I'll Second That Emotion
On a relatively subdued day with US markets closed for the Labour Day holiday, I thought that it might be a good time to reflect a little on what went on on Friday, and where we may go from here.
One report I read this morning talks of Friday's CBOT action having a lot to do with emotion. Out of a wall of data released last week from the likes of FCStone, Allendale and Linn Group the market chose to focus on the caveat within Informa's corn production numbers rather than any of the other figures being bandied about.
This is indeed trading with emotion.
Informa also actually increased their US soybean production estimate from last month, but the bulls were so busy reading the corn small print that this piece of information seemingly passed them by, and front month beans closed within a gnats chuff of session highs of 1030, and fully 40 cents higher than Thursday's low.
Corn closed at it's highest levels of the year on the weekly chart, with beans and wheat both close to their highest of the year.
The problem with emotive trade is that it's so much more difficult to predict than trading the fundamentals. We don't know where it's going to go short-term, but what we do know is that longer-term it will almost certainly end suddenly and in tears. Very much like my previous marriages. Until we get to there meanwhile, we have little idea how much higher emotion can carry this rally.
If the market can trade on emotion, it can and will also plant on it. That might give the bulls something to think about in 2011.
One report I read this morning talks of Friday's CBOT action having a lot to do with emotion. Out of a wall of data released last week from the likes of FCStone, Allendale and Linn Group the market chose to focus on the caveat within Informa's corn production numbers rather than any of the other figures being bandied about.
This is indeed trading with emotion.
Informa also actually increased their US soybean production estimate from last month, but the bulls were so busy reading the corn small print that this piece of information seemingly passed them by, and front month beans closed within a gnats chuff of session highs of 1030, and fully 40 cents higher than Thursday's low.
Corn closed at it's highest levels of the year on the weekly chart, with beans and wheat both close to their highest of the year.
The problem with emotive trade is that it's so much more difficult to predict than trading the fundamentals. We don't know where it's going to go short-term, but what we do know is that longer-term it will almost certainly end suddenly and in tears. Very much like my previous marriages. Until we get to there meanwhile, we have little idea how much higher emotion can carry this rally.
If the market can trade on emotion, it can and will also plant on it. That might give the bulls something to think about in 2011.
