Corn – May ’11 corn produced two different buy signals today at the same price, $6.90 3/4. One signal is because we gapped lower overnight and then rallied back through yesterday’s low and the second is because of yesterday’s and last week’s low being the same price. If the second signal is "good", which so far it is, then we could see a re-test of $7.44 1/4 which was the high on Monday evenings trade.
Crude oil touched $100.00 today and then backed off some. I find it hard to believe that corn will falter as crude reaches the $100+ level. Another thing to keep in mind is that fundamentals didn’t change and it wasn’t the reason for yesterday’s sell off, it was because of some hedge fund liquidation as I understand it. Volume was good today as we traded around 226,000 contracts in the electronic alone. There were three things that happened last night and today to make me think we test $7.44 1/4 relatively soon and then after that would be near the $8.00 mark if we get two consecutive closes above $7.45. Lots of what if’s between here and $8.00 though so keep your mind on business!
Bottom Line – Based on what we saw today I’m of the opinion that we see follow through to the upside in corn tomorrow. We could open kind of soft tonight and then find buying. I’m looking for an early low tomorrow.
Meal – May ‘11 meal rallied to gain back some of its losses from yesterday. I’m coming up on a cycle low for May ’11 meal right now and have it moving higher into the middle to end of March. We’ve had a $46.30 break in May ’11 meal from high to low which I believe is near enough for now. Granted, the Middle East instability can change everything at a moments notice but I’m looking objectively at the charts and that is what I see.
Bottom Line – Based on today’s action I’m looking for an early low tomorrow with follow through buying.
Hogs – Apr ‘11 hogs had a dump of a day. April ’11 futures have been trading sideways the entire month of February and is looking for some direction. We’ve tested the $90.50 low end again today but failed to close below it so now we should try and make a run at $95.00 again if we fail to move lower tomorrow. We still need to see cash and cutout come up with futures to ensure the price will be there come April expiration but we still have some "trading" time before the fundamentals kick in and pin futures to the index.
The Bollinger bands (a technical indicator) are tightening up in the April ’11 contract and that typically means we are in for a volatile move any day now. This goes along with my sideways action thought, something is going to give an more than likely it will be in the direction of a breakout. We need to keep an eye on the range of $95.00 – $90.50 and which ever direction it breaks out of should fine more momentum.
Bottom Line – I’m looking for an early low in the April ’11 hogs tomorrow as we continue to search for market direction.
I apologize for not having my normal format. I’ve been having issues with my blogging software for the past month and I can’t get it fixed so I’m back to hammer and chisel if you will.
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