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December 12, 2024
OK…I know that I am coming across like a broken record on
this…or “the boy who cried wolf”…as very few of you
have taken my screaming recommendation to BE SHORT CATTLE.
Being able to “forget” having been wrong (or sometimes just
early), and having lost money…and then being
able to re-up the bet on an idea is an extremely important mental requirement
in trading futures.
I am human, and not some steely-nerved, unfeeling
robot…And in this futures predicting business in which I am always
either an idiot, or a genius, I have had to teach myself that when initial
losses in a recommendation quite naturally lead to self-doubt and a hesitancy
to stick my neck out any further on an idea, regardless of the fact that my
research…and INSTINCTS…still tell me that I have a smart, logical, high
probability trade with gigantic profit potential…is when the last thing
I should be doing is hesitating.
Similarly, I have long understood that the time to be
the most enthusiastic about any trade is when you feel the LEAST like doing
so…That when there is absolutely NOTHING out there suggesting, especially at
market tops for example, to “Go Short Now!”, IS when you DO take short
positions.
And
in the same vein, and as the same broken record, I will state it as a fact: As
market tops are about to begin their initial collapse, they are virtually NEVER
EVER accompanied by some obviously bearish news, or event, that clearly signals
to the trading masses, “Hey everybody! It’s time to be short!” NEVER, EVER…which
IS why, no matter how stratospherically and absurdly high a market might be,
with EVERYTHING in the media endlessly repeating the same bullish “logic,” it
is SO hard for the average trader, finding NOTHING…and I mean, NOTHING from ANY
of the supposed “experts” or talking heads to support the possibility of a
major decline…to actually say, “I’m putting my cash on the short side here.”
And that IS the Cattle market today. Of late, I’ve seen and heard stories
EVERYWHERE (even NPR a few weeks ago!) about the “smallest herd since 1961,”
and how there’s “no way to fix the cattle industry,” and that “beef prices just
can’t go down from here,” etc., etc. etc.
I CONTINUE TO SEE THIS
AS AN ENORMOUS TRADE. And per historical norms I keep showing you (and doing so
again below), I DO believe that 3-6 months from now this market will have
tanked for, MINIMALLY, 50-60 cents ($25-$30K per futures contract)…And
that “drifting lower” is NOT the way this will unfold, which aside from my
usual recommendation to buy slightly out-of-the money puts, leads me to
conclude that owning SOME FAR OUT-OF-THE-MONEY PUTS also makes sense
here...
One more time, as concisely as I can show it to you…here are the 13 significant
declines that have occurred in Feeder Cattle during the past 20 years…And do
note that “straight down” DOES describe how they DO go down…And believe me, not
a single one of these moves was even remotely predicted by probably 99% of the
“professional” analytic community…I’m always saying it: That’s
NOT the way this shit works.
The average of all
those almost straight down declines was 18.2%, with the biggest being
33%...with all of them falling almost non-stop with nothing more than a few
small rallies along the way…
And really. Don’t kid yourself…Do NOT suppose that at
ANY of these highs, literally when the downside moves were just beginning, that
ANYBODY was even close to saying, “Guess what? Feeders will be down 30-50 cents
from here in the next 6-8 weeks!” NOBODY.
And it AIN’T any different right now…I think Feeders WILL go
down just as big and fast as they always have…or considering that they are
at record highs, probably even bigger and faster…And that ANY single, quiet,
no-news down day from here (like today) CAN mean we’ve seen the top tick…so I urge you to GET ON NOW…WITH
SOMETHING…BEFORE THE TRUE ACTION STARTS.
It goes without saying, but if I am wrong, you can lose
every dollar you invest in this…But here are three option possibilities that I
think will ALL pay off in very large multiples…
These two options could be
used as a combined position, buying something like one 250 put ($2114), plus 5
of the 230’s ($2820), which totals out to $4934…allowing for a variety of
profit taking choices as/if the market does go down…with just one possibility
being, for example, at 230, with the 250 then worth $10,000, the 250 put could
be sold, netting $5000…and then you’d STILL be holding all of the 230’s.
Get SOMETHING on here…I DO consider this a once a decade sort
of trade…And I DO believe it is everything I keep saying it is…A BIG, BIG
TRADE.
Also to say that if you think this makes sense, and my work
has influenced you to want to do something with it, I’d obviously appreciate
you doing it here.
Thanks,
Bill
770-425-7241
866-578-1001
All
option prices in this newsletter include all fees and commissions. All charts,
unless otherwise noted, are by Aspen Graphics and CRB.
FUTURES
TRADING IS NOT FOR EVERYONE. THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL.
THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT
OF YOUR FINANCIAL CONDITION. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE
RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST
PERFORMANCE.
The author of this piece currently trades for his own
account and has a financial interest in the following derivative products
mentioned within: Feeder Cattle