MBWealth's Commodity Blog » wheat

Protected: The Line in the Sand February 06, 2012

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

True Commodity Play 2/6/12

Matthew Bradbard — Mon, 06 Feb 2012 21:53:50 +0000

After speaking with several prospective commodity clients today I want investors to recognize that by trading etf’s or buying stocks in a commodity sector you are not trading commodities. That being said commodity trading is not appropriate for most investors but those financially suitable with some risk tolerance should explore futures, options and managed futures as a pure commodity play. Come on guys you buy your wife diamonds not cubic zirconia right? Crude oil lost ground today but the strange thing was the distillates were higher on the session with RBOB picking up 1% and heating higher by better than 2%. I remain in the camp that oil should move lower until we see a settlement above $99 in the March contract. It appear we see higher ground in the distillates but I would suggest very small size as inverse movement to Crude makes little sense and I view the correlation to come back in line very soon. Natural gas appreciated 3% but the wild west daily movements are not for me so I am on the sidelines here with clients. Stocks continue in bull mode and though I am not in agreement longs stay put until we see the 9 day MA’s broken. Those pivot points in the S&P and Dow are as follows 1323 and 12680. Gold is nearly $50 off last week’s highs and it is safe to say we hit an interim top last week. From here I suspect we see a violent $50-75 correction. Silver pared losses today but too is exhibiting signs of interim highs. I would like to see confirmation like a settlement below $32.85 in March. There is no reason to believe that if bears temporarily jump in the driver’s seat that we could see a sub $30 trade this month. I would say we’re close to crosses rolling over and turning south but I would wait for evidence before establishing trades. Sell a 5-7% rally in March coffee. Continue to use the 20 day MA as your pivot point when trading Treasuries; 10-yr notes and 30-yr bonds. Aggressive traders can start scaling into bearish trade in 2013 Euro-dollars with stops above their recent highs… a great risk to reward trade in my opinion. Corn and soybeans were flat while wheat was higher by 1%. Continue to trails tops just under the 9 day MA on remaining longs in corn and soybeans. As for March wheat the 9 day MA is too much give back so I would make it even tighter. Live cattle and lean hogs appear to be in the short run moving south. Longs should move to the sidelines looking to re-position as a buyer from lower levels.

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.

Protected: The Line in the Sand January 30, 2012

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

Taking a Breath 1/25/12

Matthew Bradbard — Wed, 25 Jan 2012 20:46:01 +0000

I misread the recent action thinking we were approaching a turning point but now it appear the markets were just taking a breath and now the underlying moves are back on track….trade accordingly. Crude appears to be finding its footing as further sales are being rejected. With a settlement back above $100 I would become more friendly. On a close above $102 in March I then would be looking for buying opportunities thinking we get a new high…trade accordingly. I say a bottom is in on natural gas and aggressive traders can be long. On a false start I would not hold it back to the bottom but a stop just below the 9 day MA would be my suggestion. Prices have already jumped 23% off their lows. In the coming weeks I could see a further 50-75 cent appreciation. Can you say short squeeze? The 9 day MA supported a trade lower in the morning only to end at fresh highs …well as of this post. I remain impressed but I still think we see an interim high very soon so I would start trimming your positions. I am not getting bearish just advising booking profits on longs. I had expected metals to back off but clearly after today’s action the bulls remain in the driver’s seat. Gold traded above the 100 day MA for the first time in seven weeks and now has completed a 50% Fibonacci retracement. Just above $1750 in February is the 61.8% Fibonacci level. Silver is above its 100 day MA the first time since mid-September when prices collapsed from above $40/ounce. I expect prices to get back near $37 but not before a correction but at this point we may juice prices a bit higher. I am holding out for new entries for clients under $30/ounce. The dollar continues to drop losing 0.50% as of this post. With dollar weakness comes strengths in other crosses. The commodity currencies were the best performers with the Euro and Swiss slightly behind. Signals point to higher trade in crosses and lower in the dollar. I unsuccessfully recommenced picking a top in the commodity currencies and traders should have been stopped at a loss. Cocoa should continue to work higher on further dollar weakness.. 2500 in March is the 100 day MA..use that as your target when evaluating risk to reward. Cotton is sale with stops above the recent highs. If coffee breaks the recent lows expect $2.00 to be breached in March. The sentiment is bearish in Treasuries and if you notice today the 20 day MA rejected further upside…that level continues to be your pivot point; in 30-yr bonds at 143’6 and 130’24 in 10-yr notes. 2013 Euro-dollars are at fresh contract highs…let them work higher and we will be looking for bearish entries on a sign of an interim high. Corn and wheat closed back over their 20 day MA’s. Ag traders can scale into longs expecting further upside. My suggestion would be to build a long position and to stagger stops behind the market. Trail stops on longs in live cattle as a new contract high was rejected…do not rule out profit taking. Lean hogs were slight gainers…stay long and run stops just under the 20 day MA.

