This report was sent to subscribers on 4/14/10 4:00 p.m. Chicago time to be used for trading on 4/15/10. Everything is done by Howard Tyllas, no program or black box.
Do yourself a favor and get your numbers after the market is closed to be used for the next session trading. Ask yourself how much would it have been worth to read my comments and get my numbers 14 hours before today's open outcry?
After the close on 4/15/10: My resistance was 9.85, just .00 1/2 from the actual high, and my pivot acted as support and was 9.64 3/4, just .00 1/2 from the actual low.
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9.77 2 1/2 cent from the 200 DMA
-------------9.64 3/4 Pivot
9.52 1/4 FG
Use the same numbers as used on 4/ 13 & 14 /10
5 day chart... Up from last week same day
Daily chart …. Down
Weekly chart …Sideways
Monthly chart Sideways $9.74 1/2 the 200 DMA
ATR 16 1/2 Overbought 83%
I said "Market has resistance at the 200 day MA, $9.77, and $9.85, support at $9.52 1/4 gap".
In my daily numbers on Wednesday; my resistance was .01 from the actual high; my support was .00 1/4 from the actual low.
Please Note: This is the actual 5 minute bar chart showing the results of the trade on 4/15/10:
This is a 5 minute bar chart of May soybeans. Bulls who wanted to buy got their chance at the pivot not long after the open and were never in jeopardy of getting stopped out. Before the noon hour the resistance was met and profits taken. Bulls that were looking for the next resistance and used a sell stop just under the resistance of 9.77 would have gotten the 9.85 resistance before the close. Once the resistance of 9.77 traded in open outcry it never traded below, and in the electronic session it never traded below 9.76 1/2. I would have taken profits at 9.77.
May Soybeans for 4/15/10:
More chart comments:
I still say "Up and downtrend lines contain the market for now. Wait for a trade location at either. We are now approaching resistance levels so my bias becomes to sell at resistance".
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.
Grains: Spot on numbers. Soybeans opened strong and stayed strong for a few bars before spitting up the gains, while corn although higher could not take out the gap a few ticks higher. When soybeans were selling off corn had a hard time going 1 cent lower, and I could see the unwinding of a spread that has been buying beans and selling corn the last 2 months. This short covering in corn above the gap hit layers of stops including above my 3.60 resistance number, and dragged soybeans back to unchanged. I was not expecting the corn market to perform as well as it did. Only thing that I did not like about corn was the inability to close near their highs.
I am sure if you read commentary from the market reporters they will outline every bullish fundamental they could think of, but this is the "pin the news story on the donkey" and is like the glass is half full half empty depending on the price action that day. I would say the corn bears ran out of energy after days of trying to extend the downside below 3.43 1/2 and watching soybeans climb higher. There is plenty of time for the market to trade a range until more information is known about this year's crops to further price discovery more than what we have seen this year high to low prices.
As I said, fundamentals are 1/2 the story, and fund buying no matter the reason is another. This week soybeans have gained $.16 1/2, corn $.12 1/4, and wheat $.09, not exactly a bull stampede to gain ownership of the future price. For $.15 you can buy the July corn $3.80 call and you have 10 weeks with a known risk and no margin to be long July corn $.11 1/2 above where we closed on Wednesday. To get your money back you would need to be at $3.95 on expiration day. Need to be at $4.10 for it to be worth $.30 and earn even money in doing so. Does that sound like a good bet? If you really thought we could go beyond that and maybe $1 or more higher than that, then it would be an attractive bet knowing if wrong and the market goes down $.50 or more you would only lose $.15.
