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Hedging commentary for 8/18/15& 8/12 report

Published on: 15:35PM Aug 19, 2015

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Attention Corn & Soybean Producers:

Feel free to inquire on learning about the best way to hedge. In my opinion my strategy is the best I have seen since I became a member in 1976 trading corn and soybeans for my own account.


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 40 years. 

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November soybean

9.47                                 

9.28 ½                         Bracket Line Resistance        

9.23 ¾                                    

-----------9.16 ¾        Pivot

9.09 ½        

9.01 ½                         Downtrend Line acts as Support

8.96 ¼                         Contract Low

5 day chart...         Down from last week same day                                                                                         

Daily chart   ….     Down 

Weekly chart …   Down     

Monthly chart ….Down                     9.72 ithe 200 DMA

ATR 23 ¾                                                   Oversold 16%      

 

 For 8/18/15Daily numbers supports, bracket line resists.   

Everything I say or have said in the past, is my opinion based on my wisdom and knowledge, and the way I view reality through my eyes as a trader. 

 

“New subscribers should now see what I have been saying, that prices are fleeting, and if you have an opportunity to improve your hedge cheaply, do so no matter what you think. I am bearish in the long run, but insisted to reduce call spreads because if for no other reason, it was the “prudent thing to do”. Doing the right things in the long run, will do much better than doing the wrong things”.    

 In my daily November soybean numbers on Tuesday; my pivot acted as resistance and was .02 3/4 from the actual high, my support was .01 from the actual low.   

8/18/15:

 

Grains: Prices are comparatively in the cellar, and the market is waiting for more information. Those looking for answers, and thinking crop scouts will give you clues to the final production, to me is like the “man behind the screen” and now after all these years you can see why to not “believe the Wizard”. The wizard is able to deceive you with his talk of “all and great power” and the ability to see things in clarity and with great power. The crop scouts figures will change by the time they reach the other end of the field. Let me remind you, you did not guess right on your own production in your own fields a day before combining, so common sense and logic should tell you that what is seen now is meaningless. But THAT is all they have to sell. It is hard to find the 1% that can truly tell you what is known, and what cannot be known. They tell you to bet on the unknown, I tell you to only bet what is known (the charts), and you should know what you are doing and why, that you can know. Not knowing is one thing and you should proceed with caution, but they are much more dangerous, because they think they know what they are doing, and if the why is based upon crop scouts walking through over 160 million acres in the middle of soybean production, good luck with that. Players need luck; casino just needs to keep the odds in their favor.  

 

They tell you how to guess and play the fundamental numbers; I teach you how to hedge like you were a trader/casino. Maybe if they knew how to trade, they would know that you never say “sell it at $5.50 and if you cannot get that, throw it in the bin and sell it next year”. Never have an open end to the amount you can lose as you pursue a reward.

 

My guess is you woke up that the herd mentality does not work, and you knew you could not do worse on your own, than following the herd to the slaughterhouse. Now the only fight you have is with yourself. Being able to plan, and execute, is easy if you are the 1%, but if you have an old lady on one shoulder, and the  shoulda woulda coulda on the other, well you know how that works. Plan, execute, and live with your decisions is all that you can ask of yourself, and along the way if you learn something about yourself, or like what I teach you, improve whenever and whatever you can, whatever works for you.   

 

Nothing has changed the chart since Friday’s close. Same recommendations to improve the upside whenever and wherever cheap, and to start over on hedges that have or close to running out of protection, and START OVER when less than $.08 remains on the 4 way.

 

“I want to trade at without bias today, and risk $.03 in corn, $.04 in wheat, and $.05 in soybeans using a stop to protect any idea”. 

 

8/17/15:

 

Grains: First thing I want to talk about is the soybean chart. What do you see? First thing I see is the gap at $9.10 made on the report day, and the next 2 days was tested but failed to “fill the gap”. This is one good example of how a gap price has more meaning than if the price was not a gap. Not only was it support, but so is the low on report day of $9.01 ½, and then a contract low which is $8.96 ¼. You have a gap support with good support just below it, which combined is strong support versus than if the next support was $.30 below, and the contract low $.30 below that. So the “stacked” 3 supports within $.14 of each other especially at contract lows, is better support than when in the middle of a sideways range. But no matter where on the chart, when numbers are close together, provide even more strength to hold one of them. Knowing this, you can clearly see why I would want to take profits on my shorts there, even if I thought we would make new lows. Yes, my known risk bear strategies would be kept for the longer term to see if indeed we will continue the bear trend, but taking something off the table and into my pocket is the prudent thing to do, so I would have.

