|
PureBytes Links
Trading Reference Links
|
In view of the following Bio-Neural concepts:
1. "When others forget, now is the time to trade"
2. "When fear is at it's peak, now is the time to trade"
I would like to submit analysis of two markets that have
the potential for tremendous gains, and which people
seem to be overlooking.
December Coffee
With all of the cycle analysis I have been seeing, I
have been suprised that the cycle traders aren't all
over this one.
At first glance, Dec Coffee seems to be winding down
in the third wave of a 3 wave set.
LOOK MORE CLOSELY. what we might be seeing is the
beginning of a MONSTROUS third wave in a five wave
set, that could carry Coffee to altime highs in the
winter months ahead.
the technicals are latent, but they are there.
The fundamentals are there:
EL NINO could bring heavy rains to the coffee growing
regions in South America.
Since most of the coffee groves are located on the
sides of mountains, heavy water run-off could
seriously damage coffee production.
All this stuff really isn't any revelation, so let's
play with a market whose connections are a little more
obscure:
December Soy Meal
EL NINO will hit this market coming and going!
The same rains that have the potential to damage the
coffes of Brazil, could also damage soybean output in
South America in general, as well as other third world
contries.
Remember also that many of these countries lack the
mechanized sophistication of US producers, and most of
these crops are harvested by hand. Inclement weather
often leads to sick workers, and fewer workers in general.
This also means that prolonged rains would allow little
time for harvesting, since they lack the speed of
mechanized harvesting procedures.
On to the life cycle of the Anchovy.
with the warmer water temperatures now prevalent in
South American waters, the normally rich Anchovy
harvests are bound to be weak.
The magic formula:
Anchovies = fishmeal
fishMeal = major competitor of Soy Meal
No FishMeal ? No SoyBeans ?
Makes it hard to believe that Soy Meal won't prove
strong in the winter months.
Have you noticed that Soy Meal seems just a little
stronger that usual compared to selling in the Bean
pits?
So, while all are desperately selling their beans,
The Spider is smiling (See Smiling Spider post).
And I am quietly accumulating Bean Meal calls.
Short covering in the nearest months in coffee as
options expire etc.... will allow many opporunities
for bargain shopping in coffee options.
Complex option strategies are not my bailiwick, but
it seems logical that strategies such as Calendar
spreads collecting premium in the near months and
using it to pay for calls in the winter months
might work.
How about spread opportunities in the futures
themselves? Before the larger moves happen, many of
the weaker speculators will be routinely nudged out
of the more current contracts.
Walt Downs
CIS trading
|