Technically Speaking
Darin Newsom DTN Senior Analyst

Sunday 07/05/15

Sunday's Referendum Vote: It's All Greek to Me

Let me begin by saying, and most of you know this already, I am not an economist. Nor will I pretend to be. For true analysis of global economics on DTN, I always point people in the direction of Editor Emeritus Urban Lehner's blog, "An Urban's Rural View". But, that having been said, I do find the ongoing (some would say never-ending) drama regarding Greece's economic downfall interesting base on how it looks on price charts.

The daily chart for the spot-euro shows a minor bullish turn may be coming. (Source: DTN ProphetX)

Recall that the basic tenet of technical analysis is that price action discounts everything. In other words, anything that can affect a market is reflected in its trade, with prices moves over time showing the overall impact. Do we know what the piece of news is that moves the market, any market? Not at the time, usually (There are exceptions: The wheat market and Chernobyl, live cattle and the first case of U.S. based BSE, etc.). Headlines appear later confirming what we already knew about market opinion based on technical analysis.

What, then, are the charts saying about the situation in Greece? To gain an understanding of market opinion, let's break it down by timeframes:

Long-term: You know from my previous blogs (the latest being June 30) that I see the major trend of the U.S. dollar index (USDX) to be down. This dates back to a bearish 2-month reversal established at the end of April and is in contrast to roughly 99% of all other analysts and economists. Conversely, the major trend on the monthly chart for the spot-euro is up based on a 2-month bullish reversal at the same time that coincided with a crossover by monthly stochastics below the oversold level of 20%. However, both the euro and the USDX have been consolidating of late, hinting at a possible slide back to the lows (euro) before finding renewed buying interest. The initial long-term target is 1.2317, the 33% retracement level of the previous downtrend from 1.6008 through the March 2015 low of 1.0475.

Intermediate-term: The secondary trend on the weekly chart for the euro is sideways at this time, though still showing a bullish wedge pattern (higher lows, flat highs). The last secondary (intermediate-term) signal by weekly stochastics was a bullish crossover below the oversold level of 20% the week of March 16. Weekly stochastics have turned neutral below the oversold level of 80%, indicating one more push higher after possibly testing trendline support (calculated at 1.1030 this week). Initial upside resistance is pegged near 1.1428, with the target still of 1.1634. The latter marks the 33% retracement level of the previous secondary downtrend from 1.3955 through the low of 1.0475. The 50% retracement level is up at 1.2215. Note the proximity this is with the long-term target of 1.2317.

Short-term: Its daily chart (attached) shows the euro to be nearing a bullish crossover by stochastics (bottom study) below the 20% level. If/when this occurs it would signal a move to minor uptrend similar to what was seen beginning on May 28. Again, trendline support (connecting the higher lows) is pegged at 1.1024 Monday, July 6.

So what is this telling us about possible Greek vote results? Unfortunately, not much. As I pointed out in a recent On the Market column (June 19, "Greek Drama"), Greece falling out of the euro-zone could eventually be seen as bullish (similar to cutting off a gangrenous limb) for the euro. If that's the case, and the long-term trend is up, it would imply a no-vote on additional bailout conditions Sunday July 5.

Keep in mind though that, as I said before, the rest of the world may view this differently. The argument is that the destabilization that could occur by Greece falling out of the euro-zone might lead to another sell-off in the euro, causing it to move counter to its long-term signals.

I'm a technician at heart, meaning I'll let the market figure it out. For now my view remains the same, the constants of bullish technical signals indicate the euro should eventually extend its secondary and major uptrends while the minor trend also turns up. The "why", in regards to Greece, remains an unknown.

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

Posted at 10:06AM CDT 07/05/15 by Darin Newsom
 

Friday 07/03/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.94, up 31 cents for the week. Cash corn extended its secondary (intermediate-term) uptrend through resistance at $3.84, a price that marks the 50% retracement level of the previous downtrend from $4.86 through the low of $2.81. Given that weekly stochastics remain bullish, the NCI.X could now target the 67% retracement level of $4.18.

Corn (Old-crop): The September contract closed 36cts higher at $4.28 1/2. As expected, Sep corn tested its December 2014 high of $4.33 3/4 last week, posting a high of $4.30 3/4. Weekly stochastics remain bullish, indicating the contract should be able to extend its secondary (intermediate-term) uptrend. Using a simple measuring technique, a move through the December high would project an upside target near $5.13.

Corn (New-crop): The December contract closed 35.25cts higher at $4.37 1/4. The secondary (intermediate-term) uptrend strengthened last week, with Dec corn coming within a 1/4-cent of its December 2014 high of $4.40. Using a simple measuring technique, combining the possible double bottom formations near $3.63 and the interim high of $4.40, Dec corn could rally an additional 77 cents once it clears its previous high. If so, the target would be $5.17, in line with the major (long-term) 38.2% retracement level of $5.21.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.98, up 34 cents for the week. The NSI.X extended its secondary (intermediate-term) uptrend through initial resistance at $10.03. This price marks the 23.6% retracement level of the downtrend from $14.97 through the low of $8.50. Weekly stochastics remain bullish indicating a possible test of the 33% retracement level of $10.66.

Soybeans (old-crop): The August contract closed 40.50cts higher at $10.38 1/4 last week. The contract's secondary (intermediate-term) uptrend continues to strengthen, clearing initial resistance at $10.30 1/4. This price marks the 33% retracement level of the previous downtrend from $12.72 1/2 through the low of $9.09 1/4. With the August to September futures spread inverted, reflecting a bullish commercial outlook, and weekly stochastics bullish the contract should extend this rally to at least a 50% retracement ($10.91) or possibly a 67% retracement ($11.51 1/2).

