Technically Speaking
Darin Newsom DTN Senior Analyst

Monday 05/04/15

Dec Cotton's Price Resistance

As most of you know, I'm one of the analysts that rotate through the Iowa Public Television show Market to Market. This last weekend was my turn in the analytical chair, discussing the various goings on in the markets. When it came time to discuss cotton, I mentioned the new-crop December contract was having trouble breaking through technical price resistance. Host Mike Pearson asked what that price was and I, true to form, could not recall off the top of my head. I told him though it would be discussed on DTN.

Source: DTN ProphetX

And here it is.

The secondary (intermediate-term) trend remains up with resistance on the weekly chart for new-crop December cotton at 68.50 (that wasn’t so hard after all). This price marks the 33% retracement level of the previous downtrend from 82.95 (high the week of May 4, 2014) through 61.28 (low the week of January 18, 2015). Buying from both sides of the market has been seen, with commercial interest reflected in the strengthening inverse of the December to Marc futures spread (bottom study, green line) and noncommercial activity showing up as larger net-long futures holdings in weekly CFTC Commitments of Traders reports (third study, blue histogram).

One technical factor that could start to slow the market is its weekly stochastics (second study). Notice how both the faster moving blue line and slower moving red line are approaching the overbought level of 80%, in conjunction with the futures contract's struggle to reach its initial price target (68.50). If selling from either commercial or noncommercial traders increases due to ideas the contract is overbought, Dec cotton could move back into a sideways trend, or possibly a secondary downtrend.

If the U.S. dollar index stays under pressure (see my blog posts from last Wednesday and Saturday), noncommercial buying could continue. That leaves commercial traders to put pressure on new-crop cotton, most likely due to larger than expected planting progress estimates in Monday's weekly NASS report. Keep an eye on the trend in the Dec/Mar futures spread for signs that this (commercial selling) may be starting.

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Posted at 7:39AM CDT 05/04/15 by Darin Newsom
 

Sunday 05/03/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 4 cents for the week. The secondary (intermediate-term) trend is down with the NCI.X closing below its previous low of $3.44 and technical support at $3.47. The latter marks the 33% retracement level of the previous secondary uptrend from $2.81 through the high of $3.80. Given that weekly stochastics remain bearish the NCI.X could look to test support at the 50% retracement level of $3.31.

Corn (Old-crop): The July contract closed 6.75cts lower at $3.60 last week. The secondary (intermediate-term) trend remains down dating back to the bearish reversal from the week of December 29, 2014. Weekly stochastics are bearish, but below the oversold level of 20% as July corn extends its sell-off under technical support near $3.66. This price marks the 76.4% retracement level of the previous uptrend from $3.46 3/4 (low the week of September 29, 2014) through the high of $4.31 1/2 (week of December 29). Major (long-term) support on the continuous monthly chart remains at $3.56.

Corn (New-crop): The December contract closed 8.00cts lower at $3.80 1/4 last week. The secondary (intermediate-term) trend is down with the contract extending its sell-off below support near $3.84 1/2, a price that marks the 76.4% retracement level of the previous uptrend from the low of $3.64 1/4 (week of September 29, 2014) through the high of $4.40 (week of December 29). Weekly stochastics dropped under 20% indicating the contract is in an oversold situation.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.29, down 2 cents for the week. Despite posting a bearish outside week the trend of the market remains sideways. Support is at the series of lows near $9.12, with initial resistance at $9.57, then $10.02. Weekly stochastics remain neutral, holding above the oversold level of 20%.

Soybeans (old-crop): The July contract closed 6.00ct lower at $9.84 3/4 last week. The secondary (intermediate-term) trend remains sideways despite last week's bearish outside range. With weekly stochastics below the oversold level of 20% the contract continues to hold above trendline support, pegged this week at $9.51. Trendline resistance is calculated at $9.78 1/4.

Soybeans (new-crop): The November contract closed 11.75cts lower at $9.40 3/4 last week. Though the contract posted a bearish outside week, the secondary (intermediate-term) trend remains sideways. However, follow-through pressure could lead to a test of support at the 4-week low of $9.33, then the contract low of $9.27 1/2. Weekly stochastics are already below 20%, indicating an oversold situation.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.46, down 15 cents for the week. The move below its previous low of $4.55 indicates the SR.X has resumed its secondary (intermediate-term)) downtrend. Next support would be at the low of $4.25 from the week of September 22, 2014. However weekly stochastics are below the oversold level of 20%, indicating an oversold situation, an opening the door for a potential change in trend.

SRW Wheat (new-crop): The July Chicago contract closed 14.50cts lower at $4.74 last week. The move to a new low ($4.64) indicates the contract has resumed its secondary (intermediate-term) downtrend despite weekly stochastics already calculated below the oversold level of 20%. Major (long-term) support is at the April 2015 low (continuous monthly chart) of $4.64.

