“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"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


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Friday, November 21, 2014

Corn Comments

Trading the grains the last two months has been akin to "Ted and Bill's Excellent Adventure". We have seen hedge funds pour money into the corn and bean markets in spite of the fact that we are dealing with record crops heading into the end of harvest season. The speed at which they have switched sides in these markets, going from big NET shorts to big NET longs has been breathtaking. The end result has been that speculative buying has caused farmers to become stubbornly bullish refusing to let go of their freshly harvested crops as they look for even higher prices.

The move higher was led by the meal, which dragged the beans higher and that in turn pulled corn higher. Of course, it does not hurt the bullish cause when China comes in and gorges on US beans. Grain traders are essentially watching to see when they will start cancelling US bean orders and move to sourcing elsewhere.

In the interim, hot money flows have forced a substantial amount of short covering as there was simply not enough commercially-related hedge pressure to absorb the buying from panicked shorts and bottom-picking bulls. Throw on top of that the usual index fund buying and you can see the result - corn prices have come well off of their late September lows.



The question now becomes - what next? Farmers have been holding back newly harvested grain in those nice shiny new grain silos that they were able to afford when corn prices were above $7.00 and bean prices were in the teens. that has keep the price relatively supported. But while US farmers are the best in the world when growing food they are oftentimes rather poor when it comes to marketing (pricing) it. No matter how one measures it, there is a HUGE amount of grain out there in the nation at this time. Farmers seem to forget this.

They get bulled up at precisely the wrong time and depressed at the wrong time. It is human nature and good business sense to want to obtain the highest price possible for one's goods - the problem occurs when farmers start thinking like speculators instead of business men. Specs take on risk in the hope of making gains - sound business policy involved AVOIDING or MINIMIZING risk as much as possible.

Farmers who are watching prices at the Board working higher and thinking: "I am not selling anything as prices are going higher" are essentially gambling with their farm's income. It makes sense, considering the soaring US Dollar (which is making US corn extremely expensive compared to corn from other source nations ) and the fact of the massive harvest and the fact that this rally has been primarily driven by short-covering (see below) to start taking advantage of this rally to price some of that newly harvested grain.

If a farmer is inclined to try holding out for even better prices, they are betting that weather problems are going to hit S. America or some other extraneous event (like the binge buying related to a modest Chinese interest rate reduction) will provide even better prices at which they can sell later on, but what if none of that happens? What guarantee do they have that weather will not be benign in the southern hemisphere? They are essentially rolling the dice and hoping and that is not a sound risk management plan. It is one thing to hold off some grain for "gambling stocks" but an altogether completely different ( and foolish in my view) thing to not price any grain at all.

That being said, take a look at the chart and notice the move off of the lows. This shows closing prices only so it does not reflect the fact that the front month contract touched $3.89 last week.


Now look at the Commitment of Traders report through this Tuesday where I have broken out the large speculative component and charted their long and short positions.



I have posted this chart up previously but wish to do so once more to make a point - notice that the number of long positions in this category have not varied by a substantial amount since late July/early August.

But look at the red line showing the short positions and note how incredibly volatile it has been. Shooting sharply higher as prices fell and then dropping off equally sharply as prices rose. What this tells us is that it is large spec activity that has been behind the move lower in corn since May of this year and the move higher in corn since October. A goodly portion of the short positions they put on over a 5 month period since late May, have now been taken right back off since October.

The question that should be asked by any farmer is simple - once these big specs are finished covering shorts ( buying back those short positions and closing them out) just who is it that is going to pay these kinds of prices for corn given the massive size of the crop out there?

Today might have been a sign that this short covering has run its course - it is hard to say given the horrific volatility in these markets of late - given the sharp drop heading into the closing minute of trade today. If it is, and again, it is not yet clear, farmers who failed to price any grain during this recent rally are going to end up kicking themselves for not doing so especially considering the amount of revenue that they might have passed up by not pricing any of their grain.

We might have to wait until after the first of the new year before we really see some heavier grain movement off of the farms, as there might be some farmers holding off selling for tax reasons. That being said, there is no guarantee of this rally lasting that long, especially with the US Dollar hitting a 51 month high today.

