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Veteran Advisor

How markets behave

I don't have a clue how markets behave in the world of centrally planned intervention- and neither do you although your guess may certainly be better than mine.

 

I will note the following divergences that bear watching- mostly for the purpose of elucidation than for anything actionable- we're all flying by the seat of out pants now (a good thing to remember when you start thinking you have it figured out).

 

Dow Theory non-confirmation- Dow Transports not even close to maing a new high as the Industrials made a very clear new high. Of lesser (or no) importance- Nasdaq and SP couldn't yet.

 

Commodities- particularly crude and gold- looking pretty punky while the doollar was making new lows- not unheard of but unusual with the recent script.

 

Long/Short Pairs- Hedge funds have popular long/short pairs- many of those popular pairs blew apart over the last week with the dogs going up sharply and the gems under pressure.

 

There's some internal ferment in the "all one market", don't know what it means but will watch attentively.

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8 Replies
Veteran Advisor

Re: How markets behave

Ps- Trannies making a new low, yuck.

 

But with the government as the bid, does anything really matter?

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Veteran Advisor

Re: How markets behave

I have to agree with Pal on one thing there is no absolute correlation between monetary policy ( i will use that losely) and market movement.  Over time we can see the effects but it is a trend not a straight line concllusion. 

THis time the bad deal will be that once they try to change in mid course the market will overwhelm them. OR using your term the market is about to be very disobedient!

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Veteran Advisor

Re: How markets behave

Hi JR,

 

I respect both of your opinions but for myself am 100% sure that you're wrong in this case.

 

Doesn't mean that I have any better idea than anybody else where the market is going, in fact it makes it harder.

 

If one had beleived on august 28 that corn was going to $7 because of fundamental reasons, he would be happy (except it may go to 5.5. before 7, if it ever does), but would have been, in my view, mostly lucky.

 

The reason bing that every chart in the book shot up when Ben said he had the risk trade's back.

 

Every market has some kind of bullish story, as well as a bearish story. When money makes the bull play, the bullish story becomes THE story.

 

Best, h

 

The difficulty that I refer to is to have the assurance of what the PTP will do and when they will do it. Might as well bet on rain 20 days out.

 

 

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Veteran Advisor

Re: How markets behave

Well I disagree I figure I am about 75% wrong! BUt in a coupole of hours I might be in total agreement with you! HE HE.

Is there much grain movement out there?

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Senior Contributor

Re: How markets behave

No fundamental reasons for corn? The story was, and still is to a large degree, the fact that the yields were repeatedly downgraded a few bu at a time while everyone nervously looked at ending stocks, ethanol use,exports and the like. Same with beans, only slightly different reasons.

 

Nox, I respect your skills in evaluating markets, but I think you are on a train that is bypassing some relevant information in your need to get to a certain conclusion. I don't think everything is hunky dory, but following your logic would make marketing objectively impossible, and I think it's not prudent to go there if you are still selling. One needs to continue to focus on the physical fundamentals and follow the trends and changes to them to market in an orderly fashion while taking part in these opportunities.

 

 

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Veteran Advisor

Re: How markets behave

I'm just saying that corn might just as easily have been a 5.50 market as a 6.50 market with those same fundamentals.

 

Also pretty comfortable in saying that it will take fundamentals considerably more bullish than 2008 in order to take out the 2008 highs.

 

Best, h

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Senior Contributor

Re: How markets behave

But it did reach 6.50, so no more need be said on that score. And rationing is not clear yet with tighter ending stocks.

 

As for taking out 2008 highs I don't know.

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Senior Contributor

Re: How markets behave

nox and pal, i agree with both of you. nox i agree that i dont see the 08 highs taken out, they may get pushed hard, but in my mind will stand. and pal is right that the trend is your friend and we are still going higher and that will continue until it doesnt. so until we started pressing the 08 highs, stay bullish on the physical, and then and only then consider hedges or forward contracts. these are times we only experience 2 maybe 3 times in a farming career. and old farmer told me years ago, you will make monster money five years the whole time you farm. and that whats sets up you up for the rest of your life. this is another one of those times. fwiw

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