Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 01/25/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, unchanged for the week. The secondary (intermediate-term) trend remains down with initial support at $3.47. This price marks the 33% retracement level of the previous uptrend from $2.81 through the high of $3.80. National average basis held steady last week at 29 cents under (NCI.X - March futures).

Corn (Old-crop): The March contract closed 0.25ct lower at $3.86 3/4. The secondary (intermediate-term) trend remains down with next support pegged at $3.73 3/4. This price marks the 50% retracement level of the previous uptrend from $3.30 1/2 through the high of $4.17. The March contract consolidated last week despite pressure from both commercial and noncommercial traders. Commercial selling was indicated by the strengthening carry in the March to May futures spread, moving it back to a slightly bearish level of total cost of carry. Friday's CFTC Commitments of Traders report showed noncommercial interests reducing their net-long position by 13,684 contracts.

Corn (New-crop): The December contract closed 2.50cts higher at $4.17 1/2. The secondary (intermediate-term) trend remains down with support between $4.15 1/2 and $4.03 1/2. These prices mark the 33% and 50% retracement levels of the previous uptrend from $3.64 1/4 through the high of $4.40. Given the neutral carry in the new-crop December 2015 to March 2016 futures spread the Dec contract could continue to move sideways between its previous high and the $4.03 1/2 support level.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.22, down 18 cents for the week. Technical indicators show the NSI.X remains in a sideways trend, though it has dipped to a lower support area between $9.26 and $9.01. These prices mark the 50% and 67% retracement levels of the previous rally from $8.50 through the $10.02 high the week of December 8. The recent bearish breakout of the sideways range between approximately $9.50 and $10.00 indicates the NSI.X could test the lower end of the retracement range at $9.01. National average basis firmed by about 1 cent, with the NSI.X at 50 cents under the close of the March futures contract.

Soybeans (old-crop): The March contract closed 19.00cts lower at $9.72 3/4 last week. Pressure came from both commercial and noncommercial traders, pushing the March contract to a test of major support near $9.64 3/4. This price marks the 67% retracement level of the rally from $9.04 (October 2014 low) through $10.86 1/4 (November 2014 high). Friday's CFTC Commitments of Traders report showed noncommercial interests moving to a net-short futures position of 7,740 contracts, a switch of 20,866 contracts from the previous week. This was due in large part to an increase of 17,355 contracts in their short futures position.

Soybeans (new-crop): The November contract closed 15.50cts lower at $9.59 3/4. This past week's close was below support near $9.64 1/4, a price that marks the 67% retracement level (weekly close only) of the rally from $9.31 3/4 through the high of $10.29. The latter was a test of resistance near $10.28 3/4, the 33% retracement level (again, weekly close only) of the previous secondary (intermediate-term) downtrend from $12.22 3/4 through the $9.31 3/4 low. The break of support combined with neutral to bearish weekly stochastics would indicate a likely test of the previously mentioned low.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.01, down 3 cents for the week. The secondary (intermediate-term) trend remains down with next support at $4.91. This price marks the 67% retracement level of the previous uptrend from $4.25 through the high of $6.23. Weekly stochastics remain bearish indicating the SR.X should continue to move lower.

SRW Wheat (old-crop): The March Chicago contract closed 2.75cts lower at $5.30 last week. Once again the March contract closed below support near $5.35 3/4 (weekly close only), a price that marks the 67% retracement level of its previous secondary uptrend from $4.87 1/2 (week of September 22) through the high of $6.32 1/4 (week of December 15). Weekly stochastics remain neutral to bearish. If commercial buying continues to provide support the contract could move back above the $5.35 3/4 level. Friday's CFTC Commitments of Traders report showed most of the pressure continues to come from noncommercial interests, with this group reducing their net-long holdings by 5,066 contracts.

SRW Wheat (new-crop): The July Chicago contract closed 1.75cts lower at $5.36 1/2 last week. The secondary (intermediate-term) trend remains down with the July contract well below support near $5.53. This price marks the 67% retracement level of the uptrend from $4.96 1/2 through the high of $6.66.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 20.

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

Posted at 5:05AM CST 01/25/15 by Darin Newsom
 

Saturday 01/24/15

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.38 lower at $48.79. Despite the lower close weekly stochastics remain neutral to bullish indicating the secondary (intermediate-term) downtrend has come to an end. The spot-month contract is a long way from establishing a bullish turn signal, with the 4-week high at $60.43. The nearby futures spread saw its contango weaken slightly last week, possibly indicating at least light commercial buying interest near the recent lows of $45.19.

Crude Oil: The spot-month contract closed $3.10 lower at $45.59. Last week's analysis talked of a market that may have reached a point of trader indecision, indicating a possible end to the secondary (intermediate-term) downtrend. However, market action this past week resulted in a bearish close by the spot-month contract near its weekly low of $45.21 and the recent major (long-term) low of $44.20. This close also erased previous bullish signals in weekly stochastics, moving the momentum study back to neutral. Friday's CFTC Commitments of Traders report did show noncommercial traders increasing their net-long futures position by 5,789 contracts due to a decrease in their short futures holdings by 10,745 contracts. The contango in the nearby futures spread continued to strengthen reflecting an increasingly bearish supply and demand situation.

Distillates: The spot-month contract closed 1.89cts lower at $1.6467. This past week saw the spot-month contract stabilize above its recent low of $1.5890. Weekly stochastics remain bullish following the previous week's establishment of a bullish crossover, though the futures market has not posted a bullish technical signal indicating the secondary (intermediate-term) trend has turned up.

Gasoline: The spot-month contract closed 1.09cts lower at $1.3479. The spot-month contract continues to consolidate above its recent low of $1.2265. This past week saw the market close near the high end of its weekly trading range, indicating momentum could be turning more bullish. Last week's bullish crossover by stochastics reflected a possible shift in market sentiment, indicating the secondary (intermediate-term) downtrend had come to an end.

Ethanol: The spot-month contract closed 7.70cts higher at $1.4300. While the market remains in a secondary (intermediate-term) downtrend, the spot-month contract was able to consolidate above the previous week's low of $1.2920. Weekly stochastics are nearing a bullish crossover below the oversold level of 20%.

