Play Turner’s Take Podcast Episode 220

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New Podcast

In this podcast we go over support levels for the S&P 500 and at what level does the stock market enter a bear market. We go over what to look for in energy and why we like July vs Dec Crude when we are ready to take a bullish position.  We also go over our game plan for the grain and livestock markes.  Make sure you take a listen to the latest Turner’s Take Podcast!

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777.  You will receive the newsletter and podcast notifications for free!

Coronavirus

It looks like coronavirus will spread worldwide sooner rather than later. Germany said they are “heading for an epidemic” as they can no longer trace infected people in their nation. For most coronavirus will range from a cold to the flu.  For the elderly with pre-existing conditions there is much higher chance of serious complications.

From purely an economic point of view, the outbreak will negatively impact Q1 stock earnings and GDP.  Heating Oil (which doubles as diesel fuel) is down about 30% since the start of 2020.  The energy markets have been hit the hardest as transportation and manufacturing have been hurt the most due to quarantines and travel bans.

Continuous Heating Oil

We are watching Crude Oil and Heating Oil for a bottom.  Once energy bottoms then the rest of the markets will be free to trade higher.  For those of you looking for a market to trade when the time is right, I would go with the July vs Dec Crude oil bull spread..

July vs Dec Crude Oil

The S&P 500 is down about 9% from the highs.  The chart below has the 10%, 15%, and 20% draw down levels.  The 20% level is very significant because that is the “bear market” level.  Markets that are 20% below their all time highs are consider to be in a bear market.

Continuous Emini S&P 500

Ag Markets

We are 30% hedged new crop corn above $4 and 20% hedged new crop soybeans above $9.70.  Don’t lift your hedges!  If you think we will have a bounce soon (and I agree with that sentiment), then buy some old crop in the May contract.  I would look for a nickel or dime in corn and fifteen to twenty cents in soybeans.  If that happens and you take some profits on old crop, then go ahead and sell a little more new crop on the board.

I want to use the carry to our advantage. The best way to do that is to sell new crop during the rallies and holding it until harvest.  When the markets sell off and you get the itch to take off hedges, just buy old crop instead for some short term trades.  For those that want to lift hedges, remember that many people end up never getting a chance to sell again at those original high prices.  Every month new crop loses more carry.  Stay short in the long term for new crop.  On the big declines go ahead an buy the dips and sell the rips in old crop.

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777.  You will receive the newsletter and podcast notifications for free!

About Turner’s Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

Craig Turner – Commodity Futures Broker