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Elgrey
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Expat finance professional living and working in Hong Kong.
  • My November-13 Strategy Review

    Time to revisit forecast for November:

    Natural Gas - I was right to quit it during first week of the month and I did it just a couple of cents away from the bottom. That's was pure luck and nothing else. Also, I was right saying that important breakthrough was about to develop. Where I was wrong is the I missed the exit moment when I reestablished my shorts during second half of the month - I was anticipating a pullback from month lows to make 4th wave of the Fibo cycle and it happened very accurately, by the book. Then, 5th wave started to develop down and I opened my shorts. However in about day or two this pattern was destroyed completely by sudden news about cold weather and I missed the exit point and now I sit with losing position. I hope the trend will reverse soon as market is heavily overbought. But overall that was quite a grim lesson.

    Cocoa - another grim disappointment. Shorts were premature. The news was old but they were enough to support a raging bull. In any event the market is crowded with speculators holding long positions. Sooner or later they will be liquidating. Stiff upper lip.

    Lean Hogs - speculators gave up their overextended longs and I made some money shorting LH. Not too much but still nice.

    Overall the month was profitable but energy sector jitters made some bloodshed. OK, keep your spirits high, the battle goes on.

    Dec 02 2:59 AM | Link | Comment!
  • My November-13 Strategy

    This one will be brief. In November I am interested in following commodities:

    Natural Gas - I am short NG as of today. My profit target has been reached but I will wait a bit further till bears grow weary. This may happen next week or next month. We are at the verge of important technical development - from this point either a strong 3rd Fibo wave of bearish cycle develops "down" or inverse head and shoulders pattern be developing final leg up. I expect a strong development. Some may say "OK, good advice - either up or down, another typical market analyst". Well, what I do not expect is that price holds still - that's for sure. And I am more bearish than bullish otherwise I would not be holding a short position. What I'm saying is that we are at crossroads and about to witness important developments so stay alert.

    Cocoa - I am bear here. Finally COT shows funds retreat and prices are $100+ off their highs. Fundamentally speaking cocoa processors have replenished stocks for Christmas and next buying wave should not be here until possibly late December - early January when preparation for Valentine day can spark buyers' interest.

    Lean Hogs - I am holding shorts here too. Last live slaughter report tells us that there less animals "processed" by slaughter houses pointing at weaker demand. COT shows bearish developments too. Last Hogs and Pigs report was bearish too but markets seemed to overlook that fact. Possibly, the rally was caused by speculators in absence of news from markets due to US shutdown. However technical picture is not 100% bearish - it looks like 5-wave Fibo cycle is over now but we still need to see more confirmations. If, say, LH loses another 2% during next week then I would be convinced that we are in a strong bearish trend.

    This is my plan for November. I do not understand which way oil is heading so I prefer to play hedged non-directional game rather than go naked for petroleum group. Corn is very lucrative but I want to see USDA WASDE numbers first. Today we only have crop condition and weekly sales reports and they do not give any comfort. For grains I play hedged non-directional game with options too.

    Whatever trash Democrats and Republicans signed in Washington there is some 6 weeks deadline and 2 weeks passed already. No news is normal for politicians. Somewhere along the way during week 5 or 6 they will realize that they ought to do something and then we will witness a brief moment of "hard work", "being almost there" and other clichés. End of the month will be fun. We are yet to see what it will mean to commodities.

    Nov 01 11:58 PM | Link | Comment!
  • My October-13 Strategy Review

    October is over and let's check the results:

    Soybeans - with absence of news from USDA beans were on their own running back and forth between 12.60 and 13.00. I covered my short position a bit earlier than anticipated as soon as first bullish pullback began. Good timing.

    Oats - I took a long position but I was too quick to quit it. In fact I missed most part of bulls rally during 2nd half of the month but I have no regrets. Can't have all the money anyway, I made my profit on oats in October. The reason for quick selling was big spread - market had too little interest in O so any big order could drastically shift prices in any direction and I decided to not tease the fortune.

    Natural Gas - I opened my shorts on 17th shortly after decline began. The move was very timely and proved to be correct. Currently, I am seeing an interim bottom around 3.60 in January contract so as soon as we be there I will initiate stop-losses.

    Cocoa - now comes hard truth. I was too quick to expect the fall of price. I jumped in 150 bucks earlier than I should. At later stages, when market began going south I sold more and diluted the gap but still - I was not correct calling highs in the end of September. We had 3 bullish grinding reports in October - Asian, European, and American, one after another. Market priced them in before the final numbers were announced so the moment the last report was published the prices began the decline. Market has been overbought for many weeks so I anticipate prices to go down further. Fundamentally speaking producers bought enough cocoa for Christmas already so there should not be any strong demand in near future.

    Lean hogs - another wrong bet of the month. There was too little news from market so even today I cannot figure out if I should quit or hold. What keeps me holding today is bearish live slaughter report and overall understanding of overbought market and super-bearish COT.

    Corn - I did not initiate the trade though I am watching C. I guess we may see further bearish developments once USDA reveals WASDE numbers. But prices look way to lucrative - spread between W and C is about USD2.50.

    This month we spent in the darkness - CFTC, USDA, EIA did not function while guys in Washington were imitating hard work. I wonder why these people get huge budgets if they can't do the job on time? They are paid to manage the country at first place but they do quite the opposite halting economy №1. And (as always) they signed some paper last moment. That paper is not meant to resolve but delay. Alright, we can't do anything about them so let's stay alert and turn the page.

    Oct 31 11:44 PM | Link | Comment!
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