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Walter,
Whatever I'm using, to time me into the wheat/corn spread, is not working
(therefore probably not worth dissemenating). At least the "outright"
positioning is still holding up. I went long wheat on Friday morning while
kicking up sand, on the beach, in north county San Diego. Nicely formed
five footers, at intervals of about seven seconds, with a slight off-shore
wind, made for a beautiful morning to surf and a decent morning to go long
wheat.
For those that are curious about the spread and the indicator I have
attached a chart. Two standard deviations from the mean usually is a
"safer" bet than to "diddle in the middle". Now, besides smacking my
forehead, I have saltwater in my ears.
Has anyone seen my boogie board?
Steve Karnish
Cedar Creek Trading
http://www.cedarcreektrading.com
----- Original Message -----
From: Walter Lake <wlake@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Monday, May 01, 2000 11:13 AM
Subject: Re: KW0K/KW0N
> Hi Steve
>
> Sorry I didn't get back to you.
>
> I found an old email were you mentioned that you were using the BB
histogram
> on spreads. Are you still using that?
>
> I've been using MRCI's normalizing procedures on individual yearly spreads
> (30 years) along with the actual spread data to do more historical
analysis.
>
> "... Thanks for making me "think", or whatever it's called when my head
> hurts ..." Sorry Steve, this is usually caused by excessive smacking of
the
> forehead. <G> duh
>
> Best regards
>
> Walter
>
> PS: to others who wrote, you can used the "butt" end of the 3-D ribbon
chart
> in XL or a 1 stdev Whisker plot for cheap/dear analysis
>
> ----- Original Message -----
> From: "Steve Karnish" <kernish@xxxxxxxxxxxx>
> To: <metastock@xxxxxxxxxxxxx>
> Sent: Wednesday, April 26, 2000 11:36 PM
> Subject: Re: KW0K/KW0N
>
>
> | Walter,
> |
> | I don't know where the cut-off for big Pee and little Pee begins and
ends.
> | I trade for producers who do four to eight thousand acres of wheat.
Jane
> | Smiley wrote in "A Thousand Acres" that the measure of wealth and
standing
> | in Iowa was her title (1,000 acres under production). Of course, that
was
> | fiction. Some of my boyz yield 75 to 100 bushels an acre in our fertile
> | "loess" soil. To here them talk, they all "poor mouth" anyone who will
> | listen and complain about being poor dirt farmers. To me, these are
large
> | wheat producers. Some have lost 300k a year during this deflationary
> | spiral.
> |
> | I don't know who the author of the article was, but "trust me" (and hey,
> | never trust a broker that says: "trust me"), producers go net long all
the
> | time. I've seen feedlots in the OK and TX panhandles go out of business
> | because of their speculative long positions. I also witnessed two
silver
> | refineries close their doors because of their speculative long positions
> in
> | the precious metals. I've never traded for a grain farmer, large or
> small,
> | that has ever priced their crop on the board of trade.
> |
> | One of the questions, when opening an account is: "is you is or is you
> | ain't" a hedger/producer. All the ag-accounts check the little box that
> | allows them to trade at the reduced/favorable margins. A typical 5,000
> | bushel wheat contract requires $675 in margin for a speculator. The
same
> | contract can be held by a producer for a mere $400. Brokerage houses,
> | exchanges, and brokers don't give a rip that most producers don't
> "properly"
> | hedge their crop. The farmers get the advantage of the hedging margins
> | (theoretically, because they are not at risk...after all, they are all
> using
> | these markets correctly...right?) and then blatantly speculate in the
> | direction they "wish" the markets will go (up).
> |
> | If the "commercials" were all using these markets in the classic hedging
> | scenario, why did Orange County and the one of the largest Japanese
banks
> | take it in the shorts? (maybe they took it in the longs?) Since it's
not
> | against the law for a reporting commercial to speculate, the numbers can
> be
> | misleading.
> |
> | Let me stoop to one lower rung on the ladder. After interviewing
hundreds
> | of farmers, I've come to the conclusion that "most" farmers LIE to their
> | county extension agents about what they have under production. Most
> county
> | extension agents claim that they know most producers lie, so they
"fudge"
> | the numbers to compensate for the little fibs when the producers feed
them
> | the "funny numbers". Now, that's about as far as I have followed the
> | dishonesty of "reporting", but as you can imagine: the govt. reports
that
> | come out are not necessarily accurate.
> |
> | Don't believe everything you read in Futures Magazine...even I was
quoted
> in
> | the April '00 edition and as Groucho used to say: "I'd never belong to a
> | club that would have me as a member." Producers go long everyday. The
> text
> | book examples of what should be done does not necessarily play out in
> | reality. This "tired" discussion has been rehashed a dozen times on the
> | "Realtraders forum" over the last three years. Survey brokerage
> principals
> | or reps and the broad smile of recognition appears when this topic is
> | discussed.
> |
> | This in no way diminishes the value of the COT report (I guess), but is
> this
> | information a real tool in creating wealth? Steve Briese would argue:
> YES.
> | Briese's broad "brush strokes" vaguely frame the market (my very
> subjective
> | opinion) and are not very much use for someone trying to catch a couple
of
> | pennies on one side, only to flip and reverse their position.
> |
> | Walter, you're contributions to the forum are terrific. Please continue
> to
> | provide us with your valuable insight. I just had to speak my piece on
> the
> | Big P, doing the right thing, thing. By the way, who is accountable for
> | assigning individuals to the categories that comprise the COT and how
> | accurate is the reporting? Always remember: the only thing that is
100%
> | the truth, on a continuing basis, is the price.