Soybeans (new-crop): The November contract closed 44.25cts higher at $10.30 1/4 last week. The secondary (intermediate-term) uptrend continues to strengthen, clearing initial resistance at $10.07 3/4. This price marks the 33% retracement level of the previous downtrend from $12.32 through the low of $8.95 3/4. Given that the new-crop forward curve is inverted, reflecting a bullish commercial outlook, November beans could look to extend this uptrend to the 50% retracement level near $10.64 or the 67% retracement level of $11.20. Major resistance on the market's monthly chart is at the November high of $10.86 1/4.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.49, up 18 cents for the week. While the secondary (intermediate-term) trend remains up, the SR.X was unable to hold near its spike high of $5.80 closing back below resistance of $5.61 1/2. This price marks the 67% retracement level of the previous downtrend from $6.23 through the low of $4.38. Also, the close near last week's low of $5.47 sets up a potential island top pattern if the market comes under pressure early next week.

SRW Wheat: The September Chicago contract closed 22.50cts higher at $5.90 1/2. Sep Chicago wheat quickly extended its secondary (intermediate-term) uptrend, posting a high of $6.17 1/2. This was a strong test of resistance near $6.15 3/4, the 50% retracement level of the previous downtrend from $7.62 through the low of $4.69 1/4. Despite the sell-off at the end of the week, stochastics remain bullish, indicating the contract should be able to test this resistance again over the coming weeks.

HRW Wheat: The September Kansas City contract closed 22.75cts higher at $5.91 3/4. The contract extended its secondary (intermediate-term) uptrend beyond initial resistance near $6.02, the 33% retracement level of the previous downtrend from $8.15 through the low of $4.95 1/2. Despite pulling back from its high ($6.11 1/2), Sep KC wheat still looks capable of testing its 50% retracement level of $6.55 1/4.

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Posted at 7:59PM CDT 07/03/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The August contract closed $2.700 higher at $151.225. Despite the higher weekly close the secondary (intermediate-term) trend of August live cattle remains down. The contract was able to rally off support near $148.125, the 38.2% retracement level of the previous uptrend, to test longer-term resistance near $152.25. Weekly stochastics are still bearish, indicating the contract could eventually work toward support at the 50% retracement level near $146.20.

Feeder Cattle: The August contract closed $0.200 higher at $217.45 last week. August feeder cattle remain in a secondary (intermediate-term) downtrend. Weekly stochastics are bearish indicating the contract should extend this sell-off to next support near $212.25, a price that marks the 50% retracement level of the previous uptrend from $196.675 through the high of $227.80.

Lean hogs: The August contract closed $3.55 higher at $76.375 last week. August lean hogs posted a strong rally last week, putting the contract in position to test resistance at $79.225. This price marks the 33% retracement level of the previous secondary (intermediate-term) downtrend from $95.35 through the recent low of $71.175. Weekly stochastics remain neutral.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.94, up 31 cents for the week. Cash corn extended its secondary (intermediate-term) uptrend through resistance at $3.84, a price that marks the 50% retracement level of the previous downtrend from $4.86 through the low of $2.81. Given that weekly stochastics remain bullish, the NCI.X could now target the 67% retracement level of $4.18.

Soybean meal: The August contract closed $15.30 higher at $350.10. The secondary (intermediate-term) trend remains up. Given the continued bullish commercial outlook indicated by the market's inverted forward curve, August bean meal should be able to move above its previous spike high of $365.20. Weekly stochastics remain bullish.

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Posted at 7:58PM CDT 07/03/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.68 lower at $61.58. The secondary (intermediate-term) trend is down with the spot-month contract testing support at $61.49. This price marks the 33% retracement level of the previous uptrend from $45.19 through the high of $69.22. Weekly stochastics remain bearish indicating a test of the 50% retracement level of $57.41 is likely.

Crude Oil: The spot-month contract closed $4.11 lower at $55.52. As expected, the secondary (intermediate-term) trend turned down last week as the spot-month contract posted a new 4-week low of $55.41. Given the close near its new low the market could see a breakaway bearish gap next week with a lower open Sunday evening. Next support is pegged at $52.31, a price that marks the 50% retracement level of the previous uptrend from $42.03 through the high of $62.58. The 67% retracement level is down at $48.87.

Distillates: The spot-month contract closed 6.35cts lower at $1.7993. The secondary (intermediate-term) trend remains sideways with the spot-month contract moving toward trendline support pegged this week at $1.7624. If the market fails to find buying there, the spot-month contract could slide back to a test of the previous low of $1.6643. Weekly stochastics are neutral.

Gasoline: The spot-month contract closed 4.70cts lower at $2.0015. The secondary (intermediate-term) downtrend looks to be gaining strength with the spot-month contract in position to post a new 4-week low below the $1.9934 (last week's low). Given its close near its low, the market could also see a bearish breakaway gap on its weekly chart. Weekly stochastics remain bearish following the crossover above the overbought level of 80% the week of June 14.

Ethanol: The spot-month contract closed 4.90cts higher at $1.6280. The secondary (intermediate-term) uptrend continues to strengthen with the spot-month contract moving to a new 4-week high of $1.6340 last week. The next target is its previous high of $1.7090, then $1.7785. This latter price marks the 50% retracement level of the previous downtrend from $2.2650 through the low of $1.2920.