US corn, driven higher in price by speculative short covering, and a soaring US Dollar, are not the ingredients that go into the recipe for making US origin corn cost competitive on the global market.





71 comments:

  1. Commodities generally move in cycles over the past 200 years. The last upswing was driven, in large part, by emerging markets. Especially China. And now, China may help fuel its down swing from 2011 peaks. Here is an article that talks about the problems in China. China is in a MASSIVE real estate bubble.

    "The End of China’s Economic Miracle?"
    http://online.wsj.com/articles/the-end-of-chinas-economic-miracle-1416592910?ru=yahoo?mod=yahoo_itp

    ReplyDelete
  2. It will not help you trade grains effectively if you rely on some sort of macro "commodity cycle"

    ReplyDelete
  3. Inflection point in $ vs Gold last week ? : both up ?
    If it lasts another week that is a seminal change ?

    ReplyDelete
  4. 100 year corn price chart.
    Just change the calendar parameters to 1912 to present.

    http://www.tradingeconomics.com/commodity/corn

    ReplyDelete
  5. eric

    "China is in a MASSIVE real estate bubble."

    no its not

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
    2. O-Feel-Ya; I think the Chinese real estate bubble might be one of the single largest asset bubbles in the history of the human species. Makes the US housing bubble look like a non-event.

      1. The importance of China's property market and construction cannot be underestimated—Construction in China accounts for over 30 percent of its GDP (compared to 5% for US) and directly affects other sectors such as banking. This boom over the last 10 years was a direct result of how the Chinese credit expansion drove the housing market and when that slows it has a direct impact on real estate, and the GDP. Furthermore, when calculating GDP, the Chinese government takes into account the construction of homes but not their sales—it isn't looking at all the vacant apartment complexes and stores. This means the Chinese economy is not performing as well as purported. At some point this will come back to bite them.

      2. Since 2008, China's money supply expanded by more than threefold and most of that money has gone into real estate.


      3. Much of this boom was a result of the communist party choosing to construct empty cities. These are referred to as Ghost cities – as these central planners believe in the mantra “If we build it, they will come”. Because these central planners believe they can prop up their economy through construction, there has been a near endless number of construction projects all over China. They are building cities for which NO ONE lives in. Completely empty. But how long can this last? Here is a very good episode on 60 Minutes that discusses these ghost cities; http://www.cbsnews.com/videos/chinas-real-estate-bubble-50142079/

      4. Many of the homes in the ghost cities across China are on sale for over $50K a piece – except no one wants to buy them.


      5. Beijing alone has over 3 million vacant homes - with the average home selling for $70K – in an area where the average worker makes only $6K per year.

      6. Chinese home prices have tripled since 2000. In some cities they have gone up by more than fivefold.

      7. At some point China will begin to deleverage from all the massive amounts of debt as the credit crunch sets in; When property developers can't get more credit, they have to slash prices to unload their unsold inventories (and pay back their debts), which gives investors second thoughts about whether to continue plowing their money into property

      8. Sales dry up, prices fall, new housing starts dry up, construction dries up, sales of construction equipment, concrete, and steel dry up, land sales dry up, local government revenues disappear and they can't pay their debts ... in other words, falling asset prices undercut the basis for both past and future lending, and you've got a real system-wide problem in China that will surpass anything we’ve seen in America or Europe.

      Delete
    3. You have absolutely no idea what you are talking about Eric; just because you read something on the internet doesn't mean it's true

      Have you ever been anywhere even remotely close to China?

      Delete
    4. I own 6 properties in China, btw, and if I had more time (on a forum not dedicated to commodities trading) I would happily (and comprehensively) debunk every one of your points.

      Delete
    5. AN Ping -- OK ... if you are so well educated about your nation -- then prove to me how this documentary from 60 minutes is completely false. let's see how smart you really are.

      http://www.cbsnews.com/videos/chinas-real-estate-bubble-50142079/

      You ought not have so much faith in communism and central planning. Never has worked in human history, and never will.

