Technically Speaking
Darin Newsom DTN Senior Analyst

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).

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Posted at 1:06PM CDT 08/02/15 by Darin Newsom
 
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.

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Posted at 11:24AM CDT 08/02/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $2.41 lower at $52.21. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $50.96. This price marks the 76.4% retracement level of the previous uptrend from $45.19 through the high of $69.22. Weekly stochastics have crossed below the oversold level of 20% indicating the market could begin to stabilize. If so, Wave 2 of the major (long-term) 5-wave uptrend could soon come to an end.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed $1.02 lower at $47.12. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $46.88. This price marks the 76.4% retracement level of the previous uptrend from $42.03 through the high of $62.58. Weekly stochastics have moved below 20% indicating the market may be in the latter stages of Wave 2 of a major (long-term) 5-Wave uptrend.

Distillates: The spot-month contract closed 4.13cts lower at $1.5889. The secondary (intermediate-term) trend remains sideways-to-down with the spot-month contract testing support at its major (long-term) low of $1.5890. Weekly stochastics have moved below the oversold level of 20% indicating the market could begin to stabilize.

Gasoline: The spot-month contract closed 5.62cts lower at $1.7720. The secondary (intermediate-term) trend remains down with the spot-month contract moving toward support at $1.7062. This price marks the 50% 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.

Ethanol: The spot-month contract closed 1.00cts higher at $1.5050. The secondary (intermediate-term) trend remains sideways after the spot-month contract rallied off its test of 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 6.0cts lower at $2.716. The secondary (intermediate-term) trend remains sideways. However, the spot-month contract is in position to test support at its 4-week low of $2.644 if pressure continues to build. Weekly stochastics are neutral.

Propane (Conway cash price): Conway propane closed 2.62cts lower at $0.3038. A move to a new 4-week low turned the secondary (intermediate-term) trend sideways-to-down. Weekly stochastics are now neutral-to-bearish indicating a test of major (long-term) support at the low of $0.2675 is possible.

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Posted at 11:00AM CDT 08/02/15 by Darin Newsom
 

Saturday 08/01/15

USDX: The "Some" of All Fears

This past Wednesday the Federal Reserve released its July comments regarding end-of-the-world like increase in interest rates (we know it's coming, just not when). Much of what was said has been heard before, except for one little four-letter word -- some.

Source: DTN ProhpetX

Month after month the Fed has stated something to the effect it was waiting to see "further improvement in the labor market." This time around though, the statement read, "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."

Did you see what they did there? They inserted the word "some", creating "some" confusion as to whether or not the fed fund rate will actually be raised in September.

As most of you know, or at least those of you following along with this blog, the U.S. dollar index (USDX) posted a strong uptrend from May 2014 through March 2015, concluding a bullish pattern that actually began back at the end of April 2008. While global economic events have come and gone, all playing a role in the swings of the USDX, the closing 11-month rally was supported in large part by the idea that the fed fund rate would be raised.

However, the sharp sell-off seen this past April established a 2-month reversal on the USDX monthly chart, signaling the major (long-term) trend had turned down. How is this possible if the fed fund rate was still in that murky range between 0.00% and 0.25%?

Those who have been around the block with the markets know the old adage of "Buy the rumor, sell the fact". According to indication on the monthly chart, traders are tired of buying the rumor and ready to sell the fact.

After posting its bearish reversal in April, complete with a bearish crossover above the overbought level of 80% by monthly stochastics, the USDX fell to a low of 93.133 during May. This test of support at 93.383, the 23.6% retracement level of the previous major uptrend from 70.698, held and sparked a rally back to a high in July of 98.151. Notice that this was a test of resistance at 97.973, the 67% retracement level of the initial sell-off from March through May.

My analysis of the USDX is unchanged: The current rally looks to be nothing more than Wave B of a 3-wave downtrend, meaning a possible test of resistance at the 76.4% retracement level of 98.677 is likely. Monthly stochastics remain bearish, with a potential rally the next couple of months setting up a potential secondary (confirming) bearish crossover. Ultimately Wave C (final wave of the downtrend pattern) could reach the support area between 90.503 and 89.048, the 33% and 38.2% retracement levels of the previous uptrend.

