George Kleinman

George Kleinman is editor of Commodities Trends, a free e-zine that reveals powerful trading strategies and secrets that will keep you up with the latest trends and developments in these lucrative markets. From energy and agricultural products to metals and currencies, George’s market wisdom has become quite a commodity among individual investors.

George is the founder and president of Commodity Resource Corp, a futures advisory and trading firm that assists individual speculative traders as well as institutional and corporate hedgers. He has been trading full time since 1977, an Exchange member for over 25 years and is the author of three seminal books on commodity futures trading. George entered the business with Merrill Lynch Commodities in 1978 and in 5 years entered the “Golden Circle” as one of firm’s top ten commodity brokers internationally.

George is a graduate of The Ohio State University and has an MBA from Hofstra University.

Content Posted by George Kleinman

Trade of the Month: A Soybean Re-Squeeze?

I see a price squeeze setting up in the July soybean contract as it heads toward expiration. A price squeeze occurs when the shorts (who are obligated to deliver a commodity) can’t find the product to deliver and instead must “pay up” to get out of their short position. This is what happened last September.

Come on, Cotton

Because of low prices, farmers in the cotton belt, which includes states such as Louisiana and Mississippi, planted the lowest cotton acres in 25 years. Lower acres equal lower supplies; add in a small carryover of supply from last year’s poor crop and supplies at the tail end of this crop are projected to be the smallest in seven years.

Timeless Trading Advice

Why do so many people sell at the bottom, or buy at the top?  It’s because they’re acting emotionally instead of intellectually. There’s one simple way to avoid this: Don’t get attached to any position. Trading shouldn’t be an ego thing. There’s always another market tomorrow, and another yet the week after.

Trade of the Month: A Wheat Play

A dramatic weather event last week in the Southern Plains could significantly influence future wheat prices. An untimely hard freeze no doubt caused crop damage and killed a portion of the immature wheat crop.

Canadian Currency Outlook

The question going forward: Is the worst behind us in terms of economic growth, energy and metals prices? If the answer’s yes, then the worst is also behind Canadian dollar values, which should start to appreciate, not only against the US Dollar, but also versus the European currencies.

A Random Chart Walk

Charts have predictive value for this reason: Large and informed buying and selling can’t be hidden; they show up in market movements. In this issue I’ll share with you some predictive chart techniques and present some interesting charts of certain commodities that represent potential trading opportunities.

How Low Can It Go?

Although your stocks can go to zero, many commodities will never have that risk.

 

Trade of the Month: A Soy Play

If current demand trends continue, the US could theoretically run out of old crop soybeans before the new crop becomes available. In reality, supplies never actually run out. What occurs is shrinking supplies effectively lead to higher prices, and higher prices eventually ration demand. We’re looking to play for those higher prices.

Precious Metals: A True Safe Haven?

Although it’s never prudent to rely on just one indicator, this, in my experience, is a particularly powerful one. The silver market has been in a bull trend for the past five months, and we would have to conclude at this time that the volume spikes registered last week are indicative of a major top.

Trade of the Month: A Gold Play

I see the gold market moving higher over the coming three to six months and perhaps beyond that time frame as well. I’m not an expert in gold mining stocks and have noted many of these have actually moved lower despite gold itself moving higher. Therefore I want a pure gold play, with some leverage, but without sticking my neck out completely.

Relative Performances

It will no doubt be an interesting year. Don’t let the gloom and doom out there blind you to the fact there will be some phenomenal trading opportunities in 2009.

Random Trading Thoughts for 2009

Be selective in picking your trades this coming year because these days preservation of capital is critical. Appreciation of capital is the goal, and it’s certainly attainable; however, today’s markets favor aggressive traders opposed to longer-term investors.

Where to Put Your Money in 2009

Now that we’ve discussed Money Management 101, let’s turn to our central question of where to place your money in 2009. The answer to this question comes from one of the preeminent investors of our time, George Soros. Soros’ advice is to follow the money flows, or in other words to go with the prevailing trends.

Trading Rules for 2009

The truth is selling is just as easy as buying. Many markets today aren’t meant for holding. With certain exceptions (i.e., core holdings), markets today don’t favor long-term buy-and-holders. They favor aggressive traders.

Trading Unpredictability

A successful trader once told me, “If you can correctly determine the trend of a market, you will make money.” This may sound like a simple concept, however in the real world it’s not particularly easy to accomplish.

The Most Bullish Commodity?

It’s no secret the commodity markets have been adversely affected by the global financial crisis. Not only has demand plummeted for many commodities, but additional selling pressure has come from massive hedge fund liquidation. Add in a deflationary psychology and a stronger-than-anticipated dollar, and it’s no wonder a host of commodities, from cotton to copper, have registered multiyear low prices this month.

The Breakout from Consolidation

For at least a month now, many of the markets in which we trade have been in choppy, range-bound, sideways patterns. Soybeans are one example of this, with January soybeans trading in a range from 840 to 860 on the support side and 950 to 970 on the resistance side.

The Canary in the Deflated Coal Mine

As I perused the market quotes for Friday, I saw the markets were almost completely red. There was just one lone green island in a red sea. The world’s stock markets were sharply lower. Oil was sharply lower. The agricultural markets from corn to wheat to cocoa to sugar to coffee were all sharply lower. Cattle, cotton, hogs and oats were also sharply lower. Silver, copper and aluminum followed the pack sharply lower as well.

Great Depression or Great Opportunity?

The talking heads say this is the worst financial crisis since the Great Depression (1929-1932), and I wouldn’t disagree. Will it lead into another Great Depression, or is the market so oversold and fearful now that it’s at--or near--the bottom? Is this a phenomenal opportunity to pick up cheap assets? Or is it more prudent to sell out now to preserve what cash you have left?

What's Next After the Bailout?

I won’t discuss the bailout program in depth in this issue, but I will tell you it makes me sick that we’re collectively bailing out the losing side of a trade for those who made the wrong call. I’ve been through thousands of commodity trades in my career. Wouldn’t it be nice if someone bailed me out of the losers while I got to keep the gains? It’s never happened, and it never will.

The September Soybean Squeeze

Something remarkable occurred in the September soybean futures contract last Friday--the last day of trading for this lightly-traded, widely ignored contract. September beans surged to a one-day record of $2.74 per bushel to end its life at nearly $15 per bushel. In contrast, the active November contract closed an unremarkable 26 cents higher at about $3 per bushel below the final September price.

What I Learned This Year Trading Commodities

This has been a year full of volatility and incongruities in the commodity markets. But there’s an upside: I’ve learned to respect both the volatility and incongruities. In fact, all traders can learn quite a bit from what’s transpired over the past few months.

Is the Worst Over?

Oil prices realized their largest weekly drop in history, $145 a barrel down to $129 a barrel. That’s a $16-a-barrel drop. Oil prices are now down $18 a barrel from the July 11 high. Since last Friday, gasoline prices dropped about 40 cents a gallon, and this should show up at the pump in a few weeks.

Stock Market Success

You should know upfront that I don’t purport to be an expert on the stock market or individual stocks. However, I’ve seen and traded thousands of markets over the years, both stocks and commodities. And over time, I’ve developed a feel for market trends.

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