Is it Corn?
So, it begins.
This link to an article where lawmakers (using that term loosely) are attempting to limit the export of natural gas.
We’ve already discussed the likelihood of some type of corn or grain embargo as prices continue higher.
Now, we have a similar (limit export) event but in the energy sector.
Recall, the statement from that prior (corn) post:
“What we’re looking for here, is some kind of Jimmy Carter type stunt where corn exports are halted in the name of ‘national security’ or some such thing.”
And this, from the same post:
“Of course, if that happens, corn is likely to crash (like it did last time) if only temporarily.”
So, let’s take a look at what happened to natural gas (UNG), when our lawmaking geniuses proposed to limit exports.
Daily Chart Natural Gas, UNG:
So, when this type of announcement comes out, the market takes a major hit … just like it’s forecast to do if we get something similar in corn (not advice, not a recommendation).
Now, if the overall long-term objective, is to wipe-out the food supply, wouldn’t you want some kind of dry run to make sure markets are going to respond as expected?
So, let’s try natural gas first, shall we?
Remember that with corn, it will (if it happens) be different.
Because of the elevated fertilizer prices, a forced lowering of the corn market may be all that’s needed to make sure very little-to-no corn gets planted … and Voila!
For a reminder on just what exactly we’re dealing with here, please reference this link.
Moving on to other markets, we have some housekeeping in the gold mining sector.
Junior Miners, GDXJ:
As stated in the pre-market update yesterday, the finger was on the sell trigger.
After the first hour of trade, it was obvious higher prices were in the offing.
Not willing to wait through a correction to a higher retrace level, the short position was closed-out (not advice, not a recommendation).
The table below summarizes the entire round-trip. It should be somewhat self-explanatory.
A hypothetical $10,000 was used as the starting amount. Any additions to the position used margin.
The end result as shown, approximately, +21%, gain.
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279