Following the paper trail

The links below follow my time series of posts about a Lumber trade which commenced in July 2020….

Today’s chart below shows Lumber halving from its recent high, to come back and say ‘hello’ to its 200 day moving average.

Some points which come to mind are:
a) catching the fat part of the trade is good enough,
b) it’s OK for prices to go higher without you being on board,
c) many times it’s knowing when not to be in a trade (when the reward doesn’t outweigh the risk being taken),
d) mean reversion eventually happens.

Previous Lumber blog posts, in chronological order;

1) https://lnkd.in/gakxCyx

2) https://lnkd.in/gW9kyYp

3) https://lnkd.in/gnvK8tH

November 2, 2020
by Rob Zdravevski
rob @karriasset.com.au

The whole picture in only revealed afterwards

so the previous post shows the chart up until I issued a Sell advice on Lumber,

but the chart below shows the whole picture before and after….

My late July 2020 Sell advice followed a 42% rise in 40 days, which is exceptional for any asset let alone a physical commodity.

Lumber then rallied a further 74% over the next 6 weeks before falling 36% this past week.

A bull market coupled with euphoria, mania and mean reversion all within 3 months.

Hopefully, homebuilding costs in the United States reflect the sudden and lower prices?

September 17, 2020
by Rob Zdravevski
rob@karriasset.com.au

You only see it up to this point

I suggested Lumber (futures) were a “Buy” in mid-June.
A month later it was time to sell.
A good trade by all accounts.
Below is the chart, at that time…..

then, look at my next post to what happen afterwards

Timber !

The 3 best commodities trades since the March 2020 lows have been Long Oil, Silver and Lumber.

 

Yes…..Lumber. (see chart below)

All have doubled over the past 4 months.

Where to next….
Oil’s bullish trend is still intact,

Silver is overbought, at extremes and warrants caution if you are long (susceptible to a pullback to $18),

and Lumber is a Sell. With its 3 standard deviation above its ‘weekly’ mean and an outside reversal week, it’s time to cash in the (wood) chips.

by Rob Zdravevski
July 27, 2020
rob@karriasset.com.au

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