Natural Gas: The spot-month contract closed 14.1cts lower at $2.986. The previous week's bullish key reversal remains in effect despite this past week's move to a new low of $2.766. The spot-month contract continues to hold above major (long-term) support at $2.985. Weekly stochastics are below the oversold level of 20% and nearing a possible bullish crossover.

Propane (Conway cash price): Conway propane closed unchanged at $0.4700. Cash propane remains in position to establish bullish technical signals with this past week's high of $0.4825 also the 4-week high. The previous week's bullish crossover by weekly stochastics continues to indicate the secondary (intermediate-term) trend has turned up.

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

Posted at 8:37AM CST 01/24/15 by Darin Newsom
 

Monday 01/19/15

Weekly Analysis: Livestock Markets

Live Cattle: The April contract closed $6.475 lower at $152.95 last week. The secondary (intermediate-term) trend remains down, with April live cattle posting a low of $151.35. The contract is nearing support at $150.65, a price that marks the 50% retracement level of the uptrend from $130.20 through the high of $171.10. Weekly stochastics are bearish and still above the oversold level of 20% indicating the market could extend its sell-off. If so, next support is at the 67% retracement level near $143.80. For a more in-depth discussion of the technical patterns of the April live cattle contract see the Technically Speaking blog post from Wednesday, January 14.

March Feeder Cattle are testing support. (Source: DTN ProphetX)

Feeder Cattle: The March contract closed $7.70 lower at $204.85 last week. The secondary (intermediate-term) trend remains down with March feeders testing support at $204.90. This price marks the 50% retracement level of the previous uptrend from $172.00 through the high of $237.80. Weekly stochastics are nearing the oversold level of 20% indicating this secondary downtrend could soon come to an end. Based on the bearish flag pattern from two weeks ago it remains possible that March feeders could spike to a test of the 67% retracement level near $194.00.

Lean hogs: The April contract closed $2.375 lower at $77.675 last week. The secondary (intermediate-term) trend remains down with April lean hogs posting a new contract low of $76.225. Weekly stochastics are below the oversold level of 20%, and if the April contract can extend its rally off last week's low could soon see a bullish crossover (stochastics). This would indicate a move to a secondary uptrend with an initial target price near $83.35, the 33% retracement level of the downtrend from its contract high of $97.65.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, down 10 cents for the week. While the secondary (intermediate-term) trend remains down the NCI.X continues to hold above initial support at $3.47. This price marks the 33% retracement level of the uptrend from $2.81 through the high of $3.80, itself a test of resistance pegged at $3.84. Given the neutral to slightly bearish view of underlying fundamentals indicated by the carry in the March to May futures spread the NCI.X could eventually test support at the 50% retracement level of $3.31.

Soybean meal: The March contract closed $22.90 lower last week at $326.20. While technical indicators continue to show the market remains in a secondary (intermediate-term) sideways trend, the March contract has posted a sharp sell-off resulting in a test of support at $321.30. This price marks the 67% retracement level of the previous uptrend from $292.60 through the high of $379.70. Given the continued inverse in market's forward curve (reflecting a bullish commercial outlook), the contract was expected to hold support between the 33% and 50% retracement levels, $350.30 and $335.90 respectively. However, as Friday's CFTC Commitments of Traders report showed, noncommercial traders liquidated another 9,633 contracts of their net-long futures position.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 13.

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 6:58AM CST 01/19/15 by Darin Newsom
 

Sunday 01/18/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, down 10 cents for the week. While the secondary (intermediate-term) trend remains down the NCI.X continues to hold above initial support at $3.47. This price marks the 33% retracement level of the uptrend from $2.81 through the high of $3.80, itself a test of resistance pegged at $3.84. Given the neutral to slightly bearish view of underlying fundamentals indicated by the carry in the March to May futures spread the NCI.X could eventually test support at the 50% retracement level of $3.31.

The NCI.X is loosely following the same path seen in 2009-2010. (Source: DTN)

Corn (Old-crop): The March contract closed 13.25cts lower at $3.87. While the secondary (intermediate-term) trend remains down the March futures contract was able to rally off its test of support at $3.73 3/4. This price marks the 50% retracement level of the previous uptrend from $3.30 1/2 through the high of $4.17. Given that the carry in March to May futures spread continues to weaken, reflecting a neutral to slightly bearish commercial outlook, the 50% retracement level should continue to hold. However if noncommercial selling intensifies, Friday's CFTC showed this group reducing their net-long position by 7,890 contracts, it is possible March corn could test the 67% retracement level near $3.59 1/4.

Corn (New-crop): The December contract closed 6.75cts lower at $4.14 3/4. While the secondary (intermediate-term) trend remains down the December contract was able to rally off its test of support at $4.03 1/2. This price marks the 50% retracement level of the previous uptrend from $3.64 1/4 through the high of $4.40. Given that the carry in the December 2015 to March 2016 futures spread reflects a neutral commercial outlook, this support at the 50% level should hold the winter sell-off. If the spread starts to turn more bearish, Dec corn could test the 67% retracement level of $3.91 1/2.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.40, down 59 cents for the week. Technical indicators show the NSI.X remains in a sideways trend though it fell below support at $9.56, the 33% retracement level of the rally from $8.50 through the high of $10.08. Next support is pegged at the 50% retracement level of $9.29. The weak carry in the futures forward curve continues to reflect a neutral to bullish commercial outlook indicating the 50% retracement level should hold.

Soybeans (old-crop): The March contract closed 60.50cts lower at $9.91 3/4 last week. Increased noncommercial pressure pushed the March contract well below expected support at $10.05 1/4, the 50% retracement level of the rally from $9.20 3/4 through the high of $10.89 3/4, to a test of the 61.8% retracement level near $9.81 1/4. Friday's CFTC Commitments of Traders report showed this group (noncommercial traders) reducing their net-long holdings by 19,263 contracts, through an increase in their short futures position of 14,475 contracts. The weak carry in the March to May futures spread continues to indicate a neutral to bullish commercial outlook.

