May 18, 2022

 More so than ever…

IT REALLY LOOKS LIKE THE COMMODITY TOP HAS BEEN MADE…

BE SHORT NOW

There is nothing tougher in this business than trying to be short at a top…Tops tend to be quite volatile, and unlike trying to buy something at a very low price, when you know that there is a “floor” somewhere, there is no way to predict how high a market might “overshoot” at the end of a raging bull market when ALL of the news is just unanimously roaring bullish…even to the extent of there being talk of “running out” or “none left” of a particular commodity. But that IS how they ALL end. That IS what you are going to frighteningly hear at every top…with the implication being that “only an idiot would go short here,” or that, “there is NO way this market could ever get back down to ____.” But that IS the way this MOB PSYCHOLOGY GAME works…That pretty much every top in the history of the markets occurs when there are no bears left…and with ALL of the “logic” pointing to, “prices gotta go higher!”

And in the same vein, it’s exactly the opposite at market bottoms, where 100% of the news is bearish, and the commodity is piled up everywhere, even to the truly absurd point where, as in when Crude Oil went negative several years ago, talking heads actually were screaming, “nowhere to store it!” and “Crude will never see $50 again!”…which obviously was NOT the case.

The point is, media generated MOB OPINION is ALWAYS extreme at big market turns…and while the timing of catching that turn can be difficult, resulting in losses, but if you CAN be there when it happens, particularly at commodity market tops which have a decided tendency towards big collapses, the potential returns can be substantial…

This may be an oversimplification but the two graphs following are depictions of what I have observed at countless bottoms and tops…and I don’t care what the market is…IT IS ALWAYS THE SAME…

THE BOTTOM…And just as one example, think back a few years when Crude Oil prices went negative and remember all those media shots of massive oil tanks supposedly overflowing their walls…and internet idiots galore talking like Oil would never rally again…

And THE TOP…which is exactly the opposite…And where I think we are RIGHT NOW…In Crude, in Soybeans, in Corn, in Wheat and in Cotton…wherein opinion is unanimously, “Supply is not even CLOSE to meeting demand!”

And yeah, I have been on this Short for a while now, and wrong…but would suggest that all of the markets I’ve been shorting have been TEMPORARILY jolted higher, ONE LAST TIME, by the war…and that, by now, with the last two months of nothing but bullish, bullish, bullish (!) media, we really have reached the point where every possible buyer in any of these commodities HAS to already be in with both feet…I mean, how could ANYBODY who has a  future need for ANY of these commodities not already have made arrangements to get them…in other words, ALREADY BOUGHT THEM?

And really…That IS the way it works at a top…

On another note…My very firm guess is that the weakness in the stock market, which certainly is indicating some degree of a less than rosy economic future, is likely suggesting that something of the same is coming in the commodity markets…that all the endless hype about demand overwhelming supply might easily be just as backwards as supposing, just 6-7months ago, that two or the world’s biggest companies, Amazon and Facebook, were generally bulletproof and undoubtedly heading higher, when in reality, they were about to lose 50% of their “value.” The point is, just as being long the FANG stocks was supposedly something of a safe no brainer, from what I read and hear, “BE LONG COMMODITIES!” IS NOW OVERWHELMINGLY THE MOST POPULAR INVESTMENT IDEA CURRENTLY BEING TOUTED, AND MARKETED, BY WALL STREET…and with that in mind, my very strong opinion is that it would be highly naïve to not understand that betting on higher commodity prices at these levels IS a bandwagon that WILL come to the same somewhat catastrophic end as a 1000 other bull markets before it. To me, it’s not IF, just WHEN…and I DO THINK IT’S NOW.

Therefore, yesterday I put my money (again) where my mouth is and bought in “units” of one put in each of six different commodities, and recommend you do the same…or some version of it…But whatever you do, my dumbass opinion is: DON’T just sit there with all the genius brokerage house guys screaming “Buy everything! Inflation is here to STAY!”, and not understand that it’s time to “Sell.” Get Short Now…BEFORE the Dam Breaks. Inflation is what we HAVE HAD…NOT what’s coming in the future.

If you don’t think any of the moves I’ve drawn are realistic, let me know and I can provide you with 100’s of examples…Futures are inherently volatile. 25%-35% or 45% FAST moves ARE something of a norm in these markets.

SOYBEAN COMPLEX – Get one or both of these

SOYBEAN OIL

Down 2.41 cents today ($1446 per futures)

SOYBEANS

Down 18 cents today ($900  per futures)

 CORN

Down 19 cents today ($950 per futures)

 WHEAT -Where between all the news about Ukraine and food shortages, the bullish rhetoric has been the loudest…

Down 46 cents today ($2300 per futures)

 COTTON – Weather has been a BIG story here…but just about every drought market I’ve ever seen priced in the crop losses and peaked…and all but crashed…And usually before the weather had actually done its full damage.

Down 3.18 cents today ($1590 per futures)

CRUDE OIL…maybe the loudest and most persistent bullish “story” out there. Seems like EVERYBODY on Wall Street is madly in love with energy.

I KNOW that with everything you hear, the idea of $75 (or lower!) Crude just sounds absurd...but that IS the way this market moves...Do note that the recent weekly swings are $10-$15...so I will assure you that a $30 move on the downside would be EASY...And DO understand that every oil company on the planet has been forward selling production at these prices for YEARS to come...and they WILL produce it...and THE "SHORTAGE" OF OIL WILL ABSOLUTELY DISAPPEAR.

Down $3.00 today ($3000 per futures)

And believe me…Just because I have been wrongly calling for all of these MAJOR declines has NOTHING to do with what comes next. I have stayed on this idea because I “know” it will happen…and when it does, it should be BIG…But you do have to BE THERE…AND STAY THERE AS EACH OF THESE MARKETS DOES DO WHAT THEY HAVE REPEATEDLY DONE FOR AS LONG AS FUTURES CONTRACTS HAVE EXISTED.

Get in touch if you want to know more. I do think this is it…Been wrong but with what stocks are doing, and what rising rates are intended to do, and simply the fact that all of these markets have actually reached price levels that ARE making them “too expensive to consume,” I don’t think there is anywhere to go but DOWN from here…and as I keep reiterating, when they DO go down, it WILL be BIG, FAST and RELENTLESS…It goes without saying that I still might be wrong…but I obviously don’t think that is the case…both with what I write…and what I am doing with my own money.

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.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Corn, Soybean Oil, Soybeans, Cotton, Wheat, Crude Oil