Technically Speaking
Darin Newsom DTN Senior Analyst

Thursday 10/02/14

Monthly Analysis: Livestock Markets

Live Cattle: The December contract closed at $163.475, up $12.05 for the month. The major (long-term) trend remains up as the December contract established a new high of $165.075 in September. Monthly stochastics remain above the overbought level of 80%, but have for the majority of months since September 2010.

Source: DTN ProphetX

Feeder Cattle: The October contract closed at $235.425, up $18.70 for the month. The major (long-term) trend remains up as the October contract moved to a new all-time high of $236.175 in September. Monthly stochastics are well above the overbought level of 80% but showing no signs of slowing buying interest.

Lean hogs: The December contract closed at $94.25, down $3.60 for the month. The major (long-term) trend is down with support pegged between $92.30 and $82.925. However, the market's long-term 3 to 4 year 6-point cycle chart shows the point-2 low (monthly close) may have occurred this past August. The normal timeframe for a point-2 low is between August and October (for more information, see the Technically Speaking blog post from July 9).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.84, down 55 cents for the month. This is the lowest weekly close since the $2.27 posted at the end of September 2006. It is possible that the NCI.X could find support at the December 2008 low of $2.6890. Monthly stochastics are well below the 20% level, indicating the cash market is sharply oversold. It is possible the NCI.X could see a secondary bullish crossover in the coming months, confirming the initial pattern from February 2014.

Soybean meal: The nearby contract closed at $304.60, down $134.90 for the month. The major (long-term) trend remains down, with next support pegged near $274.80. This price marks the low from December 2011. Monthly stochastics remain above the oversold level of 20%, indicating the market could see continued pressure.

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

Posted at 7:17AM CDT 10/02/14 by Darin Newsom
 

Wednesday 10/01/14

Monthly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed at $94.67, down $8.52 for the month. The major (long-term) trend remains down with next support at $93.18. This price marks the 38.2% retracement level of the previous uptrend from $36.20 (low from December 2008) through $128.40 (high from March 2012). Monthly stochastics are nearing the oversold level of 20%.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed at $91.16, down $4.80 for the month. The major (long-term) trend remains sideways to down with support pegged at $89.88. Monthly stochastics are nearing the oversold level of 20%.

Distillates: The spot-month contract closed at $2.6505, down 20.97cts for the month. The major (long-term) trend remains sideways with support near $2.6420. Monthly stochastics are below the oversold level of 20% and could eventually establish a bullish crossover.

Gasoline: The spot-month contract closed at $2.4373, down 19.58cts for the month. The major (long-term) trend remains sideways with next support pegged at $2.4498. Monthly stochastics are holding above the oversold level of 20%, helping to maintain the market's sideways trend.

Natural Gas: The spot-month contract closed at $4.121, up 5.6cts for the month. The major (long-term) trend remains sideways as the spot-month contract extends its rally off its test of support at $3.656. This price marks the 61.8% retracement level of the previous uptrend from $1.902 through the high of $6.493. The last major signal established by monthly stochastics was a bullish crossover at the end of May 2012. The rally and subsequent interim peak did not create a bearish crossover above the overbought level of 80%.

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

Posted at 12:54PM CDT 10/01/14 by Darin Newsom
 

Tuesday 09/30/14

Monthly Analysis: Grain Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.84, down 55 cents for the month. This is the lowest weekly close since the $2.27 posted at the end of September 2006. It is possible that the NCI.X could find support at the December 2008 low of $2.6890. Monthly stochastics are well below the 20% level, indicating the cash market is sharply oversold. It is possible the NCI.X could see a secondary bullish crossover in the coming months, confirming the initial pattern from February 2014.

Corn (Futures): The December contract closed at $3.20 3/4, 38.25ts lower for the month. The major (long-term) trend remains down with next support between the September 2009 low of $2.96 3/4 and the December 2008 low of $2.90. Monthly stochastics are well below the oversold level of 20%, with the last major signal a bullish crossover from back in March 2014. If the nearby contract stabilizes in October, monthly stochastics could establish a secondary (confirming) bullish crossover by the end of the month.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.57, down $3.23 for the month. The major (long-term) trend remains down. This is the lowest monthly close for the NSI.X since $8.30 from November 2009. Next support could be between $7.77 and $7.31, the lows from October 2008 and December 2008 respectively. Monthly stochastics have not moved below the oversold level of 20% yet, meaning more downside is possible for cash soybeans.