Soybeans (new-crop): The November contract closed 44.25cts lower at $9.75 1/4. Despite the sharp sell-off the secondary (intermediate-term) trend remains sideways. However Nov beans fell below expected support near $9.92 1/4, a price that marks the 50% retracement level of the rally from $9.27 1/2 through the high of $10.56 3/4. Last week's low of $9.67 3/4 was a test of the 67% retracement level near $9.70 1/2. While the carry in the November 2015 to January 2016 futures spread strengthened 1-cent to a Friday close of 6 cents, the commercial outlook remains neutral to bullish.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.03, down 30 cents for the week. After leaving a bearish gap to start the week the SR.X extended its secondary (intermediate-term) downtrend, closing at its weekly low of $5.03. Next support is pegged at $4.91, the 67% retracement level of the previous uptrend from $4.25 through the high of $6.23. Weekly stochastics remain bearish indicating continued pressure is likely.

SRW Wheat (old-crop): The March Chicago contract closed 31.00cts lower at $5.32 3/4 last week. The secondary (intermediate-term) trend remains sideways to down. However March Chicago wheat fell below expected support at $5.46 3/4, the 67% retracement level of the previous rally from $4.80 through the spike high of $6.77. Characteristic of wheat, this could be a head fake (to the downside) meaning next week's action could take the contract back above technical price support. Pressure continues to come from noncommercial traders with Friday's CFTC Commitments of Traders report showing this group reducing their net-long futures position by 544 contracts, though they also covered 6,546 contracts of their short-position. The weak carry in the March to May futures spread continues to indicate a bullish view of underlying fundamentals.

SRW Wheat (new-crop): The July Chicago contract closed 34.25cts lower at $5.38 1/4 last week. The secondary (intermediate-term) trend remains sideways to down though the July contract fell below support near $5.53. This price marks the 67% retracement level of the rally from $4.96 1/2 through the high of $6.66. As with the old-crop March contract, this could be a technical head-fake (to the downside) with next week's activity leading to a move back above technical price support.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 13.

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

Posted at 6:08AM CST 01/18/15 by Darin Newsom
 

Saturday 01/17/15

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $0.06 higher at $50.17. After posting another new low of $45.19 last week, the spot-month contract was able to rally to a higher close, near its weekly high of $50.62. On a weekly candlestick chart this established a dragonfly doji pattern, signaling a possible bullish turn in the market. Also, weekly stochastics posted a bullish crossover in single digits. However, given the market's continued bearish fundamentals it is hard to make the argument the secondary (intermediate-term) trend has turned up.

Source: DTN

Crude Oil: The spot-month contract closed $0.33 higher at $48.69. Last week's action (an opening price of $48.19, new low of $44.20, rally to a high of $51.27, close near the weekly open) established a doji on crude oil's weekly chart. This pattern indicates indecision on the part of traders, and led to a bullish crossover by weekly stochastics well below the oversold level of 20%. With bearish fundamental slowing (seasonally), it is possible to make the argument the secondary (intermediate-term) trend is set to turn up. Friday's CFTC Commitments of Traders report showed noncommercial interests added 6,680 contracts to their net-long futures position.

Distillates: The spot-month contract closed 3.74cts lower at $1.6656. While the secondary (intermediate-term) trend remains down, last week's action resulted in mixed technical signals. The spot-month contract posted a solid rally off its new low of $1.5890, moving back above major (long-term) support at $1.6550. Monthly stochastics remain in single digits and are nearing a bullish crossover, while weekly stochastics posted a bullish crossover last week. Seasonally the market moves into an uptrend that lasts through the end of April.

Gasoline: The spot-month contract closed 3.56cts higher at $1.3588. After posting a new low of $1.2265 the spot-month contract was able to rally to a challenge of the previous week's high of $1.4404 before closing higher. Combined with the establishment of another bullish crossover well below the oversold level of 20% and increasing demand (weekly EIA number), the market may have moved into its seasonal secondary (intermediate-term) uptrend that lasts through late April.

Natural Gas: The spot-month contract closed 18.1cts higher at $3.127. The secondary (intermediate-term) trend looks to have turned up with the spot-month contract posting a bullish key reversal. The late week rally brought the market back above major (long-term) support at $2.985. Monthly stochastics remain below the oversold level of 20%, setting the stage for a possible bullish crossover at the end of the month.

Propane (Conway cash price): Conway propane closed 6.37cts higher at $0.4700. With cash propane closing near its weekly high of $0.4725, the market is in position to establish an island bottom on its weekly chart. To complete the pattern it needs to gap higher next week. Stochastics show a bullish crossover as the market came to a close Friday, also indicating the secondary (intermediate-term) trend has turned up.

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

Posted at 8:13AM CST 01/17/15 by Darin Newsom
 

Wednesday 01/14/15

Technically Clear Cattle

Back in the day, using technical charts to project possible targets in the livestock markets was like trying to nail jello to a wall -- largely ineffective. This was due to in large part to livestock futures being driven by underlying cash markets, rather than the reverse like most other commodities. But as I discussed in Monday's weekly livestock sector analysis, the cattle markets in particular are holding true to a number of classic technical patterns. Or in other words, the nature of the beasts seems to be changing.

Source: DTN ProphetX

Take a look at the weekly chart for April live cattle. If you squint your eyes just right and use your imagination, you might see the same Elliott Wave patterns I do. Keep in mind that I use only the loosest form of Elliott Wave analysis, not necessarily being a stickler for each and every rule being followed. Chaos Theory implies that there is little chance of any pattern being perfect. Also keep in mind that there is a solid connection between Elliott Wave Theory and Dow Theory's retracements of 33%, 50%, and 67%, as you'll see in the following analysis.

Start with the contract low of $130.20 posted the week of November 25, 2013. In this case, Wave 1 lasted until the initial peak of $158.85 the week of July 28, 2014. Classic Elliott Wave Theory states that Wave 1 is usually the shortest of the five waves, but not in this case. Bullish fundamentals worked to skew the pattern without changing what the market has been telling us. Wave 2 was the sell-off back to $149.10 the week of August 18.

