Technically Speaking
Darin Newsom DTN Senior Analyst

Tuesday 08/25/15

Dec Corn: Wave on Wave

Do you all have your special technical analysis goggles you received with your DTN subscription? Good, you'll need them today as we take a look at the daily chart for Dec corn.

Source: DTN ProphetX

The first thing you'll notice is that there are a lot of lines on this chart. A lot of lines. But as we break it down you'll see that all of these different price levels mark an important turning point for the contract, and in combination confirm an active Elliott Wave 8-wave cycle.

Wave A: The first wave of a 3-wave downtrend starts at the end of the previous uptrend (naturally). In this case that is the high of $4.54 1/4 on July 14. Wave A was steep, bottoming out at $3.74 1/2 on August 3 (dashed green line).

Wave B: The second wave of a 3-wave downtrend is usually nothing more than a retracement move, its length depending on the strength and/or weakness of the underlying futures spread (commercial outlook). Here we see Dec corn rallied off its $3.74 1/2 low to test resistance near $4.01 (red dashed line). This price marked the 33% retracement level of Wave A, and given the downtrend in the Dec to March futures spread (bottom study) reflecting a more bearish commercial outlook, Dec corn's inability to move past the 33% mark wasn't surprising.

Wave C: The third wave came by way of, ahem, "bearish" yield and production numbers in USDA's August reports on Wednesday the 12th. Dec corn hit a low of $3.57 1/2 before rallying to close at $3.68. Meanwhile, unheralded by most, daily stochastics (second study) were growing more bullish indicating market momentum had changed.

Wave 1: The first wave of a 5-wave uptrend cycle starts the count over using numbers. As Dec corn rallied off its post-report low it climbed to a high of $3.84 1/4 on Friday, August 21. Note that the Wave 1 peak was a test of resistance at $3.85, a price that marked the 61.8% retracement level of Wave C.

Wave 2: Another retracement wave in the 5-wave cycle that usually sees most of Wave 1 erased. Take a close look at the activity from August 21 and you'll see a bearish reversal as Dec corn hit its new high before moving below Thursday's low of $3.78 1/4 before closing lower. Wave 2 was fast and volatile, hitting a low of $3.65 1/2 this past Monday as global markets melted down. However a funny thing happened after Dec corn tested support near $3.66 1/2 (dotted green line), the contract closed higher for the day indicating Monday's low was also the end of Wave 2.

Wave 3: Generally the longest and most volatile wave of the 5-wave cycle that tends to see solid buying from both noncommercial and commercial traders. If you drop your eyes to the third study, volume (green bars) and open interest (blue line), you'll see that Monday's rally occurred on higher volume. Meanwhile, daily stochastics continue to grow more bullish. As for commercial traders, notice the Dec/Mar spread is trending up as well. A move to Wave 3 is confirmed by taking out the Wave 1 high. Dec corn accomplished this during the overnight session, posting a high of $3.86 3/4 early Tuesday.

So where to now? Initial resistance is at $3.89 3/4, the 33% retracement level of the entire 3-wave downtrend from $4.54 1/4 through the $3.57 1/2 low. Beyond that is the 50% retracement level near $4.06. Note that this would be a test of the August 6 high (Wave B peak) of $4.02. Given that the Dec/Mar spread is still in a bearish carry situation (based on its percent of total cost of carry) a 50% retracement might be the most that can be hoped for and may not be seen until the end of Wave 5.

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

Posted at 8:41AM CDT 08/25/15 by Darin Newsom
Comments (1)
Hi Darin, how do you estimate the total cost of carry at any given time? Thanks Abbey
Posted by ABIODUN AWOLAJA at 4:40PM CDT 08/25/15
 

Saturday 08/22/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41, up 2 cents for the week. The secondary (intermediate-term) trend remains sideways with the NCI.X continuing to hold above major (long-term) support at $3.31. The minor (short-term) daily chart continues to show the NCI.X is in Wave 2 of a 5-wave uptrend, with initial support between $3.41 and $3.39. These prices mark the 38.2% and 50% retracement levels of the Wave 1 rally from $3.32 through the high of $3.47. Support at the 61.8% retracement level is down at $3.38.

Source: DTN ProphetX

Corn (Old-crop): The September contract closed 1.25cts higher at $3.65 1/4. While the secondary (intermediate-term) trend in Sep corn looks sideways, technical indicators continue to show mixed signals. Resistance and support remains at the previous week's range from $3.91 1/2 to $3.46 1/2 while weekly stochastics are neutral-to-bearish. Similar to cash corn, the Sep futures contract looks to be in Wave 2 of a minor (short-term) 5-wave uptrend on its daily chart with initial support near $3.64 1/2. However, as a Wave 2 Sep corn could pull back to support between $3.56 and $3.53 1/2.

Corn (New-crop): The December contract closed 1.75cts higher at $3.77 1/4. The December contract should continue to consolidate between $4.02 and $3.57 1/2, the trading range for the week of August 10. The daily chart shows the contract to be moving into Wave 2 of a 5-wave minor (short-term) uptrend with initial support near $3.75 1/4. This price marks the 33% retracement level of Wave 1 from $3.57 1/2 through last Friday's high of $3.84 1/4. Friday also saw the contract post a minor bearish reversal, indicating Wave 2 could possibly extend to the 67% retracement level near $3.66 1/2.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.84, down 32 cents for the week. Technical indicators continue to show the secondary (intermediate-term) and major (long-term) trends are sideways between the extended range from near $10.03 through last October's low of $8.50. However, the minor (short-term) trend on the daily chart remains down indicating the NSI.X should continue to move lower.