      Delete
    6. BTW - owning 6 properties does not make you an expert. Plenty of property owners in the US also thought they were "experts" and they were wiped out. Same is likely to happen to you.

      Delete
    7. Also - one thing I did not mention. China is in REAL serious trouble because manufacturing is moving out of China and back to America. YEP, China is one GIANT BUBBLE. A fad that is about to end.

      Delete
    8. Eric

      you asked for evidence debunking the 60 minutes documentary: here are 3 links

      http://www.vagabondjourney.com/zhengzhou-zhengdong-china-largest-ghost-city/

      http://www.cityclock.org/ghost-cities-in-china-on-the-rebound/#.VHLN0IusWn0

      http://www.forbes.com/sites/greatspeculations/2013/07/16/china-may-have-ghost-cities-but-rapid-growth-is-no-apparition/

      Eric, you are wrong, and if Dan's site teaches us one thing it is surely the need to focus on the facts on the ground, rather than what people would have us believe, or on idle fantasies of what we wish were the case

      China is not collapsing, even though people have been saying it is for years: try this wet-dreaming clown for example, writing 30 months ago - http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100016724/chinas-property-boom-has-peaked-forever/

      Delete
    9. LOL...you sir, are a true joke. You live in a fantasy land of Mickey Mouse and Donald duck - the rip off kind of course - that China has stolen from American Walt Disney. You see, China is capable of literally nothing, but stealing from those nations that are advanced. Because of this, China WILL ALWAYS remain a sad pathetic 3rd world nation. And China's people, including you, will be nothing but sad Bees in a collectivist bee hive.

      Delete
  6. Dan, I apologize in advance for this post being way off topic. I am working on an idea and I was hoping to ask for your help based on your knowledge of the markets.
    I belong to Costco and I am pleased with the savings I get from being a member. So I had this idea after watching the price of gasoline dropping. I call Costco and asked them if they could offer members a gas card that would allow them to purchase gallons of gas at the current price offered by Costco. Then use this card to purchase gas until the gallons are used up. I told them that this would be a way for "we the people" to take advantage of lower prices by locking in what we anticipated would we would use over the next of month or so. We could also think of purchasing gallons of gas as better way of savings(preserving purchasing power). I believe you get the gist of my idea. So I have been in contact with one of the vp's of Costco gas. She has told me that their system is not set up to provide this, but it is being worked on. She also told me that she spoke with the Costco gas buyer, a separate division, and they told her that they would have to "hedge exposure by buying a futures call option". So my question to you or the board is, could this gas card idea work using the futures market?

    ReplyDelete
    Replies
    1. It sounds like something that could complicate Costco's bottomline (losses if/when gasoline spikes) and require more work on their part administratively then necessary when they already probably discount their gas price to their members.

      I'm guessing most people would buy lots of cheap gas cards when gas prices are low (like now) and not so many when prices are perceived to be high.
      If I'm Costco or any other similar large retailer the .10-.20 cent/gal. discount I already offer my customers is sufficient enough without needing to start a actively hedging how I order my future gasoline orders when price might swing wildly one way or another.

      Delete
    2. I am sure it will work, especially if Costco takes advice from Trader Dan :) . IMO the only thing that Costco need to ask themselves is- Are they a for-profit business or a charity organization?

      Delete
    3. There were attempts at this same thing, but in reverse, back in 2008. Prices were on a moonshot and people wanted to "lock in" their gas or heating oil or whatever, before it went any higher. It was done here and there, often at the local utility or co-op level, but of course the herd got it wrong and prices plunged and everybody who thought they were being so smart took a bath.

      Delete
    4. Silverwood-
      I know that H.E.B. in Texas has retailed gasoline for a while in some of its locations, as has Walmart. It was a big idea some 20 years ago (mega-retailers selling gasoline). In Walmart's case it also dovetailed into RVs using Walmart's lots for overnight parking. They still retail in some locations.

      No doubt Costco has looked the idea as well. I would guess in most markets the advantages of being associated with a major refiner outweigh those of a major retailer.

