This report was sent to subscribers on 1/28/10 6:00 p.m. Chicago time to be used for trading on 1/29/10. Everything is done by Howard Tyllas, no program or black box.
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After the close on 1/29/10: My pivot acted as resistance and was 9.32, .04 3/4 from the actual high, and my support was 9.16 1/2, just .02 3/4 from the actual low.
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9.47 1/2 FG -------------9.32 Pivot 9.16 1/2 9.10 1/4 Use the same numbers as used on 1/28/10 Trend 5 day chart.…...Down (from last week same day) Daily chart …….…Sideways Weekly chart …….. Sideways Monthly chart …Sideways $9.88 is the 200 DMA ATR 20 Oversold 15%
I continue to say "Bracket line is first resistance (red), steep downtrend line is pivotal now, bears eye Octobers low".
9.47 1/2 FG
Use the same numbers as used on 1/28/10
5 day chart.…...Down (from last week same day)
Daily chart …….…Sideways
Weekly chart …….. Sideways
Monthly chart …Sideways $9.88 is the 200 DMA
ATR 20 Oversold 15%
In charting, when a resistance is hurdled it becomes support, and when the support is broken it becomes resistance.
In my daily numbers on Thursday my pivot acted as resistance and was .05 1/2 from the actual high; my support was .04 1/2 from the actual low. Daily Numbers service actual results for 1/29/10 were:
Grains: My resistance was $.04 3/4 from the actual high and my support was $.02 3/4 from the low in soybeans, and my resistance was $.01 3/4 from the actual high and my support was $.01 from the low in corn.
Crude Oil: My resistance was 0.44 from the actual high; my support was 0.02 from the actual low.
S&P: My resistance was 6.00 from the actual high; my support was 4.25 from the actual low.
Gold: My resistance was $4.90 from the actual high; my support was $1.30 from the actual low.
Euro: My resistance was 0.04 from the actual high; my support was 0.40 from the actual low.
Bonds: My resistance was the EXACT actual high; my support was 3 from the actual low.
Natural Gas: My resistance was .027 from the actual high; my support was .034 from the actual low.
Cattle: My resistance was .07 from the actual high; my support was .22 from the actual low.
for 1/29/10 Grains: Accurate corn and soybean numbers. Market looks and feels pathetic. No action to the upside. Option premiums could change quickly, but for now there are little odds for a rally. Example: March corn closed on Thursday at $3.61 3/4 , you can have the right to be long March corn from a price of $3.70 for just under $350 (6 7/8 cents) and the expiration of these calls for March is in 3 weeks from today. The most you can lose is what you paid, no margin ever needed, and if they do rally, it is no different than a futures contract above $3.70.
Even being bearish I am disappointed in the inability of the bulls to show any willingness to add to their longs at this level. I would like to see a corrective rally near resistance for my newly arrived producers to be willing to sell, and us speculators a good place to enter a sell. I would continue to have a small "core" short position for a long term trade, but I would enter more at resistances. I would use a buy stop above one of the gaps, depending on what I was willing to make if right. I have no problem to take a sell at resistance for a day trade, but would be more comfortable if they were trading at higher levels.
I still like buying December corn (CZ) and selling November soybeans (SX) as a spread, and I have also liked for some time is buying MPLS or KC wheat and selling Chicago wheat. I have the same thoughts as yesterday going into the weekend. I think we can work lower next week.
March Soybeans for 1/28/10
Numbers results for 1/27/10 were:
Grains: My resistance was $.02 1/4 from the actual high and my support was $.04 from the low in soybeans, and my resistance was $.01 3/4 from the actual high and my support was $.04 from the low in corn.
Crude Oil: My resistance was 0.17 from the actual high; my support was 0.20 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 $2.40 from the actual high; my support was $1.10 from the actual low.
Euro: My resistance was 0.23 from the actual high; my support was 0.16 from the actual low.
Bonds: My resistance was 3 from the actual high; my support was the EXACT actual low.
Natural Gas: My resistance was .046 from the actual high; my support was .039 from the actual low.
