Final Week Volatility Creates Opportunity

Written by Al Martin Sunday, 02 January 2011 20:43

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(1-2-11) Last week we told our readers that the March Long Bond contract would reach 122.00 in this week’s trade. Indeed, in the final year-end push in the Bonds, the March Bonds closed at 122.04 in Friday’s session. We had accumulated the Bonds in the Tuesday dip at an average of 119.16, and we were sellers at 122.00 in Friday’s trade, taking down a tasty 2-1/2 whole point profit in the trade.

Also we had suggested that commodities would move up generally throughout the week, that Gold, Silver and Copper would move up, and that there would be a rocky road for soft and tropical commodities. Indeed this has come to play.

The March Dollar contract did move lower late week, as we saw year-end Dollar selling. However this is simply a year-end technical phenomenon. We think the March Long Bond contract will start to move higher again in Monday’s trade.

Also we had warned that the Feb. Crude Oil contract would reach $92 in this week’s trade. We were short sellers at $92, taking 50 cents out of the contract. However the Oil still wants to go higher.

Fresh break-outs in the Gold – we were buyers in the Gold on our buy-stops above $1410. We were sellers at $1420 in late Friday’s trade, taking $10 out of the scalp. Gold is clearly overbought now. Look for some continuation to the upside early week followed by a sell-off.

The March Sugar contract was the feature trade of the week. We had been consistently warning that Sugar was overbought. Indeed we saw Sugar lose more than 10% of its value in Thursday’s trade. Our 32.99, 31.99 and 30.99 sell-stops were all hit on 10-lot contracts. The Sugar did recover, and we were buyers of the Sugar Thursday night on a move back above 31.65. However we would look to sell the Sugar again on any retest of 33.00.

 The March Orange Juice was also volatile last week, consistently holding 1.60 on dips. We were buyers in the 1.61 area throughout the week and sellers on rallies back to 1.6450. We would continue to look at the 1.6450 – 1.6650 area as fresh shorting opportunities in the Juice.

 The March Lumber contract finally started to come down under liquidation pressure, as Joe Six Pack buying eased off. We are currently short the March Lumber at 325 and intend to hold it, as we believe the contract will come back under 300.

Good move Friday in the March Beans. We had been trading the March Beans from the long side all week as it consistently demonstrated strength. Friday closed above $14. Be careful however, since the Grains are severely overbought, relative to underlying supply/demand fundamentals.

The March Silver contract also was higher but dragging relative to Gold. We like selling this contract on any test of 31.00.

The March Copper – also breaking out into fresh highs. We were buyers of the Copper midweek on the breakout above 4.33. However the Copper is also severely overbought at current levels.

March Coffee – we were consistent short-sellers at 2.41 in Thursday’s trade, covering on the dip back to 2.39. Coffee did establish a close back above 2.40. However there’s plenty of Coffee on the planet…

March Cocoa came down for a test of 3000 Thursday night and held, prompting us to buy the contract at 3003. We took $30 out of it Friday. However the March Cocoa does look tired at current levels.

March Cotton – we were consistently short-selling on the dips below 1.45, covering at the 1.3950 area. Cotton will be back late week but we believe Cotton continues to remain a sell on moves back above 1.45.

 

Chinese Interest Rates Rise & Will Threaten Commodity Bubble

Written by Al Martin Sunday, 26 December 2010 23:32

(12-26-10) The event that all commodity shills had feared -- a raised Chinese interest rate along with further crackdowns to let air out of the Chinese property and industrial building bubble has occurred. We will begin to see the effects of this immediately upon the reopen of trade Sunday night. It is likely that you’ll see the March Long Bond contract rally. As a result of this, we were consistent buyers of the contract which dipped back to 120.00 -120.04 in Thursday trade. We see the Bonds now consistently holding 120, and we expect the Bonds to experience a year-end rally in the coming week's trade.

Read more: Chinese Interest Rates Rise & Will Threaten Commodity Bubble

 

Cotton: Highest Ever Prices in History

Written by Al Martin Sunday, 19 December 2010 23:03

(12-19-10) The March Cotton – a series of limit bid moves late week as the Unwashed buying came back into the market at $1.50. The Cotton is now the highest it has ever traded in history and is at a level where no-one who deals in Cotton can make any money. We would remind our readers of the old traders’ adage that the best cure for high prices is high prices.

 In other words, when the price reaches the point where everyone that deals in the stuff or makes something which uses the stuff can’t make any money anymore. The Chinese vice premier had an interesting comment about the Cotton. Even though the Chinese are great importers of Cotton, they have actually been selling Cotton from their state reserves. As the largest manufacturers of cotton products on the planet through their state-owned sweat shops with 38 cent a day workers, they said they can’t make any money on $1.50 Cotton. That’s a tried and true way of knowing what the tops are.


Read more: Cotton: Highest Ever Prices in History

 

Gold & Silver Have Lower To Go

Written by Al Martin Sunday, 12 December 2010 22:12

(12-12-10) The March Long Bond contract fell one whole point in Friday’s session, resuming the trend of Friday declines. However after three good Treasury auctions this week, including a stellar 30-year Treasury auction on Thursday, indeed the strongest such auction in 2 years, we suspect the Bonds are a buy on a retest of the 121 area.

Read more: Gold & Silver Have Lower To Go

 

Peaches ‘N Cream Trucks Return in Late Week Action

Written by Al Martin Monday, 06 December 2010 00:53

(12-5-10) In late week action we saw a calming of the European situation along with nothing fresh out of the Bank of China, allowing equity markets globally to rally and principal bond markets to sekk off.

Read more: Peaches ‘N Cream Trucks Return in Late Week Action

 

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