Let's pause here to make a couple of interesting observations. Note that the series of highs from the week of June 30 through the week of July 28 that capped Wave 1 centered around what would ultimately become initial support near $157.50. This price marks the 33% retracement level of the uptrend that would eventually extend from the contract low to the contract high of $171.10. Similarly, the series of lows near $149.00 were near what would eventually be the 50% retracement level of $150.65.

Wave 3 saw the market resume its uptrend from the $149.10 low to a peak of $167.975 the week of October 6. Again, classic Elliott Wave Theory describes the third wave as "the longest and most dynamic". Yet this time around it wasn't to be. Likewise, it's said of Wave 4 that it is "usually a complex pattern". But not this time, as this particular Wave 4 lasted about as long as the blinking of an eye, coming to an end the following week with a low of $159.90. Wave 5 concluded at the previously mentioned contract high of $171.10 posted the week of November 17.

A five-wave uptrend is then followed by a three-wave downtrend, broken into wave A, B, and C. Wave A saw April live cattle spike to a low of $154.875 the week of December 15, below the previously mentioned 33% retracement level near $157.50 before rallying back above this mark to close at $159.675. Wave B saw the contract rally to a high of $166.00 the week of January 5.

Note that this was a solid test of resistance near $165.70, a price that marks the 67% retracement level of Wave A. Keep in mind that a market with bullish fundamentals, still the case in live cattle as indicated by the April to June futures spread, tends to retrace sell-offs by 50% to 67%, and previous uptrends by 33% to 50%.

In regards to the latter, what then might the low be for Wave C? If a fundamentally bullish market tends to see at maximum a 50% retracement of its previous uptrend, then Wave C could find its low near the same mark that held Wave 2 -- $150.65.

The key to the live cattle market, as well as what was shown in the feeder cattle chart last Monday, is that it is clearly following its technical signals without losing connection to its underlying cash market. Fundamentals, again using spreads, set the retracements that have been acting as targets for each wave of this trend pattern.

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

Posted at 8:06AM CST 01/14/15 by Darin Newsom
Comments (1)
One man's cycle is another man's Kawasaki.
Posted by greg schimkat at 9:10AM CST 01/14/15
 

Monday 01/12/15

Weekly Analysis: Livestock Markets

Live Cattle: The February contract closed $5.075 lower at $160.60 last week. The secondary (intermediate-term) trend remains down with last week's action establishing a bearish outside week. This would indicate Feb live cattle has concluded the second wave of an Elliott Wave three-wave downtrend with its test of resistance at $166.87, a price that marks the 67% retracement level of the first wave down from $172.75 through the low of $155.10. The third wave should result in a test of support at $150.80, a price that marks the 50% retracement level of the previous uptrend from $128.85 through the high of $172.75. Given the continued bullish commercial outlook indicated by the February to April futures spread the 50% retracement level should hold, with weekly stochastics expected to fall below the oversold level of 20%.

Source: DTN ProphetX

Feeder Cattle: The March contract closed $8.90 lower at $212.55 last week. March feeders posted a bearish outside week last week, indicating the minor (short-term) uptrend has come to an end and the secondary (intermediate-term) downtrend has resumed. Last week's high of $224.475 looks to be the peak of the second wave of an Elliott Wave three-wave downtrend, with the third wave projected to slide to a low of $192.15. This target is calculated by viewing the second wave as a bearish flag flying at half-mast, with the initial "flagpole" (sell-off) covering a range of $20.925 (initial bearish breakout at $228.625 through the initial low of $207.75). Subtracting that range from this week's bearish breakout of the previous week's low of $213.075 puts the target at $192.15. This would be a test of support near $193.90, a price that marks the 67% retracement level of the uptrend from the low of $172.00 through the high of $237.80.

Lean hogs: The February contract closed $2.275 lower at $79.025 last week. The secondary (intermediate-term) trend remains down with the Feb contract extending its sell-off below support near $79.30. This price marks the 76.4% retracement level of the previous uptrend $72.95 through the high of $99.925. However, weekly stochastics below the oversold level of 20% indicate the contract could continue to hold near this support before turning up again.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.69, up 6 cents for the week. Despite the higher close the secondary (intermediate-term) trend of cash corn remains down with an initial target of $3.47. This price marks the 33% retracement level of the previous uptrend from $2.81 through the high of $3.80, a test of longer-term resistance at $3.84. Given the neutral to slightly bearish commercial outlook indicated by the carry in the futures market's forward curve the NCI.X could extend its downtrend to the 50% retracement level of $3.31.

Soybean meal: The March contract closed $8.70 higher last week at $349.10. One of the main factors of soybean meal is its high market volatility, calculated at about 53.2% at Friday's close. This has the March futures contract posting wide price swings while keeping its secondary (intermediate-term) trend sideways to down. Support remains at $335.90, a price that marks the 50% retracement level of the rally from $292.60 through the high $379.70. Resistance is between $365.60 and $371.30, the 61.8% and 67% retracement levels of the previous downtrend from $410.60 through the low of $292.60.

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 6:12AM CST 01/12/15 by Darin Newsom
Comments (2)
Another USDA report-another round of serious negative "market " downtrends. Obviously 10 dollar soybeans are too much for the USDA to handle so a quick tweak of numbers and "estimates" about some other foreign country and their "projected" yields and here we are again. Just patent your lies and reports you corrupt government agency for how effective your tactics are to manipulate and control your USDA "markets." Oh we can not thank them enough for their "bullish" reports on corn, today 1-13-2015 look at what happened to corn futures. Now that prices are below cost of production, how far will this corrupt agency go. I am sure their information is spot on regarding their "estimates' concerning other countries.
Posted by DAVID/KEVIN GRUENHAGEN at 12:09AM CST 01/14/15
Good morning, and thank you for your comments. As DTN customers, you're familiar with my thoughts on government reports. I'm going to address some of your concerns in this Friday's On the Market column.
Posted by DARIN NEWSOM at 6:51AM CST 01/14/15
 

Sunday 01/11/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.69, up 6 cents for the week. Despite the higher close the secondary (intermediate-term) trend of cash corn remains down with an initial target of $3.47. This price marks the 33% retracement level of the previous uptrend from $2.81 through the high of $3.80, a test of longer-term resistance at $3.84. Given the neutral to slightly bearish commercial outlook indicated by the carry in the futures market's forward curve the NCI.X could extend its downtrend to the 50% retracement level of $3.31.

