Hedging March Soybeans and Trade Ideas for 2/8/13
Feb 08, 2013
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Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 36 years.
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This report was sent to subscribers on 2/7/13 4:30 p.m. Chicago time to be used for trading on 2/8/13.
After the close recap on 2/8/13: My resistance was 14.98, .03 1/4 from the actual high, and my support was 14.51, .02 from the actual low.
All charts and numbers for 2/11/13 have already been sent to subscribers at 4.00 pm.
15.20 ¾ Use the same numbers as used on 2/7/13
15.03 ¾ FG
------------14.86 ¼ Pivot
14.74 ¼ FG
14.53 near 200 DMA
5 day chart... Up from last week same day
Daily chart .... Sideways
Weekly chart ... Down
Monthly chart ....Sideways 14.54 ½ is the 200 DMA
ATR 23 1/4 Overbought 82%
I continue to say "Gap bracket line at $15.03 ¾ is now resistance, 200 DMA at $14.54 1/2 is support".
5 Minute chart shows an easy sell at resistance, buy back at the pivot (get long too if bullish today) back to $14.94 1/2 taking profits and/or going short, and take profits on the close. Even if you took 1 trade as a bull or bear, if you waited for a good entry, profits should have been realized, and the reward greater than the $.06 risked. Buy stops above the resistance were never threatened, nor was the sell stops under the pivot.
In my daily soybean numbers on Thursday my resistance was .01 from the actual high; my support was .03 ¾ (pivot was only .01 ¾ in open outcry) from the actual low.
Grains: Farmers and speculators should never assume that they can just do what they want and then just hope that it all works out for the best; if they have failed to plan, then they have planned to fail.
My producers the first year felt reservations about hedging, especially when the market went up right after-wards, but having the protection gave them the confidence to feel they did not need it. But then in time when the market went lower, they once again felt that it was the right thing to have done, and they realized the "old lady at the race track" was once again at work, the difference now is they were made aware of and learned that whatever you do it was the right thing to do, and that is why they did it. I have stressed that the market does not prove what you do is right or wrong, but rather it is the right thing to do regardless of the outcome. If something is not the right thing to do, then why did you do it? Time allows the experience that leads to the wisdom. If I take a trade idea or "morphing" a hedge, the risk reward and chart location is worth entering, and time will justify if the chart location holds or not, and that results in a winner or loser. The hedge or trade idea was the right thing to do when you did it, time will tell the result, but making the trade idea or hedge was always right or why did you do it? You cannot fire your gun and say that if you hit the target it was a good shot, but if it does not then you should not have pulled the trigger. When you pulled the trigger you thought you would hit the bull's-eye, you cannot say if you missed that you should not have pulled the trigger.
Buy protection, if it goes down it was the right thing to do, if it goes up it was not. That is no different than someone telling you to bet the winner after the race is over. Don't bet on him if he loses, but bet on him if he wins; this is not reality. Dismissing this reality of having to bet the race before it starts, and becoming a commentator who tells what should have been after the results are in, will never be able to gamble success-fully, and unless the responsibility for your actions are taken, blaming the market will never get your money back. I have always said, you will never know for sure what the market will do, but you should always be sure of what you do and why you do it.
Compare what we do locking in a hedge and making $.60 or more of every $1 if the market can rally, to the services who watched $8.49 come and go looking for $10 but have lost $1.37 right now, and looking for the market to rally about 20% from $8.49 to $10 when $8.49 was a new "all time high", was really euphoric in their predictions. (Did they take under consideration what $10 would do to demand?) Let's say that they could justify looking for $10, nothing can justify losing $1.37 on ANY trade idea. Talking "bull" to producers who only listen to them because that is what they want to hear, and one tries to "headline grab" attention from the rest predicting a more bullish high price than the next service, goes home every night and asks their wife "what's for dinner", while the farmer listening to them goes home to the "house of pain", and with no plan to control risk, becomes a victim. I wonder how bullish these services would be, and how long they would watch the market go down against them, before they would "do something". They are living a stress free life having no "skin in the game", but they have no problem telling you to risk your money because the market will go higher, and you will be able to sell it then, even though we are not close to those price levels. Almost all of them have no plans if the market goes down instead, and it only takes one time for it to be a fatal decision to not have a plan to control risk. All of these hedge services are focused on the market going higher, my focus has always been if the market goes down. Just like my philosophy in trading, I am not worried on how much I am going to make, I am always defending how much I am going to lose. Winners take care of themselves, but losers can end the game.
I have been saying why I have been bearish since September, and I continue to have a bearish stance until the chart shows me something different than this bear chart longer term for both corn and soybeans.
I continue to want to get more protection on any rally when at a resistance. I have really seen the progress made in my producers, I clearly see how each and every one of them has now taken responsibility and are in control of their decisions. NOBODY can tell you today where we will be tomorrow on the close, let alone where we will be by next Friday. I believe that my producers and long term subscribers can tell most of the time what I am going to say before I say it! You are looking at the same chart that I and all who look at them see, and by now you should be looking at the chart basically the same as I do. We see where the chart has support and resistance, and know there is more chance of holding there than random numbers. We know that sooner or later they can be broken, and that is not a problem when using stops. They are also getting less and less concerned with fundamentals and why the market might move up and down, they are only concerned if the market moves to a support or resistance that they can improve their position, not why the pendulum swung there.
I have seen grain fundamentals and reports for 37 years now, and my approach has always focused on participating in the market risking little to make a nice reward, not trying to get the fundamentals right. As you have seen the last few years and I have seen for decades, you can get a bullish report and the market can go down instead, or a bearish report and the market can rally. I always look at fundamentals as a possible driver of price, but learned in my first year that standing in the pit with a long position and the report is bullish, the market is called $.10 higher, but it opens $.10 lower, that you cannot justify staying in a losing position even though you were right what the report was going to say.