From the perspective of the commodity sector, the fear of a stronger USDX due to the much anticipated rate hike in 2015 could hang on what happens with the newly inserted word "some". Most of the major markets (corn, crude oil, etc.) are showing signs of major uptrends that would fit with the conclusion (based on analysis of its monthly chart) that the USDX should soon turn down again.

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Posted at 8:18AM CDT 08/01/15 by Darin Newsom
 
Monthly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 47 cents for the month. Despite the sharp sell-off in July the market remains in a major (long-term) 5-wave uptrend pattern. It could be important, but not critical, for the NCI.X to hold above its June low $3.29. Monthly stochastics are still bullish indicating long-term momentum is to the upside.

Source: DTN ProphetX

Corn (Futures): The December contract closed at $3.81 1/4, down 40 3/4 cents on the monthly chart. Despite the sell-off seen in July the market remains in a major (long-term) uptrend. June's activity, including a move above the December 2014 high of $4.17, confirmed the market was in Wave 3 of a 5-wave uptrend. Monthly stochastics remain bullish indicating corn should regain its upside momentum. Support is at the June low of $3.46 3/4.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.38, down $0.74 for the month. Despite the lower monthly close the market remains in a major (long-term) uptrend. Going back to the end of June, the NSI.X had moved above its Wave 1 peak of $10.08 indicating it had established Wave 3. Monthly stochastics remain bullish below thee oversold level of 20%, but are still showing little upside momentum. Support is at the May 2015 low of $8.88.

Soybeans (Futures): The November contract closed at $9.40 1/4, down $0.97 on the monthly chart. Soybean futures failed to confirm a move into Wave 3 of a major (long-term) 5-wave uptrend, posting a high below the peak of Wave 1 of $10.86 1/4 (November 2014). The sharp sell-off in July has the market in a major sideways trend, threatening support at the October 2014 low of $9.04. Monthly stochastics are neutral, well below the oversold level of 20%. It will be important during the month of August to see how the November contract acts in relation to the support level of $9.04.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.43, down $1.36 cents for the month. The sharp sell-off seen in July has turned the major (long-term) trend sideways with thee SR.X testing support at the April 2015 low of $4.42. Below that is the September 2014 low of $4.25. Resistance at $6.00 continues to hold.

SRW Wheat (Futures): The September Chicago contract closed at $4.99 1/4 down $1.16 1/24 on the monthly chart. The major (long-term) trend looks to have turned sideways again. Support is at the May 2015 low of $4.60 3/4 while resistance at thee December 2015 high of $6.77 continues to hold. Monthly stochastics are neutral-to-bullish, holding above the oversold level of 20%.

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Posted at 7:27AM CDT 08/01/15 by Darin Newsom
 
Monthly Analysis: Livestock Markets

Live Cattle: The October contract closed at $145.925, down $2.15 on the monthly chart. The major (long-term) trend remains down with support between $141.95 and $137.40. 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). Monthly stochastics remain bearish meaning additional noncommercial long-liquidation could be seen. However, the final CFTC Commitments of Traders report for July showed this group holding a net-long futures position of only 19,794 contracts, possibly limiting the sell-off to the 38.2% retracement level.

Source: DTN ProphetX

Feeder Cattle: The August contract closed at $210.725, down $4.00 on the monthly chart. The major (long-term) trend remains down with initial support 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). Monthly stochastics are bearish and still well above the oversold level of 20%. This would indicate the market could see increased selling interest over the coming months.

Lean Hogs: The October contract closed at $63.725, down $10.65 on the monthly chart. The market remains in a major (long-term) 5-wave uptrend pattern with the sell-off looking to be nothing more than a Wave 2 pullback. The October contract did close the month below support near $64.35, a price that marks the 76.4% retracement level of Wave 1 from $57.85 (March 2015) to $85.325 (May 2015), setting up a potential test of its previous low. Monthly stochastics are back below the oversold level of 20% and could establish a secondary (confirming) bullish crossover in the coming months.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 47 cents for the month. Despite the sharp sell-off in July the market remains in a major (long-term) 5-wave uptrend pattern. It could be important, but not critical, for the NCI.X to hold above its June low $3.29. Monthly stochastics are still bullish indicating long-term momentum is to the upside.

