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CORN – Sep ‘09 Electronic
Open – $3.95, High – $3.96 1/2, Low – $3.88 3/4, Close – $3.90 Down $.05
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Yesterday I said: "Started the day with some enthusiasm on the open but almost immediately sold off from there. I had a small sell signal in the hourly chart that sold Sept ‘09 corn at $3.97 1/2 on a stop order with a protective buy stop at $4.00 1/2 which wasn’t touched today. I am not doing this trade against any positions I am just making it known that there was a signal. I haven’t made any changes to my base position of a 3 way call position with the $3.90 July ‘09 put in place for downside protection if the market decides to collapse. I have to do something with the July ‘09 put option by Friday so I don’t get exercised into a short July ‘09 corn position which I do not want at this point. The market seems to be looking for a bottom as we have sold off below $3.90 each day this week only to come off of those lows and close the market above that price level. Sept ‘09 corn looks like it should have some additional weakness tonight in an effort to find more support.
The trade action we had today signifies balance and that the market is looking for direction from here. We are still in a downward trend although we have paused for the past couple of days so the thought is we still have some weakness to get through. I am looking for a test of the $3.80 area in the September ‘09 contract which may come in the form of a jab lower but overall I don’t expect much more downside pressure below $3.80 in the September contract.”
Sep ‘09 corn: Not much has changed from my comments from yesterday as I still believe the Sept '09 contract has a chance of touching the $3.80 level before we make any major strides higher. I was surprised in a sense that corn faltered during the close because the U.S. Dollar Index was trading lower on the day and crude oil was up $1.64. Tomorrow we have July '09 option expiration at the end of the day and because of this I exited our $3.90 July '09 put options at $.07 1/2 which helps offset the cost of the current 3 way call strategy we have in place.
Our call strategy gives us downside potential to $3.70 in the Sept '09 futures but like I said in previous posts, if the market makes it to my price objective of $3.80 I will be looking to move our 3 way call position down. The Sept '09 contract made an interesting move at the end of the day by making a low at $3.88 3/4 which is within 1/4 of Tuesday's low.
This setup provides the corn market with a potential buy stop order at $3.89 1/2 STOP with a protective risk management sell stop $.01 below the low at the time of the buy order fill. In order for this signal to be good the market needs to trade below $3.88 3/4 and then the signal is generated as a buy stop only. There is also another possible buy signal IF the market opens below $3.88 1/4 tonight then there would be a buy stop signal for $3.88 3/4 with a risk management sell stop $.01 below the current low at the time of the buy stop fill.
The market had VERY little volume today (unless my volume indicator is off) in the Sept '09 contract in part due to the industry waiting for the USDA's annual planted acres report on Tuesday morning at 7:30 a.m. CST.
Bottom line: I am looking for the market to experience an early low tomorrow.
Sept ‘09 Corn – Support/Resistance for 06-26-09
(R3) Resistance 3: $3.96 1/2
(R2) Resistance 2: $3.93 1/2
(R1) Resistance 1: $3.92 1/2
Today’s close: $3.89 1/4
(S1) Support 1: $3.88 1/4
(S2) Support 2: $3.86 3/4
(S3) Support 3: $3.80
MEAL – Aug ‘09 Electronic
Open – $366.00, High – $371.00, Low – $365.00, Close – $366.80 Up $0.80
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Yesterday I said:"The buy signal I spoke of in the above paragraph was indeed good an accurate. The buy signal was triggered at $351.60 on Monday evening and from there a risk management stop order would follow each day’s low by $1.00 so for today it was $349.50 stop and tomorrow it would be $357.80 stop. I do not have this trade on because I have call strategies in place but I wanted to follow up with the statement I made. The August contract has major support at $344.70 but the contract has acted well enough where we didn’t even get there to test it.
We closed the at $366.00 today which is just above the 50% retracement level for the most recent move lower and provides a positive spin on the August ‘09 contract. We If we close above $365.30 tomorrow then I would expect a test of $368.80 and then $380.20 but we need another close above $365.30 first!”
Aug ‘09 meal: The stop loss order for the buy signal we had at $351.60 the other day will now move to $364.00 instead of the $357.80 area we had today. August meal didn't have a great follow through day to the upside, as a matter of fact on the daily chart it looks as if we could see some selling surface below today's low of $365.00. This makes me think the sell stops in the meal trade I have been talking about for the past couple of posts may be touched tomorrow.