      Delete
  7. Thank Dan. I don't know futures trading but this will help me to figure out things in forex market where USD could not be ingored

    ReplyDelete
  8. There's some douchebag on ZH right now claiming that the Fed must...MUST, be buying S&P Futures to manipulate the market, because...well just BECAUSE!! Evidence? No. It's just gotta be! He claims to be a veteran trader and he's never seen anything like it, and if you read between the lines of his incredibly stupid rant then you can pretty much see that he's been trying to short stocks, and getting his head handed to him, for years, because...well just BECAUSE!!! Doesn't everybody know that the world is going to hell in a handbag and there's no way stocks can go up? I mean, it's obvious from everything the guy sees and reads (self selection confirmation bias alert!), that we are all doomed...DOOMED!!

    Seriously, every time a trader blows up from a series of bad trades, where he has totally lost the thread of the market, doesn't his ego demand that he find a bogeyman? Can't blame one's self for being an incredible loser. Can't fess up to da wife. Must blame outside evil forces. 1800's Fabian Socialists? C'mon man, get a grip on yourself! And shame, shame, shame, on ZH for printing such tripe. Totally retarded.

    And even if (a big IF) he were right, my only response would be "Then get LONG, dumb ass!!!"

    And no, I'm not linking it, because I'd rather die than send traffic to that evil, evil, website.

    ReplyDelete
    Replies
    1. Eric, of course the site you are referring to is quite crazy of course, just like kwn. However, how many charts have you looked at over the last how many years? Stks are clearly bogus, and any attempt at correlation between mkts and main street, the real world are total bullshit. Take care if you are looking to get long in here, because one of these nights, stks will break 25% overnite, just like in '87. Enjoy your weekend.
      es

      Delete
    2. Correllation between Main Street and Wall Street has always been terrible, with horrible lags, catching the inexperienced and unwary. So many times, good news is bad news, bad news is good news. There is nothing new under the sun about this.

      The difference now is that in the old days, if a guy went belly up, he did it quietly and alone. Nowadays, every asshole has the whole internet at his disposal where he can vent about how this makes no sense and nobody has ever seen anything like this ever, ever before, blah, blah, blah....

      Delete
    3. In '87, I was in grad school, and didn't have a clue about what had happened until I got back to my car in the ramp, about an hour after the close, and caught the news at the top of the hour on the radio. I grimly held on, while things drifted lower, lower, until finally I just couldn't take the pain any more, and sold my mutual funds (yup, got on the phone, in those days, though I also remember sometimes you had to get signature guarantees and mail the crap in). Hindsight, I sold AT THE EXACT LOW, 12/4/87. And stayed out for years afterward, while the market did nothing but grind higher in the face of relentlessly nightmarish "fundamentals". All the while reading confirmation bias garbage from fools like James Dale Davidson and Bill Bonner. I learned some valuable lessons about how wrong the "experts" can be, and how the "fundamentals" are garbage.

      Every runup and break in the market, every panic in the 90's, 2000, 2008, has paled in comparison to that experience for me.

      People who got killed in 2008, and have been scarred for life, and sought refuge in metals and got killed again, are repeating the same mistake, only worse. They will stay out of stocks for another decade, out of fear, and miss the run of a lifetime, while telling each other to "keep on stacking!".

      1987 was my defining moment. They say your first loss is your best loss...

      Delete
    4. Yup, I got hurt in 2008. But if you look at the period 1/1/07 to 12/31/09, I beat the S&P by more than 45 points. I got hurt again in the metals bubble, but again, I got out of the worst of it (silver and miners) a lot sooner than a lot of other folks and lived to fight again another day. More than just lived, actually doing better than ever. Yes, I learned some valuable lessons in 1987.

      Little known fact: Even the most rudimentary trend following system, the 200 day moving average, would have gotten you out of stocks a few days before the Crash of '87. The market actually peaked in August, so it's not like this was something out of the blue. You could look it up. I still have my hand made charts and calculations.

      Don't Fight The Tape.

      Delete
  9. I am making a prediction.