Soybean meal: The most active December contract closed at $323.90, down $21.50 on the continuous monthly chart. The monthly soybean meal chart (most active contract) continues to show a complex series of patterns. However, given that June saw a bullish key reversal established in conjunction with a bullish crossover by monthly stochastics below the oversold level of 20% the major (long-term) trend would be classified as up. Confirmation of Wave 3 (of a 5-wave uptrend) won't occur until the most active contract moves above the Wave 1 high of $417.60. This is also a test of resistance at $418.40, the 50% retracement level of the previous major downtrend from $541.80 through the low of $295.10. Support is pegged between $327.00 and $316.70, the 50% and 67% retracement levels of the rally from $295.30 (June 2015 low) to $357.70 (July 2015 high).

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Posted at 6:49AM CDT 08/01/15 by Darin Newsom
 
Monthly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed at $52.21, down $11.37 on the monthly chart. The market remains in a major (long-term) uptrend with the sell-off since May 2015 high of $69.63 looking like Wave 2 of an Elliott Wave 5-Wave pattern. Support is at %50.96, a price that marks the 76.4% retracement level of Wave 1 from the January 2015 low of $45.19 through the May high, then the January low. Monthly stochastics are back near 20% after establishing a bullish crossover below this level at the end of February.

Source: DTN ProphetX

Crude Oil: The spot-month contract closed at $47.12, down $12.35 on the monthly chart. The market remains in a major (long-term) 5-Wave uptrend with the sell-off since May 2015 amounting to Wave 2. This wave coincides with a continued reduction of the noncommercial net-long futures position from about 348,000 contracts (end of May 2015) to 243,419 contracts (end of July 2015). Initial support is pegged at $46.88, a price that marks the 76.4% retracement level of Wave 1 from $42.03 (March 2015) to $62.58 (May 2015). Monthly stochastics have moved back below the oversold level of 20%, setting the stage for a secondary (confirming) bullish crossover in the months ahead.

Distillates: The spot-month contract closed at $1.5840, down 30.26cts on the monthly chart. The close below the previous low of $1.5890 would imply that the major (long-term) trend has turned down again. However, the September contract will now take over the role of spot-month trading near that support level. With monthly stochastics already below the oversold level of 20% the market could see the return of buying interest. The noncommercial net-futures position actually grew over the month of July, with the month's final CFTC Commitments of Traders report showing it at 12,557 contracts as compared to the end of June's 6,,012 contracts.

Gasoline: The spot-month contract closed at $1.8410, down 24.86ct on the monthly chart. Despite the lower monthly close the major (long-term) trend remains up. Next support is pegged at $1.7062, a price that marks the 50% retracement level of Wave 1 (of a 5-wave uptrend) from $1.2265 (January 2015) to $2.1858 (June 2015). Monthly stochastics are bullish, reflecting increased buying by noncommercial traders over the course of the month. Also, the backwardation in the nearby futures spread also strengthened during July reflecting a more bullish commercial outlook.

Ethanol: The spot-month contract closed at $1.505, down 10.7cts 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. Support is at $1.431, the 67% retracement level of the rally from $1.292 through the May 2015 high of $1.709.

Natural Gas: The spot-month contract closed at $2.716, down 11.6cts on the monthly chart. The major (long-term) trend is sideways with monthly stochastics neutral-to-bullish below the oversold level of 20%. Resistance is at the May 2015 high of $3.105 while support is the April 2015 low of $2.443.

Propane (Conway cash price): Conway propane closed at $0.3038, down 4.62cts on its monthly chart. The major (long-term) trend remains sideways to down as cash propane stayed within its June price range during the month of July. That means support could continue to be found at the June low of $0.2675. Monthly stochastics are neutral and still well below the oversold level of 20%.

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Posted at 6:11AM CDT 08/01/15 by Darin Newsom
 

Wednesday 07/29/15

"Gold S(t)inks"

Way back when, 1980 I believe, the J. Geils Band released a song title "Love Stinks". Flash forward 35 years and commodity investors might tell you "love" has been replaced by another four-letter word - gold.

