Dec '08 Corn Daily Chart
CORN Corn played some games last night and today. I said yesterday I thought we would open lower last night and then find support and become stronger later. This is exactly what happened today. The market opened lower tonight as well but this is a good opening for follow through to the upside. I expect good buying above todays high of $5.50. Today was a classic potential reversal signal on the candle charts. There were will be candle traders with stops above todays high of $5.50 and it should accelerate a move higher if these stops are hit. I mentioned yesterday that the setup we had yesterday was the same as we had a couple weeks back at the bottom. I am not calling the bottom as being in just yet because like I said before I need to see a close above a prior day high before I get carried away about the potential of a rally. My gut says it is done moving lower but discipline says wait for confirmation.
I like the way the market closed today as well as the way it traded today. Again, I think we will see buying above todays highs and the potential target will be $5.55 1/2, $5.68 1/4 and ultimately $5.80 ($5.80 3/4 is also a gap) which would be the 50% retracement level of the current move lower. I am in the camp of $5.80 if we can close tomorrow above $5.50. I expect better trade tomorrow with a probable higher close. The only thing to throw this possible momentum shift off is crude oil. Crude dropped a couple more dollars per barrel after the grain close due to OPEC hinting toward keeping up with current production. Crude was also on the defensive because Hurricane Ike is tracking further south toward Corpus Christi, TX where there are less oil platforms. Here is a link to a CNBC news article for more on OPEC http://www.cnbc.com/id/26592420/for/cnbc/.
Bottom line is better trade tomorrow and a higher close. I feel good about today's trade and it is giving me confidence. I will see how the first hour of trade looks in the morning and I MAY buy the remaining 1/2 position in feed corn tomorrow.
Dec '08 Meal Daily Chart
MEAL Dec meal was the first commodity Ag commodity to trade higher today. I said yesterday I thought today could be the day we close above a prior day high, well we closed equal to yesterdays high. We have a similar setup in meal as we do in Dec '08 corn. I expect to see buying above todays high of $334.00 BUT there is the possibility of a sell signal at $333.50 IF the market makes new highs above $334.00 and then turns south and heads lower. The sell signal is only triggered if the market trades above $334.00, if it does then the order would be placed as a sell stop at $333.50. I will not take this trade because soybeans had two buy signals today, one at $5.67ish and also we had a bullish reversal day. I am going to remain a skeptic of lower prices from here based on what happened yesterday with a very strong dollar, lower crude and better Ag prices. Something is going on. I am still long hedges at $350.00 in the Dec '08 contract which is hindsight is to early but we all know spending time agonizing over hindsight doesn't make us our position any better.
If the market was at higher levels I would have been more aggressive in managing these futures positions. The market usually only moves so far before it takes a break and when you feel like you are toward the end of a move based on what history has proven to be a substantial move then I am more inclined to stick with a position. It is usually only a matter of time before you get a chance to adjust your position with little to no damage. Patience is key in working a position, the million dollar question is when to have the patience and when to puke! I am currently in patience mode and am looking for a test of $347.70 in the near future IF we can close above $334.00 tomorrow.
Dec '08 Hogs Daily Chart
HOGS I would like to say a quote that a friend of mine uses when he describes a weak market. Hogs are falling apart faster than a $2.00 suitcase today! We were weak in the front month of Oct '08 because of the weak cutout prices yesterday. The cutout values today were only down .18 cents and cash prices were held up until tomorrow because of technical issue with the report system (as I understood it). The packer margin has dropped dramatically over recent days and they were showing an approximate margin per head of $3.20 or so. This will put pressure on the cash market unless we can get cutout to rebound. A rebound in cutout will be tough to do with the U.S. Dollar Index on a NASA mission to the moon (so it seems). I said last week I saw some warning signs of the Dollar weakening but it has done anything but. We did pull back slightly today but nothing to cause any concern. The longer-term weekly chart looks good as of today but Fridays close is what counts for this weeks action.
Hogs opened slightly higher tonight at 5:00 p.m. CST when the market re-opens, this is a good recipe for follow through to the downside. I do not like hogs in here and will be looking at hedging some delta over the coming days against my short $64.00 Oct '08 puts I sold against a call spread I have on to give me protection to the upside against my short futures position. Get all that? : ) $64.70 is the next probable target for Dec '08 hogs based on the pit chart. There is a potential longer-term buy signal on the weekly chart at $66.70 which would only be good on a buy stop order at $67.20 but I wouldn't touch that trade right now until we see some positive signs out of the cash and cutout sector. This buy signal is good for this week and next so there is time to see how the fundamentals play out. I would be less than 5% inclined to act on this signal at this point. The only reason I don't say 0% is because I am the kind of guy to refrain from using the word never.
USDA ESTIMATED PORK CARCASS CUTOUT Based on FOB Omaha carlot pork prices and industry yields. Calculations for a 200 lb Pork Carcass 53-54% lean, 0.65"-0.80" backfat at last rib ----------------------------------------------------------------------- Total Today's Primal Cutout Values Date Loads Carcass Loin Butt Pic Rib Ham Belly ----------------------------------------------------------------------- 09/09 84.3 75.60 95.63 83.36 62.27 89.40 69.21 74.62 Change : -0.18 0.76 -1.02 -0.93 -1.87 -0.37 0.07 -----------------------------------------------------------------------
NW_LS831 Des Moines, IA Tues, Sep 09, 2008 USDA-IA Dept of Ag Market News Due to technical difficulties with the Livestock Mandatory Reporting system, the release of this report (daily cash) will be delayed until tomorrow morning. We sincerely apologize for this inconvenience. ========================================================================== Source: USDA Market News, Des Moines, IA Phone: 515-284-4460 email: desm.lgmn@usda.gov 24 Hour recorded market information 515-284-4830 www.ams.usda.gov/LSMarketNews 1500C
Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.
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