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Northwest Iowa | I thought I would take a couple of minutes to share some of the technical/trader views that I have on these markets. These are just some observations and opinions that maybe could help or encourage some members of NAT. First, If you need to make sales, make them. If you are worried that a market is vulnerable, again do something, you'll sleep better. Before acting just take a minute or two to think about the "what if" you are reading things incorrectly. Is there a way I could offset the position taken? One other broad thought or statement- To get a sustained market move in one direction, there has to be a universal acknowledgement of fundamentals( I really hate dealing with them). That being possibly, a sudden unexpected confirmed purchase by a foreign buyer. The domino effect continues then as all users of that commodity must adjust their purchasing parameters. Harvest is one thing that happens annually but does account for a higher than normal amount of farmer sales as cash flow needs are met. The sky is not falling folks. The upheaval of a new president and congressional changes have been tolerated well. WD Gann talked about comparing the first vs. the third week of January's highs and lows. The lows were made the first week and we are trading above them now. Gann said the lows(or highs if that were the case) would hold for at least 6 months and possibly as long as a year. I'll give some thoughts now on some of the markets that have been mentioned. The cattle just had an ugly COF report on Friday. Lots of placements, short on marketing, the whole 9 yards. Sounds bad, right? Be careful. we used to call it the Cattle On Fade report. Trade the market the opposite way that seems apparent. The report comes out late (to traders) on a Friday. They are all at the bar or the golf club by then. By Monday morning, the comment is" What was in the COF report? old news already. Oversimplified, but it does lose some effect and are mostly ignored by the trade because of their frequency. Looking at the Feb Live cattle chart, we have seen a nice uptrending market with only modest corrections. There are never any guarantees, but if you don't see a break of 50% of a drive along the way, the market is likely in an extension. This is from Elliot Wave theory. Watch 118 as it is a pivotal area right now. If we break, a drop to 114 would be next. I'd sure hate to be the one to sell cattle futures in winter unless I was locking up some really nice margins. Cold or muddy weather can really mess up your plans! Again, nothing wrong with buying puts so you can sleep. With the losses taken by cattle feeders last year, I'd say that a possible 10 year cycle low was struck. I have not looked deeply at that yet but the deep losses are what we look for. Hogs had their fall low earlier than expected. Normal should be Thanksgiving week but it came in September. Gigantic weekly harvest numbers but the market kept on moving higher--- doesn't make sense! But the packer was making truckloads of money everyday. Somebody was buying all that pork. The Lean Hog futures are marking time. They had a hook down or a closing price reversal on Thursday. That can be a caution flag! It was not a large range and was not done on excessive volume so definitely not a Key Reversal. TRUE KEY REVERSALS ARE RARE!!!!!!! No follow through yesterday. Watch price action around Valentine" day for a possible high. Lent is late this year and there is a fairly good correlation to fish featuring by retailers and slower pork movement. Soybean oil does indeed have a Head and shoulders formation. It is actually a correction in an Elliot Wave progression but the 2 are the same. If you would look closely, you would see the right shoulder is strong or higher than the left. One of the things that means is that the objective may not quite be hit. The support at 34 is good for now. Slow stochastics are oversold so we might be there-buy zone. If we break lower, then around 32 is the next stop. On the nearby beans, the Elliot Wave analysis I use, indicates an upmove that may have bottomed on Friday. I'm using a possible move of .56 added onto the Friday low, putting a move to just over 11.00 possibly late next week. Corn is stuck for now but we are early in the season. Possibility that corn follows the livestock higher after 6 months. That says around March 1 starts higher. We'll see on that one. Party on, Garth! | |
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market commentary-beans, oil, cattle, hogs
