Clues, Hedges, and Valentines

There’s an entertaining and informative post at Inside Futures today, under the less-than-subtle heading Sometimes it takes a Board Upside our Heads to Understand.

In a timely piece which alludes to the futility of attempts to pick market tops (and bottoms), futures trader Don Dawson suggests “picking a top” is precisely what many traders are trying to do at the moment. A price chart going back to 1973 points to historical lumber ceilings between $425 and $475. Dawson notes how commercial (producer) interest will increase as the futures market approaches extreme highs. He also looks closely at seasonal tendencies and patterns, with a reminder to be “Long by Halloween, out by Valentine’s Day”.

“Out by Valentine’s Day” might be considered a variant of “Beware the Ides of March”, a time-tested ‘market meeting’ favorite made famous by legendary trader Jim Simmons. Some Burnaby wholesalers will recall Jim once even resigned on Valentine’s Day.

Link to the full story at Inside Futures is available here.

“The rally in Lumber currently has Lumber trading up near $400.  The media is talking about how it could go much higher.  Imagine that, the media waited until the Lumber market traded up to almost 40 year highs in price before getting bullish on the market.  While this hype might make the talking heads on television look brilliant we as traders know that this is a red flag when the media is talking up a market.” – Don Dawson

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