MBWealth's Commodity Blog » soybeans

Protected: The Line in the Sand February 06, 2012

Matthew Bradbard — Mon, 06 Feb 2012 22:08:39 +0000

Upbeat Expectations 2/3/12

Matthew Bradbard — Fri, 03 Feb 2012 22:32:17 +0000

A positive jobs number and things heating up in Iran and Crude is back on the move advancing 1.5% today. We may see a bounce but until we see a trade back over $99 I still am thinking prices have more downward pressure. My target in March is a trade closer to $93-94 in the coming weeks. What is disturbing though is the disparity between the Crude daily chart and the distillates as Crude is on the lower end of the recent trading range while heating oil and RBOB are breaking out to new highs. It is a classic case of the tail wagging the dog. My sense is all products should trade lower in the coming weeks but time will tell. Natural gas is cheap but with the absence of two major events; either extremely cold weather or a significant shut in on production there is no catalyst for prices to move higher…look elsewhere. Job growth and lower unemployment rate had stocks off to the races with equities at fresh 2012 highs up near 5% ytd. Stocks will likely forge their way to higher territory as I am back in the camp as being long makes sense as long as the 9 day MA holds. That pivot point comes in the S&P at 1318 and in the Dow 12655. Gold and silver in my estimation made an interim top this week and we should see correction in the short run. Gold lost 1.8% with the June contract giving back most of the week’s gains today. I would expect a further $50-75 correction in the weeks to come. A 50% Fibonacci retracement from the current leg puts prices back at $1650. Silver was able to hold on to most of the week’s gains but still registered a 1.6% loss today. A correction here would likely drag March futures back near $31/ounce. Nothing new to report in forex as I am still expecting a bounce in the dollar and for the other crosses to back off. In full disclosure I have no recommended plays until we find a top in foreign currencies. OJ continues to slide as prices have lost ground eight of the last nine sessions…expect that to continue. I like the move in cocoa bouncing off the 50 day MA but the inverse relationship it generally exhibits to the dollar has me holding off on new purchases but have this commodity on your radar in case the dollar moves south as opposed to north as I expect. Base on the Market’s assumption that sometime in the next year we may see rates increase Treasuries got hit hard today with 30-yr bonds depreciating 1.5%. Aggressive traders can fade rallies in 30-yr bonds and 10-yr notes with stops just above their 20 day MA’s. Those levels are 143’11 and 131’06 respectively in the March contracts. Today in the AG music chairs market corn and wheat was flight while soybeans advanced 1.27%. We could see prices grind higher but I prefer to be on the sidelines with customers if and when they get stopped out of their longs that they should be trailing. A leg lower could be bought but I would like to see a correction before initiating new positions. Expect further downside in live cattle as today prices gave up 1.2%. A 50% Fibonacci retracement in April puts prices to 125.70 while 61.8% drags prices to 124.75. Lean hogs are a buy on dips that hold the 20 day MA; in April at 88.35.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Not the End 2/1/12

Matthew Bradbard — Wed, 01 Feb 2012 21:22:17 +0000

With a more positive outlook domestically and abroad expect commodities that had previously factored in a more dire picture to get back losses from late 2011. Today makes it five days in row with Crude down just over 1% as of this post trading at six week lows. A close below $98.30 in March should signal lower ground. $99 should cap further upside and I could see prices drifting back under $94 in the coming weeks. Both RBOB and heating oil are having trouble keeping their heads above water as well. If Crude turns south as I expect do not rule out a 15 cent correction on the distillates. To clarify if there is confusion when natural gas broke the 9 day MA we advised moving back to the sidelines to exit long exposure. Depending on your order entry would dictate if this was a slight profit or a slight loss. There is no doubt longs over the last few months on the whole have been a losing proposition…the good news is our clients and hopefully followers trade more than one market and can use my advice to offset their natural gas losses in other commodities. Stocks are having trouble breaking the 20 day MA on the downside as that level has supported for the last three sessions. In fact after the 1% plus surge today domestically prices are back above the 9 day MA. My suggestion is wait for the NFP number this week to get re-positioned long or short. My gut tells me that if by week’s end we do not see new high expect a 4-6% correction in the coming weeks. Gold finally reached our target trading above $1750/ounce for the first time since early December. Past performance in not indicative of future results but the last time gold was around these levels we experienced a rather nasty $200 sell off so although bulls remain in the driver’s seat have an exit strategy in place. I ultimately see $1850-1900/ounce in the coming months but I expect a correction first…trade accordingly. Silver continues to but its head against the $34 level but we need to see that level penetrated very soon or a correction will likely commence. A trade above $34 would lift prices to the next resistance at $35.50 while a correction south would take silver back near $30.50-31. I still think the 79.00 level holds in the dollar index and we experience a dead cat bounce from here. The Euro could be sold with tight stops but I would hold off trying to pick tops in other crosses as they continue to inch higher. Traders of late should have been stopped at a small loss trying to scale into shorts based on my trade recommendations. Cocoa and sugar broke their 50 day MA’s today and it appears cotton will by week’s end. I continue to advise fading rallies in these three soft commodities. OJ lost 5% today and should be headed back under $2/lb in the coming sessions. I am expecting a violent 10% correction…trade accordingly. Treasuries had their first negative day in six sessions. Likely fast money taking some risk off ahead of Friday’s NFP. Corn and soybeans have tread water for the last month getting back their December losses in January but the standout of late has been wheat. Gaining 1.25% today and advancing to eleven week highs. I see the next resistance on the March contract between $7.15-7.25. The 20 day MA in lean hogs are acting as a magnet for prices. I suggest buying a dip and have no client positions currently. April live cattle were higher by 1.75% today trading to seven week highs. I remain bullish and believe this leg can carry prices to contract highs in the coming weeks…trade accordingly.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

