The Wizetrade Commodities Blog

So much rides on the USDX staying above the 79.375 swing low of late May. Should the market break this point, the next target would be the 71 – 72 area. Most commodities would set for higher price territory and the argument that the consensus of traders hold, that hyperinflation is underway would be confirmed.

Certainly, that day should eventually come, but as long as 79.375 holds and the USDX moves off higher lows, markets should reflect this stage off deflation. That’s what I am counting on: Crude Oil to $30/Bbl, Corn to $2.00 per bushel, Gold back to $850, and so on. Time will tell, and as Diamond has said, “You have to approach each trading day without bias.”

I hereby take back my blog on Californian’s acceptance of oil revenues to help their massive budget shortfall. Sometimes policy interferes with common sense; rules conflict with each other. Click here for the rest of the story:  Californians kill

The real problem with just about everyone in our groups is what I was addressing in this morning’s broadcast. Small hands, beginners, amateurs, whatever labels you want to give common folk (like myself) are thinking we need to overcome our fears of trading before we can become successful. Last year at Wizefest in my last breakout session, I tried to address that very thing – Fear.

Instead of trying to overcome our fears, we need to confront our fears; face our fears and embrace them as normal human conditions that everyone experiences (including professional traders) whenever we are confronted with extraordinary circumstances.

I took a speech class my sophomore year in college because I hated to speak in front of any size crowd. I mean, I couldn’t even voice my opinion in a class discussion. I was taught to use fear to my advantage. Use the energy of fear and turn it into excitement about what I was saying. It changed my approach to every obstacle in my life. I then was able to know when I was afraid and try to use it to think faster and be more active instead of letting it defeat me by making me more inactive.

When Alan and I were doing our broadcasts together, he would say “Commodities Made Easy makes trading easy.” I would follow with “Trading is stressful.” He would cringe and start arguing with me, but I was firm in my stance. Trading is highly stressful, emotional, and when tried without an edge or advantage, almost like gambling.

There are nine thousand studies, “secrets of trading”, techniques and gurus in the trading market place. None of them are effective if the trader doesn’t trade. Successful trading comes through trust in the signals, algorithm or techniques used to enter and exit a trade. Trust comes through experience and experience comes from pulling the trigger.

The only way to become an experienced skydiver is to jump out of the plane.

CNBC reports: “The deal to close California's $26 billion budget deficit included a plan to drill for offshore oil, drawing allegations that the fiscal crisis was used for a backroom deal following rejection of the idea by state regulators earlier this year.” Wham! The California’s budget deficit problem outweighs 40 years of environmental concerns. Well, it’s only $100 million now and $128 million for the next 14 years. Then again, it’s only from one platform.

Truly a bi-partisan deal, Democrats joined Republican Gov. Arnold Schwarzenegger's request to expand drilling from the existing platform off Santa Barbara. Is this action from California as much a chinch in the Federal Cap and Trade armor as it is a setback for environmentalists? What if there were twenty oil platforms off Santa Barbara? What if there was a balance with any government budget and its tax revenues? Good questions to ponder.

Is having a job and transportation to and from it more important than global warming?

What are the factors that drive cotton prices?

Some are similar to the drivers for other commodities listed as Softs.  Energy Prices and the relative strength or weakness of the US Dollar impact a variety of commodity prices, but here a re a few things that you may have overlooked when determining the direction for cotton prices.

Demand

Both the consumer markets and the manufacturers can impact the demand placed on cotton.  Increasingly the time pressed consumer is looking for clothing that wears longer and requires less maintenance.  This decreases demand for the raw material and reduces the price.

Supply

Higher Grain prices have a direct impact on the cotton supply.  As farmers can demand higher prices for other grains, they will shift acreage used to grow cotton to the more profitable grain.  This reduces the available supply, and increases the price.

If cotton growth was reduced the previous year, or a greater demand for cotton seed for oil or feed occurred the previous year, it will increase the cost of seed and will serve to drive prices higher.

Climate

Growing conditions are well worth following, not just in the US but also in other global cotton regions like Egypt.  Shifts in climate have a dramatic impact on yield and will impact annual cycles.

Are you curious enough for more Cotton Education?  Give the National Cotton Council of America website a visit at www.cotton.org the following link takes you to an article titled “World of Cotton”, http://www.cotton.org/econ/world/index.cfm .

Thursday, July 16, 2009

MB Trading wants to earn your business with great service and great pricing on trades for Stocks, Options, Currencies, and Commodities.