 

The market could open Sunday night below the gap at $9.10, and that would be bearish and I would look for a retest of the contract low. Or the market could gap a little higher and if it can hold it would provide a set up to correct higher once again, and another test of the bracket line at $9.28 ½.

 

With that said, you can see how I have a foundation to work with, something solid, like the chart, and I have had a huge advantage over someone who trades fundamentals. Couple the chart with my foundation of risk protection such as stops or known risk strategies, money management, mindset, and approach, and you become the casino. The report was really bearish, but not unexpected since I am bearish the charts, but how does that report equate to discovering what the fair price or value is? Grain fundamentals at this time of the year are a fool’s game, how many times did the gurus get bullish and bearish this year, and how many times EVERY year? Next month I will have been short soybeans and corn for 3 years as a trader, which has helped you greatly. The day will come when I can turn bullish, and it might be in 6 months when we finally arrive at my destination of $2.90 and $7.90. SA will need to be looking good to get to my targets, but I will be glad to get long sooner if the charts allow it. The more years you have been with me, the more you have learned, experienced, and have become wise in what you are doing, and the alternative to what is “out there”.      

 

Nobody can tell you what the market will do, but ALWAYS KNOW WHAT YOU ARE DOING AND WHY. If you know what you are doing, you should be able to make a plan on what you will do no matter what the market does, and if it gets to your price, you do it. There is nothing to “see” and wait for, and then be the old lady and say you knew it, but missed it. If you had a plan, and the market gets there, execute your plan, otherwise, you have a problem that needs to be corrected. If you have a problem making plans in advance for a long term hedge and executing it, you have zero chance in being a day trader.

 

Did you write down what prices will be? How did you do? It took one minute to journal; do not say you did not have the time. Try again. What do you think prices will be on Monday’s close, and on Friday? Time for the biggest question of them all, what will the price be when the November soybean and December corn options expire? If you do not want to guess, you better be 100% hedged through 2017.

 

I never tell you what to do, I always tell you what I would do, and I explain all the reasons why.

 

Whatever you learn from me that can help you improve whatever you were doing before you met me, is my mission. Instead of telling you that you need me, I am trying to make everyone NOT need me anymore.

 

I make money the old fashioned way, I earn it. I am beholden to nobody, and certainly took passes on opportunities with people I did not like, or people I did not respect. My service hopefully will allow you to never be a victim, and knowledge will help you not be. You take the credit of all your success and I see all of my producers doing extremely well, and each has a batting average one better than another, but all would make my team. I would rather have them as my salesmen, than the brokers that make everyone broker than you were before you met them.

 

Corn made a new contract low last week, nothing bullish about that. Maybe the bottom pickers will spec against the contract low, and maybe the shorts like me would reduce by taking some profits, and would result in another sideways price range waiting for the growing season to progress. Consider $4.00 now strong resistance and might not be seen again this year. With that said, any rally near there should be sold, or for hedgers that means to improve your hedge by capturing more income, and now with little time remaining and out of the money puts are cheap, buying them back too giving you a short futures contract at the put strike you are long. Last year spot month corn got down to $3.18 in October 2014. That is the first target objective of long term shorts. $2.90 is my final destination.

 

Wheat continues to trade in its 2015 sideways range, and the price parameters have not changed.

 

I will not talk about 2016 and 2017 hedges until it is time to “morph” it. I am done recommending hedging through 2017, I can lead a horse/you to water, but cannot make it/you drink. I can and only should tell you what I would do and why, each of you must do what is right and the best thing for you. All producers have their own idea for risk, reward of higher prices, and when to hedge 2016 and 2017. Most have the minimum protection, with reasonable expectations of $.40 to $.80 upside unscathed (long above the put strike until the call strike sold). Same goes for 2016 hedges that were using 2015 options; you should have been morphed to 2016 options by now. Do not be short 2015 calls or call spreads if they are for 2016.

 

“I want to trade without bias today (had a friendly bias on Thursday), and risk $.03 in corn, $.04 in wheat, and $.05 in soybeans using a stop to protect any idea”. 

 

8/12/15:

 

Grains: New subscribers now have heard me say more than once, “here today, gone tomorrow”. “Prices are fleeting, capture what you can when the opportunity “presents itself”.

 

Report today at 11am, your position should reflect your current NEED for protection, and your DESIRE for the upside.