    Due to the wild gambling habits of the Chinese, combined with a peak in their real estate prices, I believe that the Chinese equity markets will end up becoming the greatest speculative mania in our lifetimes.

    Just think of 2 - 3 billion Pai Gow gamblers who suddenly realize that better money could be made by buying and selling stocks on their smartphones.

    In the meantime, the Greatest Stock Market Rally of all time continues unabated. Because the U.S. Consumer has never been stronger, due to the most ideal set of economic conditions which most would have believed to be truly impossible.

    I heard Jack Rivkin being interviewed on Bloomberg Radio last week, talking about how the Fed Funds rate was at 22% back in 1982, and the Dow had bottomed at 800.

    Could you imagine being a reporter back then, and telling guys like Jack Rivkin back then that by 2014 we would see:

    - Dow over 17,000

    - Gasoline prices at 4-year lows

    - Fed Funds rate at below 0.5% for 7 consecutive years

    - 10-yr. yield under 3.5% for the longest period in history

    - Bond market in a 35 year bull market

    - Zero inflation

    People would have told you that this was crazy.

    Yet, here we are, on the cusp of the greatest economic boom in U.S. history, fueled by the most ideal financial backdrop imaginable.

    Get ready for the good times.

    ReplyDelete
    Replies
    1. Yes, it's a secular bull market. Prolly got a decade to go, give or take. And a decade of the doomsayers just absolutely beside themselves with rage. 'Cuz they missed it, and will never get this chance again in their lives.

      Delete
    2. The lost opportunity cost of sitting in dead money metals for the next decade will be astronomical. Yes you, your wife, and your kids, will be eating catfood for the forseeable future because you thought you were so smart and decided to bet the farm on the end of the world. Sleep well, losers.

      Delete
    3. "I believe that the Chinese equity markets will end up becoming the greatest speculative mania in our lifetimes."

      I agree with that. That's why I was recently linking those articles on the
      Hong Kong markets opening up to foreign investors this past week who'll now have access to invest in Chinese companies via HK.

      HK access is the first drip in the opening of the floodgates that eventually will happen when China directly opens up all their markets to foreign investment capital.

      The yuan becoming more convertible and available worldwide only makes the idea of investing in Chinese equities more attractive to foreign traders.

      Delete
    4. China as a whole is one giant bubble. They had a good 20 years with manufacturing taking advantage of low wages. But, 2008 has forced them to take a hard look at "total owned costs" of doing business. And they have found that with low wages, comes cheap unskilled workers - and lots of corruption. That coupled with proximity to end consumers has prompted manufacturing to begin moving from China back to America. Coupled with the "Great American Energy Revolution" this could kick start one of the greatest economic boom periods in American history........the opportunity is there, now we need politicians to help kick it in gear.

      Delete
  10. Amazing how at TFMR people still keep referencing the moment when they became "awake". LOL. What they are really doing is marking the moment when they totally went into a coma and destroyed their own future. I used to care. Not any more.

    ReplyDelete
  11. The bond markets interest rates are still so low they are saying a recession has a better chance of happening than an economic boom.

    If an economic boom was coming interest rates would be going way up.

    The stock markets don't tell the truth on an economies strength, the bond markets do.

    ReplyDelete
  12. Eric,

    After witnessing the fastest, steepest, most incredible breadth surge off the October lows, when all the perma-doomers were screeching about a crash and meltdown....

    There are hundreds of stocks lifting out of multi-year consolidations, it is easy to imagine that what we are experiencing is very similar to 1968 - 1982 where the market is lifting up and out into a brand new trading range after years of going nowhere.

    Exhibit A is the monthly chart of Intel, its been in the same trading range for 10 years now and is just now starting to break out over the 2004 highs.

    And Intel's revenue and sales are 2.5x higher than they were in 2004, and in 2004 there was no dividend payment and the 10-year yield was over 4.5%.

    Which means we have a long time to go before reaching "bubble" territory.

