This report was sent to subscribers on 10/24/09 8:00 pam. Chicago time to be used for trading on 10/26/09. Everything is done by Howard Tyllas, no program or black box.
After the close on 10/22/09: My support was 1068.50 FG, just 1.50 from the actual low, and my resistance was 1099.00, 7.25 from the actual high. Look at my comments though and you will see I thought the gap support would hold and we would go 1/2 way up to the resistance at 1091.50, only .25 (1 tick) from the actual high.
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5 day chart.……….. Up
Daily chart …….…Sideways
Weekly chart …….. Sideways
Monthly chart ….... Sideways $9.47 is the 200 DMA
ATR 26 1/4 Balanced 61%
November Soybeans for 10/26/09
Also note the high and low on the chart on Friday was the exact high as well as the next downtrend line below acted as near perfect support. This is another example how what was resistance turns into support when the market is trading above it.
Many reasons this year for the swings in price, aided by the late start to the growing season and a normal frost, when a later than normal frost was needed to optimize yield. Rain delays are credited for the support, as well as the weak $. Bottom line: Bracket lines are areas that correspond with news events. Green and orange are when crops look good, red when the crops do not, or are delayed, aided by demand.
In my daily numbers on Friday my resistance was $.03 from the actual high; my support was $.07 from the actual low.
Grains: Outside markets hit the wall of resistance in all the markets I cover on Friday, and profit taking was evident. Look at all my charts and even the strong markets on Friday closed well off their highs. Grains still posted nice gains for the week and my thoughts SX would test $10.31 and CZ at $4.11 1/4 was seen on Friday, with SX barely holding unchanged on the day with CZ closing without question lower for the day after making a new high for the run.
Is the high in? I thought last week we would be close to a top and I tried to carry a small short position and that proved to be wrong. Selling resistance for a day trade proved to be the right thing to do daily. Big moves in the $ and crude oil, and wetter colder forecasts into early November was all that was needed to push the grains to the resistances. At this price level coupled with Friday's action I would dare to say that the high is in for now.
Here are the reasons I think the high is in:
The chart in SX shows the 3rd time at the line failed but I would have liked to have seen a lower close too. This chart and the fact that we are delayed in harvest are vulnerable to favorable harvest weather that would selloff with little buying down to the next support level.
Rally has slowed corn export sales and now poultry producers are back in the red.
Every day I read reports of corn and soybeans yields as tremendous or at the least exceeding expectations.
I believe crude oil has topped or at least has gotten ahead of itself in price compared to fundamentals.
Wheat is pricing itself out of the world export market with Chicago futures higher than EU wheat on the Matif exchange.
Years with extremely wet Octobers are typically followed by drier than normal Novembers.
Since this is a futures market, the adverse weather for the next 7 days has probably been priced in already.
CRB failed to hold above the 50% retracement of 7/08 highs to 10/08 lows.
Beans rallied $1.40, wheat up $1.35, and corn $.86 which is at the high end of rallies in autumn.
Barring more continued bullish weather forecasts, and the possibility that the crude oil rally is not done with the dollar losing more value, we should start to work our way lower. Slow harvest, concern with quality, and fund buying might slow the speed of the downdraft in the near term until at least 60% of the crop is out of the ground and quality is more confirmed.
I want to sell SX looking for a retest of the gap at $9.64, SX10 retesting the gap at $9.49, and sell corn (CZ) looking for a retest of $3.70. I would rather sell rallies at resistance but would sell the pivot too if the dollar is firm and crude oil is down. Why look at other markets? Normally I trade what I watch, not sell grains because crude oil is going down, if I thought crude oil was going down I would sell crude oil, not sell grains and watch corn and beans rally as crude oil continues to go down. But in the current situation, much of the strength in price of grain comes from fund buying partly based on asset allocation and weak dollar. If that goes away, grains should shed some price as a result. If the dollar loses value that would underpin markets that otherwise would be selling off.
The 5 week rally in corn is still valid on the chart as well as the 3 week rally in soybeans. On Monday if grains gap lower, that could signal a correction. I bought 4 soybeans that averaged $10.12 against 10 corn I am still short, I bought the 3 CZ at $4.02, bought the other 4 back at $3.95 1/2 since they trade the mini's until 1:45pm and they were selling for $.01 1/2 under the "big contract" low of the day. I plan on completely relying on my numbers for direction, but would like to sell my soybeans higher (maybe going short too) and stay short my corn.
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