The commodity markets were absolutely crushed Thursday afternoon, experiencing some extreme losses that I have not witnessed for quite some time. We saw -5% to -10% declines across the board. The Federal Reserve announced that they would start to raise interest rates next year as that sent the momentum to the downside as investors did not like to hear that information as higher rates are bearish commodity prices.
I have been trading these markets for around 30 years, and I have seen a sharp sell-off before as we may have gotten a little ahead of ourselves. However, I still believe you take advantage of massive sell-offs as the long-term secular bullish trends are still intact.
If you have been following my previous blogs, you understand that I try to risk around 2% of my account balance on any given trade, as this is an excellent theory. All you have to do is look at what happened over the last couple of days, especially in the metals and the grains, and if you do not follow that rule, you could lose a substantial amount quickly.
Sugar futures in the October contract settled last Friday in New York at 17.67 while currently trading at 16.76, down another 90 points continuing its bearish momentum as prices have now traded lower five out of the last six trading sessions. The commodity markets across the board are taking a beating this week because interest rates could rise in the coming year ahead. Continue reading "What Happened To The Commodity Markets?"