Source: DTN ProhpetX

That smell you've picked up wafting across the commodity sector isn't sulfur, reportedly called by those roaming the earth eons ago as "The Smell of Hell", but gold. So much so that this morning's MarketWatch website has numerous articles on the odiferous market, the most intriguing discussing a study concluding gold's target price may be $350 per ounce. Pee-yew! Smells not like teen spirit, but rather a large pile of dead, rotting gold bugs.

From a technical point of view, is there any merit to the idea of an additional $600-plus sell-off in the once gold standard of commodities? (A sidenote, according to another recent MarketWatch article, there is no merit to technical analysis itself.) With the end of July fast approaching, let's turn to gold's continuous monthly chart.

This month has seen the August contract post a new low (for this downtrend) of $1,072.30, a price not seen since February 2010 (follow the dotted red line to the left). Meanwhile, monthly stochastics (second study) are inching back toward the oversold level of 20% (not surprising) and the noncommercial net-futures position (bottom study) has been trimmed to its lowest level (28,279 contracts) since November 2013.

So, how might this play out.

My analysis continues to show the U.S. dollar index (USDX) remains in a major (long-term) downtrend*. That being the case, and given the strong inverse relationship between gold and the USDX thee implication would be the former should soon find renewed buying interest, particularly from global investment (noncommercial) trades. If so, Newton's First Law of Trend Analysis should come into play (A trending market will stay in that trend until acted upon by an outside force, with that force usually being noncommercial activity.) and the major trend should turn up again.

This conclusion would seem to fit with what has been shown in monthly stochastics, given the last major signal was a bullish crossover below the oversold level of 20% at the end of February 2014. Sometimes it takes a while for momentum to actually change.

If the technical picture plays out as it is set up late in July, a fall to $350 seems unlikely in gold -- short-term or long-term. However, as I'll discuss in Friday's On the Market column the landscape of commodity analysis is being changed, as if acted upon by a volcano. Complete with the smell of burning sulfur, or gold.

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

Posted at 7:38AM CDT 07/29/15 by Darin Newsom
 

Saturday 07/25/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.61, down 25 cents for the week. The NCI.X followed the previous week's bearish reversal with a bearish gap lower. However, weekly stochastics indicate the secondary (intermediate-term) trend is sideways-to-down rather than down, meaning support could emerge near $3.55. This price marks the 67% retracement level of the rally from $3.29 through the recent high of $4.06. Cash corn's major (long-term) trend remains up.

Corn (Old-crop): The September contract closed 27.75cts lower at $3.92 1/2. The sharp sell-off the last two weeks has led to a bearish crossover by weekly stochastics below the overbought level of 80%. This would indicate the secondary (intermediate-term) trend has turned sideways, with the last secondary crossover still bullish (week of June 1). Next support is pegged near $3.82 1/2, a price that marks the 67% retracement level of the rally from $3.52 (week of June 15) to $4.43 1/4 (week of July 13).

Corn (New-crop): The December contract closed 28.50cts lower at $4.02. The sharp sell-off seen the last two weeks established a bearish crossover by weekly stochastics below the overbought level of 80%. This would indicate the secondary (intermediate-term) trend has turned sideways with next support near $3.93, the 67% retracement level of the rally from $3.62 1/2 (week of June 15) to $4.54 1/4 (week of July 13). Volume and open interest continue to decrease, additional signals that the contract is in a consolidation phase rather than a change of trend. The corn market in general remains in Wave 3 of a major (long-term) 5-wave uptrend.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.53, down 21 cents for the week. The secondary (intermediate-term) trend remains sideways with initial resistance at the 4-week high of $10.12 and initial support near $9.50. Weekly stochastics are neutral, though the last secondary crossover was bullish below the oversold level of 20% (week of June 1). Despite the sell-off in July NSI.X remains in Wave 3 of a major (long-term) 5-wave uptrend given the move above the Wave 1 peak of $10.08 (November 2014).