We are at another tough decision, which happens often when you are gambling, and who better to make the "call" than you? I just clearly said as I have always said, that nobody can tell you where we will close tomorrow let alone the farther out you predict in time, the harder it is to get right. You already know how I look at the chart, and how I make my decisions based on them. All trades are not created equal, so I do not risk the same amount on every idea, and that is based on the chart and the location of the trade idea. With that being said, you have the same odds as I do to predict if the gap at $15.03 3/4 in March soybeans will hold the market from going higher, or if the gap at $7.08 3/4 will hold March corn from going lower. You know that I do not "cheerlead" the market through support or resistances, so I look at them as holding until they do not.
If you like to blame someone else for your decision to take their guess on the "bet" if wrong, and take the credit if their idea was right, than that would be the only reason to do so, otherwise, take responsibility and make your decisions now that you have the "tools" I have used for decades.
Lastly, the reason I have been going into "mindset", is because it is crucial for success. I as well as you my subscribers has learned how to improve what we were doing before, have improved our ability to execute our ideas, and not be focused on the half empty glass but rather the half full. Great baseball players only get 1 hit every 3 at bats, so perfect is not reality.
This is a hard decision to pay more money for 2013 protection at this time, but think of the decision that unhedged farmers are facing! At least you have about $.48 in your pocket free and clear if the market is here or lower on expiration ($.68 in November soybeans), unhedged farmers have zero. All should feel good and have learned, starting with a profitable hedge that can be adjusted with the need to do so is much better than to "risk it all". If the market rallies $.60 from here they will be no better off than you are now, but if it stays here or goes lower it gets worse for them. They risked $.60 at $6.40 looking for $7, they have lost even money for that bet so far, and tell a gambler to bet "even money" that the market will be at $7 when the high in 2012 was $6.65, instead of going down to $5.80, no gambler I know would take that bet! Does not matter corn, beans, gold, currencies, no matter, no gambler bets something will happen that has not happened in the last year and get only "even money", or even more so would lose a small amount on that idea. This is why these advisors could not trade their way out of a paper bag, because they can describe a picture but cannot paint one, and why maybe only 1 out of 100 people can trade successfully for long periods of time.
I do not know 1 successful trader who is bullish or bearish and let risk get out of control. I have no problem analysts giving projections, but not having a plan and watching the market go down is no different than the thousands of people who bought a membership and did not last 1 year on the trading floor. They might be analysts, but they are NOT traders. I have empowered you the ability to slow down the risk in the market and be able to control your "gamble", and with the mentality that you need not gamble the same every month and every year, or the same amount especially this all or nothing mentality, has allowed the freedom to reduce stress, and better understanding of using the markets, and not let the markets use you.
Maybe the report has already been "baked" into the current price, maybe not, but whatever the report says I will be more interested in how the market reacts to the report, than the report itself. Maybe a slightly bearish corn report will rally the market, and a slightly friendly soybean report will break the market, that is what I am interested in, but no matter what the report says, I always use the charts for my decisions, and the fundamentals for the possible "what if's".
Watching markets go to almost $18 and $8.49 is one thing, locking it in is another. Worse than that is to not have a plan to control risk in case they were wrong. Talk about becoming emotional with the ups and downs and doing NOTHING! As the years go by my producers clearly see it is better to take some of what the market gives you no matter how high the market can rally, compared to trying to "pick the top", and to have a plan if the market goes down, while having some "at the money" protection the entire time. I want to trade the numbers without bias today and risk $.04 in corn and $.06 in soybeans using a stop to protect any idea. We will be sending the report asap.
Grains: Brisk volume the last 2 days was no help to corn, but supported soybeans. You can see for yourself how the gap bracket line at $15.03 3/4 has held the market from further advance. Corn on the other hand after posting a $.68 advance from the pre-report low to the high made near the downtrend line at $7.46 1/4, has sold off since posting that high and closing lower that day (minor reversal). 3 days soybeans have been trying to get past that bracket line and has produced winning trades each time it traded near that resistance. It might go through it one day, but losing $.06 after making 3 winning trades in a row is why I consider it a "casino operator" bet because the odds are in your favor.
Report on Friday expects a friendly report by looking at the strength in the soybean market, and corn looks like it is worried about a bearish report. The January report had already been discounted prior to its an-nouncement, and since it was not more bearish than thought, the market had nowhere to go but up, and as I had said at the time, it will go higher until it discovers at which resistance level will hold the market from further advance, and then start its journey (at least corn right now) down to discover which support will hold. The pendulum swings! This time it looks like the soybeans are overbought after correcting $1.50 since the Final report on 1/11/13 and closed lower (a price not seen since 6/28/12). Bulls need to close over $15.03 3/4 a couple of days to target $15.46 next. Corn looks like it is in neutral ground now, and if friendly it could test $7.46 1/4 once again, and I think will be the sideways bracket line resistance going forward in time. The gap at $7.08 3/4 is support and if that goes, look for a retest of the pre-report low of $6.78.
Producers concern remains with the 2013 crop, and I would ... Subscribe Now!
Get yourself where you want to be, but make sure you are comfortable before the report at 11am on Friday. You know your risk if the market goes down, you know your reward if further protection is not bought (or bought cheaper if it can rally) and it is your decision. Who better than you will control your risk that you exactly want to assume, and what gamble you want which can be changed at any time if your thoughts and ideas change.
I want to trade without bias and risk $.04 in corn and $.06 in soybeans on any idea using a stop to protect.
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