It’s no surprise the markets are starting to look a little tired. However we don’t believe we’ll see a viscous sell-off either mainly because of the two major fundamentals leaning on this market, China and weather. Despite the rains in California they are still way behind the 8-ball and it’s not even summer. The U.S. drought picture is not improving.
GDT tomorrow night will be a good determinant on whether we get the start of this correction of not. Being first GDT of the March future, those with the arbitrage in play need to buy 50% of their underlying March futures position in C2.
