TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
January soybeans have bounced off the mid-term up trend line only to run into the short-term down trend resistance. With a USDA report coming up on Thursday the soybean market is getting pinched between support and resistance. When one gives way there could be a significant amount of technical follow through. But which way?
Since mid August soybeans have been in a shallow mid-term uptrend. Beans have tested this trend support 7 times and bounced 7 times. Of the 7 times beans have bounced off trend 5 of those times it has gone on to make a new recent high. However, lately soybeans have been under some pressure creating a short-term down trend.
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The soybean market spiked higher on the October USDA WASDE report when the USDA forecasted lower than expected yields. Since then however harvest pressure in the US and a weakening Brazilian Real have put soybeans in a short-term down trend. With the two trends coming together a breakout seems likely in the relatively near future.
Which direction may depend on what the USDA says on Thursday. If the USDA lowers yield more than trade expectations soybeans could have good reason to breakout to the upside with a target of $10.30 bu in the Jan contract. On the other hand, if the USDA leaves yield unchanged and/or lowers export demand soybeans could breakout to the down side.
While I do understand the argument for lowering exports I think the USDA will be reluctant to do so given their history of underestimating demand. At the same time our yield expectations have been declining as later harvested soybeans have for the most part not been as good as the early harvested beans. It might be an interesting day on Thursday.
Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.Follow me on twitter @thetedspread if you like.
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DecemberCorn Daily chart:
NovemberSoybeans Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or [email protected]
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. This commentary should be conveyed as a solicitation for entry into derivitives transactions. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION.