April 4, 2012

Ignore the HYPE about $5.00 Gas

BE SHORT THIS MARKET NOW…NOW.

I remain ULTRA convinced being short Unleaded Gas has GIANT potential…and pretty immediately (beginning any day now and extending out a month or two). As before, when this goes, if history has been any guide, it will be fast, something like at least a 15% move (about 50 cents or $21,000 per futures contract), and finished within 4-6 weeks. I would almost say, all you need to do is start by buying 30-45 days of time, 5-10 cents out of the money, and keep doing so UNTIL this market does crater…Then make sure you are able to sit tight on the way down…Don’t make a few bucks and grab it in other words.

AGAIN, HOW MANY TIMES DO YOU HAVE TO SEE A MARKET HYPED AS THOUGH IT CAN ONLY BE GOING ONE WAY, AND THEN SEE IT DO EXACTLY THE OPPOSITE? HOW MANY TALKING HEADS HAVE YOU LATELY HEARD TELLING YOU THAT $5.00 GAS IS ALMOST AS SURE AS THE SUN COMING UP EACH DAY?....YES, THIS IS NO CHEAP OPTION I RECOMMEND BELOW, AND MAYBE I AM DEAD, DEAD WRONG,  BUT I TRULY BELIEVE IT WILL PAY OFF IN A BIG, BIG WAY.

And I still think the following data from a recent newsletter is worth repeating…

 In the 11 years since 2000, in 10 of those years there have been relatively large percentage sell offs in Unleaded Gas prices that began on various dates between February and May.

Unleaded Gas Declines During 1^st Six Months of the Year

And I would point out…In 2012, we have seen nothing but “up” in this market…leading me to believe SOMETHING on the downside could be coming soon…

Still Short Bonds

Still believe they are here on last year’s news…

And all those 4^th quarter crisis buyers are going to lose BIG

After dropping about 7 points ($7000 per futures contract) in 7 trading days, Treasury Bonds have managed to recover about ½ of the move during the past 3 weeks. I remain firmly convinced this market has nowhere to go but down, that there is no real demand for an instrument paying 3% interest (before inflation and taxes eat up most of that) for the next 30 years, and still expect to see Bonds trading at least down to the mid 120’s within the next 2 to 3 months.

Still Buying Wheat against Short Corn

I LOVE the Long July Wheat-Short July Corn Spread. Last Friday’s USDA report only solidified the trading world’s one sided perception we could “run out of corn” by late this summer. I remain confident ALL of the bullish Corn fundamentals have LONG since been accounted for by the markets (going back to last fall when Corn was $8.00 and was supposedly heading to $10.00, but went straight to $6 in just one month’s time), and will imminently be heading south again…in a big way…Meanwhile, RECORD speculative short positions in Wheat, against RECORD commercial long positions, still lead me to believe SOME sort of rally is coming in Wheat…And I believe this combination of events means the Long July Wheat-Short July Corn Spread could EASILY move up $1.00 to $1.50 a contract from current levels.

Buy the “Pink Slime” sell off in Cattle…

I believe the combination of record prices and the “Pink Slime” story potentially impacting demand may have been the reason for the recent selloff in Cattle. If I am right about Cattle becoming a parabolic bull market similar to what we saw in Cotton last year, this dip is where you buy them. If I’m right, the move back up should be fairly steep…no messing around in other words…and be back at the highs in a matter of weeks…I obviously don’t know if this is what WILL happen, but it the Cattle contracts DO get back to their highs after this break, I would say the odds go much higher that Cattle are in the midst of a dynamic move…and we WILL see some currently unimaginable higher prices.

At any rate, if my bet is Cattle ARE going on off into new highs, the leverage is here, now, in the hole….Bull markets DO have set backs but they also should recover “quickly” and be on their way higher…If you buy this market now, and a month from now, nothing definitively positive has happened, I’d say you dump the idea and move on to other ideas.

 Still Shorting Gold

I have not verified it on my own, but it has been said the single largest retail holding at one of the oldest and biggest brokerage houses there is (I’m pretty sure I shouldn’t name them), is GOLD. Among a host of other reasons, this “statistic” just screams, to this old hack, “DON’T OWN IT. SHORT IT, WITH BOTH HANDS”.

If you follow this market at all, I am sure you have read about “strong support at $1550”, a figure that is generally derived from technical analysis, and market activity during the last 6-7 months… Having probably done more charting than 99% of the trading population on the planet, I will just say, “Bunk!”.

I CONTINUE TO BELIEVE THIS MARKET IS GOING TOTALLY IN THE TANK AND WISH I COULD GET SOME OF YOU ON IT…I encourage you to take a long look at the long term chart following and decide for yourself if, realistically, you would expect Gold, after all the HURRAH about it in recent years, isn’t living on borrowed time. Guys, I know there are a few of you who strongly disagree, but this stuff is NOT worth $1500 an ounce…or anything close to it….GET SHORT. Buy some puts. Sell futures…I think the coming BEAR MARKET IN GOLD is going to move in breathtakingly fast, big and non-stop “increments”.

Give me a call if anything here interests you…I do think there are some GREAT ideas here...

Thanks,

Bill

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