Source: DTN ProphetX

Corn (Old-crop): The March contract closed 4.50cts higher at $4.00 1/4. While the secondary (intermediate-term) trend remains down the March futures contract was able to post an inside week last week. The contract continues to hold above initial support near $3.88 1/4, a price that marks the 33% retracement level of its previous uptrend from $3.30 1/2 through the high of $4.17. Commercial buying, indicated by the weakening carry in the market's forward curve, combined with noncommercial short-covering was seen last week. Given that the futures spreads remain neutral to bearish an extension of the downtrend to test the 50% retracement level of $3.73 3/4 would not be surprising.

Corn (New-crop): The December contract closed 2.00cts higher at $4.21 1/2. While the secondary (intermediate-term) trend remains down, Dec corn rallied off its test of support near $4.15 1/2 to close higher for the week. Support continues to come from commercial buying, with the carry in the December 2015 to March 2016 futures spread (a weekly close of 8 1/4 cents) reflecting a neutral commercial outlook. Eventually the contract could test support at $4.03 1/2, a price that marks the 50% 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 $9.99, up 46 cents for the week. The cash soybean market remains an interesting mix of technical signals with weekly stochastics bullish, indicating a secondary (intermediate-term) uptrend, while the NSI.X itself moves sideways. Friday's calculated close of $9.99 is a test of the high side of its range near $10.00, hinting at a bullish breakout next week. While the week carry in the futures market forward curve reflect a neutral to bullish commercial outlook, the NSI.X has not been able to extend its uptrend to test its expected target of $11.74. This price marks the 50% retracement level of the downtrend from $14.97 through the low of $8.50. Given that weekly stochastics are approaching the overbought level of 80% the NSI.X may top out near the 33% retracement level of $10.66.

Soybeans (old-crop): The March contract closed 44.75cts higher at $10.52 1/4 last week. The secondary (intermediate-term) trend remains sideways. March soybeans continue to test resistance near $10.60 3/4, a price that marks the 38.2% retracement level of the previous secondary downtrend. The contract threatened to establish a bullish outside week, a pattern that would have reestablished its seasonal uptrend, but came up short of the previous week's high of $10.68 1/4. Still, slightly bullish weekly stochastic and neutral to bullish futures spreads indicate the contract should see an upside breakout that could eventually lead to a test of the 50% and 61.8% retracement levels near $11.04 and $11.47 1/2.

Soybeans (new-crop): The November contract closed 26.25cts higher at $10.19 1/2. The secondary (intermediate-term) trend remains sideways with support near $9.92 1/4 and resistance between $10.29 and $10.43 3/4. The latter prices mark the 33% and 38.2% retracement levels of the previous downtrend from $12.32 through the low of $9.27 1/2. Given that weekly stochastics remain bullish and the weak carry in the November 2015 to January 2016 futures spread (weekly close of 5 cents) reflects a neutral to bullish commercial outlook, the Nov contract could resume an uptrend that eventually tests resistance at the 50% retracement level of $10.79 3/4.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.33, down 19 cents for the week. Though weekly stochastics did not see a bearish crossover above the oversold level of 80% the week of December 22, indicating the secondary trend had turned sideways, the SR.X moved to a new 4-week low last week and in position to test support at $5.24. This price marks the 50% retracement level of the uptrend from $4.25 through the high of $6.23, itself a test of longer-term resistance at $6.17 (a price that marks the 67% retracement level of the previous downtrend from $7.11 through the $4.25 low). Given that the weak carry in the March to May futures spread (weekly close of 4 cents) reflects a bullish commercial outlook, the SR.X should hold support at the $5.24 level.

SRW Wheat (old-crop): The March Chicago contract closed 17.50cts lower at $5.63 3/4 last week. The secondary (intermediate-term) trend remains sideways to down with the March futures contract in position to slide to a test of support near $5.46 3/4. This price marks the 67% retracement level of the previous rally from $4.80 through the high of $6.77, itself a test of resistance near $6.77 1/2 (a price that marks the 67% retracement level of the previous downtrend from $7.76 through the low of $4.80). Most of the pressure continues to come from noncommercial selling while the commercial side remains bullish, as indicated by the weak carry in the March to May futures spread (weekly close of 4 cents).

SRW Wheat (new-crop): The July Chicago contract closed 16.50cts lower at $5.72 1/2 last week. The secondary (intermediate-term) trend remains sideways to down as the July contract moves toward support near $5.53. This price marks the 67% retracement level of the rally from $4.96 1/2 through the high of $6.66. Support continues to come from the commercial side of the market, as indicated by the uptrend (weakening carry) of the new-crop July 2015 to September 2016 futures spread. This spread closed last week at a 6 1/2 cent carry, 3/4-cent weaker than the previous Friday's settlement.

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

Posted at 8:06AM CST 01/11/15 by Darin Newsom
 

Saturday 01/10/15

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $6.31 lower at $50.11. The spot-month contract posted a new low of $48.90 last week, with next major (long-term) support at the December 2008 low of $36.20. Pressure continues to come from a more bearish supply and demand situation, as indicated by the strengthening contango (carry) in the market's forward curve.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $4.33 lower at $48.36. The secondary (intermediate-term) trend remains down as the spot-month contract posted a new low of $46.83 last week. Next major (long-term) support is pegged at the December 2008 low of $32.48. The strong downtrend (strengthening contango/carry) in the market's futures spreads (see attached chart) continues to indicate an increasingly bearish supply and demand situation.

Distillates: The spot-month contract closed 9.27cts lower at $1.7030. The secondary (intermediate-term) trend remains down as the spot-month contract posted a new low of $1.6715. Next major (long-term) support is pegged at $1.6550, a price that marks the 76.4% retracement level of the previous major uptrend from $1.1252 through the high of $3.3700.

Gasoline: The spot-month contract closed 11.02cts lower at $1.3232. The secondary (intermediate-term) remains down with the spot-month contract posting a new low of $1.2936. Next major support is at the December 2008 low of $0.7850.

