Hog & Corn Comments – 11/17/09 Dec hogs post a bullish reversal
Nov 17, 2009
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CORN – Dec ‘09 Electronic
Open – $4.00 1/2, High – $4.04 1/4, Low – $3.96 3/4, Close – $4.02 Down $.00 1/4
Thoughts – Long Term (into December ‘09) – Sideways/Lower
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Dec ‘09: The Dec '09 corn contract made a new high at $4.04 1/2 today which triggered a sell signal at $4.02 1/4 on a stop which was hit. The risk management buy stop for this position is $4.06 1/2. If this sell signal is good we could see the Dec '09 corn market drop hard, however, it is tough to say that right now with amount of outside buying that has come into the market. It is hard to get a handle on these markets when they don't respect your indicators. This happens from time to time and is usually for a short period in the grand scheme but it isn't fun to go through while you are there.
As mentioned yesterday $4.13 1/2 is still the big number the market needs to get above before we get off to the races again. Nothing has changed in with our position we are still on the sidelines for now and having upside in hogs allows us to do so. If the market makes a run for $4.13 1/2 then my attitude may change but for now the sideline is where we are. The buying we have experienced has been, in my opinion, U.S. Dollar related and the comments from Chairman Bernanke yesterday seemed to have given some the dollar some support as it traded a lot higher today.
I've made comments over the past month or so that the dollar could be taking a breather from the downside unless we had two consecutive closes below 74.94 which we have failed to do thus far. As long as 74.94 holds we could see a short-term rally in the dollar. I will say if we have two weekly closes below 74.94 all bets are off; we could see a test of 72.18 but for now I'm considering the 74.94 area as good support.
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 11-18-09
(R3) Resistance 3: $4.16
(R2) Resistance 2: $4.08 1/2
(R1) Resistance 1: $4.05 1/4
Today’s close: $4.02
(S1) Support 1: $3.97 1/2
(S2) Support 2: $3.93 1/2
(S3) Support 3: $3.86
MEAL – Dec ‘09 Electronic
Open – $304.00, High – $307.60, Low – $302.20, Close – $308.70 Up $4.30
Thoughts – Long Term (into November ‘09) – Sideways/Lower
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Dec ‘09 meal: Meal again struggled today as soybeans traded higher for a good portion of the market session as meal lagged. As I said yesterday $312.50 is a key level of resistance as I see it and right now we are holding a neutral position in meal. If the market closes two consecutive days above $312.50 I may change my mind but for now we are waiting. Dec '09 meal has traded above $307.30 eight times since the beginning of October 2009 but has failed to get a daily close above this price with the exception of today. If we close above $307.30 again tomorrow then we could be poised to go for the $312.50 target.
Bottom line: I’m looking for the market to experience an early low tomorrow.
Dec ‘09 Meal – Support/Resistance for 11-18-09
(R3) Resistance 3: $319.20
(R2) Resistance 2: $312.70
(R1) Resistance 1: $310.20
Today’s close: $308.70
(S1) Support 1: $303.80
(S2) Support 2: $299.70
(S3) Support 3: $293.20
HOGS – Dec ‘09 GLOBEX
Open – $55.05, High – $56.075, Low – $54.55, Close – $56.50 Up $1.45
Thoughts – Long Term (into December) – Neutral
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Dec ‘09 hogs: The Dec '09 managed to get a nice rally going around noon as the noon cutout report showed some possible support for cutout values this afternoon. The problem with the noon cutout report and the afternoon report is there isn't always a correlation; however, it does give some general direction or feel. The volume today was good and it seemed as if
had an up and down kind of day as we were up early until the noon cash report came out with weaker cash quotes. The problem with the noon report is you really can't believe much that is on it because it changes so much by the end of the day especially if the noon report is at an extreme either up or down. Today the quotes came in a couple dollars lower in the Midwest and I wouldn't be surprised to see the afternoon report come in down less than a dollar. It is purely a guess on my part but that's the way the reporting seems to work.
I said the market hadn't taken out last Thursday's high of $55.60 but today we did in conjunction with a reversal day back to the upside. The market will need follow through buying tomorrow to provide me with good evidence that we have turned. Our next level of resistance is $56.825 and then $58.40 becomes the next number but I would like to see the market close above $56.325 again tomorrow before I look toward $58.40 again.
The intra-day chart looks like we could see the needed follow through buying tomorrow to keep the momentum rolling to the upside. I'm expecting an early low again tomorrow and look for the market to strengthen as the day progresses.
We continue to hold our short futures long call option position in the Dec '09 contract for now and will do so for the time being so we have downside risk protected in the market and the upside opportunity is completely open.
Bottom line: I’m looking for an early low tomorrow.
Dec ‘09 Hogs – Support/Resistance for 11-18-09
(R3) Resistance 3: $59.40
(R2) Resistance 2: $57.80
(R1) Resistance 1: $57.10
Today’s close: $56.40
(S1) Support 1: $55.825
(S2) Support 2: $55.125
(S3) Support 3: $53.85
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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