Well, well, well the long-awaited FED decision has come and gone, they did as expected, cutting rates by .25 bps and the equities stayed asleep. The dull drift to new highs continues. The global economy is in meltdown mode and nobody cares. Investors can't get their Money into equities fast enough.
This market is also known as the chase for yield which eventually leads to disaster. We are long and enjoying the ride but recognize problems like we have seen in every major meltdown in the past. When investors no longer care, pundits cheer lead and everyone is reassuring us that everything is good only tells us there is troubles ahead.
We are not predicting a market meltdown; we just know that it will come at some point. For now, we continue to watch price and trade based on our algorithms. Predicting the future is for Prophets not profits. Follow the footprints the markets leave and know you will not miss the big sell off when it comes, we will have plenty of time to get in.
Grains had a moderate week but look to be bottoming across the board. We are long Beans and Wheat; Corn is not far behind. We are looking for a huge rally. There are many signs that a big rally is coming. We would expect a short squeeze to break the grains out and new money buyers to keep the rally going.
Meats are looking solid and Cattle has regained its footing from the Tyson fires. Both Fats and Feeders are pushing near their first resistance which we expect will bring some consolidation before breaking out. We are expecting a breakout to the upside and our algorithms support our theory. Hogs continue to churn near the lows but are holding strong and should be ready to rally.
All week they have been trying to break Gold but have not been able to break it. Gold has had an ugly week but is still holding strong at support. The Dollar continues its push to PAR and should get there soon, in spite of the FEDs clueless action. Crude had a monster move Monday which was a great blow off pattern to sell. Although we are still long Crude, we see a big sell off coming.
The Bottom Line: All markets except Crude have been very quiet, no volume and no real interest. All this means is that a big move is coming almost everywhere, direction to be determined. If I were to guess it would be .............. I don't guess I play the algorithms
2019-09-19 Bubba's AG Weekly Report
CORN - Appears ready to breakout to the upside. Buyers have started to appear as Corn approaches a breakout level. We remain short through the Algorithm but can see a change coming. With the AG complex turning bullish Corn shouldn't be far behind. The commercials are starting to become buyers indicating an up move is on its way.
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Short 50% - A change is coming
BEANS - Have had a rough week but continue looking like they are ready to make a big move higher. We reversed last week to the long side and expect a much bigger rally. Since the big up move last Thursday, Beans have been slightly lower every day. The pullback is natural, and this retracement should be bought.
Hedge Recommendation: Hedged and Selling weekly Put spreads
Position: Long 50% - Bought last Friday
WHEAT - The buyers are back, and Wheat is starting to breakout to the upside. We reversed last Friday, and Wheat has gone higher holding to support. The 5.00 level is just around the corner and a much bigger rally is brewing. We are buyers at support and will look to build on our long position.
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Long 50% - Reversed last Friday
DOLLAR - The FED meeting Wednesday turned out to be a big zero with no action. The Dollar continues to work its way higher as it runs to our target of PAR. The FED continues to try and manipulate the Dollar lower but continues to fail.
Hedge Recommendation: Hedge dollars against cost
Position: Long 100% - Will sell half at PAR
CRUDE - Had a monster move last Sunday night, Monday morning with a 15% up move. The suspected drone bombing in Saudi Arabia caused a major panic bringing a monster short squeeze. That was a classic blow off to the upside that failed bringing Crude right back into a consolidation. Although Crude was higher on Thursday the highs appear to be in, we are long but expect a reversal soon.
Hedge Recommendation: No Hedge
Position: Long 50% - Looking for a breakdown, 5670 is the key to watch
S+P - We remain long while the S+P churns in consolidation near the highs. The FED decision was supposed to be the big news that would send markets soaring to new highs. We expect the new highs to print but if the rally continues it will be a slow dull grinding rally. The next big move is lower however the rally can continue longer than we expect, and we remain long
Hedge Recommendation: Portfolios should be Hedged
Position: Long 100% - Will sell half at new highs.
GOLD - As ugly as the Gold trade has been, support continues to hold. For the past two weeks we have seen Gold churn on support building a congestion pattern which suggests the rally will continue. We sold half of our position at 1520. We remain long with the algorithm understanding that the pattern suggests the rally will continue
Hedge Recommendation: None
Position: Long 75% - Will buy at 1495
FEEDERS - Have broken out to the upside and look to be headed to 140 which is our first target. We are long and are looking for a much bigger rally. Look for a test of 140 and then consolidation before breaking out to the upside. We are long, the algorithm is long, and the AG space is turning bullish.
Hedge Recommendation: Hedged
Position: Long 300% - Will sell half at 140
FATS - The "V" formation held and the days they go lower is on no volume. Fats look prepared to make a big move higher and should test the 102 level any day now. All signs point to higher prices including the algorithm we use. Look for buyers to show and a short squeeze to occur.
Hedge Recommendation: Hedged
Position: Long 400% - We will sell half at 102
HOGS - The churn and big moves continue as Hogs try to find and hold a bottom. We look at this level as a possible bottom although we are still short, we are expecting a big move higher. Like Fats and Feeders, the selling pressure seems to have gone, sell offs are on light volume
Hedge Recommendation: Hedged
Position: Short 50% - May be bottoming