    ReplyDelete
    Replies
    1. Yup. Check out this post from Josh Brown a year and a half ago. May of 2013. It seemed a bit over the top at the time. Maybe a bit too much, though that is Josh's style. Now it's all confirmed.

      http://thereformedbroker.com/2013/05/16/remember-this-moment/

      Delete
    2. And this: Barry poses it in the form or a question, over a year ago, but he knows the answer and so do I. The 2002 and 2009 lows were generational lows, never to be seen again.

      http://www.ritholtz.com/blog/2013/10/secular-bull-market-roadmap/

      Delete
  13. This is not the first time a country has used monetary policy to boost their stock markets to record high after record high before.

    Its a desperation policy used to keep things from deflating.

    ReplyDelete
  14. Don't try to explain the move in the market,it always too late. Just focusing some part of FA and starring to the chart, COT report, seasonals, sentiments and price action. Those will be enough for you to read the market. That all about Dow Theory 100 years ago. It can not be wrong

    ReplyDelete
    Replies
    1. I'm glad you mentioned that! I make a practice of continually educating myself with regular reviews of primary sources, and last night, I was reviewing Dow Theory material. It was absolutely striking how useful all that stuff remains.

      Those who whine endlessly about "broken markets", Fed "deception", "propping up mkts" etc are just making excuses for their own poor performance. Robert Rhea made this EXACT SAME POINT 80 years ago--fascinating how human/crowd psychology never changes, and is such a powerful tool for designing winning trading strategies--and how arrogant disregard of it leads to such predictable downfalls.

      I've given up trying to convince the chronic losers to let go of their insecure egos, and embrace humility in approaching the markets.

      As Livermore said decades ago:

      "I have been in the speculative game ever since I was fourteen. It is all I have ever done. I think I know what I am talking about. And the conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market!'

      Delete
    2. Good stuff by both of you.
      Any recommendations on a definitive book or source that really gets into Dow Theory? Thanks!

      Snowmageddon update: mid -40's Sat. and Sun. with some rain and breezy.
      Snow melting back and withering steadily.
      Unofficial high measurement in a surrounding Buffalo area was 88 inches!

      Delete
    3. You can begin with
      http://www.amazon.com/gp/product/160796628X/ref=pd_lpo_sbs_dp_ss_2?pf_rd_p=1944687682&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=0470240598&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=0FRCJP04K7KW9K9MDX37

      Delete
    4. Thanks Linh...that's one big link!

      Delete
  15. Asia FX view: China rate cut reaction short-lived, Tokyo holiday Monday

    USD/AXJ closing bared changed on Friday night barely despite the China rate cut.

    The reaction in Asia on Monday to the PBOC rate cut will hold the key. If the SSEC and other AXJ equity markets move higher it should support copper and iron ore futures and encourage carry trade activity in the FX market involving buying AUD, NZD and CAD against EUR and JPY. If Asian markets don’t react positively – AUD/USD will likely give back the gains made on Friday.

    ReplyDelete
  16. Lavrov accuses West of seeking 'regime change' in Russia

    MOSCOW (Reuters) - Foreign Minister Sergei Lavrov accused the West on Saturday of trying to use sanctions imposed on Moscow in the Ukraine crisis to seek "regime change" in Russia.

    His comments stepped up Moscow's war of words with the United States and the European Union in their worst diplomatic standoff since the Cold War ended.

    "As for the concept behind to the use of coercive measures, the West is making clear it does not want to force Russia to change policy but wants to secure regime change," Tass news agency quoted Lavrov as telling a meeting of the advisory Foreign and Defense Policy Council in Moscow.

    He said that when international sanctions had been used against other countries such as Iran and North Korea, they had been designed not to harm the national economy.

    "Now public figures in Western countries say there is a need to impose sanctions that will destroy the economy and cause public protests," Lavrov said.

    His comments followed remarks on Thursday in which President Vladimir Putin said Moscow must guard against a "color revolution" in Russia, referring to protests that toppled leaders in other former Soviet republics.