 

Like all of the 7 years I have been doing this, all other hedge services has HEDGE on the sign on the door, but nothing could be further from the truth. I was told by two of my producers, that ********* recommended buying back “your corn” at $4 on Monday. First, it is not your corn, it is a product that you produced not to keep, but to sell, so I look it at as not YOUR corn, but someone who uses it uses it, it’s not their corn either. You produce grain to make money, not to keep until it spoils. Buying back your corn after you sold it does not make sense, you grow it, sell it, and on to the next production year. Otherwise, why don’t you buy back your corn that you sold in 2012, maybe you sold it for $8 in 2012, and maybe you already bought that back at $6 looking to sell it again at $8.00? When does it end? When does a hedge or marketing year end? My service tells you to act like a futures trader, there is an entry, and an exit, and then on to the next trade idea (or marketing year for a hedger).

 

The strategy you use makes you the casino, gives you control, and gives you some protection as you pursue more income. Once the cash sell is made, it’s over, that was what the hedge was for, give protection as you seek more income until you shake hands and sell cash.       

 

If you wanted to buy on Monday, and/or wanted to sell on Tuesday, you are the herd. If you follow what I do, I was selling on the way up, and was a buyer on Tuesday on the way down. I do not chase markets, and I do not sell at supports, and I do not cheerlead rallies to go past significant resistances.

 

It does not matter to me what the report says, what is important is how the market reacts to it. I want to sell rallies and want to buy breaks to take profits. I am uncomfortable being long while the funds are long and when we are at resistances. As a hedger and the market rallies to a level you can take advantage of, do so, and if the market breaks to a significant support and you can get upside back cheap, do so.

 

Soybeans have the bracket line near the $10.45 and the contract low at $8.96 ¾, so the pivot is $9.71 and that is where the market awaits its next move. The 200 DMA is also right here, as well as a pivot chart point at $9.76, so the market is perfectly balanced and NOTHING for me to do before the report. If it was above $10 I would be playing the short side, and if at $9.26 ¼ or below I would be long a minimal amount of contracts. For the last 3 years my bias tells me to continue to play the short side, and when I take the buys it is for less than 20% of what I would risk taking the sell signals. That is how I reflect my bias. But it is only the charts that tell me at what price levels I want to bet on. Not the weather, the chatter, or anything else, especially the “guru’s”.

 

Corn chart is more pathetic, it could not even fill the gap at $4.02 ¾ even though the beans were testing $10! Too close to the contract low to sell it for a spec trade, that opportunity presented itself on Monday, and as far as buying it at the contract low, I normally would be gung ho to do that, but when the funds are long up tp their teeth, puts the kabosh on that idea for now. But if they were short big time, I would be more than happy to take the buy signal. I would be looking to sell a rally near $4; I have no interest to buy at support today other than reducing the upside or taking profits if short.

 

Wheat is a market that I never liked to trade, because it is much easier to manipulate short term, than the much bigger corn and bean market. Long term sideways market continues, which will break down if corn does. Otherwise, it continues to be a sell the closer it gets to $5.50 and a buy the closer it gets to $4.69 ¼ the contract low. 

 

I guess the persons running the funds were right when they say “make a small fortune, let us trade your money”, but what they do not tell you is that you will need to start with a big fortune. 

 

 I want to trade at the extremes after the report, and risk $.03 in corn, $.04 in wheat, and $.05 in soybeans using a stop to protect any idea. 

 

 

 

Want to know what I think for tomorrow and going forward?


The markets covered daily are 2015, & 2016, and 2017 Soybeans and Corn.


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About the author

Currently a member of The Chicago Board of Trade (CBOT) and registered with the Commodity Futures Trading Commission (CFTC) as a floor broker and as a Commodity Trading Advisor (CTA) and a member of the National Futures Association (NFA). I started my career in 1973 on The Chicago Mercantile Exchange trading floor working for a major firm. Three years later I purchased my first membership and began what would become a thirteen-year commitment to trading soybeans for my own account on the trading floor. I began trading options on futures since their inception in Chicago about twenty years ago; doing so, I traded in various pits on the trade floor. 

One of the major lessons that I have learned from all my years of experience is that knowledge is an important condition for the possibility of successful trading. Knowledge gives you a better chance to succeed by eliminating obvious mistakes: with it, you will never find yourself shamefully uttering, “If I only took the time to learn”.  
         
I want to save you from such regrets by teaching you where the danger is, what it looks like, and how to go around it, while still keeping an eye on your destination of success. In short, I will teach you how to combat error with knowledge.
       
My mission is to educate you, giving you my 40 years experience, wisdom, and knowledge from which you will then be able to use and benefit from at will.

I know what will help you make money, and I know what will insure failure. Use my services and prevent, “If I only knew”.  
  

Howard Tyllas

Futures trading involves the substantial risk of loss and may not be suitable for all investors. Past performance does not mean future results.

If you have a question, or comment, email me dailynumbers@futuresflight.com

 

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