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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.

March Corn Daily Numbers & Trade Ideas for 1/6 & 5/11

Jan 07, 2011

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This report was sent to subscribers on 1/5/11 5:45 p.m. Chicago time to be used for trading on 1/6/11. Everything is done by Howard Tyllas, no program or black box

March Corn

After the close recap on 1/6/11: My pivot acted as resistance and was 6.19 3/4, .01 3/4 from the actual high, and my support was 6.00 1/4, the EXACT actual low.

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 March Corn                  

6.34                           

------------- 6.19 ¾            Pivot

6.05 ½                           

6.00 ¼                             

      

Trend           

5 day chart........       Down from last week same day                                                                                                                                                   

Daily chart   ......     Up                       

Weekly chart .......  Up             

Monthly chart ....    Up       4.70 ½ is the 200 DMA

ATR 13 ¾                              Balanced 56%    

 

Corn 1 6 11

Minor uptrend line (not shown) came in at $6.05 on Tuesday and at $6.09 on Wednesday. This chart tells me to sell rallies, and look for a retest of the uptrend line at $5.85.

 March Corn for 1/6/11

I still say "Bulls need to stay above $6.27 top channel line". Bulls remain in control above $5.70.          

In my daily corn numbers on Wednesday; my resistance was .02 ¼ from the actual high, and my support was .03 ¼ from the actual low.

Grains: Spot on numbers. Now we will see if the market can follow through to the upside today. I was impressed with the way grains recovered from their overnight trade lower near their low of the day session, but rallied in open outcry to close near their highs in spite of a strong dollar. Maybe the crude oil factor had something to do with it. No matter what the reason the grains posted an impressive day, with the funds buying back 12,000 corn contracts after selling 11,000 the day before. We again are near the soybean contract highs, and corn resistance of the top channel line. Action today will give me a better clue if we will make new contract highs before the report. I think it is a toss of the coin from here if we will be up or down from here on Friday's settlement, unlike the chart of just yesterday when it looked more certain. I want to trade the market with a bearish bias today, only because we are near contract highs. I want to risk $.04 in corn and $.07 in soybeans using a buy stop to protect.

Results for 1/5/11:

My soybean resistance was .06 ½ from the actual high, and my support was .03 ¾ from the actual low.

My corn resistance was .02 ¼ from the actual high, and my support was .03 ¼ from the actual low.

My nat gas resistance was .027 from the actual high and my support was .024 from the actual low.

My crude oil resistance was .69 from the actual high, and my support was .38 from the actual low.

My S&P resistance was 1.25 from the actual high and my support was .50 from the actual low.

My bonds resistance was 4 from the actual high, and my support was 2 from the actual low.

My gold resistance was 4.20 from the actual high and my support was 2.40 from the actual low.

March Corn for 1/5/11

Grains: Spot on corn numbers, and accurate soybean numbers. You can read in my comments since the last week of the year, I knew or should I say felt because of my charts, that there was more risk to the downside, than what is left on the upside. I am still bullish the chart and fundamentals are clearly bullish, but it is hard to predict when the fund selling will stop. They are the key to price action, and the charts help me with the task of indicating when corrections will begin and when they could end. Uptrend lines are the places that find support, where I can risk a little when they do not hold, and have a nice reward when they do. The corn chart told me to sell on Tuesday, even if I am bullish, and I clearly explained the reason why. They broke the trend line and closed below it on Monday, and went to it (a little higher) on Tuesday night, but remained below the uptrend line which indicates a nice place to sell (what was support is now resistance when violated). Looking at Wednesday, the charts tell me to sell this market at resistance, and that includes the pivot, and stay short as long as the top uptrend channel line is not hurdled. This type of bull charts have a tendency to hang around for a day or two and look like they will recover, but resume the correction and test a key support. It is the facts that the bulls feel complacent having big gains and stick around longer than they should. It is the "when it gets back to the settlement of yesterday (or whatever) I will sell then" that starts the trouble, because they find themselves giving back let's say $.20 more looking to sell $.10 or $.20 higher, and then they want to sell where they could have a day or two ago, but it gets another $.10 or $.20 lower. By the time it gets to a real support, they are scrambling to sell to save what profits they just made in the last few weeks, and that is where they could have thought about buying back instead of selling for money management reasons if nothing else.

With the report next Wednesday though, anything can happen before then. The only trouble I have seen and it has not really mattered, is the huge fund position in corn. But that is the risk, and the chance (but I do not expect it) for the report to show a bearish surprise, or like in November, a perfect time to take some risk off the table by selling a bullish report.

It would not surprise me to see a rally today, but it is how they finish the week I am interested in. It looks like we will be lower than the settlement on Tuesday by then. At this point of time, they will be influenced in their decision by taking cues from crude oil and the dollar. Not every day or week mind you, but for now I think it will matter, especially if crude gets weaker, and the dollar gets stronger.

My producers realize what it means to take some protection, no matter if it means "paying for insurance", because if nothing else it gives them a less stressful life if the market corrects, and they still can pursue a higher price in time. How much, and when is entirely up to them, I do not get paid to tell them what to do, I am here though to tell them how to reflect exactly what THEY think by providing option strategies based upon THEIR thoughts and ideas, not mine. The daily service DOES tell them what I think, and should be used in consideration with their own ideas. I do not play on their greed or fear, and earn every dollar charged for commissions, when executing their option orders when they decide to do something. (In my opinion I have the best execution service at the CBOT. My producers and I are on the phone using a 3 way call with my friend inside the option pit who is executing their order. They can actually hear the bids and offers.)

As I said on Tuesday "I am in day trading mode today,

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           May Your Next Trade Be The Best                          

                     Howard Tyllas            

   BT

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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