Cattle: My resistance was .35 from the actual high; my support was .30 from the actual low.
Grains: Markets breathe, and for now the bears have run out of breath and need to inhale after exhaling all the way to my longer term support levels. The corn and soybean markets are at maximum oversold conditions which tell me a corrective bounce is near in a day or two. But after coming down as much as they have and the market barely has enough strength to trade above the pivot resistance let alone the actual resistance, let alone to a bigger picture resistance, tells me the market is feeling the reality of the relative high prices for grain and are starting to exit their long grain positions.
Everyone and everything can get carried away with the perception of what something is worth. Look at your statement and one thing that is certain is the settlement price. No matter what anyone thinks, THAT is the true price that something is valued at in that point in time. From there you are gambling from that price going forward, NOT where or when you entered your position.
I am looking at some sort of correction but it does not look like it will encourage bulls, and will lead to more erosion in price once the extreme technicals subside. I would think the "commodity fund bulls and speculators" will be more selective in what they will invest in and at what price does each commodity have "value", rather than the shotgun spray hitting most commodities.
Bottom Line: I want to sell with both hands if they could rally to a resistance level at any gap. I do not mind to sell at resistance for a day trade, just use a buy stop to protect. The max oversold condition makes it harder to sell at these near term support levels, but the market feels so heavy. I still feel we are going lower, maybe much lower, the question is can we get a strong bounce first so un-hedged farmers can sell?
Un-hedged producers should ask themselves if they sold at current prices will they have a very profitable year compared with their average earnings, and if so I would lock in those profits. Now you are truly "out of the market" and it does not matter if the farmer next door or speculators sell it for more anytime after. If they made more money they earned it and were risking money to do so. What matters is that you stopped being a gambler with the farm, and now you took the gamble out of the farm. No longer being a gambler, but a business man who took profits, and now frees to do what you do best, produce the most with what you have to work with. By not hedging your income it no longer depends on your production, but at what price you finally sell it at. Hedging a profit takes the gamble out of farm operations. How you hedge could make the difference in greatly improving returns, and it is my opinion that my service is second to none, and allows just you the protection needed, and still have the potential unlimited upside. Lastly, you can at any time adjust your position bullish or bearish, or get out of any part when you want to reflect your thoughts.
March Soybeans for 1/27/10
Numbers results for 1/26/10 were:
Grains: My resistance was $.04 from the actual high and my support was $.02 1/2 from the low in soybeans, and my resistance was $.00 1/2 from the actual high and my support was $.01 3/4 from the low in corn.
Crude Oil: My resistance was 0.13 from the actual high; my support was 0.19 from the actual low.
S&P: My resistance was 6.75 from the actual high, my support was 0.50 (2 ticks) from the actual low.
Gold: My resistance was $0.80 from the actual high; my support was $3.30 from the actual low.
Euro: My resistance was 0.51 from the actual high; my support was 0.33 from the actual low.
Bonds: My resistance was 2 from the actual high; my support was 3 from the actual low.
Natural Gas: My resistance was .021 from the actual high; my support was .046 from the actual low.
Cattle: My resistance was .02 from the actual high, my support was .25 from the actual low.
Grains: Spot on corn and soybean numbers. In 3 weeks March soybeans broke $1.30 and have yet to produce a bounce of any significance. My call for grains to erode until maybe the first or second week of February still holds true.
Why I am such a bear and what will turn me? I have said this year the dollar would be strong, favorable US subsoil moisture and weather, investments in 2010 for inflation driven commodities is not starting out as planned, PRC trying to slow its economy, fund and farmer long positions, and comfortable stocks going forward. I will change my mind in a heartbeat if there is any adversity in production. Then I will use my knowledge and experience to try and take advantage of the price swings. I was never concerned with the 2009 planting noting they would get it in the ground. I pointed out then that it was an opportunity to sell at bracket levels, and would be a good trade idea because at that price the proof was on the bulls.