HRW Wheat (new-crop): The July Kansas City contract closed 7.00cts lower at $5.00 1/2 last week. While the secondary (intermediate-term) trend looks to still be down, the contract was able to rally off last week's low of $4.89 1/2. With weekly stochastics already below the oversold level of 20%, the stage is set for a potential spike low on its weekly chart.

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Posted at 10:23AM CDT 05/03/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $2.025 lower at $149.175 last week. The market remains a mix of technical signals. Weekly stochastics remain bullish following the establishment of a crossover below the oversold level of 20% the week of February 23. On the other hand, the contract itself posted a bearish reversal the week of April 6 with its high ($154.675) a test of resistance at $154.825. This price marks the 67% retracement level of the secondary downtrend from $162.925 through the low of $129.425. The for the market to continue its sideways with resistance between $150.75 and $154.825, and support at $146.175.

Feeder Cattle: The August contract closed $0.60 lower at $215.075 last week. Despite its recent strength, the secondary trend remains down. However, the futures contract has given mixed signals of late, most notably a bearish reversal the week of April 6 followed by a bullish reversal the week of April 20. Resistance remains between $217.30 and $222.20, with support between $209.10 and $206.10.

Lean hogs: The June contract closed $1.80 higher at $81.25 last week. The secondary (intermediate-term) trend remains up. Initial resistance is pegged at $82.595, then $85.850. These prices mark the 38.2% and 50% retracement levels of the previous secondary downtrend from $99.65 through the low of $72.05. Weekly stochastics are bullish indicating the contract should extend its uptrend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 4 cents for the week. The secondary (intermediate-term) trend is down with the NCI.X closing below its previous low of $3.44 and technical support at $3.47. The latter marks the 33% retracement level of the previous secondary uptrend from $2.81 through the high of $3.80. Given that weekly stochastics remain bearish the NCI.X could look to test support at the 50% retracement level of $3.31.

Soybean meal: The July contract closed $1.40 lower at $311.90 last week. The market remains in a secondary (intermediate-term) downtrend though July meal continues to hold above minor trendline support pegged this week at $308.90. Weekly stochastics are below the oversold level of 20% setting the stage for a potential bullish crossover that could signal a change in trend.

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Posted at 9:55AM CDT 05/03/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.18 higher at $66.46. The secondary (intermediate-term) trend is up, with next resistance pegged at $72.75. This price marks the 38.2% retracement level of the previous downtrend from $117.34 through the low of $45.19. However, weekly stochastics are already above the 80% level indicating the market is overbought.

Crude Oil: The spot-month contract closed $2.00 higher at $59.15. The secondary (intermediate-term) trend is up with the spot-month contract priced above initial resistance at $58.60. This price marks the 23.6% retracement level of the previous downtrend from $112.24 through the low of $42.03. While the next target remains the 38.2% retracement level at $68.85, weekly stochastics have climbed above the overbought level of 80%.

Distillates: The spot-month contract closed 5.39cts higher at $1.9822. The secondary (intermediate-term) trend is up with the spot-month contract testing initial resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Weekly stochastics remain bullish indicating an extension of the uptrend to the 38.2% retracement level of 2.2286 is likely.

Gasoline: The spot-month contract closed 3.74cts higher at $2.0453. The secondary (intermediate-term) trend remains up. The recent breakout of the bullish pennant projects a high near $2.36, a test of major resistance at $2.3527 on the long-term monthly chart. This price marks the 50% retracement level of the previous major downtrend from $3.4789 through the low of $1.2265. However, weekly stochastics are already above the overbought level of 80%, a factor that could possibly limit new buying interest.

Ethanol: The spot-month contract closed 0.6ct higher at $1.6070. The secondary (intermediate-term) remains up after the spot-month contract posted a bullish outside week. However, the market has been unable to break through resistance at $1.6637, a price that marks the 38.2% retracement level of the previous sell-off from $2.2650 through the low of $1.2920, keeping in play a potential double-top formation with its previous peak of $1.6550. Weekly stochastics remain bullish but are approaching the overbought level of 80%.

Natural Gas: The spot-month contract closed 24.5cts higher at $2.776. The secondary (intermediate-term) trend turned up as the spot-month contract posted a bullish key reversal last week. Initial resistance is pegged at $3.39, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $2.443. A test of this resistance would also be a test of the lower end of a bearish price gap ($3.351) left the week of December 22, 2014.

Propane (Conway cash price): Conway propane closed 0.75ct lower at $0.4725. The secondary (intermediate-term) trend remains sideways. Support is at $0.4466, a price that marks the 67% retracement level of the initial rally from $0.3775 through the high of $0.5850.

