January Soybeans

At 12:30pm Chicago time on 11/23/09: My resistance was 10.68, just .01 1/4 from the actual high, and my support was 10.32, .07 1/2 from the actual low.

4, just .01 1/4 from the actual high, and my support was 3.90, just .00 1/4 from the actual low.

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Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

January Soybeans Daily Numbers & Trade Ideas for 11/23/09

Nov 23, 2009

 

This report was sent to subscribers on 11/21/09 8:00 a.m. Chicago time to be used for trading on 11/23/09. Everything is done by Howard Tyllas, no program or black box.

January Soybeans

At 12:30pm Chicago time on 11/23/09: My resistance was 10.68, just .01 1/4 from the actual high, and my support was 10.32, .07 1/2 from the actual low.

4, just .01 1/4 from the actual high, and my support was 3.90, just .00 1/4 from the actual low.

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10.80                                Resistance                            

10.68                                     

-------------10.50               Pivot  

10.32                         

10.11 3/4                          

 

Trend             

5 day chart.……….. Up   (from last week same day)                                                 

Daily chart   …….…Down              

Weekly chart …….. Sideways      

Monthly chart ….... Sideways $9.56 is the 200 DMA

 ATR 26 1/2              Extremely Overbought 95%




Red bracket line near $10.50 is pivotal; downtrend line is now support near $10.12. Since downtrend line was hurdled the bulls hit their target of the red bracket line.

    Many reasons this year for the swings in price. Bottom line: Bracket lines are areas that correspond with news events. Green are when crops look good, red when the crops do not, or are delayed, aided by demand. 

    I have always said, "I do not care what the reason the market gets to a location on my chart that presents a trade opportunity".

   In my daily numbers on Friday my pivot acted as resistance and was $.01 from the actual high; my support was $.01 1/2 from the actual low.

January Soybeans for 11/23/09

More chart comments:

Objective was met on Wednesday posting a $.46 rally from Tuesdays low. Red bracket line not only provided a good place to take profits (exit), but gave a good location if you wanted to sell. Patience to wait for good locations to enter a trade will reward you by providing minimum loss if wrong, and more profit if right. You might miss trades (some glad you did) and not be as active, but this type of trading makes you a casino, not a player. These locations are also valuable to the day trader that can use (in this case) the red bracket line to be a seller and have a stronger resistance backing you, hence easier to sell than when in the middle of bracket support and resistance lines.

Grains: Spot on numbers in both soybeans and corn on Friday!

$.59 gain in soybeans, $.21 in wheat, and 1/2 cent gain in corn for the week, in spite of much better harvest weather the next 2 weeks, rain in near term forecast in Argentina, and weak corn and wheat export numbers. Soybeans sales are running at 15.8 MMT, almost twice as much as last year's 8.2. The USDA might be greatly underestimating sales in 09/10 exports (I have said this the last 2 months), as we are entering an important time in SA growing season soon, and this could be behind the buying. But for whatever reason, they hit a wall at $10.50 last week. They closed close enough to there to be able to open above it on Monday which would be bullish. If they go down instead I believe soybeans will be well supported on pullbacks to support levels for now.

You can see for yourself clearly the bracket levels and how well they work. Go back in time and you will see that corn in the last 5 months (since 6/23/09) has only trade 1 day above $4.09 and that was $4.13 1/2. The last 2 months we have been above $3.60, the other 3 months below $3.60 down to $3.02. Prices come and go, but at certain levels speculators and end users alike find value at supports, and producers and speculators find opportunity at resistance levels to sell. Can the market keep going down or up? Yes, but for end users and producers that does not matter because once they hedge they no longer want or need to take the gamble to get a better price, and concerned that the price opportunity will disappear and they would remain in a speculative position. For the speculator he buys or sells for the opposite reason, to gamble that at that price the market will indeed be an opportunity to buy or sell. If wrong the end user or producer it really does not matter, there is no gamble, the speculator is gambling and if wrong loses money.

Corn resistance is clearly defined at $4.13 1/2 in corn, with support at the steep uptrend line at $3.80, then the bracket line support at $3.58. Why or how they get there does not matter to me. Knowing the nature of markets allows me to not to have an opinion past the point of a stop or exit point, because I do not care why I am losing, or what a market will do past my profit level. I trade by taking trades based on my charts and numbers, fundamentals for a bias, and always consider the market like a giant, and when some food drops from his mouth and lands on the ground I grab it (profits) and bring it to safety before he crushes me on his next step.

Bottom Line: Read my comments from last weekend (11/16/09) as I have the same thoughts now.

 US corn harvest progress this Monday afternoon might show only a 7 or 8% increase and still coming in slowly which is supportive. Possible double top on the daily chart is negative below $4, harvest pressure, poor exports, rain in SA, are all negative. As well as the weak performance versus soybeans and wheat. So what can stop them from going down or increase the speed downward? Correct, the funds.

A hotel chain just paid $350,000 for Michael Jackson's glove and they said they would have paid 1 million. If the estate knew that was what they would pay, they would have bid it up, but they did not know what the final bid would be and if they were wrong and the last bid was theirs, they would still own it. You do not want to be the last person to buy the rally. The funds are just like any bidder in the auction process; you never know what he is willing to pay, and just because he pays whatever he bid, does not mean that it has anything to do with value. He thinks he will be able to sell it for more in the future to someone else. When he wants to sell for profit or loss he does the same thing as in futures trading, he puts it up for sale, in futures to put it up for sale you start to offer it until you find a buyer. Keep in mind, the funds have more than 1 to buy or sell.

Soybeans have the best fundamental outlook with the strong sales to support, and a bullish chart picture, but are extremely overbought and at a chart resistance level. The dollar or outside markets did not take away from soybean strength on Friday, which to me is friendly. I have no idea what the market will do next week; I think they should erode to the downside.

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

   Tel.1-312-573-2699, 1-312-961-4390



Disclaimer:     No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve risk. In no event should the content of this be construed as an express or implied promise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

 

 

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