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

    Time to earn some cash to buy Halloween goodies. Here we go, the plan for October is:

    Soybeans - I continue my shorting stance until USDA releases WASDE report and then I revaluate my trade. Possibly it will be closed.

    Oats - seasonally oats value grows in October. I am long oats at least for a couple of weeks.

    Lean hogs. End of October is the time when pork hits lows. This combined with bearish Hogs and Pigs report and cheap feed grains should support my point of view. COT report is bearish too however it is not perfectly bearish. I am shorting pork in October.

    Cocoa - I will continue shorting cocoa. Hopefully the bulls will give up soon. At least seasonal trends tell me they should. New cocoa is about to come to market. Looking at technical picture market seems like during it is at late 5 wave or early A per Fibonacci theory. Volumes get thinner - a sign of expiring rally. We shall see... On the side note I read a warning from Golden Sacks saying that market expectations went way too fast and too far. One thing I learnt of them is when GS commodity team says something - I listen, GS commodity guys are real good.

    Onto question marks!

    Corn - seasonal trends are slightly supportive, COT report is very bullish, market is in steap contango... All it needs is a tiny spark to explode prices to new heights. Note, that spread between C and W is shockingly wide - $2.50. Let's wait for this spark to happen.

    Natural Gas - weather was not supportive and NG lost almost 20 cents during last couple of weeks. Seasonally, NG starts robust decline during middle of October. I am going to see what happens during coming couple of weeks and make decision.

    That is my long-short plan for October. I am not going to elaborate about technical trades. As for other sectors I do not think that petroleum or metals groups have much of potential this month. I think that this month will not be as turbulent as previous three as most of the issues found their resolution and we are going to see range-trading in these two sectors. Markets have not reacted on issues of unresolved the debt ceiling and public sector shutdown. It seems like markets do not care about tussle in the White House and live own lives. Possibly that everyone is just waiting for Republicans to find ways to accept their defeat in less painful way, accept Obamacare, and approve budget.

    Oct 02 2:00 AM | Link | Comment!
  • My September-13 Strategy Review

    OK, September is over so let's review where we are:

    Natural Gas - I was betting on price appreciation but I added a cautious note saying that appreciation won't be long-living. So it happened. I quit my longs a day before month maximum and saved profit. This decision was purely based on historical price behavior and technical weakening of NG.

    Cocoa - I was waiting till last decade of the month cause that's when prices for cocoa usually hit the top during many years. Position is suffering a small loss now but I am not worried cause it is too early to make conclusions and I never expected to catch the very peak. According to COT report, the users of CC have accumulated a record short position (meaning that they know something bad others do not know yet) and funds are very long now (one should expect them to start fixing profits). I have March contracts so I guess I can afford some waiting. On the side note I see comments telling scary stories about shortages of cocoa and if memory serves that usually happens about the time when market is going to attract last fools and drop. In my opinion we are in a situation when any shortages (if any) are way too much outpaced by speculative buying.

    Soybeans - we started month just at USD14 per bushel and ended it below 13. Another seasonal trend proved right.

    Crude Oil - the war did not happen. Obama did not want it, his people did not want it, allies could not offer more than verbal support, who exactly used the gas was not proven. Obama played it smart and Russians helped him. So they won. Who lost - French president looked like a fool cause he made purely emotional decision and Secretary Kerry who started his race for presidency with a false start. Back to oil - November contract opened September at 108+ and closed at 102. I quit my shorts at 102.50 as I notice support at these levels. It may possibly be that war premium is no longer in place. At the same time, from Fibonacci waves theory standpoint this could be a corrective wave A to be followed by a hike, wave B, and further drop - wave C, the last one in the cycle of 8 waves. But I am not an expert in this theory so prefer to quit and observe non-technical developments.

    Apart from the above I was selling strangles but they were more technical trades so I will not talk about them.

    All in all this month was a good one. Let's turn the page.

    Oct 01 11:08 PM | Link | Comment!
  • My September-13 Strategy

    In September I am interested in following commodities:

    Natural Gas - seasonal trends show that NG bottoms in the end of August ( which we already seen around 10th of August) and appreciates during September. I opened my longs immediately after bearish storage report last Thursday of August. However I am mildly bullish as temperatures are not supportive I bet on seasonal trend alone.

    Cocoa - September is the month when harvest starts in Africa. I will be shorting CC in September.

    Soybeans - seasonal trends show bearish trend in September. Weather is not bad either. We had mad bullish run in August and it is due for a correction. These 3 arguments make me bearish. However there are talks of poorer yields so let us not be too arrogant.

    Crude Oil - I do not believe that WTI will hold at near 110 levels. I am shorting oil. I bet on peaceful resolution and Obama's wisdom. He is between a hammer and anvil now - absence of solid evidence against Assad (otherwise it would be made public long ago) on one hand and image of USA as a World watchdog on the other do not let him make his mind. The worst is that supporting anyone in Syria is a bad choice - the choice is between dictator and zealots, a lose-lose situation. I guess that political yells will last for a bit and after they will focus on something else - debt ceiling, North Korea, Snowden etc. Apologies for cynicism.

    I have a few non-directional trades in mind too - I sold strangles on coffee and intend to sell strangles on gasoline and/or heating oil as premiums are very juicy. I am thinking of selling strangles on grains too but I am not quite sure in wheat/corn non-directional price behavior.

    September may bring a few big surprises - tapering welfare aid for banks QE and war in Syria may roil all markets, weather developments may affect grains, hurricanes may add to energy and juice. Lot's of things to watch this month.

    Aug 30 10:24 PM | Link | Comment!
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