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Posted at 9:32AM CDT 05/03/15 by Darin Newsom
 

Saturday 05/02/15

Taking Left Fied on the US Dollar Index

Unless you're Alex Gordon, it's often not viewed as a good thing to constantly be stationed out in left field. Outside of baseball, this phrase is said to mean "unexpectedly", "odd", or "strange". This definition has morphed into a deeper meaning of "out of contact with reality".

Source: DTN ProphetX

(Baseball announcer voice): And now for your starting nine. Out in left field, Darin Newsom.

On the analytical field, I have frequently manned left field. This year alone I have been a member of the "Bullish Corn Club", "Society of Livestock Bears", "Gasoline is Going Higher Group", and now the sole associate of "TWTUSDXGD" (Those Who Think the U.S. Dollar indeX is Going Down).

Last Wednesday's I posted a blog discussing the completion of a double-top formation in the U.S. dollar index (USDX) projecting a sell-off back to support near 92.180. This price marks the 38.2% retracement level of the previous secondary (intermediate-term) uptrend from 78.906 to the high of 100.390. However, as April came to a close the indexes monthly chart indicated a stronger sell-off was possible.

In his book "Technical Analysis of the Futures Market", John J. Murphy lists the three common characteristics of a 2-day reversal. First, a market posts a new high and closes near that high on day one. Second, the next day sees the market open near the close of the first day. Third, the second day the market posts a sharp sell-off before closing near the low of the first day. Keep in mind something Murphy put in the book that I've used constantly over the last 25 years: The same patterns can be seen on weekly and monthly charts, gaining in importance the longer the timeframe.

Let's take a look at the monthly chart for the USDX. In March it posted a low of 95.063 before rallying to a new high of 100.390 and a monthly close of 98.357 (Characteristic 1? Check). In April the USDX opened at 98.398 (Characteristic 2? Check). As April progressed the USDX was unable to make a new high (99.990) before falling to 94.399 and closing at 94.600, near the March low of 95.063 (Characteristic 3? Check).

Therefore the USDX is now another market that, if I were to take the title off the chart and ignore what I think I know about fundamentals, would show me a clear, indisputable, technical signal. In this case, a classic 2-month reversal confirming the bearish crossover by monthly stochastics (bottom study) above the overbought level of 80% established at the end of March.

If the USDX has established a major (long-term) top, how far might it fall? As I pointed out earlier, initial support on the weekly chart is near 92.180. However, initial support on the long-term monthly chart is at 89.048, the 38.2% retracement level of the previous major uptrend from 70.698 (March 2008 low) through 100.390 (March 2015 high). If you turn back to my discussion of the weekly chart, you'll see that the secondary 50% retracement level is pegged at 89.648. Given the similarity between the major 38.2% retracement (89.048) and the secondary 50% retracement (89.648), the major target seems likely to be tested.

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Posted at 8:12AM CDT 05/02/15 by Darin Newsom
 

Friday 05/01/15

Monthly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, down 10 cents for the month. The major (long-term) trend remains up while the secondary (intermediate-term) trend is sideways-to-down. Support remains at $3.31, a price that marks the 50% retracement level of the rally from $2.81 (October 2014 low) to $3.80 (December 2014 high).

Corn (Futures): The July contract closed at $3.66 1/4, down 10 cents on the monthly chart. While the major (long-term) trend remains up, the secondary (intermediate-term) trend is sideways-to-down. Support is at $3.56, a price that marks the 61.8% retracement level of the rally from $3.18 1/4 (October 2014 low) to $4.17 (December 2014 high).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.36, up 7 cents for the month. The major (long-term) trend remains sideways, with initial support at the October 2014 low of $8.50. Resistance is at the November high of $10.08. The NSI.X continues to hold near the 50% level (midpoint) of this sideways range at $9.29. Monthly stochastics remain neutral below the oversold level of 20% indicating the next breakout could be toward the upside.

Soybeans (Futures): The July contract closed at $9.76, up 2 3/4 cents on the monthly chart. The major (long-term) remains up, based on the key bullish reversal at the end of October 2014 coinciding with a bullish crossover by monthly stochastics below the oversold level of 20%. However, the secondary (intermediate-term) trend remains sideways-to-down with support pegged near $9.65 3/4, a price that marks the 67% retracement level of the initial rally from $9.04 (October 2014 low) to $10.86 1/4 (November 2014 high). If this support fails to hold, soybean futures could fall back to test the previous low of $9.04.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.42 down 43 cents for the month. The major (long-term) trend remains sideways with support at $4.25 (low from September 2014) and resistance at $6.23 (high from December 2014).