Natural Gas: The spot-month contract closed fractionally lower at $2.770. The secondary (intermediate-term) trend remains sideways. Resistance is the recent high of $3.115 while initial support is at the low of $2.556. The most recent signal by weekly stochastics is a bullish crossover below the oversold level of 20% indicating the market could continue to see buying interest.

Propane (Conway cash price): Conway propane closed 0.12ct higher at $0.3400. The secondary (intermediate-term) trend remains sideways-to-up with initial resistance at the 4-week high, last week's high of $0.3525. Support is at the low of $0.2675. Weekly stochastics are neutral-to-bullish indicating the market could continue to see increased buying interest.

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Posted at 7:57PM CDT 07/03/15 by Darin Newsom
 

Thursday 07/02/15

Whiplash Wheat

Back before the television show MASH turned into a drama, it had a number of episodes that were so funny their lines have become part of everyday humor. If I ever need a stand in for something crazy, it's always Captain Tuttle. If in Chicago and hungry for good barbeque, I ask for Adam's Ribs in Dearborn Station. This week, watching the wheat market has reminded me of another classic episode, "Deal Me Out".

Source: DTN ProphetX

The setup is this: During a marathon poker game at the camp, Corporal Radar O'Reilly supposedly hits an elderly Korean gentleman with a jeep. Captain Sam Pak, a visiting South Korean doctor, recognizes the old man and says, "Well, you know what you got there, Henry (Colonel Blake). You got the famous Whiplash Wang." It turns out the elder Korean made a living pretending to be hit by vehicles.

After all that, how did wheat remind me of an episode of MASH? Take a look at the attached daily chart for the September Chicago (SRW) contract and you'll see for yourself. Tuesday saw the contract post a high of $6.17 1/2 before closing at $6.15 3/4, up 32 1/4 cents from Monday's settlement. Then just to prove wheat is still wheat, Wednesday's session saw the contract fall to a low of $5.76, down 39 3/4 cents for the day, before closing at $5.88 1/2. If that isn't whiplash, from a market as old as recorded time, then I don't know what is.

A sidenote here: psychotic feeder cattle could make an equally strong, if not stronger, case for whiplash. In that fun little market the more active (an understatement, to be sure) August contract rallied $3.35 Monday, fell the limit $4.50 Tuesday, before rallying almost $4.50 Wednesday.

Anyway, back to wheat. Despite the recent histrionics the market is in an uptrend on both its weekly (secondary, intermediate-term) and monthly (major, long-term) charts. The last two weeks have seen the September Chicago contract test resistance at $5.66 3/4 and $6.15 3/4, prices that mark the 33% and 50% retracement levels of its previous secondary downtrend from $7.62 through its contract low of $4.99 1/4. It was the test of the latter mark, the 50% retracement level, earlier this week that sparked the renewed selling interest that has driven the contract lower.

The DTN National SRW Wheat Index (SR.X, national average cash price) tends to post a seasonal rally (weekly close only) from mid-June through mid-August, averaging a gain of about 11% (chart not shown). However, it should be noted that the 2-week rally of this year's low weekly close of $4.60 (third week of June) has seen almost a 20% increase in the SR.X (calculated at $5.49 Wednesday evening). Therefore it is possible that the cash market may have established a minor (short-term) top, and could look to consolidate within a wide range, thanks to the volatility of the underlying futures market, over the next few weeks.

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Posted at 8:30AM CDT 07/02/15 by Darin Newsom
 

Wednesday 07/01/15

Monthly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.89, up 56 cents for the month. The NCI.X confirmed it has moved into Wave 3 of a 5-Wave uptrend (Elliott) with a move above its Wave 1 peak of $3.80 (December 2014). Just for good measure, the NCI.X also established a bullish reversal after establishing a new low of $3.29 for Wave 2. Initial resistance is pegged at $4.10, the 23.6% retracement level of the previous downtrend from $8.26 through the October 2014 low of $2.81. The long-term upside price target is between $4.63 and $4.90.

Cash corn, corn futures, and cash soybeans all pulled off "Papillon's Escape" at the end of June. (Source: DTN ProphetX)

Corn (Futures): The December contract closed at $4.31 1/2, up 80 cents on the monthly chart. The strong rally at the end of the month confirmed the corn market has moved into Wave 3 of a 5-Wave (Elliott) major (long-term) uptrend. Not only did futures establish a bullish reversal, bringing an end to Wave 2, it also moved through the Wave 1 peak of $4.17 posted during December 2014. The initial upside price target is $5.21, the 33% retracement level of the previous downtrend from $8.49 through $3.18 1/4.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $10.12, up $1.11 for the month. The NSI.X moved into Wave 3 of its major (long-term) 5-Wave uptrend (Elliott), closing above its Wave 1 peak of $10.08. The initial upside target is between $11.49 and $11.93, prices that mark the 33% and 38.2% retracement levels of the previous downtrend from $17.48 through the low of $8.50.

Soybeans (Futures): The November contract closed at $10.37 1/4, up $1.03 1/4 on the monthly chart. Though not confirming a move to Wave 3 of a major (long-term) 5-Wave uptrend (Elliott), soybean futures posted a strong rally at the end of June. The initial target remains the Wave 1 peak of $10.86 1/4 posted in November 2014. Assuming an eventual bullish breakout the initial upside target is near $11.98 3/4, a price that marks the 33% retracement level of the previous downtrend from $17.89 through the low of $9.04.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.80 up $1.27 cents for the month. The major (long-term) trend has turned up, confirming a possible double-bottom formation between the September 2014 low of $4.25 and the May 2015 low of $4.38. Initial resistance is near $6.00, a price that marks the 33% retracement level of the previous major downtrend from $11.86 through the low of $3.12. Monthly stochastics are bullish.