Bottom Line for Producers: You have a good idea of how much income you will earn if you sell your 2009 and or 2010 crops at the current price levels. Ask yourself, at what price higher will I actually sell my grain, and how much will I risk getting that? If you do not sell lower if wrong the same amount, you are in jeopardy of losing all your profits, and you had a known profit in hand. Ask yourself, how much will I earn if I sell here, and what am I risking if wrong, and why does the farm have to gamble on my idea of where the market may go? I say to you market your grain, and use some of the money to gamble long or short. If you do not sell your grain, your main job is not producing, but gambling, because it will not matter how well and efficient your can run your operation, your income will depend on when you finally sell your crop. How you sell it really matters and cash for futures is really a small basis to gain, compared with the opportunities using options.
I believe that until there is a major weather event somewhere with true loss of production, we will not see the highs seen in 2009 for quite some time, let alone 2008 highs. I published "food for thought" in 2007 calling for record grain prices in 2008, I called for accurate ranges for grains in 2009, and I call for the settlements from 1/11/10 before the report as being strong resistance, and the high for 2010 are already in. The question is the low. I laid out my support already and that should not change.
March Soybeans for 1/26/10
Grains: Spot on soybean and corn numbers. Extremely oversold for days. Soybeans took out last week's lows, and corn and wheat should do the same this week. Backdrop of bearish fundamentals I have outlined is catching up to the market and is getting a hold of them. I am still bearish and want to sell any rally near resistances.
March Soybeans for 1/25/10
I talked recently about price and time, so everyone is aware that anything can and will happen in time. In my life I live for today and plan for the future, and for me in trading is always the today, and plan for the future. It does not matter what happens in the future, it is today that matters. The Cubs might one day win the World Series, but it will not matter to me if it is after I am dead. Same in trading, it does not matter if what you thought in the future does happen, if you are bankrupt first. This is what happens when what you thought does not happen at first, and you take losses that are either unsustainable, or the time it takes for it to happen does not make it worthwhile. Take gold in January 1980 when you bought it at $850 thinking that one day gold would go to $1200. It only took 29 years to do so, but you also had years in the 1990's when you could have bought it for under $300. Was it worth holding for 29 years and not even get your money back for 28 years? Was it worth the $350 profit when in actuality at one time you were losing over $550?
98% of all the new members who threw in the towel within 6 months were doomed from the start because they had the wrong mindset. Of all the people who speculate on a position, no matter futures, stocks, opening a store, buying real estate, if they do not look at it as a business, they will either make a lot less if successful, or speed the closing. If they have a chance to exit that business and use that money for the next business idea but do not sell, they will be working for someone else when the business is forced to sell leaving no money.
98% of those who go down with the ship all say the same things "I thought this" and "I thought that", but they thought wrong. When you put all your money on one thought, you have one only chance to be right. No matter speculator, hedger, or end user, you must treat it as a business, and the risk side of the business or trade should be kept at a minimum.
You are always long or short from settlement each day, not where you got in. I am always looking at what my objective is going forward from each settlement and ask myself, what is my profit if I am right and the market gets to my objective, and what I am going to lose from here if wrong. If the answer is anything less than even money, I will exit the position. It does not matter if I am up $4000 on the trade, if I would take profits of $1000 from here but am risking $2000 to do so, I just get out. Why? Because I do not want to lose $2000 to make $1000. The wrong mindset is to think if you are up $4000 and if you lose $2000 you are still $2000 ahead. If I had $4000 in my hand and I lost $2000 to make $2000 is one thing, but to lose $2000 to make another $1000 is not a winning mindset.
Settlement is where you could have closed your position and the money would be waiting for your next investment, so what happens from there if not closed out is a new "wager", and the risk/reward should always be worth it. Lastly, keeping your trade losses to a minimum in relation to your account size allows you to not act emotionally, and protects you from one idea costing you a significant loss of income, or having to close your account (or business).
