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CORN – Sep ‘09 Electronic
Open – $3.90 1/2, High – $3.91 3/4, Low – $3.83 1/4, Close – $3.84 1/2 Down $.07 1/4
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Last week I said: "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.”
Sep ‘09 corn: I mentioned last week that I was looking for $3.80 in the Sept '09 contract and today MAY have been close enough with the low of $3.83 1/4. I also mentioned the possible buy stop at $3.89 1/2 last Friday which would have been filled and also stopped out of for an approximate $.03 1/2 loss on the trade. Tomorrow we have the USDA's annual planted acres report due out at 7:30 a.m. CST; this report should dictate tomorrow's trade action.
The market has made a steep enough decline in recent weeks that makes me think we have factored in most of the potential bad news that may come from this report. If anything I would venture to say that the setup for this report is friendly because of the decline we've had coming into it. It is tough to make a call on tomorrow's markets because of the report but my feelings are for lows to be set in the early portion of the trade session and then find support around the $3.80 area.
Bottom line: I am looking for the market to experience an early low tomorrow.
Sept ‘09 Corn – Support/Resistance for 06-30-09
(R3) Resistance 3: $3.91
(R2) Resistance 2: $3.88
(R1) Resistance 1: $3.87 1/4
Today’s close: $3.84 1/2
(S1) Support 1: $3.83 1/4
(S2) Support 2: $3.79 1/4
(S3) Support 3: $3.76 1/4
MEAL – Aug ‘09 Electronic
Open – $370.80, High – $373.50, Low – $368.00, Close – $371.40 Up $0.40
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Last week I said: "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.”
Aug ‘09 meal: The sell stop order at $364.00 that I thought would hit on Friday never did so the protective stop was at $366.10 today which again wasn't touched so for tomorrow the protective sell stop on the position we have been following will be $367.00. August '09 soybean meal looks like it wants to test the old high of $380.20 that we made on June 18th but the daily trade ranges have been getting smaller which means the market may be stalling out unless it can get a boost from somewhere like a report.
Like corn the meal market will be subject to the reaction of the report tomorrow but technically I see the Aug '09 meal putting in an early low and then try to find support from there and be firm the balance of the day. This will all be trumped by what the acreage report says for soybeans.
Bottom line: I’m looking for the market to experience an early low and a late high tomorrow.
Aug ‘09 Meal – Support/Resistance for 06-30-09
(R3) Resistance 3: $380.20
(R2) Resistance 2: $377.00
(R1) Resistance 1: $373.60
Today’s close: $371.40
(S1) Support 1: $365.00
(S2) Support 2: $364.50
(S3) Support 3: $361.10
HOGS – Aug ‘09 GLOBEX
Open – $57.90, High – $59.275, Low – $57.325, Close – $58.625 Up $.925
Thoughts – Long Term (Into August) – Friendly
Last week I said: "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."
Aug ‘09 hogs: We broke the support level of $57.62 but have yet to close below it so we are still in testing mode; the market needs two consecutive closes below this level before we look for another leg lower. The front end of the market rallied today while the back end of the market sold off due to lack of liquidation in the Quarterly Hog & Pig report from Friday which was in line with trade estimates. Keep in mind the report is from June 1st and the market has made a very sizable move lower since the first of June.
It appears that most of the report had been factored into the trade already judging by the way the front months rallied and even the deferred months rallied going into the close even though they didn't close higher. The Dec '09 contract had positive (potential reversal) trade action today but it also had the same type of action one day last week that didn't materialize. If the trade action is good and legitimate we could see some buying above today's high in the Dec '09 contract ($56.125). I AM NOT saying the market has bottomed or even Dec has bottomed for that matter I am just pointing out the fact that there could be some buying above today's high's in Dec '09 tomorrow.
I would like to see the market close strong to the upside above $56.125 for two consecutive days before I even think about higher prices on more than just a one day run and if the market did rally I think it is just a corrective rally in that would need to be sold at some point. I am expecting the market to be better tomorrow based on this afternoon's cutout being higher again. There was a letter sent to the Secretary of Ag last week asking the Government to purchase $50 million worth of pork for Government funded programs but as of right now the budget has no money left for purchases like this during this fiscal year. There has been no talk of any exceptions at this point to my knowledge.
Bottom line: I’m looking for the market to make an early low tomorrow and firm as the day progresses. We need the market to sustain trade above $59.37 (Aug '09) early in the day in order to keep moving higher for the balance of the day.
Aug ‘09 Hogs – Support/Resistance for 06-30-09
(R3) Resistance 3: $60.75
(R2) Resistance 2: $60.30
(R1) Resistance 1: $59.725
Today’s close: $58.625
(S1) Support 1: $58.25
(S2) Support 2: $58.00
(S3) Support 3: $57.225
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