Soybeans (Futures): The November contract closed 27.00cts lower at $8.89 1/2. November soybeans moved to a new low of $8.88 indicating both the secondary (intermediate-term) and major (long-term) trends are down. Commercial support, indicated by the uptrend (weakening carry) in the November to January futures spread, continues to be overwhelmed by noncommercial selling. Friday's weekly CFTC Commitments of Traders report showed this group reducing their net-long futures position by 36,807 contracts. Next major support is at the October 2009 low of $8.78 3/4.

SRW Wheat (Cash): The DTN SRW Wheat National Index (SR.X, national average cash price) closed at $4.42, down 8 cents for the week. The SR.X looks to be in a secondary (intermediate-term) sideways trend, consolidating between $4.72 and $4.37. This is the price range from the week of August 10. Weekly stochastics are below 20% indicating the cash market is oversold and nearing a possible bullish turn.

HRW Wheat (Cash): The DTN HRW Wheat National Index (HW.X, national average cash price) closed at $4.28, down 17 cents for the week. The move to a new low ($4.28) extended both the secondary (intermediate-term) and major (long-term) downtrends. Next major support on the monthly chart is at the June 2010 low of $3.42. However, monthly and weekly stochastics are well below 20% indicating the cash HRW market is sharply oversold.

HRS Wheat (Cash): The DTN HRS Wheat National Index (SW.X, national average cash price) closed at $4.55, down 15 cents for the week. The move to a new low of $4.55 extended both the secondary (intermediate-term) and major (long-term) downtrends. Next major support on the monthly chart is pegged at the September 2009 low of $4.45. Weekly and monthly stochastics are below the oversold level of 20% indicating the cash market is sharply oversold.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 18.

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

Posted at 2:59PM CDT 08/22/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The October contract closed $3.00 lower at $143.85. The secondary (intermediate-term) trend remains down with support at the previous low of $143.30. With weekly stochastics still bearish above the oversold level of 20% the contract could extend the secondary trend to a test of major (long-term) support between $141.95 and $137.50. These prices mark the 33% and 38.2% retracement levels of the previous major uptrend from $80.225 through the high of $172.75. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests reducing their net-long futures position to 14,058 contracts.

Feeder Cattle: The October contract closed $7.95 lower at $199.475 last week. The secondary (intermediate-term) trend remains down with support at the previous low of $195.00. Weekly stochastics have moved below the oversold level of 20%, meaning a bullish crossover could occur in the coming weeks. However, the major (long-term) trend remains down, and monthly stochastics bearish, with support pegged near $192.35. The previous major low is $193.00 from February 2015.

Lean hogs: The October contract closed $2.525 lower at $62.825 last week. Weekly stochastics continue to indicate the secondary (intermediate-term) trend is down. Consolidating activity over the last six weeks looks to be a short-term sideways trend with resistance at the recent high of $67.70 and support at the contract low of $59.45.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41, up 2 cents for the week. The secondary (intermediate-term) trend remains sideways with the NCI.X continuing to hold above major (long-term) support at $3.31. The minor (short-term) daily chart continues to show the NCI.X is in Wave 2 of a 5-wave uptrend, with initial support between $3.41 and $3.39. These prices mark the 38.2% and 50% retracement levels of the Wave 1 rally from $3.32 through the high of $3.47. Support at the 61.8% retracement level is down at $3.38.

Soybean meal: The more active December contract closed $0.40 higher at $314.60. Despite Friday's lower close the minor (short-term) downtrend on the daily chart looks to have come to an end. This could lead to the contract rejoining its secondary (intermediate-term) uptrend after testing support the last two weeks at $309.90, th3 67% retracement level of the previous rally from $286.00 through the high of $357.70. Support continues to come from commercial buying interest, as indicated by the uptrend (strengthening inverse in the December to January futures spread.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 18.

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

Posted at 1:52PM CDT 08/22/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Source: DTN ProphetX

Brent Crude Oil: The spot-month contract closed $3.57 lower at $45.46. The secondary (intermediate-term) trend remains down with the spot-month moving below major (long-term) support at the January 2015 low of $45.19. Weekly stochastics are deep in single-digits reflecting a sharply oversold situation. However, pressure continues to come from selling tied to both noncommercial (investment) and commercial traders, the latter indicated by the strengthening contango in the nearby futures spread. Monthly stochastics are also below the oversold level of 20% with the next major low at $36.20 from December 2008.

Crude Oil: The spot-month contract closed $2.05 lower at $40.45. The spot-month contract moved to a new low of $41.35, extending the secondary (intermediate-term) downtrend. Both weekly and monthly stochastics are below the oversold level of 20%, but have done little to spark buying interest from either commercial or noncommercial traders. Friday's CFTC Commitments of Traders report showed the latter reducing their net-long holdings by 15,279 contracts. Next major support is at the December 2008 low of $32.40.

Distillates: The spot-month contract closed 9.55cts lower at $1.4624. The spot-month contract moved to a new low of $1.4507, extending both the secondary (intermediate-term) and major (long-term) downtrends. Next major support is at the March 2009 low of $1.1311. Monthly and weekly stochastics remain well below the oversold level of 20%, though this has not led to increased buying interest from either commercial or noncommercial traders. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests holding a net-long futures position of only 1,932 contracts, down 2,592 contracts from the previous week.

