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Hedge Commentary for 5/30/17


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If you are unhedged, it would be wise to spend $50 to see if you can improve whatever you are doing until now.

Attention Corn & Soybean Producers:

One week trial offer for $50 on learning about the best way to hedge. In my opinion my strategy is the best I have seen since I became a member in 1976 trading corn and soybeans for my own account.


Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 40+ years.

July 2017 Soybeans

5/30/17:

Grains: Funds bought 8,000 corn, bought 4,000 wheat, and sold 8,000 soybean contracts. “What the funds do, the market does that day”. You do not need to look at the settlement to know, since they bought corn and wheat today I expect the market to have closed higher, and since they sold soybeans, you should know that soybeans closed lower. How much? You would need to look at the settlement price for that. For more than 6 months I have pointed this fact out, which also proves in the short term the funds absolutely control the price and direction day by day. With that said, the fundamentals do nothing to discover where prices will be in the future.

Have a safe and enjoyable holiday, and remember those who served to protect us.

Looking at the corn chart first, we see nothing but a continuation of past performance. Add up all the fundamentals in the last 9 months, and nothing has been able to break out of its sideways pattern. For the market to rally it takes 2 fundamentals, strong demand and tight supplies. Having 1 without the other will limit any rally. I am more than comfortable to rely on my charts for trade ideas that risk an amount of money if stopped out, for a reward that is far greater than risked. When stopped out, I know why I lost money, because the chart level I was betting would hold did not. The fundamental trade or trader does not have control of risk, and must wait until proven right or proven wrong. Being proven wrong could take a long time and have severe losses. If the fundamental trader uses a stop based on the chart to protect losses, in reality he is trading the chart, and uses the fundamentals to give logic and courage for the trade idea. The charts are solid foundation for my trade ideas, and give me courage to execute my ideas.

With the fundamentals in today’s market you must consider the fund activity as a fundamental in itself, because day to day what the funds do the market does. When was the last time we have seen the funds buy in a day session and the market closed lower, or when they sold the market closed higher? Long ago I started to include their daily activity, and we have not once seen a divergence. So how does the fundamentalist analysis what the funds are going to do? Since this service started 9 years ago, it has been my known opinion that all I have ever seen fundamentals do, was to keep a person in a losing trade far longer and lose more money than one should have. Fundamentalists like to justify losing money by quoting fundamentals.

You my subscribers have learned that “I would rather be right for all the wrong reasons, than right the fundamentals and wrong the market”. Price is everything, not getting fundamental answers correct. You know that the first and foremost important thing you must do, is to have some protection in case of the market going down. Otherwise, if you are the unhedged, you know pretty much at what price you will lose your farm. This year, or next, or whenever, when the price goes down to what is unimaginable to YOU, you lose your farm. It is just like a floor trader, whose position is now on margin, the back office will send the gorillas to the floor and tell you to wire money or get out. Or when you are trading even for a day, a much larger margin than your account size, they will come down and drag you off the floor and tell you to find another firm to clear your trades through. Traders, producers, and all people in general, tend to look at the world through their own eyes only, but when reality comes to their door, they must let reality in, or it forces its way in. The bank is the producers’ gorilla, think what you want, but when the money is due it must be paid, or you pay with the consequences.

Soybean chart is in a new bracket now, with the old bracket line support of $9.40 becoming the bracket line resistance now. Bracket line support comes from a low made in March 2016, the month that the funds entered the grain market with both hands, and launched an extreme buying binge that drove front month soybeans to an incredible $12.00. I say incredible, because in no way did the fundamentals justify $10.40 let alone $12.00. My target seen daily in my service since 2012 has been $7.90 soybeans, as long as year after year we produce an average crop, let alone bumper. This year or next looks to be on target to “see” that price. Bulls are betting on a weather scare at the least, and as I have said since my service started, betting adverse weather is betting on the abnormal, which also means less odds for that to occur, and I always tell you how to put the odds in your favor, and that would be to ALWAYS bet on normal weather because the odds are in your favor. I have traded grains for 44 years now, and if you look at the last 10 years, or my first 10 years, the shortfalls seldom were worse than expectations from the shortfall, and all other times the shortfall price was not sustainable in time.

I cannot remember when the funds were long wheat, but it seems to me they have been short for more than 2 years. It has been basically in a $.45 sideways range, as far back as this chart can see. That is enough time to know that like corn, it does not matter what fundamental has been thrown at this market, the price remains confined to the bracket lines we have used.

Friday’s comments said “Next week will likely be more volatile, and grains should be under pressure once again to start the week”.

5/26/17:

Grains: Funds sold 6,000 soybean, 5,000 corn, and 2,000 wheat contracts. I reduced my short position and reduced my losses when at $50.00 down $2.09 on the day. I am losing on the half of my position I did not cover when at $48.70. I want to sell rallies. I did buy puts when down $.50 on the day this morning, and spread it off when down $1.50 for a day trade.

