We have had a drastic decrease in volume and open interest in a lot of commodities across the board. Cattle is a classic example, and I look at a contract like cattle like the canary in the coal mine. Its not widely followed by anyone outside of the investment community. Volume is down. Open interest is down over 150K contracts compared to where we were last year.
The question is why?
I would guess its a combination of 4 things. 1) the continuing repercussion of the failure of MF Global and the looting there of customer segregated funds. 2) The collapse of PFG, once again, the looting of customer segregated funds and 3) the generally reluctance of so much money on the sidelines to do anything in front of this contentious election and 4) the general mess that High Frequency Trading crew has made of the markets.
Ok, now that I have vented, lets look at the Dow Position: WE have dropped 238 points from last Friday’s high at 13, 599 til today’s low tick so far at 13,361. Stay short. move buy stops down. Take profits on up to 1/3 of the position. If 13,300 doesn’t hold as support, we could flush down to 13,118, which was the low on 9/11.
Tomorrow at 730 AM, we have USDA report. I’d have resting buy and sell orders at the limits, hoping to get filled on an initial panic from any surprise number.
That’s about all.
CER