SRW Wheat (Futures): The July Chicago contract closed at $4.74 1/2 down 37 1/2 cents on the monthly chart. The major (long-term) trend looks to have turned down again following the establishment of a bearish outside month and a new low of $4.64. Monthly stochastics are below the oversold level of 20%, but could continue to trend lower.

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Posted at 6:00AM CDT 05/01/15 by Darin Newsom
 
Monthly Analysis: Livestock Markets

Live Cattle: The June contract closed at $149.70, down $2.625 on the monthly chart. The major (long-term) trend remains down with support between $141.85 and $137.30. These prices mark the 33% and 38.2% retracement levels of previous uptrend from $79.975 through the high of $172.75. Secondary resistance is pegged at $155.65, the 38.2% retracement level of the initial sell-off from the $172.75 high through the March 2015 low of $145.075.

Feeder Cattle: The August contract closed at $21.70, down $2.20 on the monthly chart. While the major (long-term) trend remains down, the market has seen a retracement rally leading to test of resistance at $219.375. This price marks the 50% level of the initial sell-off from $245.75 through the low near $192.375. The latter marks the 33% retracement level of the previous uptrend from $85.50 through the $245.75 high.

Lean Hogs: The June contract closed at $81.425, up $5.625 on the monthly chart. The major (long-term) trend remains up with resistance pegged between $83.00 and $86.725, prices that mark the 33% and 38.2% retracement levels of the previous major downtrend from $133.425 (March 2014 high) to $57.85 (March 2015 low).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, down 10 cents for the month. The major (long-term) trend remains up while the secondary (intermediate-term) trend is sideways to down. Support remains at $3.31, a price that marks the 50% retracement level of the rally from $2.81 (October 2014 low) to $3.80 (December 2014 high).

Soybean meal: The July contract closed at $316.10, down $10.70 on the continuous monthly chart. The major (long-term) trend remains down with support pegged at the previous low of $295.10 (October 2014). The market's forward curve remains inverted reflecting a bullish commercial outlook.

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Posted at 5:59AM CDT 05/01/15 by Darin Newsom
 
Monthly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed at $66.78, up $11.67 on the monthly chart. The major (long-term) trend is now up following a bullish crossover below the oversold level of 20% by monthly stochastics. The spot-month contract closed above initial resistance at $64.82, a price that marks the 23.6% retracement level of the previous downtrend from $128.40 (high from March 2012) through $45.19 (low from January 2015). Next resistance is pegged at the 38.2% retracement level of $76.97.

Crude Oil: The spot-month contract closed at $59.63, up $12.03 on the monthly chart. The major (long-term) trend turned up with the spot-month contract closing above initial resistance at $59.21, a price that marks the 23.6% retracement level of the previous downtrend from $114.83 (high from May 2011) through $42.03 (low from March 2015). Monthly stochastics established a bullish crossover below the oversold level of 20% with the strong rally in April. Next resistance is pegged at the 38.2% retracement level of $69.84.

Distillates: The spot-month contract closed at $1.9763, up 25.84cts on the monthly chart. The major (long-term) trend turned up with resistance pegged at $2.1821. This price marks the 33% retracement level of the previous downtrend from $3.3700 (high from January 2014) through $1.5890 (January 2015).

Gasoline: The spot-month contract closed at $2.0497, up 26.97cts on the monthly chart. The major (long-term) trend of the market remains up, with the spot-month contract testing resistance at $2.0869. This price marks the 38.2% retracement level of the previous downtrend from $3.4789 (high from April 2011) through $1.2265 (low from January 2015). The 50% retracement level is up at $2.3527.

Ethanol: The spot-month contract closed at $1.619, up 13.2cts on the monthly chart. The market looks to have established a major (long-term) uptrend, with monthly stochastics showing a bullish crossover below the oversold level of 20%. The initial upside target is $1.971, a price that marks the 38.2% retracement level of the previous downtrend from $3.07 (high from July 2011) through $1.292 (low from January 2015).

Natural Gas: The spot-month contract closed at $2.751, up 11.1cts on the monthly chart. The major (long-term) sideways trend looks to have turned up with the higher monthly close after posting a new low of $2.443. Initial resistance is pegged at $3.695, a price that marks the 38.2% retracement level of the previous downtrend from $5.720 (high from January 2014).

Propane (Conway cash price): Conway propane closed at $0.4750, up 1.50cts on its monthly chart. The major (long-term) trend remains sideways with support at the January 2015 low of $0.3775 and resistance at the March 2015 high of $0.5850.