Bottom Line: Bulls certainly have the momentum and are betting on the "what if" for now. I will maintain my bearish stance and take each trade for what it is, another trade. The problem I have with the upside is unless the fundamentals change, the upside is not sustainable. I favor taking all sell signal trades using buy stops not risking much to protect, and staying away from the buy signals at this level at this time and being in overbought conditions. This is not an easy trade with the threat of the bulls pushing out the weak shorts next, but for me worth
This is a 5 minute bar chart for May soybeans on 4/14/10. My resistance was 9.77 and my pivot was 9.64 3/4 and it acted as support. Sellers could have sold at resistance for the first 10 minutes of open outcry, and could have covered (taken profits) before 10am (within the first 30 minutes of trade) at the pivot support. At that time people who wanted to get long had the opportunity at the pivot and might have taken profits near the 200 day MA at 9.74 1/2 seen just after 12noon. I would not have risked more than 4 cents to make 8 on the sell or the buy, using a stop to protect.
This is how I use my numbers to trade. If you have the exact high and low of the day before the open the question becomes "how do I trade it'?
Results for 4/14/10 were:
Soybeans: My resistance was .01 from the actual high; my support was .00 1/4 from actual low.
Corn: My resistance was .03 3/4 from the actual high; my support was .00 3/4 from the actual low.
Crude Oil: My resistance was 0.68 from the actual high; my support was 0.37 from the actual low.
S&P: My resistance was .75 from the actual high; my support was 1.25 from the actual low.
Gold: My resistance was .60 from the actual high; my support was 2.30 from the actual low.
Euro: My resistance was .12 from the actual high; my support was .15 from the actual low.
Bonds: My resistance was 2 from the actual high; my support was 9 from the actual low.
Nat. Gas: My resistance was .102 from the actual high; my support was .115 from the actual low.
Cattle: My resistance was .05 actual high; my support was .17 from the actual low.
May Soybeans for 4/14/10:
Grains: Spot on corn numbers, spot on soybean support and accurate resistance. Corn is at the downtrend line now and no matter what the reason was to get it there I want to sell using a buy stop above the gap (if I sell below the pivot) and at $3.60 1/2 buy stop if I sell against the $3.56 1/2 gap.
I adjusted the downtrend line on the soybean chart in this part 2, to reflect the adjustment that needed to be made. "Pop" in soybean values is because the PRC is buying US and SA soybeans this week, as well as fund buying. In 2010 the funds have added 68,000 contracts of corn, 20,000 soybeans, and 44,000 soybean oil. This is the offset of the bearish supply demand fundamentals. Again I point out to you, do you really care what drives the market as long as you are right the trade?
I am recommending corn producers to hedge at this downtrend line, at least a % of what you have left to market. Even though corn is not far of their low and soybeans are near their high for their year, each chart is near a resistance that I want to sell. If I was long (and you are) I would sell at least 3/4 of what I had (if not all) and in that way if they did go higher I would still make more money, but if it instead went down I would have locked in some profits and would be able to buy again (if I still wanted to) and make more money if they go back up, instead of spinning my wheels to get back to where I was now.
Results for 4/13/10 were:
Soybeans: My resistance was .04 3/4 from the actual high; my support was .02 from actual low.
Corn: My resistance was .01 from the actual high; my support was .01 3/4 from the actual low.
Crude Oil: My resistance was 0.34 from the actual high; my support was 0.29 from the actual low.
S&P: My resistance was 2.75 from the actual high; my support was 2.00 from the actual low.
Gold: My resistance was 1.60 from the actual high; my support was 2.10 from the actual low.
Euro: My resistance was .65 from the actual high; my support was .29 from the actual low.
Bonds: My resistance was 8 from the actual high; my support was 12 from the actual low.
Nat. Gas: My resistance was .006 from the actual high; my support was .040 from the actual low.
Cattle: My resistance was .15 actual high; my support was .40 from the actual low.
May Soybeans for 4/13/10:
Grains: Spot on corn numbers, and accurate soybean numbers. Weekly crop progress report (comes out every Monday at 2pm Chicago time) can be found by using this link that you can copy and paste into your browser. You can keep in your favorite places and it will update every Monday. This week showed the same conditions in wheat (good to excellent at 65%) and corn did not show the progress I expected, but with the weather forecast in the near term ideal, I expect it will be reflected on next Monday's report.