The daily chart shows signs of meeting resistance but the longer-term weekly charts provide us with price optimism at this time. I have the meal market making a cycle low next week and then it begins another move higher until the middle of July.
Bottom line: I’m looking for the market to experience an early high and a late low tomorrow.
Aug ‘09 Meal – Support/Resistance for 06-26-09
(R3) Resistance 3: $369.90
(R2) Resistance 2: $368.20
(R1) Resistance 1: $367.80
Today’s close: $366.80
(S1) Support 1: $365.00
(S2) Support 2: $364.50
(S3) Support 3: $361.10
HOGS – Aug ‘09 GLOBEX
Open – $58.50, High – $59.55, Low – $58.25, Close – $58.80 Down $.025
Thoughts – Long Term (Into August) – Friendly
Yesterday I said: If there is one market that can make misery last what seems to be forever it is the hog market and it was at it again today. The market responded negatively to the lower cutout number we had last night and I assume getting a jump on tonight’s lower cutout number (down $1.19). It is hard to even talk about this but I am going to because it is an objective observation of the chart, I have a buy signal in the August contract tomorrow on a conditional basis. IF the August ‘09 contract trades lower than $58.10 then there is a buy stop generated at $58.60 STOP with a protective risk management stop $.50 below the most current low when the buy stop is filled, however, I would like to give the sell stop some room and place it below the contract low of $57.625 so I would make the order $57.125 stop.
Cutout was lower tonight but cash was near steady with a weighted average of around $57.65 and the July futures closed at $57.30, the August at $58.825 and the CME cash index settled at $58.55 today. The cutout still needs to come around and move the meat that we have if we ever want cash to start coming strong and until then I don’t expect much out of this market to the upside. Like I said before, I have a potential buy signal for tomorrow but I am not extremely confident in it therefore I would/will not trade it."
Aug ‘09 hogs: The conditions for the buy stop signal that I spoke of yesterday were not met therefore the signal was not generated. If the conditions of the market moving below $58.10 Aug '09 and then moving back up during the same or next day trading session it will give us the buy stop signal again at that time. The cutout continues to amaze me how it can be down so much one day and up so much the next. It seems to me as if someone is playing with these numbers for some reason but I have nothing to prove that statement other than a feeling that is felt by many that I talk to.
Maybe a very large retailer decided to have a company picnic nationwide this weekend and they bought all the pork for it today? Sound stupid, I think so but that is kind of how I feel when we get these cutout reports that are basically garbage. Is it the USDA's fault? I don't know but we need to get to the bottom of what is going on here, I don't even care who is at fault at this point I would just like some reliable information that is fair for everyone to use, not to be manipulated by the big boys, whoever they are.
This is one of the reasons I began using charts to make decisions because "information" can be skewed by people to reflect a false reality which can create fear or panic and control emotions for the benefit of the manipulator. I will stop with the conspiracy theories and try to give some insight into tomorrow's trade.
I watched the market rebound swiftly after the higher cutout was printed today but it lasted all of 30 seconds or so and now it is just sitting here which really isn't all that uncommon for this time of day. I still have my cycle indicator pointing higher into the middle of July and so far we have held the contract low support (because we haven't gotten there yet) level and we have a setup for a spring bottom at $58.10 IF the market meets the conditions I spoke of earlier.
I am looking for the market to experience an early low tomorrow and have some support from today's cutout number but I believe it is no big surprise to those that are "in the know" so some of this may have been priced into the market today. The market is just treading water now until we either break out to the downside below $57.62 or to the upside above $62.15 so until then there is no real news. We need the cutout to continue to climb like it did today and have it happen due to demand not as a result of a couple of key strokes on a computer.
Bottom line: I’m looking for the market to make an early high tomorrow off of tonight’s higher cutout number but I think some of it was factored into today’s trade.
Aug ‘09 Hogs – Support/Resistance for 06-26-09
(R3) Resistance 3: $60.275
(R2) Resistance 2: $59.45
(R1) Resistance 1: $59.20
Today’s close: $58.80
(S1) Support 1: $58.65
(S2) Support 2: $58.125
(S3) Support 3: $57.625
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