SRW Wheat (Futures): The September Chicago contract closed at $6.15 3/4 up $1.38 3/4 on the monthly chart. The major (long-term) trend looks to have turned up with the strong rally at the end of the month. Initial resistance is pegged near $6.26 1/2, with longer-term resistance up at $7.33 1/4.

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Posted at 4:47AM CDT 07/01/15 by Darin Newsom
 
Monthly Analysis: Livestock Markets

Live Cattle: The August contract closed at $148.075, down $3.20 on the monthly chart. The major (long-term) trend remains down with support between $141.85 and $137.30. These prices mark the 33% and 38.2% retracement levels of previous uptrend from $79.975 (March 2009 low) through $172.75 (November 2014 high). The 50% retracement level is down near $126.35.

Feeder Cattle: The August contract closed at $214.725, down $8.225 on the monthly chart. The major (long-term) trend remains down. Initial support is near $192.375, a price that marks the 33% retracement level of the previous uptrend from $85.50 (December 2008 low) through $245.75 (October 2014 high). The 50% retracement level is down at $165.625.

Lean Hogs: The August contract closed at $74.375, down $9.075 on the monthly chart. Despite the sharp sell-off, the major (long-term) trend remains up. The pullback by August lean hogs in June (low of $71.175) resulted in at test of support near $71.60, the 50% retracement level of the initial rally from $57.85 (March 2015) through the high of $85.325 (May 2015). The 67% retracement level is down near $67.00.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.89, up 56 cents for the month. The NCI.X confirmed it has moved into Wave 3 of a 5-Wave uptrend (Elliott) with a move above its Wave 1 peak of $3.80 (December 2014). Just for good measure, the NCI.X also established a bullish reversal after establishing a new low of $3.29 for Wave 2. Initial resistance is pegged at $4.10, the 23.6% retracement level of the previous downtrend from $8.26 through the October 2014 low of $2.81. The long-term upside price target is between $4.63 and $4.90.

Soybean meal: The most active December contract closed at $345.40, up $39.70 on the continuous monthly chart. Soybean meal established a bullish key reversal in June, turning the major (long-term) trend up. Given the continued bullish commercial outlook indicated by the market's forward curve, the upside target is between $418.40 and $459.60. These prices mark the 50% and 67% retracement levels of the previous downtrend from $541.80 through the low of $295.10.

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Posted at 4:44AM CDT 07/01/15 by Darin Newsom
 
Monthly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed at $63.50, down $2.07 on the monthly chart. While the major (long-term) trend remains up, a secondary (intermediate-term) downtrend could take the spot-month contract back to a test of support at $57.41. This price marks the 50% retracement level of the initial rally from the January 2015 low of $45.19 through the April 2015 high of $69.63.

Crude Oil: The spot-month contract closed at $59.34, down $0.96 on the monthly chart. The major (long-term) trend remains up with the spot-month contract testing resistance between $59.21 and $66.27. These prices mark the 23.6% and 33% retracement levels of the previous downtrend from $114.83 (May 2011 high) through $42.03 (low from March 2015). Initial support is pegged at $55.74, the 33% retracement level of the rally from $42.03 (March 2015 low) through $62.58 (May 2015 high). Monthly stochastics remain bullish following the crossover below the oversold level of 20% posted at the end of April.

Distillates: The spot-month contract closed at $1.8866, down 6.87cts on the monthly chart. The major (long-term) trend looks to have turned sideways with resistance at the May high of $2.0572 and support at the January 2015 low of $1.5890. Monthly stochastics are neutral-to-bullish, below the oversold level of 20%.

Gasoline: The spot-month contract closed at $2.0896, up 0.38ct on the monthly chart. The major (long-term) trend of the market remains up. However, the spot-month contract continues to test resistance at $2.0869, the 38.2% retracement level of the previous downtrend from $3.4789 (April 2011 high) through $1.2265 (January 2015 low). The continued strengthening of the backwardation in the market's forward curve would suggest an extended rally to the 50% retracement level of $2.3527.

Ethanol: The spot-month contract closed at $1.612, up 7.9cts on the monthly chart. The key to the ethanol market could be monthly stochastics, with the last major (long-term) signal a bullish crossover below the oversold level of 20% at the end of April. This continues to indicate the major trend is up. If so initial resistance is pegged at $1.712, a price that marks the 23.6% retracement level of the previous downtrend from $3.07 through the low of $1.292.

Natural Gas: The spot-month contract closed at $2.825, up 18.3cts on the monthly chart. The major (long-term) trend remains up with an initial upside target of $3.216, the 23.6% retracement level of the previous downtrend from $5.72 through the low of $2.443. The 33% retracement level is up at $3.534.

Propane (Conway cash price): Conway propane closed at $0.3500, down 3.00cts on its monthly chart. While the market posted a new low of $0.2675 during June, monthly stochastics continue to indicate a potential major (long-term) uptrend is in place. Initial resistance is calculated at $0.5542, a price that marks the 23.6% retracement level of the previous downtrend from $1.4825 through the June 2015 low.

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Posted at 4:42AM CDT 07/01/15 by Darin Newsom
 

Tuesday 06/30/15

U.S. Dollar Index: An Unchanged Course

Source: DTN ProphetX

The Greek economic tragedy, will it ever end? This past month has seen headlines insinuating the final act of the drama ranging from one end of the spectrum to the other. Yet, as June comes to an end, the situation seems far from resolved. And the volatility in global markets, including the U.S. dollar index (USDX) continues.

