CZ has bounced 40 1/2 cents in 4 days. 1/2 way back target is $4.87… Above that we get $4.97-$5.00
In my opinion, this is just a technical correction If you are a farmer, sell cash grain into it. If you have been short corn futures with me, you should have taken some good profits and still be short from the $5.70 area. Do you lift it and look to sell it again if we rally to 4.97? If you do that, you don’t want to be left in the dust on a bull rally trap. I’d have sell stops below $4.55 again to re establish shorts on those contracts though. No one ever went broke taking profits. An no one can buy the absolute bottom or sell the absolute high. NO ONE, of course, except the guys on TV at 2AM selling you their options/ trading software. However, did you ever stop to think if their software is so good, then why are they even selling it??
As for the short in Dow futures, we look to be grinding here against this 15000 level. We’ve had a 600 pt sell off in the past week or so. Impressive, but not if you look at the 3,310 point rally we have had in the past 9 months. Typical for the media, the 3,000 pt creeping rally gets no attention. A 600pt swoon?? Oooh that’s too good not to talk about like the world might be coming to an end. That being said, 600 pts is an 18% correction of the 3000 pt rally. Something to ponder. Is it going to stop here or do we accelerate down to the June low at 14,474? That’s the bet.
Right now I am happy to be net short against the 15,500 level.
In all honestly, NO ONE knows what this thing has in store. I do know that in another week or two weeks, everyone will be heading back from the Hampton’s or where ever the hell they went on vacation. September brings the end of the 3rd quarter and then we always have to get through October. I’d stay short for now, but I am not in love with any position. In my opinion it feels like we are building up for an event. If we take out 15,500 that would probably create a powerful rally as 1) shorts would puke, and 2) people who avoided the stock market for the past 3 1/2 years kick themselves and jump back in to the long side. Either way, it should set us up for a significant move/opportunity.
For now, however, I’d be short, but lowering my buy stops so I don’t let a good trade turn into a memory.
Its more important to have the account grow than have your ego grow.
One final item. the WZ/CZ spread has accelerated below 1.70. Look at the below chart.
Its decision time. I was looking for a break down to this level to establish a speculative long position.
Scale in buy here down to 160. If you can leg into the spread for 160, try that as well.. You’d be risking 10 cents maximum, looking for a 30 cent pop back towards the 1.90 level.. This is an aggressive counter trend trade. Make sure you have your exit strategy thought out before lighting the fuse.
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