Soybeans (old-crop): The August contract closed 23.50cts lower at $9.91 1/4 last week. Weekly stochastics established a bearish crossover below the overbought level of 80%, indicating the contract is moved into a secondary (intermediate-term) sideways trend. Initial support is at $9.82, a price that marks the 50% retracement level of the rally from $9.09 1/2 to $10.54 3/4. Next support is at the 67% retracement level of $9.57 1/2. The contract moves into delivery at the end of July, with cash bids moving to the November contract.

Soybeans (new-crop): The November contract closed 41.75cts lower at $9.65 last week. The secondary (intermediate-term) trend has turned sideways with weekly stochastics establishing a bearish crossover below the overbought level of 80%. Nov beans closed below support near $9.70 1/2, a price that marks the 50% retracement level of the rally from the low of $8.95 3/4 (week of June 15) to $10.45 (week of July 13). Next support is the 67% retracement level near $9.45 1/2. The soybean market in general remains in a major (long-term) sideways trend on its weekly chart, unable to move into Wave 3 of its 5-wave uptrend so far.

Wheat (SRW Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.53, down 45 cents for the week. There are no conclusive secondary (intermediate-term) trend signals on the weekly chart. Nevertheless the SR.X looks to be moving toward a test of 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 $4.62, down 40 cents for the week. The sharp sell-off of the last three week has the HW.X in position to test its previous low of $4.49. The major (long-term) trend remains sideways.

Wheat (HRS Cash): The DTN National HRS Wheat Index (SW.X, national average cash price) closed at $4.93, down 30 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 sideways-to-down. Next support could be found between $4.72 (low from June 2010) and $4.45 (low from September 2009).

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Posted at 9:38AM CDT 07/25/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The October contract closed $5.00 lower at $144.125. The secondary (intermediate-term) trend remains down and weekly stochastics bearish. Next secondary support could be between the previous low of $142.375 (week of February 2, 2015) and the spike low of $141.275 (week of February 23). The major (long-term) trend remains down with support on the continuous monthly chart (most active contract) between $141.95 and $137.40, prices that mark the 33% and 38.2% retracement levels of the previous major uptrend from $80.225 through the high of $172.75.

Feeder Cattle: The August contract closed $5.525 lower at $209.675 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 $0.575 higher at $64.025 last week. Weekly charts continue to show no clear signals toward the secondary (intermediate-term) trend. However, a rally next week take the October contract above resistance at the 4-week high of $66.525, establishing a potential secondary uptrend. The market in general looks to be near the end of Wave 2 of a major (long-term) 5-Wave uptrend as the more active October contract tests support near $64.35, the 76.4% retracement level of the Wave 1 rally from $57.85 (March 2015) to $85.325 (May 2105).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.61, down 25 cents for the week. The NCI.X followed the previous week's bearish reversal with a bearish gap lower. However, weekly stochastics indicate the secondary (intermediate-term) trend is sideways-to-down rather than down, meaning support could emerge near $3.55. This price marks the 67% retracement level of the rally from $3.29 through the recent high of $4.06. Cash corn's major (long-term) trend remains up.

Soybean meal: The August contract closed $6.30 lower at $354.880. Despite the lower weekly close the secondary (intermediate-term) trend remains up. The contract consolidated within the previous week's range that included a new 4-week high $372.10. Weekly stochastics remain bullish, just below the overbought level of 80%. While further consolidation could be seen in the weeks ahead, the long-term commercial view of supply and demand is bullish and should continue to support the major (long-term) uptrend.

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

Posted at 8:34AM CDT 07/25/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $2.48 lower at $54.62. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $54.55. This price marks the 61.8% retracement level of the previous uptrend from $45.19 through the high of $69.22. Weekly stochastics remain bearish meaning the contract could next test support at the 67% level of $53.33. The market is also in Wave 2 of a major (long-term) 5-Wave uptrend.

Crude Oil: The spot-month contract closed $2.75 lower at $48.14. The secondary (intermediate-term) trend is down with the spot-month contract below support at $48.87. This price marks the 67% retracement level of the previous uptrend from $42.03 through the high of $62.58. With weekly stochastics still bearish, and the market in the latter stages of Wave 2 of a major (long-term) 5-Wave uptrend, the spot-month contract could test the 76.4% retracement level of $46.88.