A perfect example of the wrong mindset is a person who or is losing let's say $10,000 on a trade and spreads it off to the next month, they think and say that since the trade is not closed out, it is not a loss yet. Look at your net liquidation account value that shows you are losing $10,000, that is the proof that no matter when you get in or out, at settlement, the loss is there even though the position is still open on the book. Now if the first trade makes back $5000, it is still losing $5000, but the spread trade side is now losing $5000, still a total of $10,000. Reality to the bottom line is by spreading it off it is like getting out, except your account executive has another commission. Now you have a spread, some could move, some not, but you are no longer outright long or short, you are spread. It became a spread trade.
Another example is the person who does a "special offset" to show a profit, and will "work their way out" of the losers. This is self denial; the bottom line on your account value will remain exactly the same no matter what trade is offset. If you are either of these examples, please do not open an account at my firm, because you are wasting my time and your money, you will be like the many traders who are smart, but do not have the right mindset and will not be around for long.
Grains: Spot on corn numbers, also spot on soybean resistance and accurate support. Exports were strong once again to help support, and oversold conditions, but did little to help improve prices. Corn is holding the bracket line support, beans trying to hold the panic selling low.
Nothing has changed since last week. So I will wrap up my thoughts on the grain market. My numbers are "for today" and my charts are my roadmaps for the "future". Last week I discussed how the market has had wide quick swings and the parameters were laid out. The market will rally and challenge their all time highs if we have a Noah's Ark type of raining for 40 days and 40 nights when we are planting, hot dry weather during pollination, and an early freeze. Any one of those things will cause a rally that is significant. Nobody can predict what will occur. You can take a "bet" on it happening, and with some option knowledge it is easy to read the "odds board" and place the wager that suits your risk appetite. If it happens you will cash in, if not with the right strategy you will have a known risk if wrong and it should not affect your account value past the limit set. Un-hedged producers are long and should not "bet the farm" on that occurring, but rather a small bet that if wrong does not change their profit margin by too much. That is their "gamble" to the upside, and my service makes it clear on what it is costing for whatever upside they are looking for.
On the other hand, Argentina is expecting a record soybean crop and a huge corn crop, Brazil is almost finished planting and is having good growing conditions. The dollar is getting the legs to make a run higher, and the funds still have huge long positions. Farmers are still holding huge long positions by NOT being hedged. Subsoil moisture is best I have seen going into a growing season here. Instead of bad weather causing a rally, the weather could cooperate and we could produce a bumper crop. The equity market could turn south, and the global picture could struggle, and that is not good for grains. If livestock producers have a hard time to rally prices, or feed does not get cheaper, they will reduce their inventory and less feed will be used. If crude oil comes tumbling down, or just gasoline, ethanol usage will be hurt. Lastly, and this is a big one, what if the funds decide to abandon their positions and even worse turn to sell grains?
Place your bets, use the roadmap for a good location, and we will see what happens. For me, I will trade day by day, for now I want to sell rallies at good locations with a reasonable small risk if wrong, and a good profit if right. I want to stand aside with no positions at times, and the only way a producer can do that is by hedging his crop. Only then can a speculator or producer wait for an opportunity to play from either side of the market. When you are out of a position it does not matter what happens in the market, because there is no risk or reward. There was nothing you wanted to do and that is why you had no position, and if you say I coulda, woulda, or shouda done something, that means you are not doing what you were supposed to do, or another way of saying it is that you cannot execute your strategy and game plans.
March Soybeans for 1/22/10
Grains: Accurate numbers for corn and helpful soybeans. I expected an up day but I would be disappointed if I was a bull. When you consider how much these markets have just went down and the corrective action so far, Friday better produce some follow through for bulls who are trying to hold onto a position that looks more like a wager on adversity in 2010 production, than the reality of current supply/demand fundamentals.
The options have increased "premium" as seen on Wednesday when December $4 calls settled up 2 1/2 cents, and the $4 puts settled up 3 3/4 cents, on a day the market settled at $4.02 3/4 down 1 1/4 cents on the day. This increase in cost for the same right to be long or short corn at $4 usually occurs on a market that is rallying, but in this case I think it is because the market is just as worried about the downside.
