China gooses Dr. Copper (or CAT?), position update

I’m wary of global economic growth but stimulus is stimulus and I’m not going to Fight the Chinese Fed.   According to Bloomberg a stimulus of the kind that actually builds roads and infrastructure is on its way.

I’m awfully tempted to play this right now…week’s positions have been ho hum; exited soybeans at 1772, got back in at 1738 but losses on S&P Futures (just 7 points, missed getting whacked by the huge rally) evened that out.  My tight stop on Gold hit, which I’m looking to get back into, but slightly ahead on long Corn and short Treasury trades.  Sold APPL for slight profit but it was underperforming S&P on big move today so thought the money would be better put to work elsewhere.

Copper is just over the highs hit twice in July, but employment report looms tomorrow morning.  Close correlation between corn & soybeans means I may lighten either (or both) positions to establish one in Copper.  May also halve position on Treasuries given the risks of a rebound there.

Shorting Copper was one of the great trades I had in August 2011: am I emotionally obscured by it, even if going long?  I’ve bought one contract of Copper at 3.567 which is a way to implement strategies to see how I feel being in the position and brings the contract to various screens of my Interactive Brokers account.

Going long CAT might also be a decent play here but haven’t given it much thought beyond initial feelings about CAT at low valuation and weak arguments to the contrary.

Chart forCaterpillar Inc. (CAT)

FWIW, CAT Jan 2014 120s & 125 calls in the low $2 range…82.5 strike at 13.10 if one feels more cautious.  I’m not sure I have the patience to let that play out.

Small other position update…Selling ZNGA Jan 13 & 14 calls at 2.5 & 3 strike prices is slightly ahead and I’m feeling good about that position.

UPDATE: did swap out of ZN at 132 ‘100 for copper at 3.575 – ZN is still in a range with a big unknown coming up in a few hours; HG is breaking out; Soybeans and Corn feel the risk/reward is better than ZN short term to swap out of them.  Set HG stop at 3.5245; HG & ZN are probably decently correlated in short term so the one breaking out of range right now is more appealing.

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