Corn broke hard to the downside. After Commercials reached their biggest net short position in years and entered a period of a seasonal weakness Corn remained in a tight range for a few days then broke down with a large range outside bar on Friday. See the chart below. Seasonal indicator courtesy of Larry Williams.
Like I mentioned it in a previous post (see “Standing on the shoulders of giants. Weekly Piece”, 06/02/2019) the discussed pattern provides a very good opportunity for an option play. Now those options are gaining. Besides this, I believe we'll have a few short-term trading opportunities here. After such a big outside bar the market usually consolidates or goes up for a few days. This way some indicators will show overbought state. That is where a good short signal might present itself.
S&P500. THE STOCK MARKET
Before I proceed with what I think is in store for the stock market, I would like to share with you one number – 30%. That is the probability of a recession in the USA shown by an indicator I've just finished developing. More on this expect in future blog posts.
Now back to the S&P500. My order was filled this week and I have a long position here. The reasons for this are:
- I am an optimist :)
- cycles suggest a bottom
there is a good seasonal tendency to rally in the first days of July (especially before 4th of July)
- Trump – Xi meeting. I will not bother you with details about what happened because all you know it already. Shortly my bet was that the meeting will be positive for the markets. I am an optimist, remember? :) And this is how it looks now Sunday afternoon. It remains to be seen how the market participants will digest the news and how they will trade on Monday.
In the picture above you've probably noticed that I have a stop loss order in place but no target. This is a short-term trade, and I did have a target. This target was removed because of the meeting in G20 in an attempt to capture a larger move. That is something which must not be done every time. I discuss how to change targets in details in the Pieces
I will wrap up this weekly piece with probably the biggest mover this week - the Bitcoin. In a post from 06/18/2019 “What is next for Bitcoin? The moon or the bottom of the ocean?” an interesting idea was suggested that Bitcoin is being hyped up in an attempt to find enough buyers for a significant distribution. I think we saw all that. Now, will look for a trend change signal. Let's see what the new week will bring
Founder of Piece of Trading
Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Charts made with TradeStation.
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