GG, I started trading in Feb and heard about the hot ag sector. I looked at the stocks and thought "They've run up way too high and they're way too expensive." Missed the 50% following run.
S2007S, what is your supporting argument that commodities are in a bubble? Simply saying that they are doesn't explain a thing. It is certainly true that these AG stock started to slant upward in mid-August when the equities shit hit the fan, so part of the bullishness of this sector has nothing to do with earnings. It is very improbable that potash earning went through the roof just when the crisis hit in mid-August. The is in other words a frenzy going on. These stocks are therefore overvalued... the question is by how much?
This still does not explain why they are correlated. Even if all of their earnings are going through the roof, they would still be different and if there were a direct correlation between earnings and stock prices, each stock would look a bit different (but all would still be going long).
I'm surprised how much interest there is in trading pot these days. I have been trading this thing for the past 4 years when it had volume under 1 million a day and everyone here thought i was crazy. Indeed pot is a monster. But like someone said, it's an atm. Only if you can understand how it trades. Otherwise, it become a black hole for your capital. And whether its in bubble land or not has nothing to do with intra-day trading.
I watched POT's charts for three months before I decided to trade it. The patience paid off because by the time I traded it, it had experienced several pullbacks and rallies to new highs, and had hit its 52-week high. By that point I had a good instinct for traders' reactions to its various support and resistance levels. What's nice about POT and CF is the high stock prices allow for large price moves in a short time if you catch the waves at the right point. As a fairly inexperienced trader, I'm ultra conservative and set my stops close to break even immediately. If the trade doesn't go my way, I obviously haven't caught the wave, and I'm out.
Look up the prices of SMN DUG DEE and DTO from the end of June until now. Adding into DUG and SMN along the way down paid off. Im now out of both positions completely at the moment. Now im playing the long side for a bounce in commodities at the moment with small amounts of DIG, UYM, DXO and DAG. S2007S Registered: Aug 2006 Posts: 6929 06-27-08 11:10 AM Quote from makloda: So what are you shorting right now anticipating this insane crash? Actually I still own QID, SMN, DUG, DEE and DTO. I believe oil and commodities are ready to correct greatly which could give equities at least a 5% boost. I actually have been adding some longs, added DDM, QLD and more UYG over the last day. Im still bearish, but Im anticipating a bounce back to 11800-12,000, that catalyst will be drop in oil from 140 to around 120-125 a barrel. Now if oil surges ahead and the dollar drops I think sub 11k levels could be here by next week, also keep in mind the VIX is not even close to march highs which makes me think more selling is coming.