Wednesday, June 04, 2008

Bernanke's Recent Dollar Jawboning

Chuck Butler gives a fantastic rant on Bernanke's recent tough talk in his morning column. Not much too add to Chuck's commentary - nicely done Chuck!

From a trading perspective - I'm trying to pare back all position sizes, and I still can't seem to do it fast enough. Meats have taken a turn down this week, erasing many gains from the previous couple of weeks.

Proceed with caution is all I can say - it looks like this commodity correction is not through yet. Remember oil will probably have to come down from the high 120's. Fundamentally there's no reason for it to be there. Long term, yes, it's going higher. But there's plenty of oil right now - this one really was a speculation run-up, I think.

3 comments:

andaluchi said...

I've read the Gallacher book 'Winner Take All' per your suggestion. Good book.

I'm putting the finishing touches on my trading plan. I still need to figure out how I'm going to place my trailing stops.

I'm also not so sure about the need to calculate risk/reward ratios. If I always place trailing stops and always sell as a result of hitting the stop, then I'll never be in a situation where I'll be saying "I've met my 'reward' goal, so it's time to sell." I'll just keep riding the uptrend until it turns.

I only see myself selling if the stop is hit or there's a change in the fundamental reasons I bought in.

Any thoughts on this? Thanks again for the tip on the book.

"I want to make a fortune in aluminum and pork bellies, then blow it all on canned hams."

Heem said...

What about corn now? I want to buy a contract on this breakout, but the volatility is going to be ridiculous. If wheat went to $25 can corn go to (dare I say) $12.

SugarHigh said...

Cool man, glad you liked the Gallacher book.

I think your sell strategy sounds right on - basically what I've been doing since late '07.

Usually I just wait for the stop to hit - sometimes I jump the gun and sell sooner if it looks like we're falling off a cliff, and I've got too much leverage.

Tough thing about selling due to change in fundamentals is that is a judgment call - personally speaking, my judgment can be clouded in the heat of the moment.

I'm still on the sidelines in corn, but I may end up regretting that. Think wheat is also a viable option. I'll give a heads up if I pull the trigger on a grain this week.

Agree, only thing holding me up is volatility as well - going to be a roller coaster, but upside is looking great.

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