Soybeans (Futures): The November contract closed at $9.13 1/4, $1.11 lower for the month. The major (long-term) trend remains down, with the November contract closing below technical support near $9.28 1/4. This price marks the 67% retracement level of the previous major uptrend from $4.98 1/2 (February 2005 low) through $17.89 (September 2012 high). Monthly stochastics have moved below the oversold level of 20%, but remain months away (seemingly) from establishing a possible bullish crossover.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.28, down $0.87 for the month. The major (long-term trend remains down. The SR.X clearly broke support near $5.12 3/4, a price that marks the 67% retracement level of the previous major uptrend $3.12 (low from December 2008) through $9.14 (high from July 2012). Next support is at the previous low. Monthly stochastics are below the oversold level of 20%, though it could take months before a bullish crossover is seen.

SRW Wheat (Futures): The December Chicago contract closed at $4.77 3/4, 85.75cts lower for the month. The major (long-term) trend is down with next support at the June 2010 low of $4.25 1/2. Monthly stochastics moved below the oversold level of 20%, meaning there could be plenty of time for the market to move lower before any bullish signals are established.

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


Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 6:32PM CDT 09/30/14 by Darin Newsom
Comments (5)
Why was there not much of a reaction to the lowest soybean number in modern history? I call there farmer inventory of corn phantom corn no way is that stored before harvest. Seems like a thief attitude toward farmer owned grain why is that?
Posted by andrew mohlman at 6:48AM CDT 10/01/14
The soybean market doesn't haven't to react to the low soybean number because it is old news - old-crop ending stocks. Traders are looking ahead to what is expected to be a record large new-crop projected to rebuild stockpiles. Had this number come out in July, we might be talking about a vastly different cash soybean market this morning. For more information, see my report review "And Then There Was None". Thanks for your comments.
Posted by DARIN NEWSOM at 7:15AM CDT 10/01/14
With boots firmly on the ground I can tell you this crop will not meet expectations. OLD news had this number came out in july sounds like double talk hard to market grain with double talking people that work it all there way.Actual conditions do not seem to matter.Marketers have a lot of room for huge profits on the backs of farmers they are a lot of dead weight.
Posted by andrew mohlman at 8:29AM CDT 10/01/14
Keep in mind that I have long stated the soybean stocks didn't exist. DTN is one of the few media sites where you will get an opinion questioning USDA's use of negative residual use.
Posted by DARIN NEWSOM at 8:47AM CDT 10/01/14
Yes I recall reading that thanks for responding held beans earlier this summer got good price but felt I should have got more.
Posted by andrew mohlman at 9:07PM CDT 10/01/14
 

Monday 09/29/14

Livestock Markets: Weekly Analysis

Source: DTN ProphetX

Live Cattle: The December contract closed $3.40 higher last week. Despite last week's higher close, the possible 5-point top formation remains in place. However, the December contract closed at its weekly high of $162.10 indicating buying early this coming week could lead to a test of the recent high (point 5 high) of $163.875. Market volatility remains high (14.2%), a factor that could spark another round of noncommercial long-liquidation. Friday's CFTC report showed this group reducing their net-long holdings by 4,517 contracts from last week's report to 91,388 contracts.

Feeder Cattle: The November contract closed $5.275 higher last week. The secondary (intermediate-term) trend remains up, with the November contract posting a new high of $231.60 last week, also the weekly close. Strong support at the end of last week could lead to follow-through buying this coming week. The contract still looks to be in the process of establishing a 5-point top as trade volume continues to increase.

Lean hogs: The December contract closed $0.375 lower last week. The minor (short-term) trend is sideways, with support near $91.40 and resistance at $98.45. The secondary (intermediate-term) trend remains down with resistance at that same $98.45 level. Recent buying interest from the commercial side of the market, as indicated by the uptrend in the December to February futures spread, has allowed the December contract to rally off the low of $84.275.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.89, down 13 cents for the week. This is the lowest weekly close since the $2.8251 posted the week of August 31, 2009. Beyond that is the $2.6890 from the week of December 1, 2008. National average basis continues to trend down, weakening another 5 cents to 34 cents under the December futures contract. The NCI.X is also 70 cents under the September 2015 contract, the weakest it has been at this point in the marketing year compared to the previous 5-years.

Soybean meal: The October contract closed $16.90 lower last week. The secondary (intermediate-term) trend remains down. Major (long-term) support is at $274.80, the low from December 2011. Fundamentally the market remains bullish with the forward curve (series of futures spreads) from October 2014 through March 2015 still inverted. However, this price relationship continues to weaken.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, September 23.

