This report was sent to subscribers on 5/6/11 3:00 p.m. Chicago time to be used for trading on 5/9/11. Everything is done by Howard Tyllas, no program or black box.
After the close recap on 5/9/11: My resistance was 13.41 3/4, .00 1/4 from the actual high, and my pivot acted as support and was 13.24, just .00 3/4 from the actual low.
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13.41 ¾ near Uptrend Line
5 day chart... Down from last week same day
Daily chart .... Sideways
Weekly chart ... Up
Monthly chart Up $12.66 ¾ is the 200 DMA
ATR 33 ¼ Oversold 20%
Market inability to close below the uptrend line, and the fact that we made a new low for the run and closed higher bodes well for another up day to follow on Monday.
In my daily soybean numbers on Friday; my resistance was .00 ¾ in open outcry from the actual high; my support was .03 ½ (.02 ½ in open outcry) from the actual low.
Grains: Spot on soybean numbers, and spot on corn resistance but support was no help. This week was clearly volatile, and liquidation of asset allocation to commodities feed on each other. From the high on Monday to the low on Friday crude oil went down over $20 or $20,000 a contract. It is no wonder for that reason alone corn and soybean oil would be punished for their alternative role. If you watched crude oil you would know what the grains were doing, because most of the day it seemed grains followed the same pattern lower. July corn closed the overnight down $.10 but 2:15 later grains opened higher and went $.01 ¾ above my first resistance number in the first 15 minutes of trade, and then by looking at the 5 minute bar chart (on page 4) you can see the market made lower highs and lower lows the rest of the day. Considering the price movements of the other commodities, grains held up well. I have said countless times the risk is always there for fund liquidation, and how they are bigger than the market itself, reduced their corn position 89,000 contracts over the last 8 days, 49,000 was sold this week reducing their long position down to about 300,000 contracts, still historically large. You should realize that 89,000 contracts represent 445,000,000 bushels of corn. It does not matter the fundamentals, when they want to liquidate large amounts of contracts in a short period of time, the price is bound to go down.
December corn traded down to $6.30 on Friday which was $.54 off their 2011 high, but did not fill the gap at $6.25 ¼. Planting pace should lag behind for weeks, and next week the USDA should lower their expectations on corn yield from 161.7 since their last guess in February. That is the chart reason and fundamentals I think as to why we should recover from these levels after the report comes out. The risk is continued fund liquidation (and they do not need a reason other than to reduce risk exposure) poor ethanol grind, lowest levels in livestock prices since January which raises concern about feed usage, poor exports, possible bearish report this week, and if Mother Nature reports perfect weather to come.
July corn chart has strong support at the uptrend line this week at $6.60 with the gap just below there. Last week's high will be tough to overcome near the downtrend line. I want to take the buy signals only today and risk $.05 in corn using a sell stop to protect.
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I notice that even though May corn is off $1 from its 2011 high and $1.04 off the 2011 low, it's still up almost $.50 on the year. May soybeans though are down $.84 this year and off $1.42 from its 2011 high and $.55 off the 2011 low. November soybeans are exactly unchanged since 12/31/10, but down $1.02 from its 2011 high and $.70 from its 2011 low. 2 weeks ago December corn posted a "double top" at $6.84, $.44 above where we are now, but it is $.97 from the 2011 low.
Informa came out with an estimate of 76 mil acres, and that takes away 25 million bushels (MB) from a tight 2011/12 US soybean supply. Beans as well as corn are definitely vulnerable if outside market continue lower, but if the sky is not falling, then I still think beans can at least recover some of their losses going into the report on Wednesday.
July soybean chart posted a new low for the run but closed higher which bodes well for another up day to follow. They also did it closing above an uptrend line but are having trouble holding the 3rd time at the line, but it has held up nonetheless. I want to take the buy signals only and risk $.08 on the trade idea using a sell stop to protect. My objective would be selling a resistance number. April's high at the downtrend line is major resistance. Unless the numbers change and it looks like production could fall short, 2011 old crop highs are in like I have said before. Old crop beans had the worst exports reported Thursday this year at 5.5 MB with no shipments to the PRC. Sales were also dismal at less than 1 MB.
November soybean chart also posted a new low for the run and closed higher which bodes well for another up day to follow on Monday. It also continues to close just above the uptrend lines, but up nonetheless. If worried about the downside, or if you are a bear looking for an objective, the gap low left in March at $12.38 would be it. Below there the market would be in full bear mode.
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