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10-18-18: Lumber Prices Collapse from a Recent Bubble, but How Far Will They Retreat?

Lumber is tricky. It is just coming off one of those rare "bubbles" on sees in commodities caused by the trade disputes with Canada. As lumber comes crashing down off its highs, the question remains as to how far it will go. Historic prices suggest it has room to go lower, and analysts are predicting this will happen. But lumber is a "reactive" commodity in our opinion and showing "bottoming" tendencies now on charts making our indicators so close predicting direction that we had to break the tie by double weighting our interpretation of recent news. That news suggests that with rising interest rates, the demand in the housing market is cooling off, and housing starts are a key indicator of possible lumber prices.

Our recent article on Lumber is in the Archives Section below.

10-13-2018: Some Commodities We Haven't Currently Reviewed

How do we pick a commodity for review? Here are technical strength or weakness ratings for 10/12 on the other major commodities not being currently being reviewed or traded on this site. To pick the commodity for our next review, Zenith will usually refer to such a list and pick the commodity which has one of either positive highest or negative lowest scores. Commodities currently under review on our list of about 18 on this site are not shown below. It's just a way of keeping track of what else is going with other commodities.


Current Advitity:

Oats                 96
Coffee "C"           56
Mexican Peso         56
Platinum             40
Corn                 24
U.S. Dollar Index    16
Crude Oil             8
Lean Hogs             8
Rough Rice            0
________________________

Lumber             -100
Milk Cl III         -80
Eurodollars         -64
NASDAQ 100 Index    -64
S&P 500 Index       -56
Silver              -40
Kansas Wheat        -40
Chicago Wheat       -40
Ethanol             -40
Gasoline            -32
Swiss Franc         -32
Soybeans            -24
Japanese Yen        -16


Previous Activity:

Oats                 96
U.S. Dollar Index    72
Crude Oil            72
Gasoline             56
Mexican Peso         56
Lean Hogs            32
Rough Rice           16
Soybeans             16
S&P 500 Index         8
________________________

Eurodollars        -100
Silver              -80
Lumber              -48
Milk Cl III         -48
Japanese Yen        -40
Corn                -40
Swiss Franc         -40
Kansas Wheat        -40
NASDAQ 100 Index    -32
Chicago Wheat       -24
Ethanol             -16
Platinum             -8
The ratings are good only for date shown, and rapidly change each day, whereas we review the list only periodically. Once a commodity appears on our list of articles and is being currently traded, we consider its long-term direction has been established and trade consistently from that direction wtihout worrying about day-to-day changes. Granted, that's not how most other futures traders work nor how we trade stocks; but we have found it to be effective for commodities to trade that way.

Archive List

10-18-2018: November Lumber: Coming Down Off a Bubble

10-10-2018: December T-Bonds: Rate Shock

10-03-2018: December Cotton: Very Oversold

09-30-2018: November Heating Oil: Imports Cut Off

09-24-2018: November Orange Juice: Production Bounces Back

09-20-2018: December Live Cattle: Hurricane, Swine Flu, Trade War, and Grain Prices

09-15-2018: December Soybean Oil: Finding Other Markets

09-11-2018: December Australian Dollar: Trade Wars Depreciate Some Currencies

09-08-2018: December Hi-Grade Copper: Chinese Economy Influences Prices

08-29-2018: December Soybean Meal: Exports Threatened

08-24-2018: September Treasury Notes: Flight to Safety

08-17-2018: December Cocoa: Price Projections Too Optimistic?

08- 13-2018: September British Pound: Two Years Later Brexit Sill Crushes

08-06-2018: September Euro Currency: Southern Member States Weak

07-30-2018: October World Sugar: World Oversupply

07-19-2018: September Palladium: Catalytic Converter Future in Doubt

07-17-2018: August Feeder Cattle: Consolidating

07-05-2018: October Natural Gas: Production Exceeds Current Demand

06-29-2018: September Canadian Dollar: Victim of Trumponomics

06-22-2018: August Gold: Strong U.S. Dollar Weakens Gold

Performance

Updated once a week (usually on Saturdays) unless the preceding week had less than five trading days.

All Commodities Trades 10/01/2018 -10/13/2018:


 # Commodity           BS    Buy   Sell   Last    Gain Intended  Rough   Group
                                                 (Loss)    Risk Percent

10 Dec Australian Dollr S         71.15  71.10 $    200  14,900  20.4% Currency
17 Dec Soybean Oil      C  28.79  30.00  29.39 $ 11,832  15,504  11.8% Grains  
 7 Dec British Pound    C 132.97 131.12 132.00 $ -8,304   8,094  20.4% Currency
 7 Dec Cocoa            C  20.39  20.89  21.60 $  3,290  14,910  15.4% Softs   
11 Dec Canadian Dollar  C  76.91  77.15  76.73 $  2,310  14,850  20.4% Currency
 5 Dec Cotton #2        C  76.45  78.56  78.37 $  5,125  14,975   5.8% Cotton  
 5 Dec Euro Currency    S        116.21 116.22 $   -213  14,938  20.4% Currency
 4 Dec Gold             C 119.08 120.74 122.20 $  6,520  14,960  11.6% Prec Met
 4 Jan Feeder Cattle    C 154.39 149.60 149.75 $ -9,700   9,580   6.6% Meats   
 4 Dec Hi Grade Copper  S        282.00 280.00 $  1,880  15,000   5.8% Copper  
 3 Nov Heating Oil #2   L 230.50        232.10 $  1,926  14,994   5.8% Energies
 9 Dec Live Cattle      C 118.12 116.03 116.18 $ -7,794   7,524   6.6% Meats   
11 Nov Natural Gas Mini C  31.51  32.48  31.61 $  2,338  14,960   5.8% Nat Gas 
14 Nov Orange Juice     C 142.52 146.01 144.15 $  6,909  14,973  15.4% Softs   
 2 Dec Palladium        S        108.51 106.08 $  4,800  14,980  11.6% Prec Met
14 Mar Sugar #11 World  C  13.28  12.65  13.07 $-10,298   9,878  15.4% Softs   
 6 Dec Soybean Meal     C 314.90 321.10 316.90 $  3,540  14,940  11.8% Grains  
12 Dec Treasury Notes   C 117.89 117.98 118.34 $    720  14,880  11.0% Finance 
 5 Dec Treasury Bonds   S        138.41 138.72 $ -1,700  13,450  11.0% Finance 

            Adjustment for Open Positions: -($    6,894)

Prior to 10/08:
Other Gains/-Losses This Reporting Period:   $   53,888  ***
 ***  For Contracts Closed or Rolled Forward  __________
 
Total for all Trades:                        $   60,375

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Music of Francis Poulenc

Trading in commodities involves substantial risk and past performance is no guarantee of future profits.  Zenith does not sell advice nor does it manage discretionary accounts other than its own. Readers should be aware of the vested interest that all traders/brokers have in encouraging other traders to make the same transactions.  No one should follow investment advice blindly.  This web site should be used only as a "sounding board" for confirming one's own opinion.  Any suggested order placements should be reviewed and reset to fit current market conditions by individual traders.

Recommendations may include trades which have already been made on the same or a previous day, otherwise the issue is placed on a "watch list." Suggested trades are based upon an approximate maximum $15,000 capitalization requirement per trade, depending upon initial contract margin requirements.  Zenith's actual trades may be larger.  $22 per round turn for futures is deducted from profit figures.   Commodity option trade recommendations are not tracked, but performance should parallel that of the underlying commodity's.

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