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Posted at 5:57AM CDT 05/01/15 by Darin Newsom
 

Wednesday 04/29/15

Doubling Down on the US Dollar Index

The U.S. dollar index (USDX) has been on a wild ride since posting a low of 78.906 the week of May 5, 2014. Though it took a while before finally breaking out of its sideways trend (week of August 18, 2014), the USDX went on a steady climb to its high 100.390 the week of March 9, 2015.

Source: DTN ProphetX

If you take a close look at the chart, you see the USDX has often indicated a potential topping formation. One of the more noteworthy occurrences was in early December 2014, leading to the conclusion that I presented in my annual market outlook at the annual DTN/The Progressive Farmer Ag Summit that, due in part to it being overbought, the USDX was set to turn down. I remember DTN Editor Emeritus Urban Lehner calmly pointing out to me that markets can be overbought for a long time. As usual, Urban turned out to be correct.

Oddly enough, what looked to be a top near 89.500 in early December is now a potential retracement level. If the USDX is indeed, finally, establishing a secondary (intermediate-term) downtrend on its weekly chart the 50% retracement level of the previous uptrend is pegged at 89.648. Before that, though, the USDX has to fall through potential support at 92.183, the 38.2% retracement level.

Interestingly enough, that's just where recent activity indicates the USDX may be headed. After posting its 103.390 high, it fell to a low of 96.170 (dashed red line) before rallying back to a second peak of 99.990. This inability to post a new high set the stage for possible double-top formation, needing only a move below the previous low 96.170 to confirm.

Which leads us to this week's activity, with the USDX now clearly trading below its previous low (Wednesday morning finds the USDX priced at 95.500. Now that we have a confirmed double-top, what do we do with it?

Projecting a downside target is relatively easy in a double-top formation. There are two was of going about it: First, take the initial low and measure to the trendline connecting the two highs. In this case, that comes to 4.060 (100.230 - 96.170). Subtracting that range from the bearish breakout point (previous low of 96.170) gives us a target price of 92.110 (96.170 - 4.060). The second way of measuring takes the length of the first leg down from the original high to the initial low. In this case that would be 4.220 (100.390 - 96.170). Subtracting that from the previous low puts the downside target at 91.950.

In this case there isn't much difference in the two target prices. Either way the USDX is looking at a potential test of its 38.2% retracement level of 92.183.

Weekly stochastics (bottom study) also indicate that the USDX is in a secondary downtrend. Following another bearish crossover (faster moving blow line crossing below the slower moving red line, with both above the overbought level of 80%) the week of March 16, bearish momentum seems to be building. With stochastics quickly dropping, this momentum study could be near the oversold level of 20% as the USDX approaches its projected target at the 38.2% retracement level.

And if the USDX is trending down, this could be the catalyst for noncommercial traders to cover some of their net-short futures positions in commodities. Two markets that quickly come to mind are soybeans and Chicago wheat. Others also showing net-short futures position (in the latest CFTC Commitments of Traders report) are Kansas City wheat, lean hogs, and distillates (heating oil).

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Posted at 8:10AM CDT 04/29/15 by Darin Newsom
 

Sunday 04/26/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, down 14 cents for the week. Weekly stochastics indicate the secondary (intermediate-term) trend remains down, dating back to the bearish crossover above the overbought level of 80% the week of December 29, 2014. Since then support at $3.47, the 33% retracement level of the previous uptrend from $2.81 through the high of $3.73, has generally held. With weekly stochastics still bearish, a downside breakout of the sideways range between $3.44 (low the week of January 26, 2015) and $3.74 (high the week of March 23) sets the stage for a sell-off to $3.14 (previous low of $3.44-$0.30 trading range), a price that marks the 67% retracement level of the previous uptrend from $2.81 through the high of $3.73.

Source: DTN ProphetX

Corn (Old-crop): The July contract closed 17.00cts lower at $3.69 3/4 last week. The secondary (intermediate-term) trend remains down dating back to the bearish reversal from the week of December 29, 2014. Weekly stochastics are bearish but nearing the oversold level of 20% as July corn closed below price support near $3.74, the 67% retracement level of the previous uptrend from $3.46 3/4 (low the week of September 29, 2014) through the high of $4.31 1/2 (week of December 29). Major (long-term) support on the continuous monthly chart is $3.56.

Corn (New-crop): The December contract closed 15.00cts lower at $3.88 1/4 last week. The secondary (intermediate-term) trend is down with the contract closing below support near $3.91 1/2, a price that marks the 67% retracement level of the previous uptrend from the low of $3.64 1/4 (week of September 29, 2014) through the high of $4.40 (week of December 29). This high week also saw the establishment of a bearish reversal that began the existing downtrend. With weekly stochastics still bearish, next support is pegged at the previous low of $3.64 1/4.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.29, up 2 cents for the week. The secondary (intermediate-term) trend remains sideways with support near $9.12. Initial resistance is near $9.57, the 50% level of the range from the highs near $10.02 through the lows near $9.12.

