Running With The Bulls– Again

Bulls are out in the Grains. Fundamental news supporting technical factors in Corn and Beans. New crop beans settle above 11.00 a bushel. Final settlement a 2 year high in SX at 11.26 after posting a 2 year high today at 1128-1/4. For the week, SX gained 57 cents. Longer term technicals make me look for a rally up to 11.82 next. I like owning 12-13 dollar call spreads to take advantage of this bullishness. However, will we run straight up? I can’t imagine that scenario. However, I firmly believe that a pull back to the 11.00 level is a buying opportunity.

Bullish rumors out today, (warning… the list is long…) 1) dryness in S.A as they get in the fields to plant their beans, 2) frost in China 3) dryness in FSU, 4) funds are record long corn, 5) rumors that Credit Suisse did put 1.B towards commodities, 6) rumors that Calpers (Yes, the California pension fund) wants to or has plans or is thinking of ….putting 3.2 billion dollars towards the ownership of physical commodities… That being said, you know my opinion about conventional wisdom.

In CZ, we once again tested the 50% retracement of the overall move from the July 2008 highs down to our June 2010 contract lows. 524 is that resistance. Interestingly, this is the second time we have been here in the past 2 weeks. For the week, CZ was only up 8.5 cents, settling at a 2 year high settlement at 521 3/4.
If we don’t get follow through, however, look out below.

If we can explode above 525, then the next target I like to the upside is 5.66. That is the 62% retracement. Still, a 2 year high settlement is nothing to sneeze at.

Feel free to go back and read my blog when we settled above 4.30. I spoke about 560 as a target then, and at the time I bought some 440-540 CZ call spreads for 24 cents. Those are doing quite well. I like them, I like them a lot more now that we settled here this Friday… Duh….

I learned along time ago the danger of hubris. One or two good calls does not make a long term track record.
I’d be a lot more bullish personally if there wasn’t so much bullish fluff floating around out there. News which has pension fund managers nosing around in commodities makes me un easy.

Bottom line, I like owning beans. I like owning corn, but I will like it better once we settle above 530.

A quick note about my crude oil opinions. My record shows I liked owning a small spec position when we were down around 71. I still like it. I want to take some profits at the 78.00 level, but remain long.

Our Aug Summer highs at 83.00 should be a good longer term target for long liquidation.
Finally, we have a 7-month low in the US Dollar Index. Just 3 months ago we were at a 16 month high up at 89. Today’s 7-month low and low settlement at 79.40 fueled the rally in the commodities.

Is the break over? Who knows? I will look to re:own when CNBC has a round table on what to do to support the “dead dollar” or when Time magazine runs a cover story, like “What next for the US Dollar”… That will be the stone cold low.
Till then, the charts don’t give any good support until 78.50 then the 77.00 level.
Good luck catching the falling knife. I’d just sit tight and look to buy on the panic lows. Reality, is, however, the dollar is roughly in the middle of a 2 year trading range between 71 and 89. That’s an 18 cent range. That leaves a lot of room for both the bulls and the bears to be right, eventually.

The stock market, I like solely on a technical basis. We could have a rally here in spite of tepid economic and political factors. Markets like grid lock. Politicians fighting for soundbites on the news don’t have time to do any far reaching and astounding changes. We get back to what our congress was set up for, incremental changes. Leave the revolutions tho Che Gueverra and the rest of the lefties. Our country’s greatness is founded on this one fact. The left screams, the right screams, and we meet in the middle, both sides holding their noses. Thankfully, however, both sides still have noses to hold. Revolutionary changes leaves us with members of both extremes missing noses and other assorted body parts.

For me, I’ll take grid lock and political howling any day over massive dramatic revolutionary change.

Good Trading.
Use your stops to protect yourself from your opinions and your ego.
Have a great weekend.

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