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Can You Imagine That!


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The data and opinions in this report are for general information use only and are not

intended as an offer or solicitation with respect to the purchase or sale of any futures

contracts. Although all information and opinions are believed to be reliable, we cannot

guarantee its accuracy or completeness. The open trade and previous recommendations

were suggested, but that does not necessarily mean any individual followed the trades

exactly as recommended. This newsletter has been prepared without regard to the specific

investment objectives, financial situation and needs of any particular recipient. Past performance

is not necessarily indicative of future results. There is a significant risk of loss associated with

trading futures and options. It should be noted that the impact on market prices due to seasonal

or market cycles and current news events may be reflected in current prices.

Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

Follow me on twitter@commodityinsite

With less than 20 minutes to trade yesterday in the critter complex I sent a Special Email Alert to those that subscribe to my twice a day newsletter and to brokerage clients. Here is what I specifically stated and note the time sent.

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SPECIAL EMAIL ALERT!


As I type furiously away, the strength being seen with stocks, bonds and commodities per se is impressive. The Dow is 45 higher, bonds up 18 points and the CRB Index, weighted towards grains, livestock and crude is 287 points higher, the best the it has been since February. For all intents and purposes, all markets are higher as investors and traders are buying breaks and not selling rallies.


But note, however, that the weakest markets anywhere are cattle. The live market is 212 to 125 lower for December and February with feeders down 70 points. Hogs are mostly on the plus with only spot December in the red and the loss capped at 52 points.


Cattle are 30 to 60 off the low and feeders 150 off their low. Prices may be lower but remain relatively well bid. But the flat price for cattle is lower and the bear spreads are doing well. Plus, front month cattle are posting an outside day down. Those are the characteristics of a market in trouble. Plus, cattle prices are struggling even though boxed beef prices rose $.51 this morning.


I am having a hard time digesting the fact that stocks, bonds and the CRB are doing so well today. A very hard time. But I am pleasantly pleased with the weakness being seen with cattle. My advice for today is avoid the long side of the livestock and try to hang on to shorts and or bear spreads. It is tough to do so based on all the volatility being seen.


The funds are holding a huge long position in cattle and a record long position in feeders. If and when the, red line, goes over the blue line or whatever, causing the funds to liquidate long positions the next step is for them to go short.


Try remain short and bear spread the cattle market. And I still see no other market anywhere I would play on the long side of the ledger. Not a one.


The time is 12:41 p.m.

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This morning though the day is young, cattle are 100 lower, feeders off 105 points and front month oinkers in the red by 70 points. In addition, the metals are lower, grains other than soybeans are in the ugly and the CRB is a tad lower as well.


However, as I type furiously away, the Dow, Nasdaq and S&P are posting modest and mean modest downside key reversals. But the Russell 2000 is down 11.80 at 1484.90. And should the Russell close here or lower it represents the worst that stock index has closed since September 27, or lower.


But here is the rub and food for thought. On September 27, when the Russell 2000 was right here, Dow Jones futures basis December was trading at 22,284 vs. what I am seeing right now of 23,459. In other words, the last time the Russell was here, the Dow was 1175 points down from here.


Can you imagine that! Can you?

The time is 9:51 a.m. Chicago

The data and opinions in this report are for general information use only and are not

intended as an offer or solicitation with respect to the purchase or sale of any futures

contracts. Although all information and opinions are believed to be reliable, we cannot

guarantee its accuracy or completeness. The open trade and previous recommendations

were suggested, but that does not necessarily mean any individual followed the trades

exactly as recommended. This newsletter has been prepared without regard to the specific

investment objectives, financial situation and needs of any particular recipient. Past performance

is not necessarily indicative of future results. There is a significant risk of loss associated with

trading futures and options. It should be noted that the impact on market prices due to seasonal

or market cycles and current news events may be reflected in current prices.





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About the author


Jerry Welch has been in the futures industry since the late 1970's and is a true veteran of the markets. He has been quoted often in Wall Street Journal and is author of Commodity Insite, one of the longest commodity futures newspaper columns in history. His weekly column has been published each week since the mid 1980's and is one of the most recognized names in the world of commodities.

Mr. Welch is also known widely as a, "so so" flyfisherman.  

His column is published by the Illinois Agri News in La Salle, Illinois, Cattle Today, in Fayette, Alabama as well as Consensus, in Kansas City, Kansas.

He can be contacted at 406.682.5010 for a view of his, "twice a day" market column that includes price forecasts and trading suggestions.

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