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


Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 6:22AM CDT 09/29/14 by Darin Newsom
 

Sunday 09/28/14

Grain Markets: Weekly Analysis

Source: DTN

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.89, down 13 cents for the week. This is the lowest weekly close since the $2.8251 posted the week of August 31, 2009. Beyond that is the $2.6890 from the week of December 1, 2008. National average basis continues to trend down, weakening another 5 cents to 34 cents under the December futures contract. The NCI.X is also 70 cents under the September 2015 contract, the weakest it has been at this point in the marketing year compared to the previous 5-years.

Corn (Futures): The December contract closed 8.50cts lower. The secondary (intermediate-term) remains down with the weekly close of $3.23 putting the December contract in the lower 3% of the market's 5-year price distribution range (weekly close only). The sideways trend in the December to March futures spread (closing at a 12 3/4 cent carry) continues to cover a bearish 72% of total cost of carry (total cost of holding grain in commercial storage). Next major (long-term) support is pegged at the September 2009 low of $2.96 3/4, then the December 2008 low of $2.90.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.60, down $0.95 for the week. This is the lowest weekly close for the NSI.X since $8.4335 the week of September 28, 2009. National average basis (NSI.X - November futures contract) continues to collapse, falling to 51 cents under at Friday's close, or 49 cents weaker for the week. Seasonally the NSI.X establishes a low the first weekly close of October (next week).

Soybeans (Futures): The November contract closed 46.75cts lower. The secondary (intermediate-term) trend remains down with the November contract closing ($9.10 1/4) near its new low of $9.09 3/4. While weekly stochastics are well below the 20% level, indicating futures to be sharply oversold (the November closed in the lower percentages of the 5-year price distribution range), pressure continues to come from both commercial and noncommercial traders. The November to January futures spread closed at a carry of 8 1/2 cents, roughly 57% of total cost of carry (total cost of holding grain in commercial storage). While larger than previous weeks, this continues to reflect a neutral view of short-term supply and demand.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.25, down 3 cents for the week. The SR.X looks to be stabilizing as it approaches its seasonal low with the close the first week of October (next week). The close of $4.25 is the lowest weekly settlement for the SR.X since $4.2366 the week of June 21, 2010. National average basis continues to weaken with Friday's SR.X losing 2 cents to the December futures contract for the week.

SRW Wheat (Futures): The December Chicago contract closed 0.25ct lower. While the secondary (intermediate-term) trend remains down, the December contract looks to be stabilizing. Weekly stochastics are bearish, well below the oversold level of 20%, in position for an eventual bullish crossover. However, last week's low of $4.66 1/4 is still well above price support at $4.25 1/2, the low from June 2010.

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

Posted at 10:33AM CDT 09/28/14 by Darin Newsom
 
Energy Markets: Weekly Analysis

Brent Crude Oil: The spot-month contract closed $1.39 lower. The spot-month contract posted a new low of $95.60 last week, extending the secondary (intermediate-term) downtrend. However, it was able to rally off this new to close at $97.00. Weekly stochastics are still well below the oversold level of 20%, indicating the market remains in an oversold situation.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $1.13 higher. The secondary (intermediate-term) trend has turned sideways, with support at the recent low of $90.43. Initial resistance is at the 4-week high of $96.00, just short of retracement resistance at $96.19. This price marks the 33% retracement level of the previous downtrend from $107.73 through the recent low. Weekly stochastics established a bullish crossover below the 20% level last week, indicating the spot-month contract could work toward resistance in the coming weeks.

Distillates: The spot-month contract closed 1.61cts lower. The secondary (intermediate-term) trend remains down. However, after posting a new low of $2.6550 last week the spot-month contract may be in the process of establishing a 2-week bullish reversal. To do so, the spot-month contract needs to rally above the previous week's high of $2.7652. Keep in mind that the October contract expires Tuesday, and the November holds a slight contango over the expiring October. Weekly stochastics remain well below the oversold level of 20%, in position for a possible bullish crossover.

Gasoline: The spot-month contract closed 5.05cts higher. The secondary (intermediate-term) trend remains up. The spot-month contract posted a solid rally last week, testing initial resistance at $2.7460 before falling back Friday. This price marks the 38.2% retracement level of the previous downtrend from $3.1520 through the low of $2.4950. Weekly stochastics remain bullish, so look for another test of overhead resistance in the coming weeks.

