December Hogs broke out to the downside of a “wedging pattern”.
If this market does not rebound immediately, it has likely begun a larger seasonal slide.
|
||||
|
November Feeder Cattle appear to have taken decisive action this week, breaking the previous summer and spring lows. The market may pause just below recently broken support for a few days or weeks but in all likely hood is headed lower over time.
Next targets are likely in the mid to high 80 dollar area.
November beans have broken trend line support and appear to be headed for a test of the summer lows near 8.80. This is typically how meltdowns starts! If summer lows are broken it would open the door for a target of $8.00 or less.
The candlestick chart shows a more defined area of weekly support being broken. This is not healthy if its closes on the low end of the weeks trade.
We continue to watch for a breakout of the sideways trading range, in either direction! Closing near weekly lows last week was not bullish but within the ongoing sideways pattern.
December Hogs now sport a significant low near 48 cents. With the Quarterly Hogs & Pigs report out of the way (very neutral) the market should now have the opportunity to rally one more time (likely up into the 51-54 area) before more seasonal influences start to weigh in on price structure. The lows near 48 cents should be looked upon as a benchmark, if broken, the major downtrend within this year is likely underway again. Use rallies to implement more price protection.
Over the last month the trading range in Nov. beans has been getting compressed. This price action is likely to lead into a much bigger move in the near future. I am watching for a breakout of the trend lines as this market is compressing together to give an indication of the next major move. This can be compared with a strong spring that stores a lot of energy when compressed. When the springs compression is released, it tends to move furiously in the direction of the release.
December Chicago Wheat (weekly chart below) has again found support near the previous yearly lows near 450 (orange line). Beware that if broken on a weekly closing basis, nearby wheat could be headed as much as 1.00 lower, as the next major support rest in the 3.75 area (red line). Will the deteriorating US Dollar garner enough support (Demand) to stop the decline? Are we in a new paradigm in which 450 is the new “Low” for wheat? Weekly closes above 480 are needed to put an end to the downtrend. I suspect we could trade lower over time, as I say, time will tell!
Looking at this year’s highs and lows for November beans, we see the market is consolidating into a point, like the end of a sideways funnel. We continue our watch to see which point of the “funnel” Nov beans break out of. Recent activity and seasonal weakness increases the likelihood we may see a downside breakout. In this case the 750 to 800 area (or lower) becomes a viable target for harvest lows. Continue with current November Bean Put option strategies from the 1020 area or add to if needed.
For our industrial metals end users: We continue to watch Dec Copper as it has developed a well defined sideways trading range between 3.00 and 2.70 The market is likely storing up a lot of energy to move in the direction of a break out. Closes above 3.00 or below 2.70 will likely determine the next major trend. Time to check inventory numbers and be ready to “pull the trigger” according to your needs! Typically, sideways trading ranges last about 8 weeks, this is week seven!
|
||||
|
Copyright © 2010 Insights for protecting commodity profits - All Rights Reserved |
||||