I want to make it clear, I am bearish grains and believe we could easily trade $8 soybeans and $3.25 corn if I am right in the long run, versus $9.94 or $10.60 soybeans and $4.26 corn if I am totally wrong.
To be more specific, March soybeans (SH) in the near term, the chart shows good support at $8.90 (the low on 10/5/09) just 3 months ago. In December 2008 front month soybeans posted a low of $7.77 (777 but no jackpot). Let me remind you, we traded $5.40 1/2 in 10/2006.
March corn has strong support at the gap at $3.54 1/4, then the lows in 9/2009 holding $3.20. Corn has had huge support since the low in 12/2008 when it posted lows of $2.90, as well as a $3 low in 2009. Corn was at $2.61 3/4 low in 10/2006. In December 2005 it posted a low of $1.86.
Time will tell what will be, as with everything in life, things can turn around on a heartbeat. As long as I see the whole picture the way I do, I will continue to have a bearish bias. When an event or price level is reached that changes my bias, I will change. I am not married to an opinion, I am married to my beautiful wife who is forever. Certainly after being a floor trader for handfuls of years, I cannot count the number of times I have been a bull or bear in the grain markets, for a day, week, month, or months.
I needed to write this because I want my producers and speculators to know the downside is alive and well. I want you to not be herded into the "does what the funds are doing" mentality. Yes, that is great when I am on their side, but I have no problem "fading" them with caution, realizing that if they abandon their longs it should also trigger fund selling, and then we will see my objective of $7.75 SX and $3.37 CZ
Corn should be coming into the pipeline that would not be if storability was not an issue. PRC slowing their economy, 2010 record US yields, Palmer index (drought index) shows plenty of subsoil moisture for 2010, and farmers tend to plant more with their profits, while Wall St. spends their bonus. Speaking of which, if Obama declared war on Wall St. this issue of separating banks from their trading groups, could lead to commodity liquidation by them.
Bottom Line: Hedgers should find places to finish off marketing their 2010 crops and leave the gamble to others. Profits should be locked in, and try to pick up an extra $.10 to $.25 when possible. Try and take as much risk off the table, and gamble when you really think the market is going up, but not the farm, but with a trading account limited to 5% of last year's income. If in 2 or 3 years your trading account grows, then you can think about gambling professionally, until then, do not try to do that with your farm. Keep gambling and marketing your farm separate.
I want you to ask yourself, not me, at what price will I sell if they go higher, and what will I do if they go down? If you do not have a solid answer, then you are a deer on the highway and the Mack truck has you in its headlights! Do not risk more (gamble) then you are willing to make if right. Remember, YOU ARE LONG UNTIL YOU HEDGE. When you sell you are not going short, you are getting out of the market and have NO position.
March Soybeans for 1/21/10
Grains: Spot on corn and accurate soybean numbers. Extremely oversold for days has yet to produce a rejection of these price levels. Bracket line support was perfect in corn and we will see if it can hold and provide a corrective rally to retest the gap at $3.81 which I would consider an excellent selling opportunity. Soybeans have support at $9.35 and I thought this area might hold for a corrective rally towards resistance and alleviate the extremely overbought condition, then a retest of support. Buy corn sell beans and wheat is working. If the dollar stays strong though, I still think soybeans will erode for another 2 weeks.
Interesting to note the British Meteorological Office is now forecasting that 2010 will prove to be the warmest year on record, succeeding 1998 and putting the temperature series back on its clear upward trend, aligned with the steady increase of human-caused CO2.
March Soybeans for 1/20/10
Grains: Accurate corn numbers and helpful soybean. I want to sell a rally at $9.94 area in SH March soybeans, $3.80 CH March corn. I might be dreaming though. Grains are having trouble to rally in extremely oversold conditions. Maximum oversold conditions in soybeans could last another day or two, but should see a corrective bounce. It is hard to sell under these conditions, but it is even harder to buy. Being under the bracket line (green) makes it a little easier though (to sell). My parameters for shorting (selling) grain have been clearly stated, and any rally is an opportunity to sell.