Gasoline: The spot-month contract closed 14.20cts lower at $1.5459. The secondary (intermediate-term) trend remains down. However, the ability of the spot-month contract to hold support at $1.4529, a price that marks the 76.4% retracement level of the previous uptrend from $1.2265 through the high of $2.1858, keeps the major (long-term) uptrend in place. The major (long-term) trend remains up with the secondary downtrend a possible Wave 2 of a 5-wave uptrend cycle. Friday's CFTC Commitments of Traders report showed noncommercial interest increasing their net-long futures position by 2,074 contracts.

Ethanol: The spot-month contract closed 2.30cts lower at $1.4470. While the market remains in a secondary (intermediate-term) sideways-to-down trend, weekly stochastics have moved below the oversold level of 20%. This could set up a potential bullish crossover if the spot-month contract is able to move back toward the high-end of its sideways range at $1.5200. An uptrend in the nearby futures spread continues to reflect support coming from commercial buying.

Natural Gas: The spot-month contract closed 12.5cts lower at $2.676. The secondary (intermediate-term) trend remains sideways. However, the spot-month contract moved below support at $2.704, a price that marks the 67% retracement level of the rally from $2.443 through the high of $3.105. With weekly stochastics neutral-to-bearish the market could see continued selling. Next support is at $2.566, then the major (long-term) low of $2.443.

Propane (Conway cash price): Conway propane closed 1.25cts lower at $0.3375. Despite the lower weekly close the secondary (intermediate-term) trend remains up. Weekly stochastics are bullish indicating the market could regain upside momentum in the coming weeks.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 18.

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

Posted at 1:02PM CDT 08/22/15 by Darin Newsom
 

Friday 08/21/15

USDX: New 4-Week Low

This past week saw the Federal Reserve hedge its comments on a September Fed Fund rate hike, renewed pressure in the U.S. dollar index (USDX) that lead to the establishment of a new 4-year low.

Source: DTN ProphetX

Whew! That was quite a sentence. Let's break it down a bit.

First, some of the uptrend in the USDX from May 2014 through March 2015 was based on the assumption the Federal Reserve would finally raise the Fed Fund rate in 2015. As the year has worn on the presumed date for such a move has been moved back from June, to at least three beginning in September, to maybe not happening until 2016. With interest rates the key fundamental to the USDX, moves on its weekly charts has reflected the change in tide regarding increases.

After posting a high of 100.390 the week of March 9, 2015, the USDX established signals indicating the secondary (intermediate-term) trend had turned down. Weekly stochastics (bottom study) saw a bearish crossover above the overbought level of 80%, confirming the 2-week reversal seen on the weekly chart. The rally that followed was unable to take the USDX to a new high, topping out at 99.990 the week of April 13 as weekly stochastics grew more bearish. Eventually the USDX tested initial support at 92.326, the 33% retracement level of its previous secondary uptrend from 78.906 through the March high.

At that time, mid-May, talk of a Fed move heated up again leading to a recovery rally that tested resistance between 97.973 and 98.677, the 67% to 76.4% retracement levels of the initial sell-off through the low of 93.133. As would be expected, from a technical point of view, the rally stopped there and the USDX looked to turn down again. However, it was reluctant to post a bearish technical signal until this week when it moved below its previous 4-week low of 95.926 (red dotted line) led to another bearish crossover by weekly stochastics.

The USDX now looks to have rejoined its secondary (and major) downtrend with initial support still pegged at 93.236. However, a 50% retracement of its previous secondary uptrend would result in a test of 89.648, a level that is in line with major (long-term) support on the monthly chart between 90.503 and 89.048. These levels mark the 33% and 38.2% retracements of the previous major uptrend from 70.698 (March 2008) through the March 2015 high (100.390).

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

Posted at 9:01AM CDT 08/21/15 by Darin Newsom
 

Sunday 08/16/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.39, down 8 cents for the week. The NCI.X posted a sharp sell-off last week from Monday's high of $3.65 through Wednesday's low of $3.32. The major (long-term) trend remains up with support at $3.31, a price that marks the 50% retracement level of the rally from $2.81 through the high of $4.06. Another key support level is the June low $3.29. A breach of these support levels could set the NCI.X on a path back to last October's low of $2.81. Monthly stochastics remain bullish while weekly stochastics are neutral to bearish.

Source: DTN ProphetX

Corn (Old-crop): The September contract closed 8.75cts lower at $3.64. Sep corn posted confusing technical signals last week, moving to a new low of $3.46 1/2 Wednesday before rallying Thursday and Friday. The contract came within a half-cent of closing a bearish gap on its weekly chart between $3.92 and $3.89 1/4 Monday before starting its sell-off early Tuesday. Weekly stochastics are neutral to bearish though the last secondary (intermediate-term) signal remains a bullish crossover below the oversold level of 20% the week of June 1.