Last week I had the opportunity to speak at a biofuels conference just outside Minneapolis, Minnesota. I was on a panel of three speakers, and found myself in respectful disagreement on most things market related with one of the other presenters. As it turns out, one of the major differences was our view on the direction of the USDX. As most of you know I'm bearish, and have been for quite some time. He, on the other hand, was equally bullish. So much so that a friendly wager was offered, one that I declined.

As the last day of June gets under way, my view of the major (long-term) trend of the USDX is unchanged. The index continues to be influenced by its 2-Month Reversal from March and April 2015, in conjunction with a bearish crossover by monthly stochastics above the overbought level of 80% at the end of April, all indicating the major trend was now down. Early May saw the USDX test support at 93.383, a price that marks the 23.6% (Fibonacci) retracement level of the previous major uptrend from the low of 70.698 (March 2008) through the high of 100.390 (March 2015).

This did spark a rally in early June to a test of resistance at 97.618, the 61.8% retracement level of the initial sell-off from the March 2015 high through the May 2015 low of 93.133. Since then the USDX has stabilized and is priced near the mid-point of the June range from 97.680 to 93.563 on the last day of the month.

Given that monthly stochastics remain bearish, the most likely scenario is that the USDX resumes its major downtrend over the course of the next few months. However, with the Fed expected to make a move (or two) on interest rates before the end of the year, the underlying fundamentals of the USDX remain neutral-to-bullish. Applying what we know about fundamentals to retracements puts support between the 33% level of 90.503 and the 38.2% level of 89.048, with an outside chance at best of a 50% retracement back to 85.544.

A stronger case for support at the 38.2% retracement level to hold is made when adding analysis of the weekly chart to the mix. The secondary (intermediate-term) trend is also down, though stochastics are nearer the oversold level of 20% than monthly stochastics. The 50% retracement level of the previous secondary uptrend from 78.906 (low from the week of May 5, 2014) through the 100.390 high (week of March 9, 2015) is 89.648. Notice that this is in line with expected support on the monthly chart (90.503 to 89.048).

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

Posted at 7:32AM CDT 06/30/15 by Darin Newsom
 

Saturday 06/27/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.63, up 29 cents for the week. Cash corn looks to have reestablished a secondary (intermediate-term) uptrend, easily moving through resistance at its previous 4-week high of $3.46. The NCI.X closed at a test of resistance, with $3.63 marking the 67% retracement level of the previous downtrend from $3.80 through the recent low of $3.29. With weekly stochastics bullish and the major (long-term) trend up, the next upside target for the NCI.X is its December 2014 high of $3.80.

Corn (Old-crop): The September contract closed 33.75cts higher at $3.92 1/2. Sep corn was able to reestablish its secondary (intermediate-term) uptrend, easily moving through its previous 4-week high of $3.75 3/4. Last week's rally saw the contract test resistance between $3.93 and $4.06 1/2, posting a high of $3.97. With weekly stochastics bullish and the major (long-term) trend up, Sep corn could look to test its December 2014 high of $4.33 3/4.

Corn (New-crop): The December contract closed 33.25cts higher at $4.02. Dec corn abruptly reestablished its secondary (intermediate-term) uptrend, posting a new 4-week high of $4.06 1/2. This is also a test of resistance between $4.01 1/4 and $4.14 1/4, prices that mark the 50% and 67% retracement levels of the previous downtrend from $4.40 (week of December 29) through the recent low of $3.62 1/2. With weekly stochastics bullish and the major (long-term) trend up, Dec corn should be able to extend this rally to at least a test of its December 2014 high ($4.40).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.65, up 26 cents for the week. The NSI.X extended its secondary (intermediate-term) uptrend, with next resistance at $10.03. This price marks the 23.6% retracement level of the downtrend from $14.97 through the low of $8.50. Weekly stochastics remain bullish.

Soybeans (old-crop): The August contract closed 42.50cts higher at $9.97 3/4 last week. August soybeans extended the recently established secondary (intermediate-term) uptrend, nearing a test of initial resistance at $10.30 1/4. This price marks the 33% retracement level of the previous downtrend from $12.72 1/2 through the low of $9.09 1/4. With the August to September futures spread inverted, reflecting a bullish commercial outlook, and weekly stochastics bullish the contract should extend this rally to at least a 50% retracement ($10.91) or possibly a 67% retracement ($11.51 1/2).

Soybeans (new-crop): The November contract closed 46.25cts higher at $9.86 last week. November soybeans extended the secondary (intermediate-term) uptrend to a high of $10.02 before falling back at Friday's close. Resistance remains at $10.07 3/4, a price that marks the 33% retracement level of the previous downtrend from $12.32 through the low of $8.95 3/4. Given that the new-crop forward curve is growing more bullish, and that the major (long-term) trend remains up, November beans could look to extend this uptrend to the 50% retracement level near $10.64 or the 67% retracement level of $11.20. Major resistance on the market's monthly chart is at the November high of $10.86 1/4.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $5.31 1/4, up 71 cents for the week. The SR.X saw its secondary (intermediate-term) uptrend strengthen as it moved through its previous 4-week high of $5.05 1/4. Resistance is pegged at $5.30 1/2, a price that marks the 50% retracement level of the previous downtrend from $6.23 through the low of $4.38. However, given last week's strong close and the fact stochastics remain bullish the SR.X could extend its uptrend to the 67% retracement level near $5.61 1/2.