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

Posted at 9:12AM CDT 09/28/14 by Darin Newsom
 

Monday 09/22/14

Livestock Markets: Weekly Analysis

Source: DTN ProphetX

Live Cattle: The October contract closed $0.65 lower last week. The secondary (intermediate-term) trend remains down. Resistance is at the recent high of $161.75, a price that also marks the fifth point of what looks to be a 5-point top on the contract's weekly chart. The more active December contract is showing the same pattern, with resistance at its recent high of $163.875.

Feeder Cattle: The October contract closed $2.80 higher last week. While the market is showing a similar pattern to live cattle (a 5-point top), the October contract continues to hold near its recent high of $229.825. This leaves the door open for the contract to post a new high that could still be viewed as the fifth point of the topping pattern. Weekly stochastics are above the 80% level, indicating the market remains in an overbought situation.

Lean hogs: The October contract closed $0.275 higher last week. The secondary (intermediate-term) trend remains up after the nearby October contract posted a bullish outside week last week. However, resistance remains near $109.05, a price that marks the 67% retracement level of the previous downtrend from $118.35 through the low of $90.45.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.02, down 10 3/4 cents for the week. The secondary (intermediate-term) trend remains down, in line with the market's seasonal index through the first week of October. The next major (long-term) price target remains the December 2008 low of $2.69. National average basis (NCI.X minus the futures market) was calculated at about 29 cents under the December contract, 3 cents weaker for the week. Weekly price distribution studies (close only) show the NCI.X nearing the 5-year low of $2.92, the lower 24% of the 10-year, the lower 15% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 30% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Soybean meal: The October contract closed $14.40 lower last week. The secondary (intermediate-term) trend remains down. Major (long-term) support is at $274.80, the low from December 2011. Fundamentally the market remains bullish with the forward curve (series of futures spreads) from October 2014 through March 2015 still inverted. However, this price relationship continues to weaken.

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


Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 6:31AM CDT 09/22/14 by Darin Newsom
 

Sunday 09/21/14

Grain Markets: Weekly Analysis

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.02, down 10 3/4 cents for the week. The secondary (intermediate-term) trend remains down, in line with the market's seasonal index through the first week of October. The next major (long-term) price target remains the December 2008 low of $2.69. National average basis (NCI.X minus the futures market) was calculated at about 29 cents under the December contract, 3 cents weaker for the week. Weekly price distribution studies (close only) show the NCI.X nearing the 5-year low of $2.92, the lower 24% of the 10-year, the lower 15% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 30% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Corn (Futures): The December contract closed 7.00cts lower. The secondary (intermediate-term) remains down with the contract moving below its floor price of $3.35. This sets the stage for a move to the next major (long-term) price target of $2.90, the December 2008 low. Both the 5-year and 10-year seasonal indexes show the futures market tends to trend down through the first weekly close in October.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.55, down $1.25 for the week. The NSI.X remains in its seasonal downtrend that tends to last through the first weekly close in October. The next major (long-term) target is near $9.05, a price that marks the 67% retracement level of the major uptrend from $4.85 (February 2005 low) through $17.48 (August 2012 high). National average basis (NSI.X minus the futures market) was calculated at $0.02 under the November contract, 97 cents weaker for the week. The NSI.X is now priced in the lower 13% of the market's 5-year distribution range. However, buyers could stay on the sidelines given the markets strong seasonal tendency (both the 5-year and 10-year indexes) to trend down through the first weekly close in October as newly harvested beans are sold.

Soybeans (Futures): The November contract closed 28.25cts lower. The secondary (intermediate-term) trend remains down following the establishment of another new low of $9.56. Next major (long-term) support on the continuous monthly chart (most active contract) is at $9.28 1/4, a price that marks the 67% retracement of the uptrend from $4.98 1/2 (February 2005 low) through $17.80 (September 2012 high). Seasonally the futures market tends to trend down through the first weekly close in October.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.28, down 29 cents for the week. National average basis was calculated Friday at 47 cents under the December Chicago contract, 2 cents weaker for the week. The trend (both major and secondary) of SR.X remains down, in step with its 5-year seasonal index that shows a tendency to post a low the first weekly close of October. Next major (long-term) support could be near $3.73, the low from March 2010.

