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Elgrey
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Expat finance professional living and working in Hong Kong.
  • My January-14 Strategy

    OK, let us start 2014 with the following trade ideas:

    Wheat, Rice, Oats - these three commodities show strong historical tendency to decline in January. Wheat has been a loser for last few months and I do not expect it to recover any time soon. At the same time I do not expect it to drop too much either as it has taken much damage already. OK, there is no such thing as rock bottom but funds short wheat aggressively for last two months so most of the damage has been already caused. Rice market has been down for last couple of weeks already so the trend is on the move. How long will it last? I do not know and I do not have big heart to short this market because of its small size and high volatility. Same applies to oats - although market is overbought I want to wait a bit longer before deciding if I want to jump in.

    Cattle and Hogs - these markets tend to show positive returns in January. However I notice that funds accumulated a substantial long position in live cattle already and this may be a sign of coming bloodshed for unaware bulls. For hogs I am not convinced that historical trend can be applied this year either - recent decline in prices is not finished, funds still have lots of hogs they may want to sell in their portfolios. Recent Hogs and Pigs report shows a slight decline in inventories, 1% in almost every category but I do not think this can revive bullishness and we may see further decline in hog prices.

    Copper - January is seasonally good for copper. I think this is linked with new year optimism. There is plenty of good data coming from almost every source but somehow I do not believe it. We know that governments have not shown how they want to solve state debt and deficit issues and we may have new Greece any moment just like we had Cyprus. it is not me being a stubborn contrarian, it is me holding longs in copper in 2013 when Cyprus happened.

    Palladium - buying palladium during last days of December and selling it in the end of January or early February worked almost every year during last 30 years. In fact this is one of the strongest commodity cycles I have seen. I am long palladium.

    I like to listen to what people like Jim Rogers, Marc Faber, Nouriel Roubini say. Couple of years ago all of them mentioned that 2013 and 2014 would difficult years as major problems of huge debt and underregulated financial markets were not addressed. 2013 was a year of new highs for Dow Jones but I cannot recall any big movement in unemployment rates. Situation improved marginally. At the same time new highs of stock market could be just another bubble caused by free cash flowing from QE3 and tapering of QE3 may blow this bubble and expose same old issues - too much debt, too much money flowing into speculation, too little attention to real sector. Someone also said that booms in commodity markets are caused by booms in economy. This is obvious - if the World needs more oil and copper than more players will come to these markets. But I read articles about outflows from commodity funds. More than that - even big banks are selling or downsizing commodity trading units. This is not a rosy situation. So I'd rather keep my "bear mode" on.

    Jan 01 10:28 PM | Link | Comment!
  • My 2013 Annual Review

    My apologies for skipping December post - I was too busy with work, studies, and family so I had literally no time to write and honestly speaking I was closing my books to draw year-end dividend so I was not interested in new trades.

    This morning I read article about commodity markets stating major word "Disappontment". I cannot say that about my minifund perfomance. My return on investment is almost 40% in 2013. On a side note I notice that most of the time I was shorting commodities, so 2013 was indeed poor for commodity markets. This year we lost illusion of gold super returns, threat of global famine evaporated with good crop knocking down grain prices, industrial commodities did not make a come back. The only bright spot is natural gas which market finally re-established status quo of supply and demand.

    OK, let us say good bye to 2013 and move into 2014. Happy investing!

    Jan 01 9:24 PM | Link | Comment!
  • 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!
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