Everyone knows the same fundamentals, and human nature will have you look at it from the bias you have, and this includes me, but I have never traded the fundamentals (only used them for a bias and help me with the "what if" scenarios) and have always traded by the charts and using my numbers. This has always kept me out of trouble. Trouble is being right the fundamentals but wrong the market and losing money. I would rather be right the market for all the wrong reasons. My mentality is to use whatever fundamental knowledge I have in the grain market to improve the approach I trade technically. Other markets I have no interest except in the basic fundamentals, and the task of trading without fundamental bias is easy, leaving only my charts and numbers for trade ideas, at what price I will be wrong and exit, and where my objectives are if right. I have a clear plan (no matter the fundamentals) of why, where, and how I want to make a trade. I can be long today, and if the charts warrant I would be short the next. I have no use for an opinion that is late to change. The fundamentals might not change but the chart could, and I will go with the chart EVERYTIME.
Monday's action if I was a bull would be very disappointed in the fact the dollar getting pounded versus the Euro would have been more supportive to grains than it was by the day's end. The market told the bulls "you are going to need more than a weaker dollar" to rally these market at this level. The market looked heavy even though all 3 grains were higher except for new crop soybeans (SX). That should tell you something about how weak soybeans are. If they are going to get corn planted early as I think, this might take away some acres from soybeans which should be supportive. But as I have been saying, it is not much to adjust for acreage from here, but the yields is really the biggest factor going forward.
I have outlined my price parameters to you over the weekend, and you will be the first to know when that changes. We have been and are marking time. Corn is flat lining..... "Stand back, paddles clear, no pulse". "Dr. Bull, what will you need to revive it, and then what will be the prognosis"?
Results for 4/12/10 were:
Soybeans: My resistance was .02 1/2 from the actual high; my support was .05 from actual low. Corn: My resistance was .00 3/4 from the actual high; my support was .02 from the actual low.
Crude Oil: My resistance was 0.66 from the actual high; my support was 0.04 from the actual low.
S&P: My resistance was 5.00 from the actual high; my support was 2.25 from the actual low.
Gold: My resistance was 1.20 from the actual high; my support was 4.90 from the actual low.
Euro: My numbers were not in play, market gapped 1.11 higher from Friday's settlement.
Bonds: My resistance was 2 from the actual high; my support was 8 from the actual low.
Nat. Gas: My resistance was .007 from the actual high; my support was .029 from the actual low.
Cattle: My resistance was .15 actual high; my support was .32 from the actual low.
May Soybeans for 4/12/10:
Grains: Spot on corn numbers, and accurate soybean numbers. Global soybean stocks are increasing by 21 MMT (million metric tonnes) more than last year and totaling 63 MMT. We could gain 7 to 10 MMT more given normal weather in 2010 for the US and SA. Corn stocks going forward although adequate now, will depend on our 2010 production and you already know how bearish I am due to what I believe will be a huge production gain given current weather forecasts. That is the "what is", and the "what if" I would play by not looking for more than the prices the day before the January "game changing report". The closer we get to a burdensome supply situation, the closer we get to the elimination of any hope for a rally of any magnitude until that fact changes. Grains will not sustain any rally as long as end users see plenty of supplies in the pipeline.
Unlike a position held on paper like accumulating stocks of a company, grain stocks have to be held in storage and that costs money. After the farmers have their bins full, that is the only choice they have, pay for storage. As the world turns and the sun comes up, they are faced with harvesting yet another crop and need to make room for the incoming supply. They almost add to their own problem of low prices by not selling and moving the supply that can be used at today's price, instead being a speculator and not selling, the result is more grain that is unsold and thus not consumed adding to the supply on hand. The more stocks the lower the price and end users back off on locking in prices and tying (using) up money. Now the market faces less demand until the market adjusts to this hand to mouth situation that will abate when the "what if" possibility makes it attractive once again to take ownership of grain and end users start fulfilling their future needs.
