2008-10-06

Commodities Are Tumbling

If you carefully analyse recent market action you can find few subtle but very important themes taking place.

a) Panic - people are throwing towels left right and centre. This forces people to get out of bad investments and usually people first get out of good investments as no one wants to crystallise a loss. Though I never understood how a loss on paper is any better but anyway these situations create opportunities.
b) Dollar is getting stronger against rest of the world (except JPY).
c) Commodities are tumbling along with every thing else (except Bonds).

This is an important shift in the markets. Remember the heady days when the world was running out of rice and wheat and commodities exchange traded funds were talk of every social party. Well now those investments are being dumped by those who got on the train late. I am looking at the following trades in near future.

CORN (ZCZ8) - I am short corn and looking to sell up to 480 with stop above 520 with target 325 - 275.
SOY BEAN (ZSF9) - I am short and looking to sell up to 1020 with stop above 1100 and target 800 - 700
WHEAT (ZWZ8) - I am short and looking to sell up to 660 with stop above 750 and target 450 - 350


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-VS