This morning the President of MB Trading, Steve Demarest was the special guest on “The Morning Edge” with Blake Morrow.

On the program Blake and Steve discussed the recent award to MB from Barron’s as 2009 Best for Active and Option Traders.  Additionally they discussed the low commission schedule for trading, broker support, charting and MB’s terrific trading platform, but most importantly they discussed the ease of using an integrated broker account inside the Wizetrade family of trading services to quickly execute and track your trades.

So, what are the potential advantages to opening an account with MB Trading?

• Highly ranked and award winning broker with terrific service record.
• Excellent support staff and support systems including webinar style training from the MB Website, and the MBT Navigator trade platform
• 24 hour service available for all markets
• No Deal Desk taking the other side of your trade (read more on MB site at www.mbtrading.com )
• Low commission rates for all investment types

If you don’t think you’re quite ready to open an account with MB for live trades, I would still like to encourage you to visit the MB home page and/or call and speak with one of their representatives about just how easy your broker relationship can be to help you facilitate control over your investments.

Crude oil prices rising or (some say) “soaring” are causing some new measures to be considered by the CFTC to “curb speculation and increase transparency in energy markets.”

The concern is over crude oil prices rising $10 per barrel in three months from February to April, another $10 per barrel in May and $10 in June. The real problem is seen in the 54 day rally in gasoline prices through May which AAA called “the largest five month retail advance this century.” Of course, this century is only nine years old, but it makes good headlines. The price reached a high of just over $73/Bbl in early June, 2009 and has fallen back to below $59/Bbl in just five weeks, a decline of 20%.

Isn’t it amazing that investigations and measures are only considered when the price rises. When the price falls, nothing is said; no new measures are sought; no transparency is required. It makes me wonder if loss is now to be considered good and gain to be regulated and therefore, prohibited.

US oil and gas drilling activity is down in the second quarter of this year. “A level not seen since 2003,” said the American Petroleum Institute. The estimated number of exploratory oil and gas wells drilled slid 63% compared to 2008, while the number of development wells* fell 46% to 6,761 wells. Yet, is there any reason for speculators to see future rising prices based on lower future inventories?

I have an idea! Let’s keep trying every way through regulation or legislation at our disposal to discourage incentive for additional exploration and development and especially speculation. Surely, that will keep lowering the price of oil and gas. It’s the green thing to do.

* A development well is drilled where oil or gas has been previously found.

The Future Focus Chart of the Day is the 180 minute chart for Cotton, as we see strength on the Long term, Short term, Mid term charts and a break out of a sideways channel and second test of resistance on the 180 minute chart as the price moves higher.

From the Arkansas Farm Bureau

Cotton Comment
Cotton closed with solid gains after breaking trendline resistance yesterday. Good followthrough on that gain suggests a retest of resistance at the recent December contract high of 63.75 cents. USDA left yield and harvested acres unchanged from the June report, but adjusted 08/09 ending stocks downward to 6 million bales. Reduced exports for 09/10 left projected ending stocks at 5.6 million bales. Only minor adjustments were made in world numbers.

OPINION BLOG OPINION BLOG

Increasingly, I'm finding articles in the financial media that voices concerns that China may be moving to the same type of loan defaults that we saw with the subprime mortgages.  The Chinese government went to the banks and told them (Communist Government) that they needed to increase lending, and just like subprime in the US they answered the call, now comes the hard part, getting repaid.

Adding to this is the following;

Financial media keep reporting things like, China signals that they have money to spend, data reflects 4th month of growth attributed to the Chinese Governments Stimulus Plan.  Additionally, China supports IMF supra-currency, China sells US Bond holdings, and China buys Gold, China's Borders want stability of Yuan vs. U.S. Dollar.

So I ask the question, how much and what % of GDP did China spend as they site a USD made unstable from over spending, and the answer is....

On November 9 2008, China launched a widely anticipated stimulus program consisting of no less than 16 percent of China's annual GDP, or $586 billion.

Almost double the US % GDP cost of stimulus version 1.0.

So what do you need to do?  Nothing, for now, but be aware that this and other things, pose a threat to economic recovery, and will impact the markets at some point in the future.  That point will come when the Chinese Banks begin to report defaults on bad loans.  The will do just what the US mortgage lending did, they will pull the bandage off slowly versus running the risk of yanking the bandage open to expose the injury all at once to the markets, so you will see warning signs.