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

Turning Point 1/24/12

Matthew Bradbard — Tue, 24 Jan 2012 22:08:15 +0000

Turing point…not today and probably not tomorrow but I would expect the equity market to give back its recent gains in the very near future. What that likely means is money out of stocks and into Treasuries and commodities…just an opinion. Crude remains in no man’s land as prices could go either way in my opinion. My bias is leaning to the bullish side but I would prefer to be buyer on breaks. For instance I see solid support in March just under $94/barrel so long entries closer to that level sound extremely appealing. In two sessions natural gas has leapt 15% with a close back above the 9 day MA today for the first time since early December. It is too early to call a bottom but a spike in volume and the capitulation we got are precursors for a bottom being established…stay tuned. Another gain today in equities but the pace is waning with prices higher by 0.25% on average. I know it is a broken record but expect higher ground as long as the 9 day MA holds. FOMC decision tomorrow could derail the ascent so stay alert. Gold closed back under the 50 day MA giving up 0.75% today. Weekly charts still look supportive but the daily screams overbought. $1650 in February will need to hold or I would move to the sidelines. For the first time in five sessions silver failed to make a new high on an inside day today. Like gold the weekly chart still appears like we have more upside but prices have started to roll over on the daily chart. I say lighten up or tighten stops as we may be close to an interim top. The dollar index failed to make a new low but as long as prices remain below the 50 day MA I remain bearish; that level is 80.10 in March. The Euro and Pound remain buys while the commodity currencies appear like we could see a retracement…trade accordingly. The Yen broke down today breaking all short term MA’s. I am expecting a move back under 1.2600 on this leg. Cocoa bounced off the 50 day MA surging almost 7% today lifting prices to two month highs. Try timing a long entry again buying a dip placing stops just under the 50 day MA. Corn was higher by 1.7% today while wheat added 2.2%. I’m comfortable buying dips in either Ag product placing stops under the recent lows. I think in the coming months we could see March corn above $7/bushel and wheat closer to $7.50/bushel. April live cattle is on the verge of making new contract highs having appreciated 4% in the last two weeks. It has been a nice run for bulls but there is no reason to believe prices should not see higher ground. April lean hogs are running into trouble at the same resistance level that capped upward momentum in late December. That being said as long as the 20 day MA holds at 87.30 I remain friendly.

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

Looking Ahead 1/23/12

Matthew Bradbard — Mon, 23 Jan 2012 21:06:24 +0000

Fed meeting this week as well as any new developments out of Europe. My suggestion is to always look one-two weeks in advance for upcoming economic events when initiating trades. Just when it appears Crude was destined to move lower prices reversed finishing 1.65% higher today. $1oo appears to be a magnet for pricing and until we get $3-4 north or south of that level expect sideways action to continue. I do not feel comfortable trading either side currently. A 9% appreciation in natural gas after posting a new low could be the capitulation low. Stay tuned but if prices can overtake $2.75 this week and hold onto gains we may have a low. As I hinted at last week prices generally make tops and bottoms at extreme sentiment levels and everyone has been bearish natural gas of late. Equities crept higher today as the appreciation ytd is now over 3%. As long as the 9 day MA holds I remain friendly. Gold traded above the 50 day MA for the first time since mid-December when prices were above $1700/ounce. As long as $1650 supports we should see further upside. The 100 day MA at $1700 should be obtained in this leg in my opinion. Silver picked up 2% lifting prices to six week highs as prices are approaching the 100 day MA. Bulls remain in the driver’s seat and I cannot rule out a further $2 appreciation in the weeks to come. Continue to trail stops though as prices are nearly 25% off levels seen just three weeks ago. The dollar has lost ground five out of the last six days closing below 80.00 for only the second time in 2012. I see further downside to come. All crosses with the exception of the Yen can be bought on dips. The Euro and Swissie will likely provide the best opportunities as they got hit the hardest in recent weeks and months. OJ continues its climb to fresh record highs putting on almost 4.5% today. I do not see upside resistance being we’re in uncharted waters. If coffee breaks the lows that held the last two months expect a test of $2/lb…trade accordingly. The momentum is shifting to the bears in Treasuries as 10-yr notes and 30-yr bond have lost ground the last four sessions. Weighing the risk soybeans have advanced too far but aggressive Ag traders could lightly step into corn and wheat with stops below the recent lows. I would be building a position assuming the market proves you right. Remain in your lean hogs and live cattle longs with stops just below the 20 day MA’s. Forced to pick one livestock trade I prefer bullish exposure in April lean hogs.

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 23, 2012

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

Protected: The Line in the Sand January 16, 2012

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

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.