markets 11/29
Looks like Pfizer is
cutting 20% of its sales force.
The pharma industry as a whole may well take a hit soon with new government leadership threatening to change the way medicare drug benefits are negotiated and carried out. Interesting article in the WSJ a couple of weeks ago pointed out that this may in fact actually lead to an overall increase in drug prices (op-ed section I believe).
Blockbuster has it's new Netflix-competing service available now that may end up being a better alternative to the mail-service pioneer. We shall see.
commodity markets
corn is still rediculously strong. Same with beans and right now there is no end in sight; however, last night 11/28, the corn market did close right on near-term sharp uptrending support, so Wednesday's action may prove corrective in nature if this support level is violated (378 for mar-07 corn).
gold seems to have some underlying strength. Looking ahead to Feb '07 gold shows that 650 is a key barrier. Surpassing it could give further strength to the bullish run.
grains 11/19
The grains are awfully interesting right now. Here's a note from an email conversation.
Looking ahead at March '07 corn, it seems like the chart is at a resting point or "pause" as Ring sometimes says. You can make an argument that it's poised to go higher or that we're in the midst of a topping process. Check out the attached chart for yourself. My bias is that a short position with a stop above the contract high at 381.75 is a relatively safe play considering how well you can limit your exposure. Despite recent strength in the last couple of sessions (tonight we're at 379), the market still has to prove itself on the upside. If it doesn't knock out that previous high, then the fall from grace could be sharp. As we've also spoke about before, traders are just waiting to buy this market so the downside magnitude seems very limited but, nevertheless, there is an area around 350 that looks to be a likely target on a corrective pullback.
If this strategy is completely off on timing, then your risk is only a few cents per contract. The exaggerated moves in the evenings are on low volume; so tonight's 8-9c move higher on thin activity may or may not be reflected in the "real deal trading" tomorrow. That may be a good time to enter if strength doesn't push march to new contract highs.
Chart is from ProphetX and shows the steep uptrend in March '07 corn as well as the ceiling imposed by the contract high. Early this week of 11/19 we could see that ceiling blown off or tested and hold.
Beans will keep rallying with corn to avoid losing too many acres. The short side of beans can be played based on the corn argument just made and might even offer better risk parameters. The only cautionary note is that beans can potentially whip you around even more than corn, so thresholds for stop loss orders need to be clearly defined (as always) from the beginning.
markets 11/9 usda production report
The USDA numbers appear bullish this morning.
Crop Production:
- Beans 3.204 bln. bu. (avg. est. 3.24 bln. bu.)
- Corn 10.745 bln. bu. (avg. est. 10.838 bln. bu.)
Carryout:
- Beans .565 bln. bu. (avg. est. .583 bln. bu.)
- Corn .935 bln. bu. (avg. est. .912 bln. bu.)
The lower than expected production on corn should be enough to ignite a frenzy of buying with beans and wheat bidding up prices in acreage competition.
Gold has recovered somewhat from its down move on Wednesday, but it still appears weak overall.
markets 11/8 corn, cattle, metals
It's been a while. I've been riding the existing positions I've had for quite some time. Gold was a solid trade a few weeks back on the downside. Shorting in the 648 zone for the dec 06 contract allowed the seller to buy in the 560s or 570s for a nice return. This morning, gold appears to be breaking down some of the recent strength that propelled it back to 630+ levels for a short time. Currently, we're right around 620 and there is a risk of slipping through support levels and heading back to retest 600.
Grains haven't really looked back. Initiated long corn positions have continued to do well. Purchased protective puts are eroding in value. May roll up those strikes a few levels higher with the premiums being reduced due to strength.
Cattle have broken down, but my distance from looking at the technicals in recent weeks has kept me out of that move.
As a sidenote, beans and corn have been nearly vertical markets for quite some time. Usually, this isn't sustainable for extended periods of time, and both markets are overdue for a corrective setback; however, that doesn't necessarily have to happen (a) at all, or (b) before a final blow off that reaches 20-30c higher.
Current strategy is to hold longs with trailing stops and roll up protective puts to higher strikes. Watch for followthrough strength from 11/7 overnight 4.5c move higher in corn. Target is 370+ price zone. Consider "stepping in front of the corn frieght train" and shorting if any confirmed weakness unfolds.
