failure of the company to the other shareholders. Like all bad news, however, the knowledge of the actions of SSC management spread, and the panic selling of worthless certificates ensued. The huge hole in the south sea bubble also punctured the Mississippi Company's unrealistic value and both came crashing down.

    A complete crash, which would be heralded by the folding of banks, was avoided due to the prominent economic position of the British Empire and the government's help in stabilizing the banking industry. The British government outlawed the issuing of stock certificates, a law that was not repealed until 1825.

  9. Charles Mackay's work I believe, David B.??

    1. Both articles were by Andrew Beattie Steve. Just shows there is nothing new in the investment world.

    2. I should add the following quotes from Charles Mackay

      "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

      "We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first."

  10. ZB ZN better better better!

    ZW 5.00 round number must have had stops above, so wheat jolts ZS ZC out of the z-day and into the common '3 day countertrend bounce in oversold mkt pattern'

    eur/usd went down 11 weeks straight, or was it 12 wks. be patient like a fisherman looking for 127.0 to 127.15 to sell again.

  11. Dec14 corn achieves 38.2% Aug-Oct retrace at 342'2 . over 350 the 50-day MA,

    Nov14 soybeans 20DMA at 947'6..open gap was from 9.56-954 3/4. (there was alot of sellers up there on the level 2 at the gap fill.

    GC 1214 was a little low, but really needs over 1245 to 'regain the range'. SI the 17.34 was a good number.

    XAU HUI following SPX etc today. you know THE buy on SPX isn't til 10/27-11/3 zone for the usual 6 month move. (the big money will be hitting SPX then)



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