SRW Wheat: The September Chicago contract closed 75.50cts higher at $5.68. The contract reestablished its secondary (intermediate-term) uptrend, quickly moving to a test of initial resistance at $5.66 3/4. This price marks the 33% retracement level of the previous downtrend from $7.62 through the low of $4.69 1/4. Given the uptrend in the September to December futures spread, reflecting a more bullish commercial outlook, and bullish weekly stochastics the contract could extend its uptrend to the 50% retracement level near $6.15 3/4.

HRW Wheat: The September Kansas City contract closed 56.00cts higher at $5.69. The contract looks to have reestablished its secondary (intermediate-term) uptrend, closing near last week's high of $5.72. Stochastics remain bullish, indicating a possible extension of this rally to a test of resistance near $6.02, the 33% retracement level of the previous downtrend from $8.15 through the low of $4.95 1/2.

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

Posted at 8:25AM CDT 06/27/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The August contract closed $2.155 lower at $148.525. Not only did August live cattle close lower, the contract did so after establishing a bearish outside week on its weekly chart. This should strengthen the secondary (intermediate-term) downtrend. However, last week saw the contract test support near $148.125, the 38.2% retracement level of the previous uptrend from $137.975 through the high of $154.40. Given that the carry in the August to October futures spread continues to reflect a relatively bullish commercial outlook, August live cattle could find renewed buying interest between the 38.2% retracement level and the 50% retracement level near $146.20.

Feeder Cattle: The August contract closed $6.175 lower at $217.255 last week. August feeder cattle confirmed recent signals of a secondary (intermediate-term) downtrend, following up the previous week's bearish crossover by stochastics above the overbought level of 80% with a bearish outside week. The contract immediately fell to a test of support near $217.50, the 33% retracement level of the previous uptrend from $196.675 through the high of $227.80. Next support is at the 50% retracement level near $212.25. Given momentum (stochastics) are growing more bearish, a slide back to the 67% retracement level near $207.05 is likely.

Lean hogs: The August contract closed $1.00 lower at $72.825 last week. August lean hogs fell to a new contract low of $71.175 before posting a solid rally into Friday's close. This move could lead to the market turning sideways within last week's trading range (a high of $74.05).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.63, up 29 cents for the week. Cash corn looks to have reestablished a secondary (intermediate-term) uptrend, easily moving through resistance at its previous 4-week high of $3.46. The NCI.X closed at a test of resistance, with $3.63 marking the 67% retracement level of the previous downtrend from $3.80 through the recent low of $3.29. With weekly stochastics bullish and the major (long-term) trend up, the next upside target for the NCI.X is its December 2014 high of $3.80.

Soybean meal: The July contract closed $18.20 higher at $341.30. The secondary (intermediate-term) trend remains up. However, the contract did fall back a bit from its initial test of resistance at $351.90. This price marks the 50% retracement level of the previous downtrend from $409.30 through the low of $294.40. Given the continued bullish commercial outlook indicated by the market's inverted forward curve, July bean meal should be able to extend its rally to at least a test of the 67% retracement level of $371.00.

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

Posted at 7:37AM CDT 06/27/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $0.24 higher at $63.26. The secondary (intermediate-term) trend is sideways-to-down with support at $61.49. This price marks the 33% retracement level of the previous uptrend from $45.19 through the high of $69.22. Weekly stochastics remain bearish indicating the spot-month contract could move to a test of the 50% retracement level of $57.41.

Crude Oil: The spot-month contract closed $0.02 higher at $59.63. The secondary (intermediate-term) trend remains sideways with the spot-month contract holding below resistance between $58.60 and $65.41. These prices mark the 23.6% and 33% retracement levels of the previous secondary downtrend from $112.24 through the low of $42.03. Support is at the recent low of $56.51. Stochastics continue to hold above the overbought level of 80% indicating a breakout of the sideways trend would likely be to the downside.

Distillates: The spot-month contract closed 0.41ct lower at $1.8628. The secondary (intermediate-term) trend remains sideways with the spot-month contract holding below resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Support is at the recent low of $1.8185. Weekly stochastics are neutral-to-bullish.

Gasoline: The spot-month contract closed 1.01cts lower at $2.0485. The secondary (intermediate-term) trend looks to be down. Weekly stochastics have recently established a bullish crossover above the overbought level of 80%, in conjunction with the spot-month contract falling back from its test of resistance at $2.1892. This price marks the 50% retracement level of the downtrend from $3.1520 through the low of $1.2265. Initial support is pegged at $1.8664, the 33% retracement level of the previous uptrend from the $1.2265 low through the recent high of $2.1858.

Ethanol: The spot-month contract closed 10.40cts higher at $1.5790. The secondary (intermediate-term) uptrend strengthened again last week with the spot-month contract posting a solid rally off its test of support at $1.4309. This price marks the 67% retracement level of the initial rally from $1.2920 through the high of $1.7090. Given the continued inverse in the market's forward curve, the upside price target remains between $1.7785 and $1.9410.

Natural Gas: The spot-month contract closed 4.3cts lower at $2.773. The secondary (intermediate-term) trend remains sideways. Resistance is the recent high of $3.115 while initial support is at the 4-week low of $2.556. The most recent signal by weekly stochastics is a bullish crossover below the oversold level of 20% indicating the market could continue to see buying interest.

Propane (Conway cash price): Conway propane closed 5.01cts higher at $0.3388. The secondary (intermediate-term) trend is sideways-to-up with initial resistance at the 4-week high of $0.4025. Support is at the low of $0.2675. Weekly stochastics are neutral-to-bullish indicating the market could continue to see increased buying interest.