SRW Wheat (Futures): The December Chicago contract closed 28.00cts lower. The secondary (intermediate-term) trend remains down. Major (long-term) support on the continuous monthly chart (most active contract) is at $4.25 1/2, the low from June 2010. Friday's close of $4.74 1/2 put the December contract in the lower 7% of the market's 5-year price distribution range. The 5-year low weekly close is $4.35 3/4.

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

Posted at 9:48AM CDT 09/21/14 by Darin Newsom
 

Saturday 09/20/14

Energy Markets: Weekly Analysis

Brent Crude Oil: The spot-month contract closed $1.28 higher. The spot-month contract rallied off its test of major (long-term) support at $97.70, a price that marks the 33% retracement level of the previous major uptrend from $36.20 (December 2008 low) through $128.40 (March 2012 high). Weekly stochastics saw a bullish crossover below the oversold level of 20%, indicating a turn to at least a secondary (intermediate-term) sideways trend if not an uptrend. Either way, initial resistance is now pegged at $103.25.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $0.14 higher. The secondary (intermediate-term) trend remains down, with weekly stochastics just missing a potential bullish crossover below the oversold level of 20%. Secondary support is at the recent low of $90.43, with major (long-term) support at $89.88.

Distillates: The spot-month contract closed 2.39cts lower. The secondary (intermediate-term) trend remains down. The spot-month contract moved to a new low of $2.7010 last week, with major (long-term) support pegged near $2.6420.

Gasoline: The spot-month contract closed 9.26cts higher (see attached chart). The secondary (intermediate-term) trend turned up last week. The spot-month contract posted a bullish key reversal, setting a new low of $2.4950 before rallying beyond the previous week's high and closing higher for the week. Weekly stochastics also established a secondary bullish crossover below 20% (the initial occurring the week of August 18), confirming the pattern in the futures market. The initial upside target is $2.7460, a price that marks the 38.2% retracement level of the previous downtrend from $3.1520 through last week's low.

Natural Gas: The spot-month contract closed 2.0cts lower. The secondary (intermediate-term) trend is sideways. Support remains at the recent low of $3.723 while resistance is at the 4-week high of $4.101. Weekly stochastics remains well below the oversold level of 20%.

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

Posted at 8:42AM CDT 09/20/14 by Darin Newsom
 

Wednesday 09/17/14

Word Watching

It's possible that the short-term fate of the commodity sector, including grains, could hang on whether or not the Federal Reserve includes two words in its September meeting policy statement. If the phrase "considerable time" is seen commodities, again including grains, could find new life until the burdensome supplies knock them out again. If the phrase isn't seen, "look out below" could be heard next.

Source: DTN ProphetX

So why does the future (albeit short-term) come down to this linguistic coin toss? Because if "considerable time" is not stated in regard to the talk of holding interest rates steady after the FOMC stops buying bonds (scheduled for October), the U.S. dollar index (USDX) would be expected to post another strong rally. And the higher the USDX goes (supported by the possibility of higher interest rates) the more pressure is put on commodities as ideas of inflation are deflated.

This being a technical analysis blog, is there any hint as to what may happen on the charts? I'm glad you asked that. Yes, the weekly chart does seem to be indicating a possible change in the secondary (intermediate-term) trend.

Notice that this most recent run in the USDX has seen it move within shouting distance of its previous high of 84.753 (week of July 8, 2013). However, you will also note that the index has stalled this week in anticipation of the release of Fed's September comments. From a purely technical point of view, the USDX seems to be in the process of establishing a secondary double-top, meaning the next move should be down.

Furthermore, weekly stochastics (bottom study) are nearing a bearish crossover well above the overbought level of 80%. If this is still in place at the close of the week (Wednesday morning has the faster moving blued line at 92.4%, the slower moving red line at 93.3%), then it would confirm the idea that the secondary trend has turned down. However, we need to keep in mind that in situations of strong major (long-term) trends (e.g. the uptrend in cattle, downtrend in corn) crossovers by weekly stochastics (bullish or bearish) can be trumped by longer-term signals. The major trend in the USDX is not that clear-cut though, showing signs of being nothing more than an extended sideways pattern between support at 78.725 and resistance at the previously mentioned 84.753 level.

Therefore, analysis of both the weekly and monthly technical situation of the U.S. dollar index would indicate that those two little words (considerable time) should be found in the Fed's comments Wednesday afternoon, sending the USDX into a downtrend and possibly sparking a round of short-term buying interest in commodities.

