Today we have a half day and then on Thursday we start back up. With just 4 1/2 trading days left in the year, I’d be very careful putting any thing on.
We’ll start with the grains:
Wheat looks poised to take out $6.00. Below there I’d be looking to put on speculative longs to fade the herd who are going to try to press it lower.
Beans: Remain mired in a range between 13.13 and 13.50. Trade the break out, but look for a flush lower because the funds maintain a huge long position. If they need to bale, it could get ugly to the downside.
Corn: Stay away until the Jan 10th number. Herd is bearish, but that number could do anything to flat prices. Corn will most likely trade w/ the beans until then.
Stock indexes: I continue to look for the indexes to trend higher. Trending higher does not mean that we won’t get some gut wrenching and sickening corrections for the weak longs. The first good trend line support in the Dow is 15,800. The second is 14,800. The last is 14,500. Don’t mis-understand me. The trend is up. The market continues to climb a wall of worry and pessimism. Money flow, however, that has been on the sidelines in 2013 looks foolish now. That money should come back strong as folks try the old double-up-to-catch-up if they are fretting about missing out on the 30% gain in 2013.
See Trend Lines below :
When you are looking at new market highs, you have to look at technicals more closely. Fundamentally the markets are applauding what companies have done by cleaning out employees, increasing productivity, and increasing profitability.
For clients that are sitting on huge paper gains and are reluctant to protect these gains with some risk management strategies, I can only ask you to go back to 2007-2008 and remember that debacle when the Dow went from 14,300 down to 6,500.
Granted, these long-term trend lines are pretty ham-fisted; they don’t always work; but if we get a panic flush, we will head to those levels as a self-fulfilling prophesy because the trend line is visible to every one. Bulls, Bears, Fundamental traders, technical traders, winners, losers, contrarians, what have you; They all are aware of these broad trend lines.
Finally: Gold Dec gold took out 1200 again and stopped at 1188.70 This is just $6.00 above the June 24th low at 11.82 Below here, we have an old major low posted on 2/1/2010: 4 years ago down at 1137 and the 1100. Its really any one’s guess if the 1182 level will be a magical “double bottom” or not. I can tell you that if it does hold, in about a month , some analyst will be telling how his system predicted that that level will hold. Phooey. If you think it will hold, then buy it now and ride it against that old low. Bottom picking is a dangerous sport, but it can be very lucrative if you get it on the right way.
The chart above is a weekly chart pricing gold. Note the 1182 level where we are currently sitting.
That is the lure of a counter-trend strategy. When you catch the herd going the other way, you get very nice profits very quickly. This is why a lot of “professional” traders as well as “professorial” traders try this strategy. As long as you use good risk management, you should be OK. When you start betting your whole account on your ideas and you are wrong: you create 2 problems: 1) a loss of capital (always bad) combined with 2) a loss of confidence in your decision making ability. Guard against that and you will live to fight another day.
Never approach every trade like its the one that is going to let you buy a beach house or retire in 6 months.
Ok, that’s about it. Markets close in 6 minutes: Merry Christmas CER
