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From Manic To Depressive And Back To Manic


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

Here are some thoughts and ideas from Haunted By Markets in a chapter entitled, From Manic To Depressive And Back To Manic I composed on August 10, 2007, 11 years ago today. The second paragraph read as follows:

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"To understand how panic stricken the markets have become, here are the thoughts of a well-known chief market strategist; "our market is rapidly swinging from manic to depressive and back to manic in nanosecond moves with each headline acting as a trigger." He is right, as uncertainty is always bearish. Mood swings from "manic to depressive" are even more bearish in my view as it fosters more uncertainty


And in the final sentence of that chapter I wrote. Call me for advice about mood swings flipping from manic to depressive. I've been there. Heck, I'm there now!"


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I thought I would reprint that column from 11 years ago because yesterday, the livestock complex traded, manic to depressive and the stage is set for the grain complex to do the same along with the stock market.


In the livestock complex yesterday, hog prices ended limit up and at one time, cattle prices were approaching limit down. By the close, hog futures gained nearly 500 points on cattle futures. In the grain complex, a major report is due this morning that will cause both manic and depressive price swings if my work is close to being correct. And as I type furiously away, the Dow and other stock indexes are deep in the red.


I have been trading spot month August hogs on the long side of the ledger and getting hammered. The market has been wildly depressed with futures closing lower 10 days in a row to the tune of $12. And a month ago, July hogs expired at approximately $79.70 but August hit a low yesterday of $54.20. Thus, in a month, there was a $25.50 drop from one expiring hog contract to the next. Talk about, manic to depressive.


And based on what I am seeing this morning as I type furiously away, the next market that may slip into a scenario of manic to depressive is the Dow Jones and other stock indexes. Yesterday, in the afternoon broadcast of my twice a day newsletter Commodity Insite I suggested selling short the Dow Jones E-mini with the fill being 25,531. I do not offer many trading suggestions for stock future and that was the first one in months. In months!


This morning, Dow futures are 152 lower at 25,344. The market is leaking here on a Friday. History shows that a poor close with the Dow on a Friday, oftentimes leads to much lower prices come Monday. However, more often than not, a poor close is 200 points lower or more. Thus, the Dow is certainly leaking but to set the stage for sharply lower trade for Monday, the market needs to slip further.


There are two big play for today. One, is to come out of the day short the Dow in some fashion. In other words, sell futures or buy deep out of the money put options. The other big play is to wait for the USDA grain report later this morning and trade accordingly.


My work suggests the report will hold a bearish surprise for soybeans. Time will tell.


Yesterday, trading in the critter complex was, manic and depressive. Later today, the grains may be, manic and depressive as well. And if the Dow slips another 100 points from here with futures already 105 lower, all next week may be manic and and depressive for stocks as well. But if my work is correct, stocks will be far more depressive than manic.


There is no substitute for timely and accurate information. That is why you should check out Haunted By Markets by going to www.commodityinsite.com. Keep in mind that those purchasing my book receive for free my twice a day newsletter and all Special Email Alerts. It is heck of a deal. Check it out!


And before the close, I fully expect to to send another Special Email Alert to my subscribers, my brokerage clients and to those that recently bought Haunted By Markets. They know first hand that there is no substitute for timely and accurate information.


The time is 8:37 a.m. Chicago




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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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