Technically Speaking
Darin Newsom DTN Senior Analyst

Monday 05/18/15

July Corn: Time (?)

Time can pass quickly, as anyone with children knows. Or it can move like molasses in winter, as the few remaining corn market bulls waiting for the establishment of bullish technical signals will attest. However if the weekly chart for the July contract can be believed, the wait may finally be getting close to over.

Source: DTN ProphetX

This past winter the corn market established bearish technical signals indicating the secondary (intermediate-term) trend had turned down. In the case of July, this occurred the week of December 29 as the contract posted a bearish reversal (traded outside the previous week's range before closing lower) that coincided with a bearish crossover by weekly stochastics (bottom study) above the overbought level of 80%. Note that the high that week was $4.31 1/2, a test of resistance at $4.39. This price marks the 50% retracement level of the previous secondary downtrend from $5.31 1/4 through the low of $3.46 3/4.

Since then the corn market, including the July contract, has continued to grind lower, working its way through technical price support levels. The last three weeks has seen July corn hang on to support at $3.66 3/4 (the 76.4% retracement level of the uptrend from $3.46 3/4 through the high of $4.31 1/2) by its fingernails. Last week, July corn closed 2 1/2 cents higher (for the week) at $3.65 1/2. This week's begins with the contract priced near $3.68 1/2.

Along with the slow slide lower in price, weekly stochastics worked their way from overbought to oversold, setting the stage for a potential bullish crossover that would signal a change in secondary trend. Last week's slightly higher close in July corn led to just such an event, the first bullish crossover since the bullish crossover at the close of the week of October 6, 2014 (itself a confirming signal to the previous bullish crossover the week of August 11, 2014).

Does this mean the corn market is going to turn on its heels and quickly run higher? Probably not. But it does indicate the secondary trend has at least turned sideways and could start to build toward a pattern that would signal the major (long-term) uptrend is beginning Wave 3 of its 5-wave (Elliot Wave Theory) uptrend (for further discussion on this, see my On the Market column "Papillon's Escape" from May 8). The next pattern I'm looking for would be the establishment of a new 4-week high, possibly occurring the first week of June.

Why would the market rejoin its major uptrend if all the headlines are bearish? That's where we can analyze the different components (futures, basis, cash) of the market to get a clearer picture. In the case of corn, the futures market looks to be the first to turn bullish with the cash market (DTN National Corn Index, NCI.X, national average cash price) still showing bearish weekly stochastics.

What's the significance of bullish futures and lagging cash? This structure would indicate the initial support is coming from noncommercial traders, most likely covering some of their net-short futures holdings. Last Friday's weekly CFTC Commitments of Traders report showed this group adding 720 contracts to their net-short position (as of Tuesday, May 12). Meanwhile national average basis (NCI.X minus the close of July contract) weakened by about a 1/2 last week.

The cash market could struggle a bit with the weight of stocks. Supplies of on-farm cash corn could start to move to town as we move into the fourth-quarter of the 2014-2015 marketing year and planting of the 2015 crop nears its end. If demand picks up significantly, something both futures spreads and USDA are indicating should happen, then both corn futures and cash corn should move higher with futures holding the lead.

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

Posted at 7:21AM CDT 05/18/15 by Darin Newsom
 

Saturday 05/16/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, up 2 cents for the week. The secondary (intermediate-term) trend remains sideways, though could soon turn up given the bullish reversal seen the previous week. Weekly stochastics are below the oversold level of 20% and could work toward establishing a bullish crossover, confirming the recent technical pattern of the NCI.X. Support remains at $3.42, a price that marks the 38.2% retracement level of the previous uptrend from $2.81 through the high of $3.80.

Corn (Old-crop): The July contract closed 2.50cts higher at $3.65 1/2 last week. July corn held trendline support at $3.56 early in the week before rallying above the previous week's high and closing higher. This action established a bullish crossover below the oversold level of 20% by weekly stochastics, indicating the secondary (intermediate-term) trend has at least turned sideways if not up. It would not be surprising to see consolidation for a couple of weeks, setting the stage for a possible bullish breakout by establishing a new 4-week high. Buying could come from noncommercial short-covering, with Friday's CFTC Commitments of Traders report showing this group increasing their net-short futures position by 720 contracts.

