Bullish Rumor’s Take Flight

  • Posted on: September 17, 2010

First Bullish Rumor is that Credit Suisse Bought 1 Billion dollars in the grain markets overnight.

Frost Anticipated in China China’s Weather Bureau issued a warning overnight that a frost/freeze would
hit the major corn and soy areas of China from Sept 20-24th. The Chinese corn
and soybean crops are some 10-15 days late due to the exceptionally cool/wet
spring and the late seeding dates.

Soybeans in the US have popped above the 10.50 resistance level, although i remain suspect until we settle above 10.75, but that suspicion is born out of trading beans in the bean pit as a floor trader for 18 years. I know well enough that the beans can move 30 cents in a heart beat. If I am bullish for the longer term, I want to own beans on my terms.

The CZ, however is meandering along nicely. Back on Aug 27th, I wrote to own corn because we settled above 4.30. That settlement projected a high target at 5.60 to 5.80 One caveat, however, we took one painful day of heat on that position. If you recall on the 31st, that last trading day of the month, we rallied to 444 3/4 and then broke 13 cents to settle at 432. That was the one day I thought I might have bought the top. As is typical, the market tried to get traders out of there positions. Luckily, my sell stop was down at 426 1/2, so we didn’t get out. Since then, we have picked up 81 cents. $4,050 per contract, while having risked 5 cents at the time.

I have moved stops up now, and will continue to adjust them aw we rally. I did lighten the load at 485-500. I sold 1/3 of my longs at 505 last night. Quite frankly, I was hoping for a correction down to 475 or 460 to buy some more. Time will tell.

If November beans settle above 10.50 for the week, I am going to buy a small amount just to get it on the sheets. I’d rather be in a profitable position, moving with the trend, rather than stewing about why, fundamentally, “this is all wrong”. Let the fundamentals be. The price will tell you the facts.

I must say I am surprised we have not had some sort of a correction more than 15 or 20 cents. However, with the funds long close to 475K contracts, and with the commercials short 600 to 700k contracts, who is going to blink first?

Quite frankly, this rally is getting long in the tooth. With our high last night/ today at 511 3/4, (as of 11:22 AM)… how much higher will we go? 525? That is a nice round number for some profit taking. However, with this market heading vertical, I am not going to step in and even make a guess where the blow off top will be. I am only glad that I am long, with sell stops. I would love to stay long as long as this thing rallies.

At some point, it does not matter to me why the market is rallying. Leave that to the TV pundits. Take advantage of it. Manage the position. But don’t break your arm patting yourself on the back.

As soon as you do, the market will step up and slap you down for your hubris.

Good Trading.
For the bulls, lets hope Credit Suise and Goldman Sachs are right and we are heading into a secular bull market in commodities. I know my kids college funds could use the profits. 4 years of undergrad, 4 years of graduate school, is kind of pricey.

Good Trading