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

Posted at 8:49AM CDT 09/17/14 by Darin Newsom
Comments (2)
I just had a great question sent to me via email. Having read this blog, the gentleman asked, "Darin, Looks like the second bearish inside week in this uptrend. Any thoughts?" If you look closely, you'll see the first inside week occurred in mid-August 2014. Similar to the current inside week, that one came as the USDX was testing resistance (81.876) and weekly stochastics were above the overbought level of 80%. From there the USDX went on to extend its uptrend to last week's high of 84.519. Could a similar move be seen this time? Yes. But the difference I see is that this time around the USDX is testing major (long-term) rather than secondary (intermediate-term) resistance. We'll see in just less that 30 minutes if this pattern pans out. To the gentleman who sent in the question: Good eye and a good catch on that previous inside week.
Posted by DARIN NEWSOM at 12:34PM CDT 09/17/14
Let me add this: If the USDX does break through and extend its rally, the next major (long-term) target is the June 2010 high of 88.708.
Posted by DARIN NEWSOM at 12:41PM CDT 09/17/14
 

Sunday 09/14/14

Grain Markets: Weekly Analysis

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.12 3/4, down 17 1/4 cents for the week. The secondary (intermediate-term) trend remains down, in line with the market's seasonal index through the first week of October. National average basis (NCI.X minus the futures market) was calculated at about 26 cents under the December contract, fractionally weaker for the week. Weekly price distribution studies (close only) show the market to be underpriced. Last week's close puts the NCI.X in the lower 2% of the 5-year range, the lower 26% of the 10-year, the lower 18% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 33% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Corn (Futures): The December contract closed 17.50cts lower. The secondary (intermediate-term) remains down following last week's move to a new low of $3.35 3/4. While weekly stochastics continue to indicate the market remains sharply oversold, the December contract could look to test major (long-term) support $2.90. Both the 5-year and 10-year seasonal indexes show the futures market tends to trend down through the first weekly close in October.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $10.80, down $0.68 for the week. National average basis (NSI.X minus the futures market) was calculated at $0.95 over the November contract, 32 cents weaker for the week. The NSI.X is now priced in the lower 23% of the market's 5-year distribution range. However, buyers could stay on the sidelines given the markets strong seasonal tendency (both the 5-year and 10-year indexes) to trend down through the first weekly close in October. The 5-year index shows a 13% drop from the first weekly close of September (2014 = $11.48) while the 10-year index shows a 10% decrease. This puts the possible target range between $10.33 and $9.99.

Soybeans (Futures): The November contract closed 36.25cts lower. The secondary (intermediate-term) trend remains down following the establishment of another new low of $9.69 1/2. Major (long-term) support on the continuous monthly chart (most active contract) remains between $9.91 1/2 and $9.28 1/4. Seasonally the futures market tends to trend down through the first weekly close in October, with the November contact dropping 8% (5-year index) from the first weekly close in September. This puts the possible low weekly close target near $9.40.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.57, down 34 cents for the week. National average basis was calculated Friday at 45 cents under the December Chicago contract, unchanged for the week. The trend of SR.X remains down, in step with its 5-year seasonal index that shows a tendency to post a low the first weekly close of October. On average the SR.X tends to lose 9% from its high weekly close the first week of August. This year's market move has already seen the SR.X drop 12% from its secondary high of $5.19 the second week of August.

SRW Wheat (Futures): The December Chicago contract closed 35.75cts lower. The secondary (intermediate-term) trend remains down. Major (long-term) support on the continuous monthly chart (most active contract) is at $4.25 1/2, the low from June 2010. Friday's close of $5.02 1/2 put the December contract in the lower 12% of the market's 5-year price distribution range. The 5-year low weekly close is $4.35 3/4.

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

Posted at 10:09AM CDT 09/14/14 by Darin Newsom
 

Saturday 09/13/14

Livestock Markets: Weekly Analysis

Source: DTN ProphetX

Live Cattle: The October contract closed $3.475 lower last week. The October contract looks to have established a top on a variety of weekly charts. This last week saw the contract establish a new high of $161.75, the fifth point of a 5-point topping pattern, before falling to its lower close. On the weekly close only chart (see attached chart) the contract looks to have established a classic double-top formation. Confirmation of either will take a sizeable sell-off, needing a move below the point 4 low of $144.25 and/or a weekly close below the interim low weekly close of $156.275.

