A
Th e
Component Manufacturing dverti$ dverti $ er
Don’t Forget! You Saw it in the
Adverti$$er
February 2022 #14271 Page #94
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
February Rally 91% Probability
“Chaotic”...the Perfect January Tag If there was ever any doubt as to what we should expect from January Chaos, 2022 is a textbook example. Traders (buyers and sellers) enter the month with new year expectations that either repeat or improve upon the previous year. These intentions are pre-empted by either an inventory liquidation or accumulation, which is most directly influenced by the emotions carried into the new year. Regardless of what that position is, January becomes perplexing. Traders who have taken aggressive inventory positions pause to consider whether or not they were overly ambitious. Those who have had a more tepid approach look for signs that will inspire them to change or hold a lighter inventory position. The chaos usually begins the second week of the month and only lasts a couple of weeks. Traders have a mental checklist which I suggest be written down and reviewed to monitor weekly changes. That list will include both supply and demand factors, looking for new disruptions or changes to existing conditions. January Chaos is the most difficult time to make rational decisions since the period is littered with constantly changing market opinions, which lead to irrational actions. Buyers, regardless of positions, look for price softness when winter weather turns extreme. Procrastinators hope for relief, and speculators look to add to positions during the winter confusion. The entire buy side of the market is seeking opportunity to increase inventory. There is typically an underlying pent-up demand that must be covered. Only a very minor few lumber handlers enter mid-January with what they consider to be an overbought condition... regardless of price or despite any disruption potential of any kind. Over the past 22 years, January has ended the month higher than it began 85% of the time and February has finished higher 91% of the time.
Continued next page
PHONE: 800-289-5627
Read/Subscribe online at www.componentadvertiser.com
FAX: 800-524-4982