I had an interesting talk this AM with a trader who I think is one of the best in the history out here in Chicago. I won’t mention his name. He mentioned that the market reminded him of 1980, where the commodity market took a sudden and unexpected down move, while the stocks held firm.
That commodity sell off was a leading indicator of underlying problems which the other markets ignored. If you remember 1980, we had high interest rates and we moved into a recession, which we later rebounded from sharply.
Bottom line, this sell off in the grains after what should have been bullish news, with the deal in DC, is troubling from a bull perspective.
Its early to tell, but if we keep leaking in front of the USDA on fund liquidation, then we could have a ways to go. When markets move lower in the wake of what should have been bullish news, you have to look for the downside.
How would you feel about another 80 cent move lower in CZ 13? Another 1.30 lower in SX 13? Another dollar lower in WN 13?
Its possible if you look at the charts and do a “what if” scenario.
I turned bearish grains yesterday.
That means I am looking to sell rallies, and cover profits on dips. I want to maintain a net short grain position.
CER