By holding grain instead of selling the producers become the weakest of speculators, even worse than the funds who also never consume product but whose function is to risk money to make money. Farmers are risking their income, funds risk "risk capital" of a portion of clients income, and bull speculators accounts will find trouble when the market has a downturn and it turns into a long term bear market that not only lasts 1 year but more, and the losses become such that they are UNABLE to maintain ownership. That is why you hear the old expression "farmers and speculators sell when they are forced to, and that is when they are at the low for the move". When I say they are forced to I mean when they are bankrupt or risk capital ends. Tens of thousands of farms have been lost in my day, and thousands of funds have closed their doors due to losses because they were wrong and their plan for survival was never in place. They "risked their farms" or lost their "Funds" because they did not allow for being wrong and bet it all (or enough to close). Strong hands are end users who will use the product eventually. They will use it if the market goes down, and unless the price goes up enough to make more profit by selling it back than what they would make if they use it, it will never come back into the pipeline. So while the stocks will report the same, who has ownership matters. In farmers hands it will eventually need to be sold, the same stocks in commercial hands even though there now will be gone tomorrow and not be for sale. This is the way I look at it.
Lastly, I have said in the past that the funds are "strong hands" and that is true when the market is going higher or is reasonably going lower, but the more they are wrong their trade idea, the weaker their hands become. When they (funds or farmers) have to sell, the situation becomes worse with no buyers to take their place.
The PRC appetite for soybeans is steadily growing but not at the pace of world production. Record SA production and record world soybean supplies will limit any rally in soybeans. They might pay more for what they need now (old crop) but they will not for the new crop, that is why there is an inverse in price relationship reflecting tighter stocks now than will be in the future. This is why I want to sell November (new crop) soybeans more than the front months old crop such as the May contract.
November futures (SX) will do well this year to get back to the gap left on 1/14/10 at $9.59 1/2, just $.23 above where we are now. The low on 2/4/10 of $9.01 should hold next time down, but as the days go by and the crop makes further progress getting planted, the price will erode as to where $9.01 will be resistance going forward from there. When any sign of the "what if" comes into sight I will reset all thoughts to reflect that possibility and position myself to take advantage if the "what if" turns into the "what is".
December corn futures would do well to get back to my bracket line at $3.90, but any rally in the future will be capped by the major downtrend line that comes in $4.12 now but will be coming down about $.08 a month in the near term, so it will not take more than 3 months to get under the bracket line. May corn looks vulnerable to taking out their recent lows.
My outlook is the same as it has been. I look for eroding prices and I want to sell rallies at resistance to get short, and take what the market has to offer when at support and oversold conditions to take profits, then my position will be "none at all" and I will wait for another opportunity to get short. While waiting to get short longer term I would day trade the long or short side with no overnight position. Bottom line is I look for 10% lower prices in all 3 grains from here as we get near the end of pollination and the weather cooperates. I will quickly get off that idea on any sign of potential problem with the weather. For now that is of no concern and I will not bet on that "upside lottery ticket". I know that the market will not go down every day, and I know there will be weeks where grains will have good gains, but the charts are pointed lower, and no matter the fundamentals I want to TRADE THE CHARTS for price discovery, and use my numbers on the days I want to trade.
Results for 4/9/10 were:
Soybeans: My resistance was .04 1/4 from the actual high; my support was .04 1/2 from actual low. Corn: My resistance was .02 from the actual high; my support was .00 1/2 from the actual low.
Crude Oil: My resistance was 0.48 from the actual high; my support was 0.75 from the actual low.
S&P: My resistance was 2.50 from the actual high; my support was 2.00 from the actual low.
Gold: My resistance was 1.70 from the actual high; my support was the 0.60 from the actual low.
Euro: My resistance was 0.17 actual high; my support was 0.35 from the actual low.
Bonds: My resistance was 3 from the actual high; my support was 9 from the actual low.
Nat. Gas: My resistance was .003 from the actual high; my support was .048 from the actual low.
