2011-05-23rd (Mon)

At the end of the previous trading session I had the following positions;
Long 110 contracts Copper July 2011 with ACB of 410.73
Short 10 contracts Wheat July 2011 with ACB of 825.00

In today's trading session weak US economic data and expectation of Greece to restructure its debt sent the Euro falling and the USD rising.

The fear of contagion from the European Debt situation was complimented by China's worse than expected PMI figures for the month of May.

China's tightening policy is feared to choke economic development going forward which can ripple to decreased industrial demand and markets weakened on global growth concerns.

I expect Greece to repostion its debt (2011-05-18th (Wed)) in some form or way as kicking the can down the road is the least painful way out for now.  There are more painful and drastic solutions proposed like disolving the EU or exiting membership by Germany but that may have a more detrimental ripple effect on the global economy that the world can take for now.

The USD is expected to bounce after QE2 ends in June.  Contra the herd, I believe the US should take this opportunity to continue QE3 and even QE4 while the world still considers the USD as a relative safe haven and print as much money as it can, but I warn this is only a short-term solution that can crumble the economy more long-term.

The Debt Ceiling issue has yet to be resolved.  The debate behind closed doors is not whether to raise but by how much.  For if Uncle Sam does not raise the debt ceiling sufficiently high the US will find itself hitting it again very soon.  The political fall out may cause voters to dissent and fire the incumbent party when they exercise their 15th Amendment at the next scheduled opportunity.

I therefore expect the USD to bounce as long as the fear from the Greek Debt situation continues, but I am long-term bearish on the USD.

Regarding Copper, I believe even with China's weakened May PMI figures the economy must for now continue to grow at the expect 6% annual rate to avoid the people's unrest and the central government will continue their Chinese Stimulus Package (CSP) even though the media is not doing a good job reporting on its progress.  Pockets of growth and inflation will continue to be the model of Chinese economic growth for now.

Very long paragraphs above, and some may question my thinking.

Ultimately as a Trader only the trades matter;
Buy 10 contracts Copper July 2011 at 404.88 (2011-05-23, 01:07 am EST)
Buy 10 contracts Copper July 2011 at 397.48 (2011-05-23, 11:26 am EST)

Currently I have the following positions;
Long 130 contracts Copper July 2011 with ACB of 409.26
Short 10 contracts Wheat July 2011 with ACB of 825.00

Copper July 2011 is currently 400.70 (2011-05-24, 01:49 am EST)
Wheat July 2011 is currently 806.63 (2011-05-24, 01:49 am EST)

Our first line of credit activated on 2011-05-05th (Thurs) is allowing me to weather today's volatility as our account equity has been chopped significantly, yet in this situation I have added to our positions and am considering adding even more until we reach our limit per our by-laws.

Total equity is 103% of May 1st and significantly lower than last Friday.

Stay Tuned,

Jeff
(2011-05-24, 01:54 am EST)