Natural Gas: The spot-month contract closed 5.7cts lower at $2.946. The secondary (intermediate-term) trend remains down despite the spot-month contract posting an inside week last week. The spot-month is priced just below major (long-term) support at $2.985, the 76.4% retracement level of the previous uptrend from $1.902 through the high of $6.493. Monthly stochastics are below 20% indicating the market is long-term oversold.

Propane (Conway cash price): Conway propane closed 0.37ct lower at $0.4063. The lower close after posting a new low of $0.3775 indicates the cash propane market remains in a secondary (intermediate-term) downtrend. However, the close was near the week's high of $0.4125 putting cash propane in position to establish an island bottom with a gap higher next week. Weekly stochastics are in single digits, indicating a sharply oversold market, nearing a bullish crossover that would indicate a potential change in trend.

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

Posted at 8:08AM CST 01/10/15 by Darin Newsom
 

Wednesday 01/07/15

Soybean Spreads Tell Real S&D Story

To those of you who came to this blog after reading Wednesday morning's Early Word Grains comments, expecting an analysis of the March soybean contract, I apologize. I will post that chart in this weekend's update of weekly analysis for the grains complex. Instead this morning I want to discuss a different aspect of the soybean market, its futures spreads, because it implies a radically different view of global supply and demand than what is expected in the January WASDE report set for release next Monday (January 12).

Source: DTN ProphetX

Before we move forward, let's take a step back and revisit the world supply and demand numbers from December. That report pegged total global supplies at 379.39 million metric tons, due in large part to an estimated record production figure of 312.81 mmt. The latter includes an estimated record production in the United States of 107.73 mmt (3.958 bb), and projected record production in both Brazil (94 mmt, 3.454 bb) and Argentina (55 mmt, 2.021 bb).

On the other side of the ledger, global demand was projected at a record high 286.07 mmt. This includes a record large Chinese import estimate of 74 mmt. The net result is projected ending stocks of 89.87 mmt (also record large) with ending stocks to use pegged at 31.4% (you guessed it, another record for a marketing year)

Given that set of data, die-hard fundamentalists would conclude without question that world supply and demand is bearish. But as ESPN's college football analyst likes to say, "Not so fast my friend."

If you've followed my analysis over the years you recall that I couldn't care less about USDA estimates/projections. To me the real story of fundamentals is told in the analysis of futures spreads, as it reflects what the commercial (those actually involved in the underlying cash commodity) side of any market believes the true supply and demand situation to be.

So let's turn our attention to what we see in the spreads. If you take a look at the attached chart (weekly close only) you'll see a number of different colored lines. The heavier black line shows the trend of the January to March, the blue line is March to May, the green line is May to July, and the red dashed line the new-crop November 2015 to January 2016 spread. With just a quick look at the chart, what is the common theme of all these different spreads? Go ahead; I'll wait while you take a look.

Welcome back. Those that said these spreads are trending up (decreasing carry), give yourself a gold star. And what does a series of futures spreads with decreasing carry reflect? That's right: A more bullish view of fundamentals by commercial traders.

First the January to March, though I know January is in delivery and approaching its last trading day (Wednesday, January 14). Notice that the Jan/March is approaching its previous peak of a 3 1/2 cent carry (thin dashed line heading to the left side of the chart. This reflects an immediate need by merchandisers for cash soybeans, not surprising given ongoing strong demand (both export and crush) while available cash supplies are tightly held in cold hands. The 4 1/2 cent carry accounts for roughly 28% of total cost of carry, again reflecting a short-term bullish commercial view.

Things get even more interesting when we look at the deferred spreads. Remember that harvest of the expected record South American crop will begin in late February to early March, with much of the production set to move immediately into position for export. Yet the March to May spread is showing a carry of about 5 1/2 cents, approximately 35% of total cost of carry. At worst this is a neutral read of fundamentals for this key time frame, with 33% a rough border between bullish and neutral. Deeper into the 2015-2016 marketing year the May to July spread turns bullish again, with its 4 cent carry making up only 24% of total cost of carry.

If the spreads are bullish, and trending up reflecting an even more bullish commercial view, then what should we make of bearish WASDE report numbers next week.

Nothing. Time and time again USDA has shown it has no clue, or worse ulterior motives, when it comes to soybean supply and demand. Given what soybean spreads are telling us it would not be surprising to see the nearby March futures contract finally break through technical resistance near $10.60 3/4, a price that marks the 38.2% retracement level of its previous downtrend from $12.87 1/2 through the low of $9.20 3/4, setting its sights on at least the 50% retracement level near $11.04.

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

Posted at 8:51AM CST 01/07/15 by Darin Newsom
Comments (2)
I have 2 - $11 - 11.80 put spreads should I hold tell after report or take even money
Posted by Fred Middleton at 5:11PM CST 01/07/15
sorry call spreads
Posted by Fred Middleton at 7:28PM CST 01/07/15
 

Monday 01/05/15

Weekly Analysis: Livestock Markets

Live Cattle: The February contract closed $3.20 higher at $165.675 last week. While the secondary (intermediate-term) trend remains down, the minor (short-term) uptrend has resulted in a test of resistance near $166.875, a price that marks the 67% retracement level of the initial sell-off from $172.75 through the low of $155.10. The pattern on the weekly chart resembles the first two phases of a typical Elliott Wave downtrend. The third wave would be projected to see the contract fall from this test of resistance to a test of support at $150.80, a price that marks the 50% retracement level of the previous uptrend from the contract low $128.85 through the contract high of $172.75.

Feeder Cattle: The March contract closed $9.55 higher at $221.45 last week. Despite the higher close the secondary (intermediate-term) trend of the market remains down. Last week's high of $221.825 closed a bearish gap left the week of December 15 between $221.25 and $219.725, resulting in a test of resistance pegged near $222.80. If like live cattle this is the conclusion of the second wave of a three-wave downtrend, then the March contract would likely turn lower toward a test of secondary support at $204.90. This is the 50% retracement level of the previous uptrend from its contract low of $172.00 through its contract high (part of a double-top high) of $237.80.