Corn (New-crop): The December contract closed 8.25cts lower at $3.75 1/2. Similar to September corn, Dec corn's weekly chart shows a number of confusing patterns, though ultimately last week's move to a new low looks to be bearish. Monday saw the contract close a bearish gap between $4.02 and $3.39 1/2 on its weekly chart, before a strong sell-off Tuesday and Wednesday led to a new low of $3.57 1/2. The market then rallied Thursday and Friday, though not enough to close higher for the week and establish a bullish reversal. Trade volume and volatility also increased on the weekly chart while the carry in the December to March futures spread strengthened. All of these technical factors could be interpreted as bearish.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.16, down 50 cents for the week. Though technical indicators continue to show the trend of the cash soybean market is sideways, the sharp sell-off by the NSI.X last weekly erased eight weeks of building bullish momentum. This put the NSI.X within striking distance of technical support at $9.02, trendline support at $9.01, and its previous low of $8.89 from the week of May 18.

Soybeans (Futures): The November contract closed 46.75cts lower at $9.16 1/2. Last week's bearish action saw Nov beans come within 5 cents of establishing a new contract low below $8.96 3/4 (week of June 1). With the pattern on the contract's daily chart looking like a bear flag, the contract could see renewed selling this coming week that would take it to a new low. If so it would erase previous bullish patterns on the market's long-term monthly chart and set the stage for an extended sell-off, despite monthly stochastics showing soybeans to be sharply oversold already.

Wheat (SRW futures): The December Chicago contract closed 4.00cts lower at $6.11 3/4. As with the other grains, December Chicago wheat's weekly chart is showing a number of conflicting signals. The contract posted a bearish outside week last week, testing its previous low of $4.85 3/4 before posting a solid rally. This may have established a double-bottom with the interim high all the way up at $5.23 3/4. Support continues to come from commercial buying with uptrends in both the September to December and December to March futures spreads strengthening. On the other hand, Friday's CFTC report showed noncommercial traders adding 1,667 contracts to their net-short futures position.

Wheat (HRW futures): The December Kansas City contract closed 3 3/4cts lower at $5.10. Last Friday's session had the contract in position to establish a bullish reversal on its weekly chart before a late round of selling took it back below the previous week's settlement of $5.13 3/4. Weekly stochastics are showing the contract in an oversold situation, setting the stage for a possible bullish turn in the coming weeks. Support is at last week's new contract low of $4.91.

Wheat (HRS futures): The December Minneapolis contract closed 7.50cts lower at $5.33 3/4. The move to a new contract low indicates the secondary (intermediate-term) trend remains down. Support is at the new low of $5.21 1/4. Weekly stochastics indicate the market has moved back into an oversold situation.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 11.

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

Posted at 10:51AM CDT 08/16/15 by Darin Newsom
Comments (2)
U.S.D.A. had Ohio corn pegged at 160 bu. Pro Farmers first day tour found 113 bu.
Posted by Raymond Simpkins at 4:36PM CDT 08/18/15
You have mentioned inverses as a bullish argument. farm cotton. We inverted in 2011 by $1/ pound when the world almost ran out of cotton. Five years later we are at a stocks to use of 100%. Guess what, cotton is still inverted as the price declined from $2.30 to the current 65 cents. Funds that always trade the front end have changed things. L Mc
Posted by LARRY McCLENDON at 3:07PM CDT 08/19/15
 
Weekly Analysis: Livestock Markets

Live Cattle: The October contract closed $1.675 lower at $146.85. After testing resistance at $149.725 October live cattle posted a bearish outside week, indicating the minor (short-term) uptrend had come to an end and the secondary (intermediate-term) downtrend was being rejoined. Weekly stochastics remain bearish above the oversold level of 20% leaving open the possibility of moving below its previous low of $143.30 to test major (long-term) support between $141.95 and $137.40.

Source: DTN ProphetX

Feeder Cattle: The October contract closed $0.85 lower at $207.425 last week. The secondary (intermediate-term) trend remains down with the contract posting a bearish outside week last week. Weekly stochastics remain bearish indicating a test of support between $195.00 (secondary) and $192.40 (major, long-term) is likely.

Lean hogs: The October contract closed $1.20 higher at $65.325 last week. Weekly stochastics continue to indicate the secondary (intermediate-term) trend is down. Consolidating activity over the last five weeks looks to be a short-term sideways trend with resistance at the recent high of $67.70 and support at the contract low of $59.45.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.39, down 8 cents for the week. The NCI.X posted a sharp sell-off last week from Monday's high of $3.65 through Wednesday's low of $3.32. The major (long-term) trend remains up with support at $3.31, a price that marks the 50% retracement level of the rally from $2.81 through the high of $4.06. Another key support level is the June low $3.29. A breach of these support levels could set the NCI.X on a path back to last October's low of $2.81. Monthly stochastics remain bullish while weekly stochastics are neutral to bearish.

Soybean meal: The more active December contract closed $18.50 lower at $314.20. The market is a confusing mix of technical signals with last week's action establishing a bearish outside pattern one week after posting a bullish reversal. Dec meal remains within striking distance of support at $309.90, a price that marks the 67% retracement level of its previous rally from $286.00 through the high of $357.70. Support continues to come from the inverted December to January futures spread, reflecting a bullish commercial outlook. However, Friday's CFTC Commitments report showed noncommercial interests reducing their net-long futures position by 4,798 contracts. Weekly stochastics are neutral to bearish.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 11.