> |
> | Thanks for making me "think", or whatever it's called when my head
hurts,
> |
> | Steve Karnish
> | Cedar Creek Trading
> | http://www.cedarcreektrading.com
> |
> |
> |
> |
> | ----- Original Message -----
> | From: Walter Lake <wlake@xxxxxxxxx>
> | To: <metastock@xxxxxxxxxxxxx>
> | Sent: Wednesday, April 26, 2000 5:49 PM
> | Subject: Re: KW0K/KW0N
> |
> |
> | > Hi Steve
> | >
> | > We are talking about reporting Commercials aren't we? ... and
Producers
> | with
> | > a Capital "P" <G>
> | >
> | > But since I'm such a wicked mouth piece for exchange literature <G>
...
> | > maybe you could help me out with "...have taken advantage of hedging
> | > margins, but have always been "long in the field and long on the
board".
> | > ..."
> | >
> | > Best regards
> | >
> | > Walter
> | >
> | > PS: For others that wrote ... I received this back from the author of
> the
> | > Futures Mag article on COT analysis.
> | >
> | > "... when Producers cover short positions they just REDUCE their total
> | > shorts--I don't believe they ever go net long (likewise for Users
> selling
> | > their long positions).
> | > I get my COT data from the CFTC website, but I don't use spreadsheets;
I
> | > save the data as a text file & import it into my own programs. ..."
> | >
> | >
> | > ----- Original Message -----
> | > From: "Steve Karnish" <kernish@xxxxxxxxxxxx>
> | > To: <metastock@xxxxxxxxxxxxx>
> | > Sent: Wednesday, April 26, 2000 5:46 PM
> | > Subject: Re: KW0K/KW0N
> | >
> | >
> | > | "Producers are usually short in the market. Because Producers are
> going
> | to
> | > | deliver product against their short
> | > | positions, they rarely go long."
> | > |
> | > | Walter,
> | > |
> | > | Nothing could be farther from the truth than the above statement.
My,
> | my,
> | > | my Walter...please don't influence "young and tender" newbies with
> such
> | > | wickedly false sentences, gleaned from exchange literature. I've
> traded
> | > for
> | > | hundreds of producers (grain, cattle, pig, metal and "you-name-it"
> | > | producers) and 99% of them have taken advantage of hedging margins,
> but
> | > have
> | > | always been "long in the field and long on the board". It's just
the
> | way
> | > it
> | > | is. I'm not saying it's the right thing to do. All I'm saying is:
> | that's
> | > | the way it is.
> | > |
> | > | The truth is out there,
> | > |
> | > | Steve Karnish
> | > | Cedar Creek Trading
> | > | http://www.cedarcreektrading.com
> | > |
> | > |
> | > | ----- Original Message -----
> | > | From: Walter Lake <wlake@xxxxxxxxx>
> | > | To: <metastock@xxxxxxxxxxxxx>
> | > | Sent: Wednesday, April 26, 2000 12:47 PM
> | > | Subject: Re: KW0K/KW0N
> | > |
> | > |
> | > | > To Steve and Scheier and others who wrote
> | > | >
> | > | > "... My experience with the commercials is that they accumulate a
> long
> | > | > position often well before the bottom has arrived, and even more
of
> | > | > interest, will begin dumping this position long before the top.
..."
> | > | >
> | > | > Commercials are not a monolithic block but are composed of two
> | separate
> | > | > "hedger" groups in the grains complex: Users or "millers and
bakers
> | and
> | > | > cereal makers, etc." and Producers i.e., farmers, elevators, etc..
> | > | >
> | > | > Both are hedging from different points of view.
> | > | >
> | > | > Users are usually long and Producers are usually short in the
> market.
> | > | > Because Producers are going to deliver product against their short
> | > | > positions, they rarely go long. The reverse is true for Users.
> | > | >
> | > | > This simplified explanation is how I understand the COT positions.
> | Maybe
> | > | you
> | > | > could explain some more about how to think about how to trade
> against
> | > | > (contrarian maybe) hedging strategies Steve.
> | > | >
> | > | > Commercials are positioned for a longer time frame.
> | > | >
> | > | > The Funds are where the "danger" or "opportunity" lies. This is
why
> | the
> | > | > Research Departments track their positions so carefully.
> | > | >
> | > | > Best regards
> | > | >
> | > | > Walter
> | > | >
> | > | > PS: For others who wrote here's an end-on look at the last 30
years
> of
> | > SK
> | > | > front months. It'll give you an idea of how flat they are and
cheap
> Vs
> | > | dear.
> | > | > You can do the same with the spreads. Seasonalities are different.
> If
> | > you
> | > | > don't like using Demetra then you can use "P" values for the
> dailies.
> | > | >
> | > | > ----- Original Message -----
> | > | > From: "scheier" <scheier@xxxxxxxxx>
> | > | > To: <metastock@xxxxxxxxxxxxx>
> | > | > Sent: Wednesday, April 26, 2000 9:55 AM
> | > | > Subject: Re: KW0K/KW0N
> | > | >
> | > | >
> | > | > | The question I guess is whether you should ever buck the
> | > | > | commercials in the commitment of traders report as they
> | > | > | accumulate a position, in this case, the grains. I think you
> have
> | > | > | to consider whether your system is designed to trade short term
> | > | > | signals or you're a longer term trend follower. I don't see it
> | very
> | > | > | relevant for Adam's P&L techniques, and even's Steve K's
> | > | > | oscillator signals could continue to give accurate calls for
short
> | > | > | term cycles while the commercials continue to accumulate.
> | > | > | My experience with the commercials is that they accumulate a
> | > | > | long position often well before the bottom has arrived, and even
> | > | >
> | > | >
> | > |
> | >
> | >
> |
>
>
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