If Equities Fall 1/30/12

Matthew Bradbard — Mon, 30 Jan 2012 21:31:36 +0000

Over the next few sessions we will know but we may see some gains given back in equities as minor chart damage is being done. That being said expect higher trade in Treasuries and commodities on a stock retraction. Crude continues to flirt with $100 unable to pick a direction. The longer this consolidation pattern continues the larger the breakout the tough part is determining what direction will prices breakout. A settlement above $100.50 or below $98 would likely signal the direction but until then who knows? Natural gas failed to hold onto early gains trading down 3.4% as of this post. As long as the 9 day MA holds on a closing basis at $2.59 in March I’m assuming the bottom is in. Equities have not given up much ground but prices have lost ground now for the last three sessions and today could be the first settlement below the 9 day MA. If that happens expect the 20 day to support and then the 50 day MA. Those levels are 1293 followed by 1250 in the S&P and 12470 followed by 12090 in the Dow…trade accordingly. Gold failed to trade higher today but I am still eying the 61.8% Fibonacci level at $1750 in February. Considering the run we’ve seen of late I would not be adding new positions at this level but rather be looking for an exit door. Those still long are encouraged to trail stops. March silver is having trouble holding above $33.75 as that level has been rejected the last three sessions. Momentum remains with the bulls but without a settlement above $34 very soon I would expect a $2.50-4.00 correction. The dollar dug in its heels today gaining for the first time in four sessions. If the 79.00 level can hold in March for the next few trading days we may get a dead cat bounce. I would expect all buying to be rejected between 80.25-80.50 if we can even muster that much. Aggressive traders can sell the commodity currencies with stops above the recent highs…this is a good risk to reward trade. Cocoa got within $10 of the 100 day MA but failed to reach our target. From here it looks like lower trade which would be confirmed on a trade below the 50 day MA; in March at 2255. Cotton looks destined for lower ground as well…this too would be confirmed on a trade below the 50 day MA; in March at 92.75. Treasuries gained for the fourth consecutive session and do not appear to be done on this leg. We’ve already seen new contract highs in 10yr notes and we could be headed for fresh highs in 30-yr bonds…trade accordingly. Ags traded lower today with soybeans the biggest loser at a 2.77% loss. Those that are long corn or wheat could tighten up stops as we may experience a bit of a give back. A trade under the 20 day MA’s in both lean hogs and live cattle should have traders back on the sidelines.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Protected: The Line in the Sand January 30, 2012

