Corn made a new 2-1/2 year high at 666 1/4. that marked a 1.46 rally from the November low, and a 71 cent rally from the January low.
Profit taking is in order.
If you’ve been reading my blog, I have been a cautious seller of new highs, ALWAYS entering a buy stop when entering a new short position.
I personally sold corn yesterday, when we started melting after the opening. I have moved my buy stop lower to ensure a profit.
Technically, 6.30 was 1/2 way back. I covered shorts there this morning. I want to cover more shorts at 6.22 which is 62% retracement, and in fact, I will be a buyer from 6.22 down to 6.18.
Fundamentally, we are still in a major uptrend in both Corn and Beans. At some point, we’ll find out it farmers will plant more corn than beans. Most farmers, if they have their druthers, would rather plant corn than beans. Will producers plant cotton instead of beans? With cotton at record highs that will have to be a consideration.
Only time will tell if this Key Reversal turns into a selling orgy for the funds. I have no idea. I would be selling rallies, and covering on dips. That’s my personal preference.
As for the Dow, 10,800 was my initial sell area. We took a little heat, but I am currently short at that level, after getting in on sell stops.
I like entering the market on buy and sell stops. Very often that’s the only way to get the trigger pulled on an idea, especially if the markets are volatile.
I still feel that the market will be drawn to that 11,000 print in the Dow and the 1300 print in the S&P.
Quite frankly, I don’t think we have had a lot of business so far this year in the markets.
January has been relatively sleepy. We have not had any 200 or 300 point ranges in the Dow yet. No 20 handle days yet in the S&P’s. I think those will come, but for now, the market seems to be “hanging fire”.
That’s an old expression from when cannon gunners would light the fuse, and wait. Very often, if the cannon mis-fired, then a lucky gunner would get to go and re-tamp the cannon ball. Every so often, the gunner placed his hand or head right at the business end of the cannon at the worst possible time, and would suffer the consequences.
As traders, we have the luxury of getting into and out of positions at our discretion. When the markets are not trending in a manner which gives us opportunity, there is absolutely NOTHING WRONG with sitting and waiting. The market will wake up and give bulls and bears opportunities. Only pigs get slaughtered. So my advice right now would be to sit tight. Trade by appointment only. Trying to make trades when there are non presenting themselves can be dangerous. I for one don’t want to be the guy who has to go and re-load an already loaded cannon.
That is all.
CER