Corn (New-crop): The December contract closed 4.50cts higher at $3.82 3/4 last week. December corn came close to posting a bullish reversal on its weekly chart, equaling the previous week's low of $3.72 1/4 before rallying beyond the previous week's high of $3.85 and closing higher. Last week's solid showing also established a bullish crossover by weekly stochastics below the oversold level of 20%, indicating the secondary (intermediate-term) trend has at least turned sideways, and could soon turn up. As with old-crop July corn, it would not be surprising to see consolidation for a couple of weeks, setting the stage for a bullish breakout to a new 4-week high. Support remains at the contract low of $3.64 1/4.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.17, down 22 cents for the week. The secondary (intermediate-term) trend of the market remains sideways. Support is at the series of lows near $9.12, with initial resistance at $9.57, then $10.02. Weekly stochastics remain neutral, holding above the oversold level of 20% with the last signal a bullish crossover in oversold territory the week of October 13, 2014.

Soybeans (old-crop): The July contract closed 23.00cts lower at $9.53 1/4 last week. The secondary (intermediate-term) trend remains sideways-to-down, with trendline support calculated this week near $9.52. Beyond that suppose is at the contract low of $9.32 1/4. Weekly stochastics are neutral with last week's action pulling them back below the oversold level of 20%. The most recent secondary signal remains a bullish crossover the week of October 6, 2014.

Soybeans (new-crop): The November contract closed 17.50cts lower at $9.34 1/2 last week. The secondary (intermediate-term) trend remains sideways. Support is at the contract low of $9.27 1/2. Weekly stochastics have slipped below the oversold level of 20% with the last secondary signal a bullish crossover the week of October 13, 2014.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.82, up 29 cents for the week. The SR.X built on last week's bullish reversal, quickly extending its newly established secondary (intermediate-term) uptrend. Initial resistance is at $5.00, a price that marks the 33% retracement level of the previous downtrend from $6.23 through the low of $4.38. Weekly stochastics remain bullish, moving back above the oversold level of 20%.

SRW Wheat (new-crop): The July Chicago contract closed 29.50cts higher at $5.11 last week. The contracts confirmed the previous week's signal of a spike low by posting a new 4-week high of $5.19 3/4 last week. With weekly stochastics bullish, July Chicago wheat should extend its secondary (intermediate-term) uptrend to initial resistance near $5.61, a price that marks the 33% retracement level of the previous downtrend from $7.62 through the low $4.60 3/4.

HRW Wheat (new-crop): The July Kansas City contract closed 33.25cts higher at $5.41 3/4 last week. The contract extended its newly established secondary (intermediate-term) uptrend last week, setting the stage for a possible new 4-week this week. Initial resistance is pegged near $5.97, a price that marks the 33% retracement level of the previous downtrend from $8.20 through the low of $4.85 1/2. Weekly stochastics are bullish following a confirming bullish crossover below the oversold level of 20% the week of May 4.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 12.

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

Posted at 8:11AM CDT 05/16/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $1.025 higher at $152.525 last week. The secondary (intermediate-term) trend is up, though the contract looks to have established a potential double-top formation near resistance at $154.825. This price marks the 67% retracement level of the previous downtrend from $162.925 through the low of $138.60. Weekly stochastics remain bullish, indicating the contract could eventually poke through this resistance. If the contract follows through on late week weakness, support remains at $146.175.

Feeder Cattle: The August contract closed $0.775 higher at $218.40 last week. The contract is testing resistance near $222.20, a price that marks the 61.8% retracement level of the initial sell-off from $237.95 through the low of $196.675. This is also a test of the previous high of $221.45 from the week of April 6 when the contract posted a bearish reversal. Weekly stochastics are nearing the overbought level of 80%.

Lean hogs: The June contract closed $1.475 lower at $83.35 last week. Despite the lower weekly close the secondary (intermediate-term) trend remains up. However, the contract has found renewed selling interest near resistance at $85.85, the 50% retracement level of the previous secondary downtrend from $99.65 through the low of $72.05. Weekly stochastics are bullish but nearing the overbought level of 80%.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, up 2 cents for the week. The secondary (intermediate-term) trend remains sideways, though could soon turn up given the bullish reversal seen the previous week. Weekly stochastics are below the oversold level of 20% and could work toward establishing a bullish crossover, confirming the recent technical pattern of the NCI.X. Support remains at $3.42, a price that marks the 38.2% retracement level of the previous uptrend from $2.81 through the high of $3.80.

Soybean meal: The July contract closed $10.10 lower at $303.30 last week. The market resumed its secondary (intermediate-term) downtrend as July bean meal fell below trendline support. Next support is at the contract low of $294.40. Weekly stochastics are below the oversold level of 20%.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 12.

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

Posted at 7:20AM CDT 05/16/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.42 higher at $66.81. Last week saw the spot-month contract consolidate within the previous week's trading range while weekly stochastics continue to show a bearish crossover. Resistance remains at $69.22, a price that marks the 33% retracement level of the previous downtrend from $117.34 through the low of $45.19. Next resistance is the 38.2% retracement level of $69.22.