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

Posted at 10:05AM CDT 08/16/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $0.58 higher at $49.19. The spot-month contract posted a bullish reversal on its weekly chart last week, possibly indicating the secondary (intermediate-term) trend has turned up. Weekly stochastics have not confirmed this move with a bullish crossover though last Friday's close continued to show this momentum study well below the oversold level of 20% leaving open the possibility in the near future. However, the downtrend in the nearby futures spread continues to reflect a more bearish commercial outlook that could limit buying interest. Major (long-term) support remains at $45.19.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $1.37 lower at $42.50. The secondary (intermediate-term) trend remains down with the spot-month taking out its previous low of $42.03 last week. Though the contract was able to rally slightly late in the week, the move to a new low has created doubt about this sell-off being Wave 2 of a major 5-wave uptrend. Despite weekly stochastics indicating the market is sharply oversold pressure continues to come from both commercial and noncommercial selling. Friday's CFTC Commitments of Traders report showed the latter reducing their net-long futures position by 21,250 contracts.

Distillates: The spot-month contract closed 1.43cts higher at $1.5579. While indicators continue to show the secondary (intermediate-term) trend remains down, the spot-month month contract could begin to stabilize above its recent low of $1.5212. Weekly stochastics are well below the oversold level of 20% and nearing a bullish crossover.

Gasoline: The spot-month contract closed 6.39cts higher at $1.6869. Though indicators continue to show the secondary (intermediate-term) trend remains down the spot-month contract has rallied off its test of support at $1.5930. This price marks the 61.8% retracement level of the previous rally from $1.2265 through the high of $2.1858. Support has been tied to buying interest from both commercial and noncommercial traders, the former indicated by last week's upturn (strengthening backwardation) in futures spreads. Friday's CFTC Commitments of Traders report showed noncommercial interests adding 1,993 contracts to their net-long futures position.

Ethanol: The spot-month contract closed 1.00ct higher at $1.4700. Ethanol is showing contradicting signals regarding its secondary (intermediate-term) trend. Weekly stochastics remain bearish, not yet moving below the oversold level of 20% to establish a bullish crossover. However, the spot-month contract posted a bullish reversal on its weekly chart indicating at the least the short-term trend has turned sideways. Support remains at $1.4309, a price that marks the 67% retracement level of the previous uptrend from $1.2920 through the high of $1.7090. Resistance is at the 4-week high of $1.5440.

Natural Gas: The spot-month contract closed 0.03ct higher at $2.801. The secondary (intermediate-term) trend remains sideways. Support is at $2.704, a price that marks the 67% retracement level of the rally from $2.443 through the high of $3.115. Resistance is at the 4-week high of $2.951. Weekly stochastics are neutral.

Propane (Conway cash price): Conway propane closed 2.50cts higher at $0.3500. The secondary (intermediate-term) uptrend continues to strengthen with as the spot-month contract moved to a new 4-week high of $0.3525. Weekly stochastics remain bullish.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 11.

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

Posted at 9:23AM CDT 08/16/15 by Darin Newsom
 

Friday 08/14/15

USDX: Do Yuan(na) Dance?

If you've been following along with market headlines this week, China's devaluing of the yuan has been blamed for everything but the contaminated water leak in southern Colorado. Given time, some connection might be made there as well.

Source: DTN ProphetX

Be that as it may, the U.S. dollar index (USDX) has largely yawned at the goings on in the yuan, not surprising given the USDX is based on its value versus a basket of European currencies. Still, with the world financial markets heaving as if having eaten liver sushi, a stronger upward move in the USDX might have been anticipated.

Looking at its weekly chart as Friday gets under way, the USDX is grinding toward its 4-week low of 95.633 (red dotted line). Even if it doesn't cross that bearish line today, a close near this week's low puts the index within striking distance of its new low - this week's low - early next week. At that point, barring another strong recovery rally, the USDX would be signaling a return to the secondary (intermediate-term) downtrend on its weekly chart and a move back in step with the major (long-term) downtrend its monthly chart.

Weekly stochastics would confirm such a move as well. The recent recovery rally from the low of 93.133 (week of May 11) resulted in a test of resistance near 97.973, the 67% retracement level of the initial sell-off from 100.390 through the previously mentioned low. At the same time, weekly stochastics posted a bullish crossover above the oversold level of 20% indicating a minor (short-term) sideways trend or consolidation phase. This week, stochastics are in position to post a bearish crossover below the overbought 80% mark, signaling the secondary downtrend is set to begin again.

Initial support on the weekly chart remains near 93.236, the 33% retracement level of the previous secondary uptrend from 78.906 (week of May 5, 2014) through the 100.390 high. This level corresponds with 23.6% retracement support on the long-term monthly chart. If this area fails to hold next secondary support is at 89.648, a mark between major support at the 33% and 38.2% levels of 90.503 and 89.048.

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

Posted at 7:42AM CDT 08/14/15 by Darin Newsom
 

Sunday 08/09/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, up 4 cents for the week. The NCI.X has held support at its previous low of $3.29, though the recent sell-off left a number of bearish gaps on its weekly chart. Weekly stochastics are neutral-to-bearish, though the last secondary (intermediate-term) signal was a bullish crossover below the oversold level of 20% indicating the secondary trend is still up.

Source: DTN ProphetX

Corn (Old-crop): The September contract closed 1.75cts higher at $3.72 3/4. Sep corn may have stabilized after posting three down weeks against its prevailing secondary (intermediate-term) uptrend (Moves of Three theory). Still, the contract established a new low of $3.65 last week before rallying. Weekly stochastics are neutral to bearish with support at the previous low of $3.52.