You know I like buying corn selling wheat, but I am more in favor of buying December 2010 corn and selling November 2010 soybeans. Long time subscribers know when the ratios is near 3 to 1 beans over corn that beans are expensive relative to corn, 1.8 to 1 is really cheap soybeans in relation to corn. We are about 2.3 to 1 now and I am looking for a ratio of 2 to 1 (price of soybeans versus corn).
I think that we are at about 1/3 of carry charge in soybeans, but with S.A. bringing soybeans online in April there will be plenty of soybeans around and a carry charge will come back in play. Producers would be more inclined to store if they were near carry, but that is the function of the tight carry as to induce farmer selling. I think the old/new crop (SN/SX) can be bullish though.
We are going to have the largest soybean harvest in history (in S. America) the way the weather looks the next 2 weeks. End users should be backing off not worried as much about tight supplies that have been seen for over a year. I want to remind you again at the progress in yields which looks like it is outpacing the ethanol mandates. Was it the cool wet weather, the gigantic farm equipment that is fast and minimizes loss, or the seed companies who think their triple stack corn is the reason? Pro Farmer says that US corn yields are advancing 2.5 bushels per acre a year which equates to let's say 90 million acres X 2.5 or 225 million more bushels for 2010.
I am bearish and want to be a seller on rallies, long term core position I would remain short with a buy stop close only above $9.94 in March Soybeans, and $3.82 buy stop close only to make me want to exit (corn). I have no problem selling at these levels, but I would rather wait for less oversold conditions.
With all that said, I am aware that Reuters ran a story which included: Burnt by the financial crisis of the last two years, money managers are now raising sharply the amount of money allocated to raw materials such as oil, gold, copper, sugar and coffee. The value of commodity funds looks set to grow by a third this year, or by as much as $100 billion. Barclays Capital figures show commodity investments in passive, long-only commodities funds increased by $93 billion last year to $255 billion with $67 billion in fresh inflows hitting the market. Fund managers estimate that inflows this year will match or even exceed 2009. It went on and on, but what caught my eye was: Hilary Till, principal at Chicago-based proprietary trading firm Premia Capital, says this has led to huge demand for some commodities as hedges against potential dollar depreciation.
If I am right and the dollar is strong this year, would the funds abandon their positions? Trend funds have no problem selling.
Bottom line: When trading I like to trade the side of the fundamentals and that is bearish grains. I also know that the funds are the drivers as long as they have their foot on the pedal, but in the end many have actually crashed and burned. The charts are bearish, and I think we will remain under pressure for the next few weeks, and then we could see corrective action as row crops compete for acreage. At this time the upside is cheap for grain options as at this time it should be, but ANY hint of a problem even via weather forecast will cause the shorts to scramble, and funds will be the steamroller if they can maintain soybeans at these levels. If they do get hammered (go down $.50 or $1) their ability to add to such a losing position should be limited.
My battle plan before stepping into the ring is play it from the short side and look to hit more times than I get hit.
Producers who still have this and or next year's crop to hedge leaves them in a "long" position no different than the speculator who bought, you are both long. In my service no matter what market I have always been insistent on not risking more if your thinking is wrong, than what you would make if right. For both of you as the market goes down must ask yourself, what am I thinking? You will always be faced with more loss if it goes down, and recoup money if it goes up. The problem is, if for whatever reason the market would continue down the result would be the same, you will lose your account, or everything you own. And what would you have sold it for if it went how much higher? You will never win on a professional poker table. There is no difference in gambling, money management is just one key to successful trading or marketing grain. You might get lucky in the short run year or two, but in time you will wind up with the short end of the wishbone.
March Soybeans for 1/19/10
All numbers and charts have been updated for 1/19/10, my comments will be sent in less than 3 hours from now, and here are some comments.
Make note that the charts are showing the exact same range of the Monday session, so disregard the "shadow bar" (last bar on the right), but the previous bar is correct for Monday's session.
