I think the extreme bearish stage of this market collapse is nearly through and I wanted to share some ideas of things I am watching.
I am about ready to pull the trigger on a stock index trade. While here in the US we are yet to experience peak COVID-19 cases yet, new cases are now in decline in some of the worlds hottest spots such as China and Italy. The peak in the bond market is signaling that stocks have bottomed. I think we need to be thinking of how to enter the market with a long position of some sort, even if it is only with a micro-mini contract.
I am going to take a position in one of these indexes, but I am not expecting this move to be pretty. I think we should still expect a lot of volatility. We have just been through several weeks of extreme volatility and if that about did you in then don't feel you should take this trade. I am going to list some ideas that I think should give an easier ride a bit later.
Here are some ideas on where I would like to see the stock indexes go tonight. I may put in an offer to buy one of these at these levels. Remember there are the micro emini contracts which are 20% the size of the normal emini.
I am not ready to recommend buying any precious metals now, but I may try a Palladium contract here. I am placing an order to buy a Palladium at 1400 tonight with a stop at 1350 should it get hit risking 50 points. Each PA point is worth $100.
The move in PA since early December was just ridiculous.....almost parabolic. PA trends well but its cycles end with a thud. It tends to give a steep drop lasting only 2-3 days before resuming higher. It usually becomes oversold on the 3 and 5 day RSI.
Ohhh, did I mention the margin required for a PA contract is now $28,600? It was only around $12,000 6 months ago.
I did buy soybeans tonight. Seasonally speaking, this is not the time of year you want to be buying soybeans, but the cycles and seasonals are kind of out the window at theis point. This trade is more based on what appears to be a completion of a price pattern going back to last fall. The green and the blue box are identical in size. I think we could see beans rally 50 cents over the next few weeks. Stop at 8.20.
I like long positions in Hogs and Cattle. The target area is in the green.
I also like long positions in sugar, cotton and cocoa here. Cocoa has already given a hammer type of candle today.
Look at the updated futures specs document I sent out earlier to learn more about how these trade and what the margins are.
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