Feeder Cattle: The October contract closed $1.55 higher last week. October feeders posted a new high of $229.825, continuing to indicate a possible 5-point top (for more information, see the Technically Speaking blog from Thursday, September 4). Trade volume increased last week to 24,132 contracts, an important characteristic of a 5-point top as opposed to declining volume of a head-and-shoulders formation. Weekly stochastics remain bearish, dating back to the crossover above the overbought level of 80% in conjunction with the first high (point 1) of the 5-point top the week of July 7.

Lean hogs: The October contract closed $0.075 higher last week. The secondary (intermediate-term) trend is up following the bullish crossover by weekly stochastics the week of August 18, 2014. However, the contract is testing resistance between $104.40 and $109.05, prices that mark the 50% and 67% retracement levels of the previous downtrend from $118.35 through the low of $90.45. Given the bullish commercial outlook indicated by the October to December futures spread, the contract could soon see a solid test of the previously mentioned 67% retracement level.

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.12 3/4, down 17 1/4 cents for the week. The secondary (intermediate-term) trend remains down, in line with the market's seasonal index through the first week of October. National average basis (NCI.X minus the futures market) was calculated at about 26 cents under the December contract, fractionally weaker for the week. Weekly price distribution studies (close only) show the market to be underpriced. Last week's close puts the NCI.X in the lower 2% of the 5-year range, the lower 26% of the 10-year, the lower 18% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 33% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Soybean meal: The October contract closed $18.80 lower for the week. The secondary (intermediate-term) trend has turned down again, despite a continued bullish commercial outlook indicated by the inverse in the market's forward curve (series of futures spreads). Seasonally the market tends to trend down through September, with major (long-term) support on the monthly chart (most active contract) all the way down at $275.40 (low the month of December 2011).

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


Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 11:54AM CDT 09/13/14 by Darin Newsom
 
Energy Markets: Weekly Analysis

Brent Crude Oil: The spot-month contract closed $3.71 lower. The secondary (intermediate-term) remains down. The spot-month contract moved below the market's previous low of $96.75 (week of April 15, 2013) on continued pressure from commercial traders. The contango in the nearby futures spread strengthened to 85 cents on Friday's close. Weekly stochastics remain in single digits indicating a sharply oversold situation. Major (long-term) support is between $97.70 and $93.18 on the market's monthly chart.

Source; DTN ProphetX

Crude Oil: The spot-month contract closed $1.02 lower. The secondary (intermediate-term) trend is down after the spot-month contract moved below, and closed below, its previous low of $92.50. However, losses were trimmed by support from the commercial side of the market, as indicated by the strengthening backwardation in the nearby futures spread. Major (long-term) support remains at $89.88 (last week's low was $90.43).

Distillates: The spot-month contract closed 7.87cts lower. The secondary (intermediate-term) trend remains down. The spot-month contract moved to a new low of $2.7213 last week, with major (long-term) support pegged near $2.6420.

Gasoline: The spot-month contract closed 6.46cts lower. The secondary (intermediate-term) trend remains down. The spot-month contract tested its previous low of $2.4945 (week of November 4, 2013), hitting $2.4968 last week. Major (long-term) support is near $2.45.

Natural Gas: The spot-month contract closed 6.4cts higher. The secondary (intermediate-term) trend remains up despite the lack of strong bullish enthusiasm in the market. Weekly stochastics remain below the oversold level of 20% after posting a bullish crossover the week of August 25. Secondary support remains at the recent low of $3.723 while major (long-term) support is between $3.656 and $3.431.

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

Posted at 8:03AM CDT 09/13/14 by Darin Newsom
 

Monday 09/08/14

Livestock Markets: Weekly Analysis

Live Cattle: The October contract closed $8.325 higher last week. October live cattle are in posting to test the recent high of $160.75, with a move to a new peak setting the stage for a possible 5-point top, similar to what could be seen in October feeder cattle. Weekly stochastics remain neutral to bearish with the last secondary (intermediate-term) signal a crossover in conjunction with the bearish close the week of July 27. Friday's CFTC report showed noncommercial traders added to their net-long futures position, though high market volatility could soon lead to renewed liquidation.

Feeder Cattle: The October contract closed $7.65 higher last week. October feeders posted a new high of $225.00, setting the stage for a possible 5-point top (for more information, see the Technically Speaking blog from Thursday, September 4). Trade volume increased last week to 23,972 contracts, an important characteristic of a 5-point top as opposed to declining volume of a head-and-shoulders formation, despite the 4-day holiday shortened week. Weekly stochastics remain bearish, going back to the crossover above the overbought level of 80% in conjunction with the first high (point 1) of the 5-point top the week of July 7.