Lean hogs: The February contract closed $0.25 lower at $81.30 last week. While the secondary (intermediate-term) trend remains down, contract continues to consolidate above its recent spike low of $78.675. Weekly stochastics are below the oversold level of 20%, indicating a possible bullish crossover into a secondary uptrend in the weeks ahead.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.63, down 18 cents for the week. The secondary (intermediate-term) trend remains up. As discussed the last few weeks, the secondary (intermediate-term) trend turned down after the NCI.X fell back from its test of technical resistance at $3.84. Weekly stochastics established a bearish crossover above the overbought level of 80%, confirming the move to a downtrend. Initial support is pegged at $3.47, the 33% retracement level of the previous uptrend from the $2.81 low through the high of $3.80. However, given the continued bearish carry in futures spreads the NCI.X could test the 50% retracement level of $3.31.

Soybean meal: The March contract closed $21.40 lower last week at $341.40. The secondary (intermediate-term) trend is sideways with support pegged at $335.90, a price that marks the 50% retracement level of the previous uptrend from $292.60 through the high of $379.90. However, given last week's bearish outside week and despite an inverted forward curve (bullish market fundamentals), the March contract could look to extend its sell-off to the 67% retracement level of $321.30.

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 5:17AM CST 01/05/15 by Darin Newsom
 

Sunday 01/04/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.63, down 18 cents for the week. The secondary (intermediate-term) trend remains up. As discussed the last few weeks, the secondary (intermediate-term) trend turned down after the NCI.X fell back from its test of technical resistance at $3.84. Weekly stochastics established a bearish crossover above the overbought level of 80%, confirming the move to a downtrend. Initial support is pegged at $3.47, the 33% retracement level of the previous uptrend from the $2.81 low through the high of $3.80. However, given the continued bearish carry in futures spreads the NCI.X could test the 50% retracement level of $3.31.

Corn (Old-crop): The March contract closed 19.00cts lower at $3.95 3/4. The secondary (intermediate-term) trend has turned down following the establishment of both a bearish key reversal on its weekly chart and a bearish crossover by weekly stochastics above the overbought level of 80%. Initial support is near $3.88 1/4, a price that marks the 33% retracement level of the previous uptrend from $3.30 1/2 through last week's high of $4.17. A move below this support, and the now 4-week low of $3.87 1/2, would indicate an extended selloff to between $3.73 3/4 and $3.59 1/4.

Corn (New-crop): The December contract closed 19.50cts lower at $4.19 1/2. The secondary (intermediate-term) trend is now down. Similar to the old-crop March contract, new-crop December posted a bearish key reversal last week while its weekly stochastics established a confirming bearish crossover above the overbought level of 80%. Initial support is near $4.15 1/2, the 33% retracement level of the previous uptrend from $3.64 1/4 through last week's high of $4.40. However, a test of the $4.03 1/2 to $3.91 1/2 range (50% to 67% retracements) is likely.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.53, down 44 cents for the week. Weekly stochastics remain bullish as the NSI.X tests support at $9.56, a price that marks the 33% retracement level of the uptrend from $8.50 through the high of $10.08 posted the week of November 10. Since then the NSI.X has been consolidating, with its initial target price still sitting at $10.66. A lack of support from both futures spreads (neutral) and national average basis has held the cash market's uptrend in check.

Soybeans (old-crop): The March contract closed 46.50cts lower at $10.07 1/2 last week. Weekly stochastics established a bearish crossover below the overbought level of 80% in conjunction with a bearish outside week by the futures contract. Both would indicate the secondary (intermediate-term) trend has turned sideways with support at $10.05 1/4, a price that marks the 50% retracement level of the uptrend from $9.20 3/4 through the high of $10.89 3/4. Next support is pegged at the 61.8% retracement level near $9.85 1/4.

Soybeans (new-crop): The November contract closed 35.75cts lower at $9.93 1/4. A bearish outside week by the futures market established a bearish crossover below the oversold level of 80%, indicating the secondary (intermediate-term) trend has turned sideways. Next support is near $9.23, the 50% retracement level of the uptrend from $9.27 1/2 through the high of $10.56 3/4. The 67% retracement level is near $9.70 1/2.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.52, down 25 cents for the week. The secondary (intermediate-term) trend remains down. A close at last week's low sets up a potential island-top formation on its weekly chart if the SR.X gaps lower this week. Technically, support is pegged at $5.48, a price that marks the 38.2% retracement level of the uptrend from $4.25 through the recent high of $6.23. This price is also the mid-point between the bottom of a bullish gap at $5.44 (week of November 24) and this past week's low/close ($5.52).

SRW Wheat (old-crop): The March Chicago contract closed 29.50cts lower at $5.81 1/4 last week. The secondary (intermediate-term) trend remains sideways as the futures contract tests support near $5.79 1/2. This price marks the 50% retracement level of the previous uptrend from $4.80 through the high of $6.77. Given that the weak carry in the March to May futures spread continues to reflect a neutral to bullish commercial outlook, this price support should hold. If so, the March contract could look at gaining back 2/3 to nearly all of its most recent sell-off, pulling weekly stochastics back above the oversold level of 80% and setting the stage for a more conclusive bearish turn.

SRW Wheat (new-crop): The July Chicago contract closed 27.50cts lower at $5.89 last week. The secondary (intermediate-term) trend remains sideways as the July contract tests support at $5.81 1/4. This price marks the 50% retracement level of the uptrend from $4.96 1/2 through the high of $6.66. A neutral level of carry in the July to September futures spread indicates this support should hold, leading to a rally that would eventually take weekly stochastics back above the overbought level of 80%.

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

Posted at 6:28AM CST 01/04/15 by Darin Newsom
 

Saturday 01/03/15

Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $3.03 lower at $56.42. The spot-month contract posted a new low of $55.48 last week, below major (long-term) support at $57.96. This price marks the 76.4% retracement level of the previous major uptrend from $36.20 through the high of $128.40. Pressure continues to come from a more bearish supply and demand situation, as indicated by the strengthening contango (carry) in the market's forward curve.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $2.04 lower at $52.69. The secondary (intermediate-term) trend remains down as the spot-month contract posted a new low of $52.03 last week. This is a test of major (long-term) support at $51.91, a price that marks the 76.4% retracement level of the previous uptrend from $32.48 through the high of $114.83. Pressure continues to come from the commercial side of the market, as indicated by the downtrend (strengthening contango/carry) in the market's futures spreads.

