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What a week, started it out with sellers everywhere. No asset class was safe Monday morning, equities to Ag, they were all under pressure. The panic was on and everyone was puking, until they weren't. By mid-morning the smart money knew it was panic and many markets started to bottom. Tuesday saw a small bounce but still some fear and pressure. Wednesday the panic was back, and equities were down 600, suddenly buyers stepped in all losses were gone and the markets closed positive for the day. By Thursday the buyers were back, and the route was on, Dow closed up 400.
A wild week indeed, but as always happens when markets go too far in any direction there will be a reversion to the mean. Equities closed at resistance on Thursday and are now at a key decision point. Will they go on to make new highs again? Is this a great selling opportunity? The markets will tell us if we listen, follow the pattern, and follow the money.
What would a week be without the FED and their manipulating style? This week we can't blame the FED as much as I would like to, Central Banks around the globe were lowering interest rates which was strengthening the Dollar. The FED was just trying to keep up and keep things balanced. However, the only way to really keep balance is through free markets and true price discovery. Oh well, we will trade the market we have not the one we want.
The grains all made their weekly lows on Monday and spent the rest of the week coming back. They actually closed on the upside Monday after making lows on the open. Everyone is waiting on the other group that has no clue, the USDA. They report on Monday, as always, we believe that news is already priced in. We are short term bearish based on our algorithms, however I believe we go much higher after the lows are made in the next week or two.
Cattle spiked lower on Monday but held their ground all week and look poised to go higher. They are set up in a very bullish pattern, our algorithms are long, and we could see a long bull run. Hogs are still on a sell but made up some nice ground this week and look ready to potentially run. They are getting very close to a reversal signal and the long-term view is becoming bullish. Overall, we expect higher prices into the fourth quarter.
As much as the FED tried to push the Dollar lower it held up pretty well and closed Thursday on some key support. Gold exploded this week and surpassed our first target of 1500, which has now become support. Silver also woke up out of its slumber and made yearly highs while Gold is on 6-year highs. Crude got clobbered as expected and almost tested our 50 level on its way to the 40's.
The Bottom Line: No surprise volume has been light on the rallies and heavy on the sell offs. Thursday's big rally was on pathetic volume indicating the bears are letting the bulls run. We are short but it's very close to us becoming long although this looked like no more than a relief rally. Grains are waiting on the USDA, Meats look solid, Gold should consolidate before running again and Crude should continue lower.
Remember the news means nothing it always comes down to price action. TRADE THE NEWS YOU LOSE
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2019-08-08 Bubba's Weekly AG Update (VIDEO)
CORN - After last week’s break through support Corn has found a new level. It appears that 4.00 December Corn is solid support, although we are short because of our algorithm we expect higher prices after this recent down action resolves. That appears to be happening now, Corn is preparing to make a big move which we expect to be higher. However, a pullback should be first allowing us to cover shorts and get long
Hedge Recommendation: Hedged
Position: Short 50% - Will observe
BEANS - Held a test of support and look to be in consolidation with a lean to the upside. The news this week caused a little heartburn before cooler heads prevailed. The bottoms are possibly in but 840 could be tested before we see the final bottom. We are short but wouldn't be surprised if they started to turn. We will follow the algorithm with our positions, the 840 test would lock in profits for us for the turn when they go higher.
Hedge Recommendation: Hedged
Position: Short 50% - Holding with concerns at a must hold area
WHEAT - Tested support and bounced and is now approaching resistance. Wheat has been very sloppy as it has traded lower, we are short but are looking for a turn. All of the news is negative which we consider more bullish over time. We expect one more pullback and will stay short until the Algorithm changes
Hedge Recommendation: Hedged
Position: Short 50% - Will observe
DOLLAR - The FED is at it again as well as the Central Banks around the globe. The FED weakens the Dollar and then every Central bank lowers their rates pushing the Dollar higher. This is known as the Currency Wars and has gone on for years. This time is no different, because the US Dollar is the reserve currency the FED will eventually win out, but the Dollar looks primed to make a run at PAR
Hedge Recommendation: Hedge dollars against cost
Position: Long 100% - Will sell half at PAR
CRUDE - Broke down this week and almost hit our first target of 50 on Wednesday. Crude has bounced back, but we are looking a continuation of the break and a trade into the high 40's. Thursday's bounce was no surprise and we are sellers at 55 if it can rally that far. Crude looks bad especially with it trading in backwardation which is an extremely bearish pattern
Hedge Recommendation: No Hedge
Position: Short 50% - Will add at 55
S+P - Surprise there was a huge bounce off of Monday's lows. After six days of selling we expected a rally. After Wednesday's panic sell off early on interest rate fears among others the S+P had a big rally on Thursday. The rally ended at resistance and is still ready to go lower although our algorithm is short but getting close to changing. The next day or two will decide where we are going. We remain short and can see a major meltdown
Hedge Recommendation: Portfolios should be Hedged
Position: Short 50% - Will add at 3000
GOLD - What a show Gold put on this week, blowing off to the upside on Wednesday and busting through the 1500 level which was our first upside target. 1600 is now in play although the rally this week would be best served by a period of consolidation. The speed at which Gold has gone up needs a little selling before the rally can continue in earnest.
Hedge Recommendation: None
Position: Long 100% - will add at 1500
FEEDERS - hanging around and hanging around which only makes the pattern more bullish. The action is dull, and the volume is light which is bullish when a market is at support. Feeders could churn around these higher lows, but the next big move appears to be up. We are long with our algorithms.
Hedge Recommendation: Hedged
Position: Long 300% - Will sell half at 150
FATS - Ran into a little buzz saw on Monday when equities had a meltdown early. However, the recovery the rest of the week is very bullish and as long as 105 holds we expect new highs. All signs point to higher prices and we are long with the Algorithms and expect a big run to the upside
Hedge Recommendation: Hedged
Position: Long 400% - Will hold all
HOGS - Have been struggling but may have made a puke low on Monday. We are still short, but the action is starting to turn bullish. The best action here would be to build a base before breaking to the upside. There is a big move coming and it could be higher but of course we are prepared to reverse.
Hedge Recommendation: Hedged
Position: Short 50% - Will sell more at 75
