November Soybeans Daily Numbers & Trade Ideas for 6/21/12
Jun 22, 2012
November Soybeans Daily Numbers & Trade Ideas for 6/21/12
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This report was sent to subscribers on 6/20/12 2:10 p.m. Chicago time to be used for trading on 6/21/12.
After the close recap on 6/21/12: My pivot acted as resistance and was 13.91, .03 1/4 (only .02 1/2 in open outcry) from the actual high, and my support was 13.70 1/2, .00 1/2 from the actual low.
All charts and numbers for 6/22/12 have already been sent to subscribers at 3.20 pm.
5 day chart... Up from last week same day
Daily chart .... Sideways
Weekly chart ... Sideways
Monthly chart ....Down 12.63 ½ is the 200 DMA
ATR 29 ½ Ex. Overbought 99%
For 6/21/12: $14 is major resistance is now pivotal, daily numbers support and resist.
In my daily November soybean numbers on Wednesday; my resistance was .00 ¾ from the actual high, my support was .05 ¾ (pivot was .03 ½ in open outcry) from the actual low.
Grains: 6 of the grain numbers were spot on, 2 were accurate. Is everyone long yet? No not us, I am talking about the rest of the market participants. There are so many things that you could get bullish or bearish about, so unless you are trying to find out the drivers because you are new to the grain markets, all points are useless in the pursuit to make money. I have always thought that the market does its job of with all things considered, and all participants no matter why they take a position, are reflected in the last trade price which is ALWAYS the correct price of what it is worth right now. They have their bets down to reflect what the market will do from the last price compared to what they think it will be in the future. There are all types of participants and they have their reasons for taking a trade; my reason is the chart and the numbers. The past gives me the premise as to what I think the market will do in the future, because all charts are reflecting the facts, so I am basing my approach and trade ideas on facts, not weather forecasts, yield forecasts, demand or anything else that is a guess at best. Professional gamblers and traders do not make bets on guesses, they would not be professional if they did, it is the odds and money management that dictates, and they have enough control to wait for the set up instead of being impatient and take trades with reduced risk reward due to entering at bad trade locations with lower odds.
I always reiterate "nobody knows what the market will do (stay away from people who say they do) but you should always know what you are doing and why. In the grain markets at this time, trade is chaotic, and what do you expect when the "fundamentals" are a crap shoot at best. What they do for me is help me with the "what if's" so I can find the larger even off the chart levels to work with.
November soybeans proved once again tonight that cheerleading through a major resistance number is like being down 21 to 7 with 4 minutes left in the football game, to bet on the team down 14 points will come back to win because you think they have great potential to do so at any time. Would you take even money bet on that? Certainly not, so what are the odds, 10 to 1 maybe? How many teams in the last 5 years came back to win like that? If it is 10 to every 1 game, that would be true odds, so I would bet it if I got 20 to 1 odds, and not interested even at that 10 to 1..... I want an edge! So what are the odds for the market to get past the resistance on every attempt? One of these times it will go through, maybe this year or next, but it is how you bet it that makes you a trader. I encouraged everyone who called in on Wednesday to buy more put protection and many did so. I want grains to be twice the price they are now, and everyone has a good yield, but I would always protect what the charts say might be needed in the future.
All corn and soybean put spreads are now cheap, and if these markets come down you will have missed an opportunity to buy protection cheaply, and you will be paying $05 to $.10 more if the market comes down. Your bet to be long is not buying put protection, but for me it would be hard not to buy some at least because of the USDA next Friday that is a volatile one, especially with all the uncertainty.
I would not hesitate to buy the call spreads back if we get above the resistances I have outlined, or move them up, but I would rather try to do that when the market is at a chart support. All new crop options will start to move faster compared to the movement in the underlying futures market since time is getting closer to expiration. I want to continue to trade the numbers without bias and risk $.04 in corn and $.06 in soybeans on any idea using a stop to protect.
Grains: Spot on corn numbers except new crop resistance was blown away in open outcry. Soybean support numbers were spot on but resistance was not close. July soybeans rocketed to test the high of last week but at least for now held the rally in check. As far as a one day rally at or near limit, only in March and last October had seen such action, otherwise you need to go back more than a year to find it. $14.65 was the high of last year in August, and $15.12 ½ was the top this year in April, so this is not the place I want to buy it. After the report in May I said soybeans have the best fundamental picture, but the $1.20 beating it took after that friendly report took the heart out of wanting to buy it. Soybeans were at February level two weeks ago, and I noted we broke $2 almost exactly ½ ways down to the $11.25 bottom in December. As you look back my producers took advantage of it in the old crop by getting some upside back, and some took off a little of the new crop (November contract) short call spreads especially when they had more than $1.40 call spreads, most have $1. If July closes above the neckline at $14.50 of the mini head and shoulder bottom, the bulls have every right chart wise to test the 2012 high again. If I was long I would take a profit here, and if bullish I would buy once again above $14.50 down the road, but I expect it to go to a support level again first and it is there I would want to get long.
November soybeans were impressive to get a $.01 ½ away from this year's high and the high of last year which makes it a double top year to year. But now a triple top (March, May, and June) this year alone which is what makes it major resistance at $14. Different reasons got it to $14, the last two times it was not enough to get through this tough resistance or since before 2011, but when it does, losing $.06 to try and get a piece of what the last two draw downs produced, is a trade always worth taking. If I was really bullish I would still get out, but I would not sell, and my way of being long then would be to not take the sell signal.
2008 is fresh in my mind, and we had a bull market, the weather changed and the market also really was a victim to the collapse of the economy. So the grain market is not a sure thing one way or the other, and you can see for yourself that the pendulum swings in both directions, so take what you can and as always, make sure you control your losses.
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