The World Didn't End... Now What?

December 20, 2012 11:56 PM

What Traders are Talking About:

* Merry Christmas. Grain and livestock markets will observe normal trading hours today, but will trade an abbreviated schedule next Monday with grains closing at noon CT and livestock markets ending at 12:15 p.m. CT. All markets and government offices are closed Tuesday, Dec. 25, for Christmas. Normal trade will resume Wednesday, Dec. 26.

The long and short of it: I wish you and your families a very blessed and merry Christmas.

* Keep things in perspective. Funds have been actively liquidating long positions this week. With just two holiday-shortened weeks until the end of the year, some fund "window dressing" is not a surprise. It’s especially not surprising given the ongoing fiscal cliff uncertainties and the unstable macro-economic environment. With funds still holding sizable long positions in both markets, more fund selling is possible into year-end. While the sharp price pressure raises concerns about whether something major has changed in the corn and soybean markets, it’s important to keep the total situation in perspective, especially the timing. This started ahead of the holidays and in the final weeks of the year, suggesting it very well could be nothing more than a short-term pullback.

The long and short of it: A major key will be whether the fund selling dries up (or fresh buying resurfaces) with the start of the new year. If that isn’t the case, then there’s more reason to question whether to hit the panic button. For now, don’t panic, but be aware of the situation.

* The Mayans were wrong, but the 'cliff' looms. The Mayans' prediction for the end of the world didn't come to fruition. Shocking, right? But the U.S. fiscal cliff is still looming and House Speaker John Boehner's Plan B didn't even have enough support from his own party to get the needed votes. It looks like there will be a lot of last-minute scrambling after Christmas and before the noon CT deadline on Jan. 3 to avoid going over the cliff. Where this all ends up is literally anyone's guess at this point, but it clearly illustrates the vast differences that exist in Washington.

The long and short of it: Fiscal cliff uncertainty will keep markets on edge during the holidays -- a time when trading volume typically thins and volatility can increase.


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