Distillates: The spot-month contract closed 3.39cts lower at $1.6302. The secondary (intermediate-term) trend remains sideways-to-down with the spot-month contract moving toward a test of its major (long-term) low of $1.5890. Like the oil markets, distillates look to be in Wave 2 of a major 5-Wave uptrend on its monthly chart. However, the spot-month contract will need to hold its major low from January.

Gasoline: The spot-month contract closed 10.04cts lower at $1.8282. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $1.8193. This price marks the 38.2% retracement level of the previous uptrend from $1.2265 through $2.1858, continues to hold. Weekly stochastics remain bearish indicating a test of the 50% retracement level at $1.7062 is likely. The major (long-term) trend remains up.

Ethanol: The spot-month contract closed 5.70cts lower at $1.4950. The secondary (intermediate-term) trend is sideways. Next support is pegged at $1.4309, a price that 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 9.4cts lower at $2.776. The secondary (intermediate-term) trend remains sideways. However, the spot-month contract posted a bearish outside week indicating the market could now fall back to the low end of its trading range between $3.115 and $2.556. The major (long-term) trend is sideways-to-up.

Propane (Conway cash price): Conway propane closed 0.25ct lower at $0.3300. The secondary (intermediate-term) trend remains sideways-to-up with initial resistance at the 4-week high of $0.3525. Initial support is at the 4-week low of $0.3025. Weekly stochastics are neutral-to-bullish. The major (long-term) trend is sideways-to-up.

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

Posted at 8:08AM CDT 07/25/15 by Darin Newsom
Comments (4)
Hi Darin, thanks for putting in your technical analysis in for the energy market. I have a question for you. Your definition of your intermediate term trends and consequently short term and long term trends is not quite clear. I am used to performing swing charts on commodities to determine these three scenarios. The intermediate term trend i eventually trade after determining where we are at the moment (for the particular commodity I am analysing) Is your analysis based on swing charts? Or do you determine these three trends using different technical analysis? Thanks Abiodun
Posted by ABIODUN AWOLAJA at 9:11AM CDT 07/29/15
Hi Abiodun and thank you for your comments. I have a very simplistic view of trend timeframes: Major (long-term) is what I see on monthly charts, Secondary (intermediate-term) trends are on weekly charts, and minor (short-term) trends are the patterns I see on daily charts. These trends can all be different for a particular commodity (e.g. Crude oil: minor down, secondary down, major up). I look for the same turn signals (e.g. reversals, crossovers by stochastics, etc.) for all three, with more importance put on the longer term signals (monthly vs. weekly, weekly vs. daily). Thanks again for your questions and comments.
Posted by DARIN NEWSOM at 7:56PM CDT 07/29/15
Thanks for the clarity Darin. I really appreciate the level of undemanding you bring into these analysis Regards Abbey
Posted by ABIODUN AWOLAJA at 4:03AM CDT 08/02/15
You're welcome Abbey. And note that I also post monthly analysis of the energy sector that looks at the major (long-term) trends. Thanks again for your comments.
Posted by DARIN NEWSOM at 10:28AM CDT 08/02/15
 

Monday 07/20/15

The Many Trends of the USDX

Since Greece's referendum vote two weeks ago and the hubbub that followed, the U.S. dollar index (USDX) has been pushing higher and the euro sliding lower. This has led to the knee-jerk analysis that the greenback is set to soar once again, particularly with the Fed still expected to make an interest rate move (or two) yet in 2015, while the euro sinks further into oblivion. However, a look at weekly and monthly charts for both indicates that still might not be the case.

Source: DTN ProphetX

A look at its weekly chart shows the recent rally has the USDX testing resistance at 97.973, the 67% retracement level of the sell-off from 100.390 (week of March 9, 2015) through the low of 93.133 (week of May 11). Note that the latter was a solid test of the 33% retracement level of the previous secondary (intermediate-term) uptrend from 78.906 through the 100.390 high. Given what we know about fundamentals and retracements (the more bullish market fundamentals, the smaller the retracement) and the never-ending promise of higher interest rates from the Federal Reserve (bullish market fundamentals), support between the 33% retracement level and 50% retracement level of 89.648 should hold the ongoing secondary downtrend.