Distillates: The spot-month contract closed 11.22cts lower at $1.7957. The secondary (intermediate-term) trend remains down as the spot-month contract posted a new low of $1.7871. Next major (long-term) support is pegged at $1.6550, a price that marks the 76.4% retracement level of the previous major uptrend from $1.1252 through the high of $3.3700.

Gasoline: The spot-month contract closed 7.53cts lower at $1.4334. The secondary (intermediate-term) remains down with the spot-month contract posting a new low of $1.4101. This is a test of major (long-term) support at $1.4208, a price that marks the 76.4% retracement level of the previous major uptrend from $0.7850 through the high of $3.4789.

Natural Gas: The spot-month contract closed 0.4ct lower at $3.003. After posting a new low of $2.805 the spot-month contract rallied to close back above major (long-term) support at $2.985. This price marks the 76.4% retracement level of the previous major uptrend from $1.902 through the high of $6.493. Monthly stochastics are below the oversold level of 20%, possibly sparking renewed buying interest.

Propane (Conway cash price): Conway propane closed 4.50cts lower at $0.4100. The cash market posted a new low last week of $0.4000, extending the secondary (intermediate-term) downtrend. Weekly stochastics are in single digits indicating the market is sharply oversold.

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

Posted at 8:27AM CST 01/03/15 by Darin Newsom
 

Thursday 01/01/15

Monthly Analysis: Grain Markets

Corn (Futures): The March contract closed at $3.97, 8 1/4 cents higher on the monthly chart. The major (long-term) trend remains up with initial resistance pegged at $4.43 1/2. This price marks the 23.6% retracement level of the previous downtrend from $8.49 (high from August 2012) through the October 2014 low of $3.18 1/4. Monthly stochastics remain bullish.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.64, up 15 cents for the month. The major (long-term) trend remains up with initial resistance pegged at 44.10, a price that marks the 23.6% retracement level of the previous downtrend from $8.26 (August 2012) through the low of $2.81 (October 2014). Monthly stochastics remain bullish. Also, national average basis strengthen by about 7 cents during December despite the rally in the futures market (see above), closing at 33 cents under.

Soybeans (Futures): The March contract closed at $10.23 1/2, 7 1/2 cents higher on the monthly chart. Monthly stochastics established a bullish crossover in December, confirming the major (long-term) uptrend established in October when the futures market posted a bullish key reversal. Support from the commercial side of the market could lead to a test of initial resistance at $11.98 3/4, a price that marks the 33% retracement level of the previous downtrend from $17.89 (September 2012) through the October 2014 low of $9.04.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.68, up cents for the month. Monthly stochastics posted a secondary (confirming) bullish crossover to the one established at the end of November 2013 (more than a year ago), indicating the major (long-term) trend has turned up. Initial resistance is pegged at $11.49, a price that marks the 33% retracement of the previous downtrend from the high of $17.48 (August 2012) through the low of $8.50 (October 2014). However, national average basis weakened in December, closing the month at 55 cents under the March futures contract.

SRW Wheat (Futures): The March Chicago contract closed at $5.89 3/4, 11 1/4 cents higher on the monthly chart. While the major (long-term) remains up, the futures market looks to have established a spike high with its rally to $6.77 late in December. This put the market in the technical no-man's land between resistance near $6.26 1/2 and $7.06 3/4, prices that mark the 33% and 50% retracement levels of the previous downtrend from $9.47 1/4 (July 2012) through the low of $4.66 1/4 (September 2014). The sell-off to close out the month has the contract testing support between $6.06 3/4 and $5.71 1/2. Beyond that support is pegged near $5.36 1/2.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.57, up 13 cents for the month. The major (long-term) trend remains up. However, the SR.X posted a spike rally above its initial price target near $5.88, a price that marks the 33% retracement level of the previous downtrend from $9.14 (July 2012) through the low of $4.25 (September 2014). From there the SR.X fell back to a test of support near $5.57, with next levels pegged near $5.24 and $4.91.

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 8:53AM CST 01/01/15 by Darin Newsom
 
Monthly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed at $57.55, down $12.60 on the monthly chart. The major (long-term) trend remains down as the spot-month contract tests support at $57.96. This price marks the 76.4% retracement level of the previous uptrend from $36.20 (low from December 2008) through $128.40 (high from March 2012). Monthly stochastics are in single digits, well below the oversold level of 20%, indicating the market could begin to stabilize.

Crude Oil: The spot-month contract closed at $53.27, down $12.88 on the monthly chart. The major (long-term) trend remains down as the spot-month contract tests support at $51.91, a price that marks the 76.4% retracement level of the previous uptrend from $32.48 (December 2008) through $114.83 (May 2011). Monthly stochastics are in single digits, well below the oversold level of 20%.

Distillates: The spot-month contract closed at $1.8336, down 39.72cts on the monthly chart and below support at $1.8727. This price marks the 67% retracement level of the previous uptrend from $1.1252 (March 2009 low) through $3.37 (January 2014 high). Next support is pegged at the 76.4% retracement level of $1.6550. Monthly stochastics are in single digits, well below the oversold level of 20%.

Gasoline: The spot-month contract closed at $1.4721, down 43.18cts on the monthly chart. The major (long-term) trend remains down as the spot-month contract tests support at $1.4208. This price marks the 76.4% retracement level of the previous uptrend from $0.7850 (December 2008) through $3.4789 (April 2011). Monthly stochastics have moved below the oversold level of 20% with the market trading at its lowest levels since May 2009.

Natural Gas: The spot-month contract closed at $2.889, down $1.199 on the monthly chart. The major (long-term) trend is down as the spot-month contract moved below support at $2.985, a price that marks the 76.4% retracement level of the previous uptrend from $1.902 (April 2012 low) through $6.492 (February 2014 high). However, with monthly stochastics below the oversold level of 20% the market could begin to stabilize near this price support.

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

Posted at 8:51AM CST 01/01/15 by Darin Newsom
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