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

Posted at 7:14AM CDT 06/27/15 by Darin Newsom
 

Sunday 06/21/15

Listening For Thunder

2015 Introduction: Good morning everyone. I wrote this piece as an On the Market column back in 2008, about this same time of year. However, I didn't submit it to run on DTN until early November, after Dad had passed away. I thought of thispiece, and Dad, again this morning as I watch another rain stom move into Omaha. Best wishes and Happy Father's Day.

This Father's Day morning, I'm listeng for thunder as another rainstorm moves into Omaha. (Source: DTN)

Over the last few weeks as I do my early morning work at home, I've been reminded of a fond memory. Sitting at the dining room table typing out early morning analysis I've listened to the rain storms moving in, announced and preceded by the far off roll of thunder.

The sound takes me back to growing up on a small farm outside of Lewis, Kansas where it didn't rain all that often and when it did it usually occurred overnight. I was curious why we were seldom able to see it rain, so I remember asking Dad once why the storms tended to move in at night. Of course he had an answer - Dad's always have an answer - but unfortunately I don't recall what it was.

Then early one summer morning I heard Dad hit that squeaky bottom stair as he made his way up to my room. When he got there he said, "I want you to hear this. Listen closely and you can hear the thunder way off in the distance". We waited, and sure enough in a short time the low rumble of thunder reverberated over the old farmhouse.

We went downstairs and watched the rain come in. While farmers have always looked forward to rain, I was happy for a different reason. I wasn't wired to sit on a tractor and rain usually meant a break from having to spend all day driving back and forth in the field. You see when I drove the tractor my mind began to wander and then inevitably, the tractor would begin to wander. Sooner rather than later, the swaths through the field always had that same rainbow pattern, a particular point of humor with Dad whose reputation was that you could fire a rifle down his rows they were that straight.

As I listen to the summer thunder, I think of other things Dad used to say. Yes, I know he didn't create these little sayings, he didn't patent them or put a trademark on them, but he did use them and I and my brothers remember them to this day.

"It won't rain until the wind stops blowing, and the wind won't stop blowing until it rains". This one seemed to be borne of spending his entire life watching summer after summer of lots of wind and very little rain. Yes, there is a bit of despondency in this saying but also a somewhat cynical sense of hope. I guess at some point the wind could possibly stop blowing in Kansas, stop blowing the ground around in large clouds of dust that were as common as tumbleweeds in that area each summer. It's no wonder that one of the few "rock" songs Dad would ever sing along with on the radio was Kansas' "Dust in the Wind".

"If you can cut the mud holes you won't need to cut the rest of the field." This one seems a logical extension of the first saying. Dad had one field in particular that didn't seem to fit the area for it was a mucky quagmire. A rain on this particular piece of ground could keep you out of the field for a week. However, when it came time for wheat harvest Dad knew that if the mud holes were dry there hadn't been enough rain to make much of a crop on the rest of the field.

"Plant in the dust and the bins will bust." Are you picking up on a theme here? Most of Dad's sayings had something to do with dry, dusty conditions though this one was bursting with optimism. Honestly, there were many years when farmers had no choice but to drill the wheat into ground that hadn't seen rain in weeks/months and hope for the best.

I've carried the lessons of these sayings with me at every stop I've made in my career as the underlying logic can be applied to situations regardless of profession. I hope that I can pass them along to my own kids.

Dad can't listen for the distant thunder anymore, nor can he watch the effects of the incessant Kansas wind on the ground he used to scratch a living off of. But I know I will never forget one particular morning as he and I watched a summer rainstorm move in and the lessons about life that it brought with it.

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

Posted at 8:37AM CDT 06/21/15 by Darin Newsom
Comments (1)
My Grandpa had one "If your going to have a terrible crop, hope it is from too dry, not too wet, as there is a lot of misery with too wet" Brad Paumen
Posted by Unknown at 8:17PM CDT 06/21/15
 

Saturday 06/20/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.34, unchanged for the week. Cash corn remains in a secondary (intermediate-term) sideways trend. Resistance is at $3.47, a price that marks the 33% retracement level of the previous downtrend from $3.80 through the recent low of $3.31. Support is at $3.31, the 50% retracement level of the uptrend from $2.81 through the high of $3.80. Weekly stochastics are neutral below the oversold level of 20%.

Weekly chart for December corn discussed in the comment section on 6/23 (Source: DTN ProphetX)

Corn (Old-crop): The July contract closed 0.25cts higher at $3.53.25. The secondary (intermediate-term) trend remains sideways as the nearby July contract (still being used for cash price calculations and registering on the continuous monthly chart) holds above it double-bottom at $3.46 3/4. A break of this secondary support could lead to a test of major (long-term) support at the October 2014 low of $3.18 1/4.

Corn (New-crop): The December contract closed 0.75cts lower at $3.68 3/4. Last week's move to a new contract offsets the bullish reversal posted the week of June 1, indicating the secondary (intermediate-term) trend is sideways-to-down. Despite weekly stochastics below the oversold level of 20%, noncommercial traders continue to pressure the corn market in general. Friday's weekly CFTC Commitments of Traders report showed this group increasing their net-short futures position by 40,138 contracts.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.39, up 30 cents for the week. The NSI.X extended its secondary (intermediate-term) uptrend, though unable to move through initial resistance near $9.50. The consecutive weeks of April 27 and May 4 saw highs of $9.50 and $9.48 respectively. Weekly stochastics are bullish, indicating the NSI.X should extend this uptrend to resistance at $10.03. This price marks the 23.6% retracement level of the downtrend from $14.97 through the low of $8.50.