Cattle: My resistance was .12 actual high; my support was .07 from the actual low.
May Soybeans for 4/9/10:
Grains: Spot on numbers. Report tomorrow and I will comment on what I think now and going forward on the weekend report. Basically you know I am bearish all 3 grains, and look for much lower prices at harvest than where we are now if we have normal growing conditions.
Forecasts for a normal planting season, and more importantly a forecast for a rainy July (when corn pollination takes place, an important phase in production) which trumps too little or too much rain until then. El Nino pattern this year bodes well for favorable growing conditions. We have plenty of subsoil moisture even if conditions are warmer and drier than expected. Rain in July, that's worth hundreds of millions of bushels in grain production if in fact that happens.
I will send a report and my comments by 9am Chicago time, but I do not see a surprise in here.
Lastly, I want you to notice how once again the downtrend line in corn was a perfect place to sell. This applies no matter the market. This is my location (signal) to sell to go short or sell to take profits if long. Remember how many times I have said and try to instill in you, "that I do not care the reason a market goes to a chart location, I want to exploit that and risk little if it does not hold, and be rewarded nicely when it does". This has been the premise of my trading since I started trading decades ago.
I am a technical trader in any market or time frame I trade, only the grains do I call myself an expert analyst, if I cannot say that after trading it for 34 years and followed the fundamentals the entire time, then who can? Being a technical trader I knew from the beginning and have seen nothing change in all these years as far as my charts are concerned and my trend lines, bracket lines, gaps, and more important how I view and trade them. I use these "lines in the sand" because from the beginning until now I can see that in doing so I become the casino getting the odds instead of the player who feels "lucky" and feels they can beat the odds. I want to always be the casino. I NEVER want to be emotional, and NEVER want to make any trade anything but "just another trade". The only way I can do that is by never making a wager that the risk is significant, affects the way I think, that could affect the way I would view and approach my next trade, and most important is to not lose more money on a trade idea than my account size warrants. I really like trading my signals and I would say reasons I have been able to be here today is, I have a structure that I can execute, makes sense and is logical to me, has parameters that work, and does not allow me to let a trade lose more than what should be lost a given trade idea.
When I see the downtrend line in corn with a correction in a bear market from lower levels approaching that line, it is a sell every time. That is why yesterday in bold letters I said I wanted to sell against that line. If wrong and the line did not hold I would have lost a little, but if right I would make more than I was willing to lose. These signals give me a trade, how you use these signals from the chart and the approach you use depends on you the trader, the time frame, account size and so on, but that lines for me is a place to take profits if long, and a place to go short.
Results for 4/8/10 were:
Grains: My soybean resistance was .01 3/4 from the actual high and my support was .02 1/4 from the actual low, and my corn resistance was .01 1/4 from the actual high, and my support was .01 1/4 from the actual low.
Crude Oil: My resistance was 0.02 from the actual high; my support was 0.49 from the actual low.
S&P: My resistance was 3.00 from the actual high; my support was 0.75 from the actual low.
Gold: My resistance was 3.70 from the actual high; my support was the 6.60 from the actual low.
Euro: My resistance was 0.10 actual high; my support was 0.17 from the actual low.
Bonds: My resistance was 14 from the actual high; my support was 9 from the actual low.
Nat. Gas: My resistance was .074 from the actual high; my support was .026 from the actual low.
Cattle: My resistance was .37 actual high; my support was .20 from the actual low.
Subscribers of 6 months or longer have seen this 3rd time at the down or uptrend line works a high % of time, and the risks are minimal when it does not hold, and rewards you nicely when right. No matter what market you trade, learn this tool that I have relied on for decades, and my instilling courage to believe in this in you that took me so long to truly believe in. I take these trades every time when possible, and in the long run in my years it has truly been a casino bet for me and not a player, and are the ones most worth taking. See for yourself and if you see this pattern works, start to incorporate it in how you use it to trade with.
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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.