    ReplyDelete
  17. @DPH,
    Well, you could go seriously Old School, and read Robert Rhea's book "Dow Theory", which is an analysis of the 200+ original editorials which form the basis of the theory. What I was reading last night was some of Victor Sparandeo's writings on the subject, whom I consider invaluable, and whose books are full of all sorts of other useful trading fundamentals. All the above is available on Amazon.

    Study, study, study is my trading mantra. Only in this way can I gain the knowledge to make my own decisions. I've been at it for years, but I've never been bored--each day is a new beginning, and a new opportunity to learn.

    ReplyDelete
    Replies
    1. Thanks, appreciate that Rico.
      I'm about to look his name up.

      Delete
    2. Rico, why do you quote Livermore? He was a born loser and blew his brains out in the men's room?

      Delete
  18. The only study you need is to watch the tape and sentiment.

    The S & P 500 has been in a relentless uptrend for years.

    Each time there is a selloff, the put/call ratio goes through the roof and the CNN Fear/Greed Index plunges. In fact, the last selloff saw the CNN Fear/Greed Index plunge to ZERO, an ALL TIME RECORD LOW.

    Hilarious how at that time every doom blogger was screaming for "devastation" and "collapse" when any simpleton could have seen that based on the huge spike in the put/call activity, a vicious v-shaped bottom was imminent.

    It really isn't that hard.

    ReplyDelete
    Replies
    1. On the other hand, miners such as TRX and MUX have been in a 10 year downtrend since 2005 and the shareholders sentiment is getting close to suicidal.

      Delete
    2. Yeah, Mark--really nothing to it...

      Everyone's a genius in a bull market--even you.

      Delete
    3. Well said, throw a dart at a dart board of stocks and they all have gone up over the last few years.

      Don't fight the Fed as they say.

      Delete
  19. If central the banks all stepped away tomorrow and announced they are all stopping their monetary policies, I like the odds the S&P 500 would implode.

    Why are central banks bothering to do these extreme monetary policies if it does nothing to influence markets like was so obvious on Friday?

    Lol

    ReplyDelete
    Replies
    1. "The primary function of a central bank is to manage the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis"

      Delete
    2. That is a very true statement you make.

      Their old dual mandate should look like the below now though.

      - Price Stability
      - Full employment
      - and keeping the markets up :)

      Delete
    3. When we say propping up the stock market, what does that mean, or who does it benefit. Obviously Wall Street--but that also includes pension funds, who were in desperate shape as boomers begin retiring--so you could rephrase that to "The Fed is inflating the stock and bond market to prop up pension funds as the demographic mouse of boomers has nearly passed through the snake."

      Delete
    4. Whole bunch of gold bugs really dissapointed the economy isnt crucified on a cross of gold.

      Suck it up.

      Delete
    5. The central banks have to hold them up now as they will not stand on their own any more. Those days are over.

      Dow would be lucky to hold 10,000 without the central banks liquidity pump.

      Delete
    6. As I said, suck it up or learn to live with it. You got your QE to infinity so whats the compliant about?

      Delete
    7. Nothing short term anyway.

      Delete
  20. The markets could collapse overnite when you least expect it so I hope those suffering from " irrational exuberance " are properly hedged.

    ReplyDelete
  21. Sounds like an underfunded pipe dream from the start...
    ~☆~☆~☆~☆~☆~☆~☆~☆~☆~
    "How the EU Plans to Turn $26 Billion Into $390 Billion"

    By Rebecca Christie
    November 23, 2014 9:04 AM EST

    The European Union is planning a 21 billion-euro ($26 billion) fund to share the risks of new projects with private investors, two EU officials said.

    The new entity is designed to have an impact of about 15 times its size, making it the anchor of the EU’s 300 billion-euro investment program...(cont.)

    http://mobile.bloomberg.com/news/2014-11-23/how-the-eu-plans-to-turn-26-billion-into-390-billion.html

    ReplyDelete
    Replies
    1. I see the USDJPY is about to poke through 118 again.
      And the USDEUR opened down a bit and is still below Friday's 1.24 close but not by much.