Corn (New-crop): The December contract closed 2.50cts higher at $3.83 3/4. Dec corn stabilized last week following the sharp sell-off seen the previous three weeks. The minor (short-term) downtrend on the contract's daily chart looks to have come to an end, possibly moving to an uptrend with a bullish outside day posted last Friday. Weekly stochastics remain neutral-to-bearish though the last secondary signal was a bullish crossover established the week of June 1. Though near key support at its previous low of $3.62 1/2 the contract looks poised for a continued rally.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.66, up 28 cents for the week. Despite the strong rally the secondary (intermediate-term) trend remains sideways. Support is at the recent low of $9.24 while resistance remains near $10.03. Weekly stochastics are neutral with the last secondary signal a bullish crossover below the oversold level of 20% the week of June 1.

Soybeans (Futures): The November contract closed 23.00cts higher at $9.63 1/4 last week. The minor (short-term) trend on the daily chart looks to have turned up after Nov beans tested secondary (intermediate-term) support near $9.31. This price marks the 76.4% retracement level of the previous rally from $8.95 3/4 through the high of $10.45. Last week's rally also established a bullish reversal on the weekly chart and closed a bearish gap between $9.63 1/4 and $9.60. The contract looks to be in position to resume its secondary uptrend, with support coming from continued commercial buying. Last week saw the carry in the November to January futures spread trimmed to 4 3/4 cents. Friday's CFTC Commitments of Traders report showed noncommercial interests reducing their net-long futures position by 4,168 contracts.

Wheat (SRW futures): The September Chicago contract closed at $5.10 1/2, up 11 1/4 cents for the week. The contract posted a bullish reversal on its weekly chart, indicating the minor (short-term) downtrend has come to an end making it possible to rejoin the secondary (intermediate-term) uptrend. The rally in Chicago Sep allowed it to close back above support at $5.04 1/4, a price that marks the 76.4% retracement level of the previous rally from $4.69 1/4 through the high of $6.17 1/2. Buying interest continues to come from commercial traders, as indicated by the carry in the September to December futures spread being trimmed to 5 1/4 cents.

Wheat (HRW futures): The September Kansas City contract closed at $4.93, up 0.75 cent for the week. Last week's rally off a new contract low of $4.81 1/2 could be viewed as a spike reversal. However, continued buying interest will need to be seen this coming week to confirm that the minor (short-term) downtrend has come to an end. Weekly stochastics remain neutral to bearish.

Wheat (HRS futures): The September Minneapolis contract closed at $5.25, up 1 1/2 cents for the week. After posting a new low of $5.11 the September contract was able to rally to a higher close, possibly establishing a spike reversal and reestablishing a secondary (intermediate-term) uptrend. Key will be if the market sees continued buying interest this coming week.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 4.

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

Posted at 2:20PM CDT 08/09/15 by Darin Newsom
Comments (2)
Update: Nov soybeans posted a bullish gap at the open of Sunday night's session between Friday's high of $9.64 and the initial overnight low of $9.65 1/4. We'll see if it holds. If so, it would be another bullish secondary (intermediate-term) technical signal for soybeans.
Posted by DARIN NEWSOM at 7:29PM CDT 08/09/15
Update: On its daily chart, Dec corn is moving up fast toward the bottom end of a bearish price gap between $4.02 and $3.99 1/4 (July 24 and July 27). With the minor (short-term) uptrend gaining momentum it's possible Dec corn could 1) fill the gap 2) close near its session high Monday setting the stage for a possible bullish gap Monday night into Tuesday morning, establishing an island bottom on its daily chart, or 3) fall back on renewed pressure Tuesday. Stay tuned.
Posted by DARIN NEWSOM at 10:00AM CDT 08/10/15
 
Weekly Analysis: Livestock Markets

Live Cattle: The October contract closed $2.60 higher at $148.525. The secondary (intermediate-term) trend remains down with the contract in short-term retracement uptrend. Given the theory of Moves of Three (in this case, three weeks against the prevailing trend) the contract could trade higher again this coming week. Resistance is pegged between $149.70 and $151.90, prices that mark the 50% and 67% retracement levels of the previous sell-off from $156.15 to the low $143.30. Weekly stochastics remain neutral to bearish while Friday's CFTC Commitments of Traders report showed noncommercial interests continuing to reduce their net-long futures position by 10,712 contracts.

Source: DTN ProphetX

Feeder Cattle: The August contract closed $3.40 higher at $214.125 last week. The secondary (intermediate-term) trend remains down with the short-term uptrend a retracement rally. Based on the theory of Moves of Three (in this case three weeks up against the prevailing downtrend) August feeder cattle could trade higher again this coming week. Resistance is between $214.65 and $221.25, prices that mark the 33% and 50% retracement levels of the sell-off from $227.80 through the $208.075 low. Weekly stochastics remain bearish.

Lean hogs: The October contract closed $0.40 higher at $64.125 last week. Despite a move to another 4-week high last week the secondary (intermediate-term) trend looks to still be down. Weekly stochastics are neutral-to-bearish indicating a test of the recent low of $59.45 is possible.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, up 4 cents for the week. The NCI.X has held support at its previous low of $3.29, though the recent sell-off left a number of bearish gaps on its weekly chart. Weekly stochastics are neutral-to-bearish, though the last secondary (intermediate-term) signal was a bullish crossover below the oversold level of 20% indicating the secondary trend is still up.