Lean hogs: The October contract closed $7.50 higher last week. October lean hogs extended its strong rally off the test of support at $90.45 (low of $90.45 the week of August 18), a price that marked the 67% retracement level of the previous uptrend from $76.525 through the high of $118.35. The contract is now testing resistance between $104.40 and $109.05, price that mark the 50% and 675 retracements of the recent downtrend. The secondary (intermediate-term) trend is up with last week's move to a new 4-week high in conjunction with a bullish crossover by stochastics below the oversold level of 20%.

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.30, down 9 cents for the week. National average basis (NCI.X minus the futures market) was calculated at 26 cents under the December contract, 1 cent weaker for the week. Weekly price distribution studies (close only) show the market to be underpriced. Last week's close puts the NCI.X in the lower 9% of the 5-year range, the lower 31% of the 10-year, the lower 23% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 37% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Soybean meal: The October contract closed $5.80 lower for the week. While technical signals continue to indicate the secondary (intermediate-term) trend is up, given the recent bullish crossover by weekly stochastics (week of August 11) and move to a new 4-week high (week of August 18 and last week), the lower close could lead to a minor (short-term) sell-off. Support is at the recent low (the 4-week low) of $354.60.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, September 2.

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


Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 7:43AM CDT 09/08/14 by Darin Newsom
 

Sunday 09/07/14

Grain Markets: Weekly Analysis

Corn: The DTN National Corn Index (NCI.X, national average cash price) closed at $3.30, down 9 cents for the week. National average basis (NCI.X minus the futures market) was calculated at 26 cents under the December contract, 1 cent weaker for the week. Weekly price distribution studies (close only) show the market to be underpriced. Last week's close puts the NCI.X in the lower 9% of the 5-year range, the lower 31% of the 10-year, the lower 23% since the beginning of corn's demand market with the 2005-2006 marketing year, and the lower 37% of the range since total domestic demand climbed above 10 bb during the 2003-2004 marketing year.

Corn: The December contract closed 8.75cts lower. December corn is showing mixed trend signals, with the move to a new low of $3.43 3/4 last week indicating a continued downtrend with a target price near $3.35. However, the rally off this new low at the end of the week established a bullish crossover by weekly stochastics below the oversold level of 20% hinting a move to a secondary sideways trend and possibly and uptrend.

Soybeans: The DTN National Soybean Index (NSI.X, national average cash price) closed at $11.48, down $0.32 for the week. National average basis (NSI.X minus the futures market) was calculated at $1.27 over the November contract, 28 cents weaker for the week. However, basis could be skewed by cash buyers moving to new-crop only given the tight supply of old-crop soybeans. The NSI.X was priced in the lower 28% of the 5-year price distribution range (weekly close only). Seasonally the cash soybean market tends to trend down through the first week of October.

Soybeans: The November contract closed 2.75cts lower. Given that the November contract posted a new low of $10.01 1/4 last week, it could be argued that the secondary (intermediate-term) trend remains down. However, using candlestick chart analysis, the contract's strong rally to close near where it opened last week ($10.21 1/2, $10.20 3/4) creates a doji formation, that in combination with a bullish engulfing pattern on the minor (short-term) daily chart indicates the trend has turned up. Also, weekly stochastics established a bullish crossover below the oversold level of 20%. If the trend has changed the initial upside target is $10.93 3/4, the 33% retracement level of the previous downtrend from $12.79 through last week's low.

Wheat: The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.91, down 24 cents for the week. National average basis was calculated Friday at 45 cents under the December Chicago contract, 3 cents stronger for the week. The trend of SR.X remains down as it remains priced below major (long-term) support near $5.12 3/4, the 67% retracement level of the uptrend from $3.12 (December 2008 low) through the high of $9.l4 (July 2012 high).

SRW Wheat: The December contract closed 28.25cts lower. The secondary (intermediate-term) trend has turned down again. Bullish technical signals established a week ago were erased as the contract fell to a new low of $5.27 1/2 last week. However, this could be a characteristic head fake by the wheat market, meaning it could quickly rally back above the low end of its recent sideways trend at $5.42 1/4. The major (long-term) continuous monthly chart shows a narrowing sideways trading pattern with support at the August 2014 low of $5.27 1/4 then the July 2014 low of $5.18 1/2.

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

Posted at 10:15AM CDT 09/07/14 by Darin Newsom
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