The Stick That Stirs The Drink

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

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In my book, Haunted By Markets, in a chapter entitled, "The Stick That Stirs The Drink" from September, 2010, I wrote the following. "Over the years, I have described crude oil as, the stick that stirs the drink." What I meant by that was simple. Down thru history, as crude goes, so go commodities.


Of course, that does not mean that commodities per se have to or will follow the lead of crude oil on a daily basis. But when crude begins to move in a meaningful manner it is a development that needs to be monitored carefully.


Today, front month crude oil is $1.35 a barrel to the good and trading at new, one month high. The strength with crude is impressive considering yesterday, stocks and commodities were slammed hard. And I mean hard. Thus, crude is showing independent strength not only yesterday but more importantly again today.


Yesterday, in my twice a day newsletter Commodity Insite I suggested exiting shorts in July Chicago wheat that were place at $5.21 and higher. I also suggested exiting short corn and short old crop soybeans. Coming into today, I am long front month oat futures with a few cent loss but still short new crop soybeans.


As I type furiously away, wheat prices are up 4 to 5 cents, new soybeans are on the plus by 3 cents, corn is 1 higher and oat prices up 2 cents and change. Based on the strength of grains coupled with the solid gains being seen with crude, the odds are great that tomorrow will be one of higher grain prices.


With grains trying to hang in there and crude up smartly, livestock prices are mostly lower. Live cattle are in the ugly by 70 points with feeders down a tad more. All lean hog contracts are lower except for April futures that are showing a gain of 25 tiny points.


However, the fact April hogs are higher represents an upside key reversal. Assuming, of course,the market ends on the plus by the close.


For today, probe the long side of oats and expect hogs to close higher since front month futures are posting an upside k-r. Should cattle close higher, that market would also be posting an upside k-r.


To take a peek at my new book, Haunted By Markets go to commodityinsite.com. Search for sneak preview and judge for yourself if my new book is a one-of-a-kind. It is 758 pages lower and will keep you busy for a day or so.


With crude showing so much character today, it should be supportive to other commodities. And that is why I refer to crude as, the stick that stirs the drink!

The time is 10:24 a.m. Chicago

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