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"Obsevation. experience , memory and mathmatics--These are what a successful trader must depend on. He Must not only observe accurately but remember at all times what he has observed. He cannot bet on the unreasonable or on the unexpected, however strong his personal convictions maybe about man's unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities--that is try to anticipate them. Years of practice at the game, of constant study, of always remembering, enables the trader to act when the unexpected happens as well as when the expected comes to pass. A man can have great mathmatical ability and unusual power of accurate obeservation and yet fail in speculation unless he also posseses the experience and memory "
THIS PUBLICATION CONTAINS THE VIEW AND OPINIONS OF THE AUTHOR, EXCEPT WHERE OPINIONS ARE ATTRIBUTED TO OTHER SOURCES. WRITTEN PERMISSION IS. REQUIRED PRIOR TO ANY DISTRIBUTION OR REPRODUCTION. FUTURES TRADING IS RISKY AND CAN CAUSE SUBSTANTIAL FINANCIAL LOSS. THE USE OF OPTIONS AND OPTION TRADING INVOLVES A HIGH DEGREE OF RISK. THE USE OF STOPS MAY NOT LIMIT LOSSES TO INTENDED AMOUNTS. SPREAD POSITIONS MAY NOT BE LESS RISKY THAN OUTRIGHT FUTURES POSITIONS. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. SOURCES ARE BELIEVED TO BE RELIABLE BUT NO ASSURANCE IS MADE FOR ACCURACY. ADDITIONAL RISK DISCLOSURE IS AVAILABLE.
September 1st 1997
As many long time Readers know I have been Bullish Cattle for some time now. In fact the lows seen last year when Corn was at it's peak will probably be lows that we won't see again for some time.
Last Spring the 'Mad Cow' scare caused heavy selling in Cattle Futures and gave traders a chance to buy some cheap meat. In fact Cattle reached new contract highs after that happened !
Recently the E-Coli scare has caused heavy selling, and a subsequent technical break down of Cattle Futures. I say enough is enough ! Cook Your Meat and you won't have a problem.
During the Recent scare I came down with a 'Bug' as most of you know. I even wondered if I had some kind of food poisoning, but I like my Steaks and Burgers Well Done, so that wasn't it. As soon as I was 'Well' the first place I went to eat was my favorite Steak House for a 22 oz Porterhouse, that hit the spot.
What I am trying to say is this crisis will soon pass and Cattle should begin to trudge it's way upward to highs with a resumption of the long term Bull that began last year.
On a 'Seasonal' basis December Cattle Futures begin to rise from now until about the middle of October. The result of recent 'sell-off' is that traders now have a chance to buy some cheap meat.
As far as the 'Technicals' go , the 9 Day RSI is sitting at 20 which implies an over sold condition . In addition. In addition I have a key 'fib' Arc that may just cause a bit of short covering.
Therefore I advocate purchases of December Cattle at current levels. looking to exit sometime near the Middle of October.The settlement on Friday was 6875, off the recent highs of 7300 set on July 29.
Traders should consider buying a few Long Dec Cattle and Shorting June Cattle as a Spread for the next six weeks or so. That particular spread closed at December 'Under' June by 165 Pts. The Dec/June spread was 50 pts Dec 'Over' June on August 8th.
Traders should also consider a strategy of Buying Dec Cattle Futures and Selling December Call Options against the Long Position for a protective measure, I suggest the 7000 calls or 7200 calls.
In any event you should keep in close liason with your broker or my office if you are a Paid Subscriber. If you are not you should seriously consider doing so.
If you are not yet trading this may be a way to get started.
-A Ship in Harbor doesn't Sail-
p.s. If you don't yet have a broker or are shopping around for a new broker, get in touch with me and I will forward you to a very capable gentleman who is an Ex-Floor Trader on the CME, in fact when I started as a runner way back in 1979 he was filling orders in the Pits.
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