Grains: Tuesday night update: Tonight's volume is extremely light and I would not make too much of it. Only 2123 contracts of March soybeans and 3923 in March corn as 7:10 just before I sent this.
As you can see the soybean and corn market held their pivot and looks firm tonight. Markets are extremely oversold and a corrective bounce was in order. How much we correct can be helped by outside help if a weaker dollar, and higher commodities, but I think it really depends internally on farmer selling and willingness for the shorts to cover and take profits, at least for now. We did not trade on Monday and of course I feel the same tonight without an "event" in sight to change my numbers or opinion. I continue to call for selling at my resistances, and I would not press the short here in extremely oversold conditions and near short term supports that I feel in time will be taken out.
Nothing changed. Charts are clearly near support bracket lines, and I would like to sell a rally. I do not see a run to buy grains on this light volume. Looks more like people who do not mind paying up to cover shorts rather than a surge in new buying. The funds were adding to their positions last week with the commitment of traders report showing: The index trader's net long across the 12 reported commodities increased 56,500 contracts during the latest week. Changes during the two previous weeks were down 2,360 and up 10,970, respectively.
Brazil's soybean crop is coming up beautiful and set to produce excellent yields.
March Soybeans for 1/18/10
On Thursday 1/15/10 my numbers were:
Grains: My resistance was $.05 from the actual high and my support was $.03 1/2 from the low in soybeans, and my resistance was $.03 from the actual high and my support was $.01 1/2 from the low in corn.
Crude Oil: My resistance was 0.21 from the actual high; my support was 0.06 from the actual low.
S&P: My resistance was 0.75 from the actual high, my support was 0.50 (2 ticks) from the actual low.
Gold: My resistance was $5.30 from the actual high; my support was $4.20 from the actual low.
Euro: My resistance was 0.18 from the actual high; my support was 0.37 from the actual low.
Bonds: My resistance was 21 from the actual high; my support was 1 from the actual low.
Natural Gas: My resistance was .009 from the actual high; my support was .036 from the actual low.
Cattle: My resistance was .20 from the actual high, my support was .40 from the actual low.
Grains: You have known for months I have said that producers should hedge 100% of their crop, and speculators should play it from the short side. I have not wavered from my view, and told my producers to sell more of the upside when they were rallying to $10.60 in soybeans (collecting $.25 now for a $1 spread above the market in the future), and near $4.20 in corn. I was fully aware of the power of the funds and thought the opportunity to sell at these levels were handed to producers and speculators alike as a gift, to sell at levels that would not have been seen without them. I also have told you how to play each trade using a stop, so you would lose small when wrong, and very profitable because of the location when right. I have told you about bracket line supports that produced rallies back to resistance bracket lines. I have told you that no matter if long or short, if you held for a few months you would have seen big profits and big losses come and go, and you are right back to where you started from. That is good for a producer because he is not in the market when hedged, but for a speculator the buy and hold or sell and hold never made sense to me. The buy or sell and then take profits or losses, and then look for the next trade, not continue or compare to the last trade.
Others would try to "pin the tail on the outside markets" such as weaker crude, stocks, and the dollar which is helpful, but I believe the fundamentals from the report justifies the plunge from lofty levels. Wheat down $.58, corn $.51, and beans $.48. All 3 closed within a hand full of cents from their lows after the report, are extremely oversold, but I still believe we will take out those lows and test my support numbers for Tuesday (no trading Monday) sometime this week, and second supports in the next 3 weeks.
Bottom Line: I want to continue to sell rallies near $9.94 in SH and $3.81 in CH, Looking for a test of my support numbers. Extremely oversold now but I think the longs that are underwater will look to abandon the long side soon. Producers have a wakeup call and when they look on the chart and see where they were a few months ago, they will be selling too. I also remember that 1000's of funds went broke in 2008, and just because they have money and can force the market their way in the short run, does not make them right in their perception and trade idea. What do you think corn would be priced at if it were not for the funds allocating money to this "asset class"?
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