As a discretionary/intuitive trader, I sometimes get the feeling that something is about to happen. After doing literally nothing for about two months, I am having that feeling. Most of the time, I was sitting here watching my screens, just waiting for any markets to show any sign of life or potential or anything. In my younger days, I probably would have kissed goodbye a good chunk of my account trying to make something happen where no legitimate potential actually existed. Especially in light of the breakdown of the tried and true correlations of the last several years (dollar/oil/gold/stock market/general commodity index), I am actually quite happy that I am not down a lot of money this year. Whether the old correlations are coming back or not, i think is now irrelevant. gold has been moving sharply higher in the face of a rising dollar. This is sign number one of a nascent CRB bull market. I don't really know if we are near bottom tick or not, I just suspect that there's not much more to go down. So, today I bought may beans corn and wheat for 948.25, 347, and 468.25. I'm willing to take a bit of pain because I know how these things change directions and that often involves sharp stop running. that might lead to say 335 corn or so but I dont care about that. I'm looking for 50 cents to 2 dollar moves up. I'm also looking to buy oats, but I think that is more likely to drop to 2 because of the thinness of the market. I know the fundamentals are horrible but I think that after a certain point, that doesn't matter, price is going to trump bearish headlines and crop reports. How many markets are there that are about the same price now as they were at the march 2009 lows? Off the top of my head, these are the only ones. For the casual observer, you can use stock DBA to track this (although it includes wildman sugar, which can throw it off a bit). It's 24.35 now. the descent from 26 in mid february has been on super low volume. there are also island gaps at 27 from early january and again breakaway downside gaps at 27 from june 09. First target therefore is around 27. Off the top of my head that would mean something like 4 corn, 11 beans and 6 wheat. I'm also going to watch rice. it's had a bullish bounce over the last two weeks. If I can get some around the 12.50 monday gap, that would be great. We can discuss trade ideas here too, even fundamentals, although I suspect all you guys are positioned against me
As a rule of thumb I like to be long gamma going into reports and usually take my other positions (or short options) off before them. I have a feeling you might be right about something is going to happen in the grains. The China news gave a little kick yesterday but it was given back today. At some point over the next 60-90 days you have to figure some major news with the dollar or the old inflation concerns providing some bull fodder to commodities.
Caroy, I am not a fundamental trader and I find hard to get which reports are important for grains and which are not. I use the calendar from USDA website but most of the time there is no particular market action at the time of the reports. For example, every tuesday there is a weather-crop summary at 12 PM NY time but I can't recall a day when it triggered a move. Today there is a report on Cotton, grains, oilseed and world agricultural production. Is it important? What are the reports you are long gamma for? Thanks a lot.
The WASDE report coming out today in a couple of hours is very important - newbies dont hold grains during this report cause report is issued whilts grains are closed http://www.usda.gov/oce/commodity/wasde/index.htm#monthly
In general for the grains the World Ag Supply and Demand monthly reports are important. Prospecitve plantings and I like to look at the weekly Commitment of trades. For grains though in general the World Ag supply and demand is important as numbers are often revised. The recent down trend in corn and a sell off of 44 cents in beans during the march report are all examples. Sometimes nothing happens but the grains do tend to trend or reverse after these reports. The only downside of buying gamma ahead of them is the 1-2 cent inflated premium on the option bid asks the day before.
There's a low of 326 from back in Sep09 on the front month ZC chart. I had some 344 on the other day but took it off when it didn't move when I had to leave for an appointment. Of course an hour later it took off up into the 350's but that all came right back after the crop report within 24 hours.