Matthew Bradbard — Sun, 29 Jan 2012 17:30:41 +0000

Protected: The Line in the Sand January 23, 2012

Matthew Bradbard — Sun, 22 Jan 2012 17:38:46 +0000

A Straight Line… 1/19/12

Matthew Bradbard — Thu, 19 Jan 2012 22:15:28 +0000

Nothing included markets move in a straight line…stocks will not move higher in a straight line nor will natural gas move lower…all things must come to an end. I am still in a holding pattern waiting for direction in Crude oil. We’re still experiencing a tug of war in the distillates as RBOB was lower today and heating oil was higher…the reverse of previous sessions. Natural gas was lower by 7% today making it 21% already in 2012..a rocky start! The reality is I still do not see signs of a bottom. Equities continued their climb with the S&P exceeding our target of 1300 and the Dow within 100 points of our target…see previous posts. The 9 day MA should continue to support and as long as prices hold above that level I remain friendly. Gold is having trouble getting above the 38.2% Fibonacci retracement level at $1663 in February. I still see $1676; the 50 day MA but much more than that is not likely in my opinion on this leg…trade accordingly. Silver bulls are running on fumes as well…I am not advocating a bearish trade yet but start looking for an exit door on longs. The dollar index broke the 31 day EMA, a level that has supported since mid-November…could the tides be shifting? The Euro and Swiss franc are above the 20 day MA and the Pound is on the verge of penetrating that level…all starting to look more friendly. From where I stand the commodity currencies look the weakest along with the Yen and the European currencies appear to be a buy. Trade small because the forex market has been manic of late. Cocoa is back above the 50 day MA…aggressive traders can work back into longs with stops below the recent lows. Sugar #11 could be bought with stops below the 50 day MA as well. Treasuries appear to be rolling over but my clients have been fooled too many times so we will remain on the sidelines…forced into the market I would be a seller. Grains were higher by 1-2.25% today though I remain on the sidelines still to see if we get a test of the December lows. Next week if we have not I may be a buyer of wheat and or corn for clients…stay tuned. Live cattle and lean hogs remain a long proposition until prices breach the 20 day MA on the downside.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Protected: The Line in the Sand January 16, 2012

Matthew Bradbard — Sun, 15 Jan 2012 22:13:55 +0000

Friday the 13th 1/13/12

Matthew Bradbard — Fri, 13 Jan 2012 22:16:22 +0000

The day is not over but I have not had any strange things happen to me that are typical of this date. I’ll let you know next week if I made it the whole day. Crude failed to make a new high this week closing roughly $5 from its highs. Prices failed at the same level they did in mid-November which was followed by a choppy $10 trading range since ..will this continue? My stance is that short term we drift lower as long as $100 contains any upside. An additional influence will be if the US dollars strengths continues expect Crude to trade lower. Exit all natural gas longs and wait for a bottom. I’ve seen enough damage and there are markets that can make you money until we see evidence of a bottom. I likely stayed too long as is with clients and with more warm weather coming I do not see any immediate catalyst for a turn. Equities probed the 9 day MA in early dealings but with a close back above that pivot point I remain friendly. Gold is meeting resistance at the 40 day MA but with prices only down 0.50% and based on the greenbacks appreciation I would say this is a small victory for bulls. I am thinking we still have more upside with $1680 as a target. Silver ran out of gas at the 40 day MA as well. My interpretation is the market is taking a breath before a higher leg. The dollar traded to the highest level since September 2010. I see significant resistance about 1% higher so I do not expect there to be much left in the tank. Commodity currencies look to be the best sale as prices have just started to roll over. Though the European currencies have gotten hit the hardest I view those crosses as the largest risk as big moves could happen in either direction in my opinion. Cocoa could not maintain the 50 day MA and will give back gains until the dollar stops appreciating. Move to the sidelines on longs. 10% daily ranges in OJ would have me looking elsewhere as I do not have the stomach as the moves are in both directions. Coffee gave up nearly 4% today as prices may not reach the 100 day MA before they head south. Stay tuned as we may have some bearish trade recommendations next week. Continue to hold for a high entry on bearish Euro-dollar trades. Agriculture resumed their downward move as forecast with corn and soybeans down roughly 2% and wheat suffering only 0.50%. As prices approach last month’s lows I want to see the price action and if support holds I may re-establish longs for clients…stay tuned. Buy signals in lean hogs and live cattle with confirmation with both meats closing back above their respective 20 day MA’s. I like the chart formation in hogs better and suggest scaling into longs in April thinking in the next 90 days we see prices back near their highs…stay tuned.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The Line in the Sand January 09, 2012

Matthew Bradbard — Sun, 08 Jan 2012 16:04:41 +0000

Please click on the spreadsheet to view, zoom to 100% if needed. The Line in the Sand format has changed, you will be receiving the chart on technical analysis Monday mornings. Please visit Matthew’s Daily Thought for your market wrap ups and predictions. In addition he will be posting a new article per week, you can find those in Published Articles. If you subscribe to our Feed, you will be notified when new posts are available. If you ever have any questions about The Line in the Sand or any other post, you may contact us for any reason.