The markets remained quiet again this week, light volume across the board and no volatility. They will eventually breakout the only real question is which way. Equities continue the slow grind higher with the S+P and Nasdaq making new all-time highs. The Dow is lagging behind along with the Russell.
Wednesday was the FED decision on rates and to no surprise they cut .25 bps. The markets originally had a positive reaction but by Thursday the rally was over. Everything is setting up for a much bigger mover, the compressed price and volume can only lead to a much bigger move. We are long equities and watching.
Grains had a rough week especially Thursday, they were basically down every day. The volume and volatility are missing here as well. Fortunately, Corn Wheat and Beans are all on support and should go higher. With all of the trade war talk the grains have remained constant making higher lows and higher highs which indicates there is more room on the upside. The harvest looks to be an issue as well and I'm hearing reduced expectations.
Cattle both Fats and Feeders had a terrific week although closed on a sour note. Both pushed to new recent highs and pulled back on Thursday which was expected. Fats and Feeders should pull back to support before resuming the rally. Last Friday was Cattle on Feed which we wrote would be neutral and it was. Hogs continue to struggle in consolidation and still in a bearish pattern. We remain long Cattle and short Hogs.
The FED continues to pressure the Dollar with rate cuts and QE programs. The Dollar is breaking down but trying to hold this last support, but the trade has been remarkable based on the pressure it should be lower. Gold looks to have flattened out and may have found a bottom based on the last week of trading. Crude failed at resistance and looks to be going lower trying to test the 53 level. We are short all three.
The Bottom Line: Markets are still slow, there is no real activity. Equities drift higher while grains drift lower. Crude, Gold, and the Dollar are all in congestion patterns looking to find a direct. Meats have been the most consistent with Cattle rallying and Hogs under pressure. These dull markets will end, the only question is which way and when. Stay hedged and protect your assets
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2019-10-31 Bubba's AG Weekly Report (VIDEO)
CORN - Over the last seven days nothing has changed, Corn is stuck in the same trading range. Our support level held but volume and volatility have dried up. The market is very quiet and has brought a new resistance level into play at 390. The algorithms are long.
Hedge Recommendation: Hedged and Selling Weekly Iron Condors
Position: Long 200% - Will sell half at 4.00
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BEANS - As we say goodbye to November Beans and welcome in January 2020, we see a pattern that is weakening. This week has been consecutive down days which is bringing Beans to a major support level. We remain long but will be watching the 920 level very closely. The Algorithm is long
Hedge Recommendation: Hedged and Selling weekly Iron Condors
Position: Long 50% - will add at 920
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WHEAT - Went from looking great on our last report to down six days in a row. Like Beans, Wheat has come to a major level of support at 5.00. We remain bullish but have concerns as Wheat approaches support, we will add at 5.00 cautiously. The algorithm is long
Hedge Recommendation: Hedged and Selling Weekly Iron Condors
Position: Long 50% - Will add at 5.00
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DOLLAR - Continues to plummet while the Dollar held support last week and rallied, Wednesday's FED decision pushed the Dollar back to the lows. Once again, the Dollar has reached a key support level and is in danger of heading much lower. The Algorithms are short
Hedge Recommendation: Hedge dollars against cost
Position: Short 100% - Added at 98
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CRUDE - Failed at resistance and has now defined a consolidation pattern between 53-57. As Crude hangs at mid-range we expect a test of the bottom end and a potential breakdown. We remain short and are still targeting the high 40's. For now, the algorithms are short
Hedge Recommendation: No Hedge
Position: Short 300% - Will cover half at 54
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S+P - As we have written for weeks the S+P made new highs day after day this week. The slow dull grind figures to continue as should the new highs. We believe the next big move will be lower however this rally can last longer than we expect. We are long and will stay there until the Algorithms reverse. The algorithms are long
Hedge Recommendation: Portfolios should be Hedged
Position: Long 50% - Holding
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GOLD - Appears to be changing patterns, the downtrend could be over although we are still short. The action on Wednesday after the FED decision may have put in a bottom. The range has tightened up considerably now 1490-1510. That could change but for now the algorithms are short as are we
Hedge Recommendation: None
Position: Short 200% - Missed our cover at 1480, will observe.
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FEEDERS - January Feeders broke out on Wednesday although the action looked like a blow off. We expect the rally to continue however it would be no surprise to see a small pullback before the rally continues. Look for support at 142 before the rally continues. Algorithm long as are we.
Hedge Recommendation: Hedged
Position: Long 100% - Will add at 142
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FATS - The rally continues as Fats broke out twice in the last week. We made new highs on Wednesday and are targeting 120 as our next target. A pullback to 116 would be no surprise, we would add at that level. Algorithm long as are we.
Hedge Recommendation: Hedged
Position: Long 100% - Will add at 116
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HOGS - The downtrend continues although Hogs did fail once again at the resistance levels. Hogs look to be forming another consolidation pattern with a new range of 64-66. We are expecting a bottom to be made soon but we remain short. Algorithms are short
Hedge Recommendation: Hedged
Position: Short 100% - Observing new congestion pattern.
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