Soybeans (old-crop): The July contract closed 0.75ct lower at $9.70 3/4 last week. The secondary (intermediate-term) trend remains sideways with minor trendline support calculated at $9.50 this week. Resistance is at $9.97 1/2, the high from the week of March 30. Weekly stochastics established a bullish crossover below 20% last week, indicating potential renewed buying activity. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests reducing their net-short futures position by 26,467 contracts, due in large part to short-covering of 23,059 contracts.

Soybeans (new-crop): The November contract closed 0.25ct lower at $9.52 1/2 last week. The secondary (intermediate-term) trend remains sideways with November beans consolidating between support at $9.27 and trendline resistance calculated next week at $9.57 3/4. Beyond that resistance is at $9.78 3/4 (high from the week of March 30) and $10.04 3/4 (high from the week of March 2).

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.60, down 9 cents for the week. The secondary (intermediate-term) trend remains sideways with support at the recent low of $4.55 and resistance at $5.11. The latter marks the 33% retracement level of the previous downtrend from $6.23 (high the week of December 15, 2014) through the $4.55 low (week of March 2, 2015). Weekly stochastics are neutral with the last signal a bullish crossover below the oversold level of 20% the week of March 16.

SRW Wheat (new-crop): The July Chicago contract closed 0.75cts lower at $4.88 1/2 last week. The secondary (intermediate-term) trend remains sideways with support at the previous low of $4.84 1/2. Resistance is at the previous high of $5.43 3/4 (week of March 23, 2015), creating a range of rough 59 cents. A bearish breakout would suggest an extended sell-off to near $4.25, a test of the June 2010 low of $4.25 1/2. Weekly stochastics are already below the oversold level of 20% indicating renewed buying activity could emerge. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests increasing their net-short futures position by 1,092 contracts.

HRW Wheat (new-crop): The July Kansas City contract closed 7.25cts lower at $5.07 1/2 last week. The secondary (intermediate-term) trend remains down as the contract posted a new low of $5.06 1/4 last week. Major (long-term) support on Kansas City's continuous monthly chart is at $4.53 1/2, the low from September 2009. Last week's action took stochastics below the oversold level of 20%.

The weekly Commitments of Traders report showed positions held as of Tuesday, April 21.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 11:03AM CDT 04/26/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $2.20 higher at $151.20 last week. The technical picture for live cattle remains complicated, with chart patterns indicating a resumption of the previous downtrend while weekly stochastics show an uptrend. With the latter a function of the former, price patterns tend to win out over time. That would indicate that June cattle should resume a secondary (intermediate-term) downtrend based on its bearish reversal from the week of April 6. The contract could look to test support between $142.225 and $140.575, prices that mark the 61.8% and 67% retracement levels of the previous uptrend from $129.425 through the contract high of $162.925.

Feeder Cattle: The August contract closed $5.475 higher at $215.675 last week. Similar to live cattle, August feeders show a complicated technical picture. The last three weeks have seen the establishment of a bearish reversal (week of April 6) and a bullish reversal (week of April 20). The latter saw August feeders test both minor support near $206.15 (low of $205.675) and secondary resistance near $217.35 (high of $216.35). The major (long-term) trend remains down on the monthly chart with resistance at $219.375.

Lean hogs: The June contract closed $3.175 higher at $79.45 last week. Like the cattle markets, June hogs are technically complex. A week after posting a bearish reversal thee contract closed sharply higher and above initial resistance near $78.575, a price that marks the 23.6% retracement level of the previous downtrend from $99.65 through the low of $72.05. Bullish weekly stochastics suggest a possible test of the 38.2% retracement level near $82.60, though a failure to take out its previous week's high of $79.75 could spark renewed selling interest.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, down 14 cents for the week. Weekly stochastics indicate the secondary (intermediate-term) trend remains down, dating back to the bearish crossover above the overbought level of 80% the week of December 29, 2014. Since then support at $3.47, the 33% retracement level of the previous uptrend from $2.81 through the high of $3.73, has generally held. With weekly stochastics still bearish, a downside breakout of the sideways range between $3.44 (low the week of January 26, 2015) and $3.74 (high the week of March 23) sets the stage for a sell-off to $3.14 (previous low of $3.44-$0.30 trading range), a price that marks the 67% retracement level of the previous uptrend from $2.81 through the high of $3.73.

