Back in the 1980’s there was a commercial for a Ginsu knife. The ad copy was “it slices! it dices!”. That is exactly what December does to futures traders.
Lets face it, the only people still actively trading are trading because they had a lousy year. That’s warning sign one. If you had a good year, you are booking profits and looking ahead to 2014.
People tend to trade the opening and the close, while spending the afternoon on the computer or in the bar having “business lunches”. Its the time of the year where you are looking at dropping cash for your wife and kids for X-mas.
In the 25 years I have been in the business, with out a doubt December is the worst single month to trade.
So for that reason, I am not a big believer in having any sizable positions on for December.
There are only really 12 trading days left in the month. between the 20th and the 30th there is so little trade its hard to even count them.
December has a tendency to punish the bulls and the bears. Rallying sharply, breaking sharply. Bearish news met with rallies, bullish news met with breaks.
Some Technical Levels to look at in the beans and the Dow:
Beans: Jan beans got bearish news from China rumors or truth of cancellations of previous shipments. It started with 3 to 4 cargoes of corn being turned away for non GMO. That sparked fears that more cancellations were ahead.
If we get a break to 13.00 that would be a level to buy. A tight stop would be needed, in case we take it down to the 1275 support from the older trend line.
that being said, we seem to be trying to hold here at 13.13. If you see the volatility in the past 2 weeks, 1) rallying 80 cents, breaking 34 cents, and then rallying back 20 today, you can see how choppy the market actually is. Its very important to keep your size small if you are trying to trade the flat price. The smaller the better when its whipping around like this. Respect the risk and shoot to take the meat of the move, not the entire move.
As for the Dow, we continue to climb the wall of worry. There is a hell of a lot of air between these record highs and anything resembling a Trend line of support. Figure 850 pts of air… However, given the fact that we have rallied 3K pts this year, and have actually rallied 3,521.. The low on December 31st 2013 was 12,641. the high on last Friday’s record tick was 16,162.00… Basic math suggests that a 20% correction would be 700 pts. That pencil out at 15,400 down side support. Food for thought if you are wondering how much a cleansing sell off could slam the Dow.
