CME:LBS1!   RANDOM LENGTH LUMBER FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT)
Some may not be aware of the importance of lumber price movements.

Basically lumber rocketed like nobody's business, then crashed (>50% correction) pretty quickly. This post is not an analysis of why lumber prices rose so crazily. Viewers will need to do some background reading.

The collapse was the worst seen since 1978. That's something to chew on. In essence it was a bubble that popped. It was about demand going wild for all sorts of reasons, with no true underlying 'value'. That phenomenon has been seen repeatedly across all asset classes. It happens when something is fundamentally wrong with market booms.

Those who would purchase lumber wised up; the market became saturated in extreme overbought territory, and those who would have been using lumber (for house-building etc) basically switched from 'commodity' purchases to 'services'. That's the broad brush and I can't give chapter and verse here. People went on holidays! I didn't say 'everybody'. Yes - read about it. They decided, 'Now is not a good time - I'll do some travelling and living instead'. Funny but true.

But what's underlying the lumber bubble pop, is that the Housing market has suffered a similar pop. Ahhhh.. some will disagree with me because they're not seeing much about that in the news. Well BigMedia news is usually 3 to 6 months late! And of course, people believe more than 50% of what they read in the #LameStreamMedia news - but will never admit that.

I'm not about to deviate onto the metrics for the Housing Bubble pop here. Serious traders and investors can find that on the net from reputable channels on popular non-conventional streaming channels. But don't expect the whole picture to be found in one place.

The lumber pop, in conjunction with the housing pop - is basically bad news for loads of commodity sectors. If you don't believe me go back to 2007-2009. This is literally where the 'house of cards' (pun intended) collapsed. History repeats itself because human nature doesn't change much.

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FED balance sheet 42% of GDP @ 2020-01-26. Does money have value anymore? [Different perspective on the virus https://youtu.be/NjTdvALChwk ]

Comments

Interesting it has returned to match the 2018 peak of around $625. Yet we know lumber is very dependent on transport being available, Just find it quite odd the level its taken now (compared to 2018) when we are still in the midst of the pandemic, and crazy transport prices and availability being challenged.
+1 Reply
@Korchoi, True. What happens to parabolic curves, also interested me.
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