Soybean meal: The more active December contract closed $8.80 higher at $332.70, establishing a number of bullish signals on its weekly chart. Most notable is the bullish reversal as the contract traded outside the previous week's range and closed a bearish gap left two weeks ago. This would indicate the contract is set to rejoin its secondary (intermediate-term) uptrend after testing support at $321.90, a price that marks the 50% retracement level of the initial rally from $286.00 through $357.70.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 4.

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

Posted at 1:21PM CDT 08/09/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $3.60 lower at $48.61. The secondary (intermediate-term) trend remains down with the spot-contract nearing the previous low of $45.19. If this secondary downtrend is Wave 2 of major (long-term) 5-wave uptrend, then support at the previous low needs to hold. Weekly stochastics are the oversold level of 20% indicating the market could begin to stabilize.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $3.25 lower at $43.87. The secondary (intermediate-term) trend remains down with the spot-month nearing its previous low of $42.03. If this downtrend is indeed Wave 2 of a major 5-wave uptrend, then support at the previous low needs to hold. Friday's CFTC Commitments of Traders report showed noncommercial traders increasing their net-long futures position, slightly, possibly in response to weekly stochastics showing the market in an oversold situation.

Distillates: The spot-month contract closed 4.04cts lower at $1.5436. The secondary (intermediate-term) trend remains is down after the spot-month contract posted a new-low of $1.5212 last. However, weekly stochastics below 20% continue to show the market in a sharply oversold situation, possibly leading to a reversal in the near future.

Gasoline: The spot-month contract closed 21.80cts lower at $1.6230. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $1.5930. This price marks the 61.8% retracement level of the previous uptrend from $1.2265 through $2.1858, continues to hold. Weekly stochastics remain bearish indicating the market should continue to see selling interest, most likely from the commercial side of the market. Last Friday's CFTC Commitments of Traders report showed noncommercial interests increasing their net-long futures position by 1,321 contracts.

Ethanol: The spot-month contract closed 4.50cts lower at $1.4600. The secondary (intermediate-term) trend remains sideways with the spot-month contract moving toward support at $1.4309 last week (a posted low of $1.4300). This price marks the 67% retracement level of the previous rally from $1.2920 through the high of $1.7090. Weekly stochastics are neutral-to-bearish. The major (long-term) trend remains up.

Natural Gas: The spot-month contract closed 8.20cts higher at $2.798. The secondary (intermediate-term) trend remains sideways. Support is at the $2.704, a price that marks the 67% retracement level of the rally from $2.443 through the high of $3.115. Weekly stochastics are neutral.

Propane (Conway cash price): Conway propane closed 2.12cts higher at $0.3250. The secondary (intermediate-term) trend remains sideways with support at the 4-week low of $0.2925 and resistance at the recent high of $0.3525. Weekly stochastics are neutral.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 4.

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

Posted at 12:37PM CDT 08/09/15 by Darin Newsom
 

Friday 08/07/15

Bottoms Up in Chicago Wheat

I've been dealing with the wheat market for as long as I can remember; growing up on a Kansas wheat farm watching my dad struggle to makes sense of price moves, merchandising grain for a cooperative in the central part of the state, to being one of the few analysts the IPTV Market to Market program likes to have lead off the analysis segment talking wheat. And all along the way I've said the same thing: Wheat is one of the hardest markets to analyze.

Source: DTN ProphetX

Corn is relatively simple, as it tends to follow its technical patterns fairly closely. Soybeans are an over-caffeinated, jumpy market and always have been. But wheat is different, posting nearly as many false technical signals (head fakes) as real, making the question of which ones to trust difficult to answer. This week's activity by the September Chicago (SRW) contract may not have as much to do with a head fake as a false bottom.

Take a look at the daily chart for the Chicago Sept and you'll see a well-rounded bottom. Ahem. Let me restate that. Take a look at the daily chart for Chicago Sept and you'll see a rounding bottom pattern.

Characteristics of a classic rounding bottom (saucer bottom, bowl) is a gradual shift from down to up (or up to down in a rounding top). Also, daily volume (bottom study, green histogram) tends to post a saucer pattern as well. Using your imagination a bit due to a skewed scale accounting for the most recent low volume overnight session, you can see what looks to be a saucer shape in daily volume.

Thursday's session saw the contract take out its previous daily highs at $5.12 1/2 (July 28 and 29), posting a high of $5.14 on increased trade volume. This seemingly confirms the bullish crossover established by daily stochastics below the oversold level of 20%. All of this combined indicates the minor (short-term) trend has turned up.

The first possible target is near $5.32 3/4, a price that marks the 33% (Dow Theory) retracement level of the previous downtrend from $6.17 1/2 (June 30) through the $4.90 1/2 low (August 3). However, given the bullish commercial outlook indicated by the weak carry in Chicago wheat's forward curve (series of futures spreads from the September 2015 contract through the May 2016 contract) Chicago Sept could possible make a run at its 50% retracement level of $5.54.

It should be noted that a similar pattern is not seen on the daily chart for the September Kansas City (HRW) contract, though the less heavily traded markets of Kansas City and Minneapolis (HRS) could see some spillover buying from Chicago.