Soybeans (old-crop): The July contract closed 31.50cts higher at $9.71 1/2 last week. July soybeans (still used in calculating cash price) posted a number of bullish technical signals last week, including a bullish outside week and a new 4-week high. All while trade volume for the week (681,222 contracts) increased from the previous week (637,767 contracts). Indications are that the secondary (intermediate-term) uptrend continues to strengthen, with Friday's weekly CFTC Commitments of Traders report showing noncommercial interests reduction their net-short futures holdings by 18,169 contracts.

Soybeans (new-crop): The November contract closed 35.50cts higher at $9.39 3/4 last week. November soybeans extended the recently established secondary (intermediate-term) uptrend, posting similar bullish technical signals as the old-crop July contract with a sharp increase in trade volume (580,685 contracts compared to the previous week's 417,981 contracts). Unlike the July though, support also came from commercial buying with the carry in the November to January futures spread trimmed by 1 1/2 cents to close at 5 3/4 cents.

Wheat (Cash): The DTN National HRW Wheat Index (HW.X, national average cash price) closed at $4.68, down 22 cents for the week. The weekly chart remains a mix of gaps, indicating the secondary (intermediate-term) trend remains sideways. Resistance is at the recent high of $5.19 (week of May 18) and support the recent low of $4.49 (week of April 27). Seasonally (using both 5-year and 10-year indexes) the HW.X tends to post a low the last full week of June through the first weekly close July, a timespan covering the next two weeks.

HRW Wheat: The July Kansas City contract (still used for calculating cash prices) closed 22.75cts lower at $5.03 1/4. The secondary (intermediate-term) trend is sideways again, with resistance at the recent high of $5.64 1/2 (week of May 18) and support at the contract low of $4.85 1/2. Weekly stochastics are neutral above the oversold level of 20% with the last trend-indicating signal a bullish crossover below 20% the week of May 4.

SRW Wheat: The July Chicago contract (still used for calculating cash prices) closed 15.25cts lower at $4.88 1/2. The secondary (intermediate-term) trend is now sideways with resistance is at the 4-week high of $5.37 1/2 and support at the contract low of $4.60 3/4. Weekly stochastics are neutral, above the oversold level of 20%. The most recent trend-indicating signal was a bullish crossover below 20% the week of May 4.

The weekly Commitments of Traders report showed positions held as of Tuesday, June 16.

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

Posted at 9:47AM CDT 06/20/15 by Darin Newsom
Comments (1)
Update: Dec corn is pushing toward a test of resistance near $3.88 1/4, a price that marks the 33% retracement level of its previous downtrend from $4.40 (week of 12/29/2014) through the recent contract low of $3.62 1/2. The last signal by weekly stochastics was a bullish crossover (week of May 11 and June 1). If Dec corn can break through overhead resistance, sideways range of 25.75 ($3.88 1/4 - $3.62 1/2) puts target near 67% retracement level of $4.14 1/4. I posted the chart in the blog from last weekend.
Posted by DARIN NEWSOM at 12:03PM CDT 06/23/15
 
Weekly Analysis: Livestock Markets

Live Cattle: The August contract closed $0.125 lower at $150.675. The secondary (intermediate-term) trend remains down with resistance near $152.25, a price that marks the 67% retracement level of the previous downtrend from $159.40 through the low of $137.975. Weekly stochastics are bearish following a crossover above the overbought level of 80% the week of June 1. Initial support is at $148.125, the 38.2% retracement level of the previous secondary uptrend from $137.975 through the recent high of $154.40.

Feeder Cattle: The August contract closed $0.025 lower at $223.425 last week. While the minor (short-term) trend could see the contract trend sideways, holding between resistance levels of $222.175 and $224.325, indications are that the secondary (intermediate-term) and major (long-term) trends are down. Secondary support is near $217.45, a price that marks the 33% retracement level of the previous uptrend from $196.675 through the high of $227.80. The 4-week low is at $218.375.

Lean hogs: The August contract closed $2.90 lower at $73.825 last week. August lean hogs tested their contract low of $73.55 last week, posting a low of $73.65. However, weekly stochastics remain bearish indicating the contract could move to a test of major (long-term) support between $71.575 and $67.00, prices that mark the 50% and 67% retracement levels of the previous major uptrend from $57.85 through the high of $85.325.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.34, unchanged for the week. Cash corn remains in a secondary (intermediate-term) sideways trend. Resistance is at $3.47, a price that marks the 33% retracement level of the previous downtrend from $3.80 through the recent low of $3.31. Support is at $3.31, the 50% retracement level of the uptrend from $2.81 through the high of $3.80. Weekly stochastics are neutral below the oversold level of 20%.

Soybean meal: The July contract closed $5.70 higher at $323.10. The secondary (intermediate-term) trend remains up. The contract continues to hold below resistance at $332.70, a price that marks the 33% retracement level of the previous downtrend from $409.30 through the low of $294.40. Support continues to come from noncommercial buying, with Friday's CFTC Commitments of Traders report showing this group increasing their net-long futures holdings by 13,381 contracts. Also, the July contract is in the process of establishing a bullish key reversal on the monthly (long-term) chart.

The weekly Commitments of Traders report showed positions held as of Tuesday, June 16.

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

Posted at 8:34AM CDT 06/20/15 by Darin Newsom
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