November 2, 2005

 

Copper - I Surrender

 

It probably means we are undoubtedly near the top tick in Copper but I am retracting my recommendation to short this market. I have been losing money in Copper since I started shorting it in April, which aside from sucking dollars away from profitable trades made, just gets psychologically wearing after seven months of being wrong...Even though I still look at it and think, "ANY day now", there comes a point in this business when you just have to put a bad trade behind you (yes, give up) and concentrate on what you perceive to be opportunities in other markets....

 

With me throwing in the towel, I know there are some of you out there who'll say, "Now it's ready", and I assure you my feelings will not be hurt if you call in here and decide to short copper....

 

Here's one last look at it if you are so inclined.....

 

 

SELL/SHORT SUGAR

 

Since recommending short Sugar on Oct. 21st, this market appears to have started rolling over to the downside. However, as I look at the establishment of further new positions, I find put option prices to be so high that the risk just isn't worth the potential reward and therefore will be making no further recommendations in this market....This is oftentimes true of tops. Options prices tend to be severely inflated due to volatility associated with tops, making it such that, unless you are exactly right, and then get a BIG move, the gains just don't seem to be worth it....So I am removing it from my list of markets to be covered.

 

 

 

Sell/Short Gold

 

Gold is now about $15.00 off its highest close and I continue to think it will be going a LOT lower. As I have written before, Gold moves on emotion more than anything else and speculative traders are VERY long this four year old bull market...Inflation (!) is their primary war cry and if the Fed was saying, "We don't care. Let inflation run rampant.", I might think differently about being short. The Fed has, however, been raising rates steadily and to think the effects of those rate increases won't have counter-inflationary effects is foolish...I believe Gold is ripe for one of its "typical" rip roaring sell offs and seeing it $40-$60 lower several months from now would not surprise me at all.

 

To save saying it again, here's a reprint from a recent newsletter...