      Delete
  22. all right futures reopen top of the hour: 'what's the buzz tell me what's a happenin'

    ooops eating wheat is eating roundup:
    http://www.thehealthyhomeeconomist.com/real-reason-for-toxic-wheat-its-not-gluten/

    the bedraggled euro is gap down about 20 pips. 1.2328, the October 2008 low eur/usd. interesting with GLD tonnage and HUI were challenging 2008 numbers at recent lows.

    US oil imports from Opec at 30-year low.

    prelim grains open interest corn -7,572 soybeans -756 wheat -10,516 soymeal +1,514 soyoil -1,316... December options expired Friday.

    looking at a continuation chart of soybeans it could form a right shoulder at 10.50.. the neckline the 10.00 round number!
    ...soybeans have further to fall than corn if the world carryout does pop up to expected levels, and the soybeans/corn ratio drops to historical 'normal' levels.

    the stock mkt tends to stay up for thanksgiving week, then gives it back the week after... but this year thanksgiving is late on the calendar so the week after is 1st week of Dec.

    ReplyDelete
  23. futures options expire tomorrow for GC SI HG RB HO NG:
    http://www.barchart.com/futures/expirations.php?view=options

    the cot in the metals wasn't bullish:
    Hedge funds extended their fastest exit from gold this year, cutting bullish gold wagers for a third week. Holdings tumbled 49 percent over three weeks, the most since December. Additionally, assets in exchange-traded products backed by the metal dropped to the lowest since 2009, as the World Gold Council said third-quarter global demand was the weakest in almost five years.

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  24. I think if the Iranian nuclear deal isn't reached (which I never thought was likely) it'll hasten Iran's inclusion into the SCO/ Shaghai Cooperation Organization where a security arrangement from Russia/China will protect Iran from attack by anyone.

    The SCO is Asia's version of a baby NATO that will one day pose the biggest threat to NATO since post-WWII. If the US/West & friends (SA & Israel) had ever hoped to take Iran down their window of opportunity is closing.

    Which makes Syria's downfall that much more important asap.

    ReplyDelete
  25. Watch 1.2360 for support on Euro

    ReplyDelete
  26. Lest we forget:

    From Barrons in 2009 - jim sold many more shares since, so less then 3% became less then 1.5%!

    "he has steadily sold TRE shares into the open market. He sold stock more than 50 times in 2008. Over the years, as the stock price soared, Sinclair and his family have reduced their TRE stake from 25% in 2002 to less than 3% now, company documents show."

    -Whats good for the goose is good for the gander.
    -Jimmy doesnt walk his talk.
    -Jimmy doesnt take his own medicine. 

    ReplyDelete
    Replies
    1. Last time I heard of him he said "Im fully commited".

      Delete
  27. japan is closed for holiday. the natgas was the big gap down about -5% on warmer weather.. so perhaps other items that some bulls were thinking weather might not have that input this week, as harvest will resume and cows might not need as much feed.

    dec bond futures options went off the board friday, and the offtake is that the zillions sloshing around the world want our treasuries.

    Someone exercised 8,502 ZB 142 calls after Friday's close (December OPEX) | that is an LARGE amount of 30yr Bonds .

    It’s a madhouse! A madhouse!

    ReplyDelete
  28. The "redback" cometh...
    ~☆~☆~☆~☆~☆~☆~☆~
    "China's ICBC to set up offshore yuan center in Los Angeles"

    http://mobile.reuters.com/article/article/idUSKCN0J605B20141122?irpc=932

    ReplyDelete
  29. the soybean weather mkt is red today:
    http://www.bloomberg.com/news/2014-11-24/wheat-advances-as-dry-weather-seen-hampering-crops-in-russia.html

    soybeans historical is up both day before and day after thanksgiving.

    trading platform switches to march in ZC ZW ZB they must now be 'front' as option protection is gone.

    OPEC’s much anticipated meeting is on Thursday... could be a black friday surprise for usa traders, that's why the bigs need option protection.

    SNB says if left alone they will neither sell or buy gold.

    precious has to be on guard for a potentially restrictive Indian central bank import duty or import limitation directly ahead.

    cheers!

    ReplyDelete

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