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  • As Goes Orange Juice, So Go Equities ? 0 comments
    May 13, 2012 6:53 PM | about stocks: UDOW, SDOW

    We should start by making it clear that there is no historically consistent correlation between orange juice futures and equities that we're aware of. However, it is always a good time to be reminded what can, and often does, happen in any market.

    Click this text to view a weekly chart for orange juice futures.

    We note that orange juice hit highs in 2007 from which it collapsed until it bottomed in March of 2009, then went up at a 45-degree angle virtually without interruption until early 2012 at which point it made front-page news as it hit multi-year highs. Then over the course of three months it fell almost 50%, so far.

    Here's a chart of the DJIA :

    The parallels to the orange juice chart & commentary are plainly obvious, we hope. Will equities drop 50%? It happened in 2008 and will again sometime in the future. Silver collapsed last year. Gold probably will in the future.

    Reminder - never be complacent and be very careful of "buy the dips" mentality. Many were rushing to buy orange juice when it dipped to $180 a few weeks ago and now it's at $118. History repeats, at some point.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: orange juice, futures, DJIA Stocks: UDOW, SDOW
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