Corn and wheat numbers remain the same for Friday, and sitting on the strikes that should be closest to expiration. I think that it will be quiet expiration with little movement. Soybeans however are bleeding before the weekend, and the bears have no intention or reason to cover their shorts and let the bulls out, as long as the market is below the bracket line which now acts as resistance.

Next week will likely be more volatile, and grains should be under pressure once again to start the week. But June is the month that will continue to pressure the market, but if there is a big sell off lead by services who are throwing in the towel, I will be interested in reducing call spreads especially if cheap, at significant chart support. If June does not produce a rally, the bulls will be doomed to a slower and lower eroding market to contend with.

Walking zombie looks are taking hold of the unhedged, and reality is or will be forced upon those who looked away from the risk of even lower prices. “Think what you want but always have a hedge on”, works no matter trending years as in 2012 when all time highs were made, or every year since then. The bear chart continues to be intact long term, and will continue to go down until it does not (things do what they do…).

You should be proud of yourself because you no longer are a victim to the services, brokers, radio, articles, and everything else. You no longer care what anyone thinks, you only care about protecting yourself to the extent of the strikes you need, and the upside you want, and nobody can add information that can improve what the chart tells you about price performance, or what a reasonable objective is to the upside, or what is reasonable to expect to the downside if the market goes down. Words/fundamentals cannot support like a bracket line, words cannot tell you if the market will go up or down, and words/fundamentals do not tell you how to control risk. You are the 1 in 100 producers that “know what you are doing and why”.

This is the first day for the rest of your life, so start or improve whatever you know you can do better, including hedging, executing, and most important…… have a plan to begin with. Start today. Learn from the past (it gives you wisdom through experience). Knowledge is meaningless if you do not use it.

June options expire today. I have only 1 producer remaining to roll.

5/18/17:

Grains: Funds bought 9,000 corn and bought 3,000 wheat contracts, and were flat on the day in soybeans.

These are what true sideways markets look like, and we defined it a long time ago. So it is no surprise, and if you have been a subscriber long term, we expect the sideways affair continue until it does not. “Things do what they do until they do not do it anymore”. It will be a surprise when it breaks out of that range, and that is the one time that betting on the bracket line will hold, failed. Compare all the times when betting on support or resistance bracket lines will hold worked, to the times when the bracket lines failed to hold and you are stopped out. Look at the possible rewards (depending on where you took profits) and the $.05 or less stop loss to get you out. You are rewarded much more than you risked, and you are rewarded more times than not. YOU are the casino giving you the odds, rather than the player/unhedged trying to beat the odds.

For a producer or end user, you should not trade the market, but instead do things to improve your hedge when cheap. Although the 2017 crop options moves slowly, they are doing its job, and you can do your job farming, rather than trying to trade the market, or the unhedged “keeping an eye on it”.

You know how to use (or are learning if a new subscriber) the charts to your advantage, you have the strategies needed to be ahead of the herd, you have less stress and less emotions, you have control, and you live in the reality of price, not B*LL SH*T fundamental guesstimates by those who are “talking their position” or are saying “what they want to hear”. You are self directed, and every year you should be improving your mindset, and outlook on hedging.

Since my service started and especially from 2012 until now, I have been the only one who insists on being 100% hedged. What they have lost since 2012, they will never get back, and if it does again make new contract highs, we will once again outperform them on the way up and down using our strategy that never picks the “top”. Getting 65% or more no matter how high the market can go, is much better than picking a price and be done with it and it goes another $5 higher.

But the most important reason to hedge is to take some risk off the table.

Want to know what I think for tomorrow and going forward?


The markets covered daily are 2017 & 2018 Soybeans and Corn.


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Howard Tyllas
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Email:dailynumbers@futuresflight.com

http://www.futuresflight.com/

Tel.1-312-823-9189,1-702-405-7245



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About the author


Currently a member of The Chicago Board of Trade (CBOT) and registered with the Commodity Futures Trading Commission (CFTC) as a floor broker and a member of the National Futures Association (NFA). I started my career in 1973 on The Chicago Mercantile Exchange trading floor working for a major firm. Three years later I purchased my first membership and began what would become a thirteen-year commitment to trading soybeans for my own account on the trading floor. I began trading options on futures since their inception in Chicago about twenty years ago; doing so, I traded in various pits on the trade floor. 

One of the major lessons that I have learned from all my years of experience is that knowledge is an important condition for the possibility of successful trading. Knowledge gives you a better chance to succeed by eliminating obvious mistakes: with it, you will never find yourself shamefully uttering, “If I only took the time to learn”.  
         
I want to save you from such regrets by teaching you where the danger is, what it looks like, and how to go around it, while still keeping an eye on your destination of success. In short, I will teach you how to combat error with knowledge.
       
My mission is to educate you, giving you my 45 years experience, wisdom, and knowledge from which you will then be able to use and benefit from at will.

I know what will help you make money, and I know what will insure failure. Use my services and prevent, “If I only knew”.  
  

Howard Tyllas

Futures trading involves the substantial risk of loss and may not be suitable for all investors. Past performance does not mean future results.

If you have a question or comment, email me dailynumbers@futuresflight.com

Visit my website www.futuresflight.com

                                                 

                        

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