92.2 Million Acres– Look Out below

  • Posted on: June 30, 2011

I didn’t get a chance to write last night. We were very busy in front of today’s USDA crop report.
Thankfully, one of my rules is that its good to get flat, on a futures basis, in front of numbers.
I like options in front of numbers b/c you can ABSOLUTELY know your risk.
Case in point.
CN old crop corn was 30 cents higher yesterday, Today, with no limits, it is 75 cents lower.
With the Acres report out, there is probably another 1.50 to 1.70 risk below this market.
To say that most farmers/ producers were bullish would be an understatement. With the wet spring, the flooding in MO and along the Miss River, it was hard to see how we got enough acres planted.
Farmers in Ohio planted, rather than take prevent planting, b/c they realized even if they had 100 bu/acre yield instead of 150 or 170, they still made more money by planting the corn and taking the risk.

Bottom, line, we had a bull market which was born exactly a year ago today. Today’s action may signal its passing.

The 11,900 level held well here. We’ve had a good bounce again, from negativity stemming from the Greece- PIIGS fears. (Portugal, Ireland, Italy, Greece, Spain). Even though Greece’s economy is the size of Dallas Ft.Worth, a failure then could spark the domino melt down of all the rest.

That Being Said, 12,400 is a sell, in my opinion. Take the 500 point rally and run.
If you think we are gonna rally up to 13,000, then buy some calls.
You have to be heading the opposite way of the crowd. The talking heads on CNBC are looking very bulled up to me, after looking over the edge of the roof of the building just 6 days ago.

So that’s my opinion. Sell the Dow Cash Index here, today. At 12,490, initiate new shorts. Initiate those shorts with a 100 to 150 point buy stop above.

That is all for today.
CER