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

Posted at 8:41AM CDT 08/07/15 by Darin Newsom
Comments (1)
Update: Something I didn't mention in the blog is that the move beyond last week's high of $5.12 1/2 puts Sept Chicago in position to establish a bullish reversal on its weekly chart. All that is needed is a close above last week's settlement of $4.99 1/4. If this occurs the secondary (intermediate-term) trend would also be viewed as up.
Posted by DARIN NEWSOM at 10:21AM CDT 08/07/15
 

Sunday 08/02/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 18 cents for the week. Cash corn has collapsed after the NCI.X established a bearish reversal the week of July 13. This came on the heels of testing resistance at $4.08 with a calculated high of $4.06. Longer-term support remains at $3.31 with the previous low down at $3.29.

Source: DTN ProphetX

Corn (Old-crop): The September contract closed 21.50cts lower at $3.71. Sep corn has posted a sharp sell-off from its high of $4.43 1/4 posted almost three weeks ago. The sell-off has taken the contract well below support near $3.82 1/2, a price that marks the 67% retracement level of the rally from $3.54 1/4 through the $4.43 1/4 high. This puts next support at the previous low.

Corn (New-crop): The December contract closed 21.50cts lower at $3.81 1/4. Dec corn has posted a sharp sell-off the last three weeks, falling below support near $3.84 1/4. This price marks the 76.4% retracement level of the rally from $3.64 1/4 through the high of $4.54 1/4. The latter was a test of resistance marking the 38.2% retracement level of the previous secondary downtrend. If the "Moves of Three" Theory holds true, then the past move against the secondary (intermediate-term) uptrend should have ended with last week's close. However, most technical indicators have turned bearish indicating Dec corn could possible test its previous low.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.38, down 15 cents for the week. The secondary (intermediate-term) trend is sideways to down after the NSI.X posted a new 4-week low of $9.24 last week. However, there is a slight chance cash soybeans could establish a bullish island reversal on its weekly chart if is calculated Monday afternoon above last week's high of $9.50. To do so the market will need to rally at least 13 cents.

Soybeans (Futures): The November contract closed 24.75cts lower at $9.40 1/4 last week. The secondary (intermediate-term) trend is sideways-to-down with Nov beans testing support near $9.31. This price marks the 76.4% retracement level of the previous rally from $8.95 3/4 through the high of $10.45. Though weekly stochastics remain neutral to bearish, Nov soybeans could see support on the same "Moves of Three" Theory discussed in the Dec corn analysis. Renewed support could come from the long-term bullish commercial outlook reflected by the market's inverted forward curve.

Wheat (SRW Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.43, down 10 cents for the week. There are no conclusive secondary (intermediate-term) trend signals on the weekly chart. Nevertheless the SR.X is testing its previous low of $4.38. The major (long-term) trend is sideways.

Wheat (HRW Cash): The DTN National HRW Wheat Index (HW.X, national average cash price) closed at $4.47, down 15 cents for the week. The sharp continues with the HW.X falling below its previous low of $4.49. While it could prove to be a head-fake, both the secondary (intermediate-term) and major (long-term) trends now look to be down.

Wheat (HRS Cash): The DTN National HRS Wheat Index (SW.X, national average cash price) closed at $4.72, down 21 cents for the week. Cash HRS moved to a new low 5-year low last week, keeping both the secondary (intermediate-term) and major (long-term) trends down. Next support could be found between $4.72 (low from June 2010) and $4.45 (low from September 2009).

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

Posted at 1:06PM CDT 08/02/15 by Darin Newsom
Comments (1)
Update: November soybeans are in position to post a bullish reversal on its weekly charts this week, trading outside last week's range of $9.31 3/4 to $9.60. All that is needed is a higher weekly close on Friday (Aug 7). Last week's settlement was $9.40 1/4.
Posted by DARIN NEWSOM at 9:50AM CDT 08/07/15
 
Weekly Analysis: Livestock Markets

Live Cattle: The October contract closed $1.80 higher at $145.925. Despite the higher close the secondary (intermediate-term) trend remains down with weekly stochastics bearish. Initial support is at the new 4-week low, last week's low, of $143.30. Major (long-term) support is between $141.95 and $137.40.

Source: DTN ProphetX

Feeder Cattle: The August contract closed $1.05 higher at $210.725 last week. The secondary (intermediate-term) trend remains down with next support near $207.05, a price that marks the 67% retracement level of the previous uptrend from $196.675 through the high of $227.80. Weekly stochastics are bearish indicating pressure should continue to be seen. The major (long-term) trend is down with support pegged near $192.35.

Lean hogs: The October contract closed $0.30 lower at $63.725 last week. Weekly charts continue to show no clear signals regarding the secondary (intermediate-term) trend. However, the October contract posted a new 4-week high of $67.425 before selling off. This could establish a secondary uptrend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 18 cents for the week. Cash corn has collapsed after the NCI.X established a bearish reversal the week of July 13. This came on the heels of testing resistance at $4.08 with a calculated high of $4.06. Longer-term support remains at $3.31 with the previous low down at $3.29.

Soybean meal: The more active December contract closed $9.50 lower at $323.90. Despite another lower weekly close the secondary (intermediate-term) trend remains up. However, Dec meal did leave a bearish gap on its weekly chart between last week's high of $331.10 and the previous week's low of $332.10. The market's inverted forward curve continues to reflect a bullish commercial outlook, possibly limiting the sell-off to a test of support at $321.90, the 50% retracement level of the previous rally from $286.00 through the high of $357.70.

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

Posted at 11:24AM CDT 08/02/15 by Darin Newsom
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