Bulltart Of The Year

I just came back from my chiropractor as I needed to be treated for acute whiplash after glancing at my agri futures charts earlier this morning. Yes of course I’m kidding but what’s currently unfolding in that sector, although not exactly unprecedented, represents nothing short of the most exciting trading opportunity of this year – by far. Honestly I don’t know why you guys keep staring at equities all day, but since we’ve got movement let’s get that out of the way first:

Okay, so how do I put this as delicately and politically correct as possible…

Yes, this pretty much summarizes the overnight activity. And I’m not even kidding this time. That breach of ES 2800 is extremely bad news for equities and every handle lower from here increases the odds of a drop into ES 2700 and below.

I usually don’t share this chart with you leeches but that whiplash this morning must have somehow triggered an uncharacteristic bout of generosity. Look at the current (inverted) IVTS ratio and how it’s falling away from its (also descending) SMA.

That’s extremely bad medicine and in my not so humble opinion may pave the way for a considerable corrective move in the making. With summer at our doorsteps and the most bullish period of the year wasted this may spell a very chilly summer for equity traders.

Update On The Most Exciting Markets Of 2019

Alright, now let’s get to the really interesting stuff. About two weeks ago, before heading to Slovenia for a well deserved week of R&R, I submitted to my kind audience what I deemed to be the most exciting and possibly most explosive markets of 2019.

Let’s review what transpired in the meantime:

ZB futures – massive spike higher. Incidentally they are rolling over now, so if you’re in this one then tag you’re it!

Soybean futures – explosive move higher. I really hope someone here grabbed that pullback because, and I hate to quote myself (not really):

 IMO any meaningful pullback in ZS – whenever it happens – is a buy opportunity.

Here’s the soybean meal futures contract. INSANE!!!! We don’t eat any soy products but will need to start stacking up on any grains as food prices are expected to explode higher in the coming months.

Here’s corn. Completely. Out. Of. Control. An entire year of downside being erased in three weeks. If you were short here in early May then you are looking at a bonafide risk of ruin right now.

Not sure if you ever watched or read the ‘Big Short’. I sort of had a Michael Burry moment in early May after seeing one report after the other that farmers were unable to put seed into the ground, both in the U.S. as over here in Europe, due to incessant rain and cold temperatures.

Meanwhile futures across the grain sector continued to scrape the bottom of the barrel, which once again proved that relatively small markets can screw with traders, especially around futures and option expiration dates. Anyway, at some point that pressure cooker simply could no longer be kept under control and what you are looking at is the new direction for agricultural futures throughout 2019 and possibly 2020 as well.

By the way, if you squint a little you can actually see the wagging finger of God warning us to not be so damn complacent.

Finally here’s wheat. Same picture – same idea – same direction. Those opening gaps across the board is what we older dogs call ‘the point of recognition’ – which is when the dynamic of an entire sector turns on a dime and runs off.

FWIW – a concerted move higher like this is not something you see in equities very often – it really is the exception and usually does not sustain. In the grain futures however it is known to happen regularly and those moves often occur out of nowhere when you least expect it. Which is why I always caution people against taking on more than 0.5% in ANY correlated position.

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