That's right, an ongoing secondary downtrend.

The recent rally in the USDX has daily stochastics showing an overbought situation and nearing a secondary (confirming) bearish crossover above 80% that would establish a minor downtrend. With the USDX testing secondary (and major) resistance at the previously mentioned 97.973 mark, the stage seems to be set for the minor trend to turn down, reestablishing the secondary downtrend and strengthening the major (long-term) downtrend on the monthly chart.

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

Posted at 7:38AM CDT 07/20/15 by Darin Newsom
 

Saturday 07/18/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.86, down 14 cents for the week. The secondary (intermediate-term) trend looks to have turned sideways after the NCI.X posted a possible bearish reversal last week. Its early high of $4.06 was a test of resistance at $4.08, the 61.8% retracement level of the previous downtrend from $4.86 through the low of $2.81. Minor (short-term) support is pegged between $3.80 and $3.68, prices that mark the 33% and 50% retracement levels of the previous rally from $3.29 through last week's high.

Corn (Old-crop): The September contract closed 14.50cts lower at $4.20 1/4. Despite last week's lower close the secondary (intermediate-term) trend remains up. However, the contract could look to pull back to support between $4.13 and $3.97 3/4 over the next couple of weeks. These prices mark the 33% and 50% retracement levels of the rally from $3.52 through last week's high of $4.43 1/4. Weekly stochastics are still bullish.

Corn (New-crop): The December contract closed 13.75cts lower at $4.31 1/4. Despite the lower close the secondary (intermediate-term) trend remains up. However, the next couple weeks could see Dec corn test support between $4.23 3/4 and $4.08 1/2, prices that mark the 33% and 50% retracement levels of the previous rally from $3.62 1/2 through last week's high of $4.54 1/4.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.74, down 18 cents for the week. A bearish crossover by weekly stochastics below the overbought level of 80% indicates the secondary (intermediate-term) trend has turned sideways again. Major (long-term) resistance is at the June 2015 high of $10.12, a price that took out the November 2014 high of $10.08 indicating the major uptrend had moved into Wave 3 of a 5-Wave cycle.

Soybeans (old-crop): The August contract closed 17.25cts lower at $10.14 1/4 last week. Despite the lower close the contract remains in a secondary (intermediate-term) uptrend. However, its sell-off has resulted in a quick test of support near $10.06 1/4, a price that marks the 33% retracement level of the previous rally from $9.09 1/4 through the recent high of $10.54 3/4. Last week's low was $10.07 1/2. The 50% retracement level is down at $9.82.

Soybeans (new-crop): The November contract closed 15.50cts lower at $10.06 3/4 last week. Despite the lower weekly close the secondary (intermediate-term) trend remains up. Both trade volume and open interest declined last week during the sell-off, indicating most of the pressure came from a round of long-liquidation. The November to January futures spread continues to reflect a neutral-to-bullish commercial outlook meaning the November contract should be able to eventually extend this uptrend to a test of $10.64, the 50% retracement level of its previous downtrend from $12.32 through the low of $8.95 3/4.

Wheat (SRW Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.98, down 28 cents for the week. While the secondary (intermediate-term) trend remains up, the SR.X continues to fall back from the recent test of resistance near $5.61 1/2. This price marks the 67% retracement level of the previous downtrend from $6.23 through the low of $4.38. Next support is pegged near $4.85, the 67% retracement level of the rally from the $4.38 low through the recent spike high of $5.80.

Wheat (HRW Cash): The DTN National HRW Wheat Index (HW.X, national average cash price) closed at $5.02, down 25 cents for the week. Despite another lower close last week the secondary (intermediate-term) trend remains up. The close of the HW.X was a test of support at $5.06, a price that marks the 50% retracement level of the rally from $4.49 through the recent high of $5.63. Next support is at the 67% retracement level at $4.87.

Wheat (HRS Cash): The DTN National HRS Wheat Index (SW.X, national average cash price) closed at $5.23, down 38 cents for the week. The secondary (intermediate-term) trend remains sideways between a wide range from the low of $5.01 and recent high of $6.05. Given the recent bearish crossover by weekly stochastics, well below the overbought level of 80%, the SW.X could look to test its previous $5.01 low.

