CORN – Mar ‘10 Electronic
Open – $4.13, High – $4.13 3/4, Low – $4.04 1/2, Close – $4.06 1/2 Down $.08
Thoughts – Long Term (into February) – Sideways
Mar ‘10: Corn continued lower today as it had a very difficult time making any rally attempt. The market made a low of $4.04 1/2 today and settled at $4.06 1/2 which is just above the $4.05 3/4 50% retracement level back to the $3.90 1/4 swing low. Thus far the market shows that it's holding support at $4.05 3/4 but if we close two consecutive days below that number we could see a test of $3.90 1/2 soon. The March '10 contract has a double top at $4.25 which is still in play until we make a new high above $4.25.
We are long a call strategy to give us some protection if the market moves higher but we also have downside to $3.70 in the March '10 contract. As long as $4.25 holds resistance we should continue to creep lower but with fund buying having no rhyme or reason it is tough to make that call. It looks like we may have done enough to the downside for now and should see some higher prices tomorrow but if we don't then I say $3.90 1/2 here we come.
We can look for the markets to become more and more volatile between now and the first of the year as we have to move through the holidays. Nothing has really changed in my opinion; the funds will decide where this market goes.
Bottom line: I am looking for the market to experience an early low tomorrow.
Mar ‘10 Corn – Support/Resistance for 12-03-09
(R3) Resistance 3: $4.17 1/2
(R2) Resistance 2: $4.12
(R1) Resistance 1: $4.08 1/4
Today’s close: $4.06 1/2
(S1) Support 1: $4.02 3/4
(S2) Support 2: $3.99
(S3) Support 3: $3.89 3/4
MEAL – Jan '10 Electronic
Open – $313.30, High – $315.40, Low – $304.70, Close – $305.50 Down $7.90
Thoughts – Long Term (into February '10) – Sideways
Jan ‘10 meal: Meal did find selling at and below $312.50 as I mentioned yesterday. Not much has changed in the Jan '10 contract, the previous two days trade looked like the market was searching for a top and today suggests it found one, for the short-term anyway. If we continue to move lower we should target the $298.40 to $293.30 area before we find good support. We may have done enough to the downside today as I expect to see some higher trade tomorrow but like corn, if we don't there could be something bigger brewing.
We are still on the sideline in meal and will continue to be for now as we begin to move through the holiday season. As always if there is profit in a group of hogs with corn and meal prices at current levels just lock it in!
Bottom line: I’m looking for the market to experience an early low tomorrow.
Jan ‘10 Meal – Support/Resistance for 12-03-09
(R3) Resistance 3: $319.20
(R2) Resistance 2: $312.40
(R1) Resistance 1: $308.50
Today’s close: $305.50
(S1) Support 1: $301.70
(S2) Support 2: $297.80
(S3) Support 3: $287.10
HOGS – Feb ‘10 GLOBEX
Open – $66.675, High – $67.025, Low – $66.10, Close – $66.65 Down $.30
Thoughts – Long Term (into February) – Neutral
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Feb ‘10 hogs: The Feb '10 contract traded both sides of unchanged today but made a low early in the session and gradually firmed as the day progressed. The afternoon cash and cutout reports were friendly as cash was $1.00+ higher and cutout was up $1.19. I said yesterday that my indicator suggest a potential test of $64.525 which is still the case even though we had good trade action today. I am expecting higher prices again tomorrow but I think we are just trading around and we could grind lower toward that $64.525 but if we close above $68.10, the swing high, all bets are off.
The dollar index was higher today and commodity markets in general were lower so if the dollar continues to move higher I think it will be tough for hogs to skyrocket without some type of demand story. The dollar has yet to close the week below 74.97 so support is still holding in my opinion and the longer it holds the better chance there is to see a bottom. Don't get me wrong, I do not see any buy signals in the dollar, I am just commenting on how well support has been holding over recent weeks. The market is currently at 74.63 which is below my support number but it has traded below and rallied to finish the week for the last three weeks so we will see what happens by Friday.
$66.55 is an area of support for the Feb contract and if we close above this price on Friday we should target $70.675 in the near future. There is a POTENTIAL sell signal on the weekly chart at $65.00, if Feb '10 closes below $65.00 this Friday that would trigger the sell signal. If the market does NOT settle below $65.00 by this Friday the signal is null and void. This signal is only good if the market gets as low as $65.00, it is not good at current levels.
Bottom line: I’m looking for an early low tomorrow.
Feb ‘10 Hogs – Support/Resistance for 12-03-09
(R3) Resistance 3: $68.45
(R2) Resistance 2: $67.50
(R1) Resistance 1: $67.075
Today’s close: $66.65
(S1) Support 1: $66.15
(S2) Support 2: $65.675
(S3) Support 3: $64.75
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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