Soybean meal: The July contract closed $1.40 lower at $313.30 last week. The market remains in a secondary (intermediate-term) downtrend with July meal holding above minor trendline support pegged this week at $308.40. Weekly stochastics are below the oversold level of 20%, nearing a potential bullish crossover.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 10:01AM CDT 04/26/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.83 higher at $65.28. The secondary (intermediate-term) trend is up. Weekly stochastics remain bullish meaning the market could ultimately test $72.75, a price that marks the 38.2% retracement level of the previous downtrend from $117.34 through the low of $45.19.

Crude Oil: The spot-month contract closed $l.41 higher at $57.15. The secondary (intermediate-term) trend remains up. The spot-month contract is testing resistance at $58.60, the 23.6% retracement level of the previous downtrend from $112.24 through the low of $42.03. However, with weekly stochastics still bullish the market could extend its rally to the 38.2% retracement level at $68.85.

Distillates: The spot-month contract closed 4.59cts higher at $1.9283. The secondary (intermediate-term) trend is up with the spot-month contract nearing a test of initial resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Weekly stochastics remain bullish indicating an extension of the uptrend to the 38.2% retracement level of 2.2286 is likely.

Gasoline: The spot-month contract closed 7.80cts higher at $2.0079. The secondary (intermediate-term) trend remains up. The recent breakout of the bullish pennant projects a high near $2.36, a test of resistance at $2.4165. This latter price marks the 61.8% retracement level of the previous downtrend from $3.1520 through the low of $1.2265. However, weekly stochastics are already above the overbought level of 80%, a factor that could possibly limit new buying interest. Friday's CFTC Commitments of Traders report showed noncommercial interests increasing their net-long futures position by only 755 contracts.

Ethanol: The spot-month contract closed 1.5cts lower at $1.6010. While the secondary (intermediate-term) remains up the spot-month contract was unable to breach resistance at $1.6637, a price that marks the 38.2% retracement level of the previous sell-off from $2.2650 through the low of $1.2920. While weekly stochastics remain bullish, last week's high of $1.6480 sets up a potential double-top with the recent high of $1.6500 (week of April 6).

Natural Gas: The spot-month contract closed 10.3cts lower at $2.531. The secondary (intermediate-term) trend remains sideways-to-down with weekly stochastics holding well below the oversold level of 20%. Initial support is at the recent low of $2.475.

Propane (Conway cash price): Conway propane closed 2.25cts lower at $0.4800. The secondary (intermediate-term) trend looks to be turning sideways with last week's lower close resulting in a bearish crossover by weekly stochastics above the oversold level of 20%. Initial resistance is at the 4-week high of $0.5125 with support at the 4-week low of $0.4475.

The weekly Commitments of Traders report showed positions held as of Tuesday, April 21.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 9:26AM CDT 04/26/15 by Darin Newsom
 

Monday 04/20/15

Channeling July Soybeans

Ag markets never sleep, and neither do those who watch them. This point was made again late Sunday night when a question came to me via Twitter just after midnight (CT) Monday morning. The questioner asked, "Seeing a descending channel on daily soybeans?"

Source: DTN ProphetX

A great question, playing into the discussion recently in my weekly "Technically Speaking" updates. Soybean charts (weekly and daily) are becoming littered with technical signals, mostly bullish, that have failed. The daily chart for the July contract, at least for now, is no different.

First, the questioner's interpretation is correct. Connecting the first two highs dating back to November 12 and December 10 ($10.97 and $10.78 respectively) establishes trendline (solid red line) that the July contract has not been able to substantially penetrate since. Yes, there have been times (late-December 2014 through mid-January and late-February through early March) when the contract tried to break resistance but soon fell back below this trendline.

Take note of daily stochastics (bottom study). The contract saw an initial bullish crossover (first green circle, faster moving blue line crossing above the slower moving red line with both below the oversold level of 20%) in conjunction with the spike rally of February 3. The subsequent rally led to the later break of trendline resistance, but a stronger uptrend failed to materialize. Take another look weekly stochastics and see that the contract turned lower with stochastics below the overbought level of 80%.

A technical reading would say that the uptrend indicated by the previous bullish crossover never actually came to an end. Yet the contract moved to a series of new lows, the latest being $9.49 on April 10. You'll also see that daily stochastics established a confirming bullish crossover (second green circle) below 20% on March 18 that also failed to generate much buying interest.

Analysis of patterns in daily stochastics as we start a new week suggests the contract should see a minor (short-term) uptrend. July beans tested initial resistance of $9.79 (high from April 15, dotted red line) with its overnight high of $9.78 3/4. If the contract is able to push through this level it could immediately find selling at trendline again. Beyond that is the high from April 2 of $9.97 1/2 (dashed red line). A test of that price would likely have daily stochastics near or above the overbought level of 80%, setting the stage for a possible bearish turn.