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

Posted at 9:36AM CDT 07/18/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The August contract closed $0.825 lower at $167.65. The secondary (intermediate-term) trend remains down. However the contract was able to rally off its test of support near $146.20, a price that marks the 50% retracement level of the previous uptrend from $137.975 through the high of $154.40. Weekly stochastics are still bearish meaning the contract could push through this support to test the 67% retracement level near $144.25.

Feeder Cattle: The August contract closed $3.95 higher at $215.20 last week. The contract posted an inside range, meaning it stayed within the previous week's trading range from $218.85 to $210.60, keeping the secondary (intermediate-term) trend down. Weekly stochastics remain bearish indicating the contract could eventually test 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.

Lean hogs: The August contract closed $2.025 higher at $75.6775 last week. Hog futures remain volatile, continuing to give no clear trend signals. The August contract moved to a new low of $70.650 before rallying, all while weekly stochastics are neutral.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.86, down 14 cents for the week. The secondary (intermediate-term) trend looks to have turned sideways after the NCI.X posted a possible bearish reversal last week. Its early high of $4.06 was a test of resistance at $4.08, the 61.8% retracement level of the previous downtrend from $4.86 through the low of $2.81. Minor (short-term) support is pegged between $3.80 and $3.68, prices that mark the 33% and 50% retracement levels of the previous rally from $3.29 through last week's high.

Soybean meal: The August contract closed $5.50 higher at $361.10. The secondary (intermediate-term) trend remains up. The contract moved to a new 4-week high of $372.10 last week on continued support from a bullish commercial outlook, indicated by the market's inverted forward curve. The major (long-term) price target is $428.20.

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

Posted at 8:54AM CDT 07/18/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.63 lower at $57.10. The secondary (intermediate-term) trend remains down with the spot-month contract testing support at $57.51. This price marks the 50% retracement level of the previous uptrend from $45.19 through the high of $69.22. Weekly stochastics are bearish meaning the contract could look to retest support at the 67% level of $53.33.

Crude Oil: The spot-month contract closed $1.85 lower at $50.89. The secondary (intermediate-term) trend is down with the spot-month contract below support at $52.31. This price marks the 50% retracement level of the previous uptrend from $42.03 through the high of $62.58. With weekly stochastics still bearish, the spot-month contract could test the 67% retracement level down at $48.87.

Distillates: The spot-month contract closed 7.58cts lower at $1.6641. The secondary (intermediate-term) trend remains sideways-to-down with the spot-month contract sliding below its previous low of $1.6653. Weekly stochastics are neutral-to-bearish indicating a possible test of the major (long-term) low of $1.5890 from January 2015.

Gasoline: The spot-month contract closed 8.79cts lower at $1.9286. The secondary (intermediate-term) trend remains down with the spot-month contract posting a new 4-week low of $1.8527 before rallying. Support at $1.8664, a price that marks the 33% retracement level of the previous uptrend from $1.2265 through $2.1858, continues to hold. However, weekly stochastics are bearish indicating a test of the 50% retracement level at $1.7062 is likely.

Ethanol: The spot-month contract closed 9.70cts lower at $1.5520. Last week's sharp sell-off turned the secondary (intermediate-term) trend sideways. Next support is pegged at $1.5005, a price that marks the 50% retracement level of the previous rally from $1.2920 through the high of $1.7090. Weekly stochastics are now neutral to bearish.

Natural Gas: The spot-month contract closed 10.0cts higher at $2.870. The secondary (intermediate-term) trend remains sideways. Initial resistance is the 4-week high (last week's high) of $2.934. Beyond that is the high end of the sideways trading range at the high of $3.115. Weekly stochastics remain bullish meaning the market could start to build upside momentum.

Propane (Conway cash price): Conway propane closed 1.00ct lower at $0.3325. The secondary (intermediate-term) trend remains sideways-to-up with initial resistance at the 4-week 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.

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

Posted at 8:28AM CDT 07/18/15 by Darin Newsom
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