But what about the downside? If July beans fail to break through initial price resistance and fall back once again, trendline support (green line, connecting the lows $9.35 1/4 from October 1 and $9.49 from April 10) is near $9.50 through Friday's close.

To track my thoughts on the markets throughout the day, follow me on Twitter:www.twitter.com\Darin Newsom

Posted at 8:23AM CDT 04/20/15 by Darin Newsom
 

Saturday 04/18/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.61, up 4 cents for the week. The trend of the market remains sideways with the last secondary (intermediate-term) signal by weekly stochastics a bearish crossover above the oversold level of 80% level the week of December 29, 2014. Support remains at $3.47, the 33% retracement level of the previous secondary uptrend from $2.81 through the December 2014 high of $3.80. Resistance is near $3.84.

Corn (Old-crop): The July contract closed 2.00cts higher at $3.86.3/4 last week. The secondary (intermediate-term) trend remains down with support near $3.68. This price marks the 67% retracement level of the previous secondary uptrend from $3.39 1/4 through the high of $4.25 1/4. Weekly stochastics remain bearish above the oversold level of 20%, needing an additional sell-off in the futures market to set up a possible bullish crossover.

Corn (New-crop): The December contract closed 0.75cts higher at $4.03 1/4 last week. The secondary (intermediate-term) trend remains sideways to down with next support near $3.91 1/2. This price marks the 67% retracement level of the previous uptrend from $3.64 1/4 through the high of $4.40.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.27, up 18 cents for the week. The secondary (intermediate-term) trend remains sideways with support near $9.12. Resistance is up at the recent highs near $10.02.

Soybeans (old-crop): The July contract closed 15.50cts higher at $9.71 1/2 last week. The secondary (intermediate-term) trend remains sideways-to-down with support at the contract low of $9.35 1/4. Weekly stochastics are neutral below the oversold level of 20%, indicating the next move could be bullish.

Soybeans (new-crop): The November contract closed 10.25cts higher at $9.52 3/4 last week. November soybeans stayed within its previous week's range while stochastics moved closer to an oversold situation. The secondary (intermediate-term) trend remains sideways with support at the contract low of $9.27 1/2.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.70, down 31 cents for the week. Last week's sharp sell-off turned the secondary (intermediate-term) trend sideways again. Support is at the recent low of $4.55 while resistance remains near $5.11, a price that marks the 33% retracement level of the previous downtrend from $6.23 through the low of $4.55.

SRW Wheat (old-crop): The May Chicago contract closed 32.00cts lower at $4.94 1/2 last week. The sharp sell-off turned the secondary (intermediate-term) trend down. Support is at the contract low of $4.78 1/4 with resistance near $5.44 1/4, a price that marks the 33% retracement level of the previous sell-off from $6.76 3/4 through the contract low.

HRW Wheat (new-crop): The July Kansas City contract closed 47.75cts lower at $5.14 3/4 last week. July Kansas City wheat followed through on the previous week's bearish outside week, confirming its move to a secondary (intermediate-term) downtrend. Major (long-term) support is at $4.53 1/2.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 1:19PM CDT 04/18/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $0.20 higher at $149.00 last week. Technical indicators remain mixed, with weekly stochastics showing a continued secondary (intermediate-term) uptrend while the previous week's activity established a bearish key reversal. This could lead to a consolidation phase between resistance at $158.825 and support at $146.175.

Feeder Cattle: The August contract closed $1.25 lower at $210.20 last week. Similar to live cattle, August feeders show conflicting technical signals. The previous week saw the August contract post a bearish key reversal after testing resistance near $222.20. However, the last signal by weekly stochastics was a bullish crossover below the oversold level of 20%. August feeders could look to test support near $206 in the coming weeks.

Lean hogs: The June contract closed $1.875 lower at $76.275 last week. June hogs posted a bearish reversal last week, indicating the contract could now test its recent low of $72.05. Weekly stochastics are neutral below the oversold level of 20%.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.61, up 4 cents for the week. The trend of the market remains sideways with the last secondary (intermediate-term) signal by weekly stochastics a bearish crossover above the oversold level of 80% level the week of December 29, 2014. Support remains at $3.47, the 33% retracement level of the previous secondary uptrend from $2.81 through the December 2014 high of $3.80. Resistance is near $3.84.

Soybean meal: The May contract closed $5.80 higher at $315.00 last week. The market remains in a secondary (intermediate-term) downtrend with last week's move to a new low of $307.30 before rallying back above support at $314.30. Monthly stochastics are below the oversold level of 20% meaning the contract could soon see a bullish turn.

To track my thoughts on the markets throughout the day, follow me on Twitter: www.twitter.com\DarinNewsom

Posted at 12:39PM CDT 04/18/15 by Darin Newsom
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