Crude Oil: The spot-month contract closed $0.30 higher at $59.69. The secondary (intermediate-term) trend remains up, though weekly stochastics are above the overbought level of 80% and nearing a bearish crossover. The spot-month contract held above resistance at $58.60, a price that marks the 23.6% retracement level of the previous downtrend from $112.24 through the low of $42.03. However, it continues to consolidate rather than showing signs of extending the uptrend toward next resistance at the 33% retracement level of $65.41.

Distillates: The spot-month contract closed 5.11cts higher at $20048. The secondary (intermediate-term) trend remains up with the spot-month contract closing above resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Support continues to come from the commercial side of the market, as indicated by the uptrend (weakening contango) in the market's futures spreads. With weekly stochastics still neutral-to-bullish the spot-month contract could extend the uptrend to test the 33% retracement level of $2.1465, if not the 38.2% retracement level of $2.2286.

Gasoline: The spot-month contract closed 6.50cts higher at $2.0568. The market looks to have reestablished its secondary (intermediate-term) uptrend with last week's high close. However, weekly stochastics remain well above the overbought level of 80% meaning it could be more difficult for the market to extend its uptrend to next resistance at $2.1892. This price marks the 50% retracement level of the previous downtrend from $3.1520 through the low of $1.2265. Complicating things further, Friday's CFTC Commitments of traders report showed noncommercial interests reducing their net-long futures position by 2,529 contracts.

Ethanol: The spot-month contract closed 2.1cts higher at $1.6800. The secondary (intermediate-term) remains up as the spot-month contract closing above technical resistance at $1.6637. This price marks the 38.2% retracement level of the previous downtrend from $2.2650 through the low of $1.2920. Given that the forward curve remains inverted, reflecting a bullish commercial outlook, the spot-month could look to test the 50% retracement level up at $1.7785. However, weekly stochastics are already well above the overbought level of 80%, meaning it could become increasingly difficult for the market to extend its uptrend.

Natural Gas: The spot-month contract closed 13.6cts higher at $3.016. The secondary (intermediate-term) trend is up. Initial resistance is pegged at $3.39, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $2.443. A test of this resistance would also be a test of the lower end of a bearish price gap ($3.351) left the week of December 22, 2014. Weekly stochastics remain bullish.

Propane (Conway cash price): Conway propane closed 0.63cts higher at $0.4313. The secondary (intermediate-term) trend remains sideways. Support is at $0.3775, the previous low from the week of January 5, 2015.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 12.

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

Posted at 6:58AM CDT 05/16/15 by Darin Newsom
 

Monday 05/11/15

July Sugar: First the Market Move, Then the Headlines

Over the weekend, a Wall Street Journal news stories talked of one company's large purchase, Wilmar International Ltd., sending the world sugar market "scrambling" last Friday. As the article reported, "More than a dozen ships are now lined up at Brazilian ports to transport the sugar to Asia." Later in the piece it was said that "some analysts think it could be the harbinger of stronger-than-expected global sugar demand".

Source: DTN ProphetX

I find this thought interesting for a couple of different reasons. First, last week saw Mars (the candy company, not the red planet) release a statement announcing its support for added sugar labeling. In his latest blog, "On Added-Sugar Labeling, Mars Is From Mars", DTN Editor Emeritus discusses the whys and wherefores of Mars' stance. Second, this weekend's news once again confirms the basic tenet of technical analysis: If everything that affects market price is ultimately reflected in market price, then the study of that market price is all that is necessary. [Technical Analysis of the Futures Markets, pg. 3; John J. Murphy]

Or as I like to say: First the market move, then the headline.

Take a look at the attached weekly chart for July sugar. Notice the green circles on both the bar chart (top chart) and weekly stochastics (second study). These market the bullish technical signals that indicated the market was already in a secondary (intermediate-term) uptrend, long before Friday's big buy by Wilmar.

On its bar chart the July sugar contract posted a classic 2-week reversal the weeks of March 23 and March 30. Remember the three characteristics of such a pattern: 1) the market sets a new low for the move (12.26 cents per pound) before closing near that low (12.29); 2) The market opens the next week near unchanged (12.28) before 3) Closing near the previous week's high (12.80, 13.05 respectively). The week of April 13 saw the contract post a high of 13.03, moving above its previous 4-week high of 13.10, another indicator the secondary trend had turned up.

At the same time, the week of March 30 to be specific, July sugar's weekly stochastics posted a bullish crossover below the oversold level of 20%. This is a familiar technical signal that I look for indicating momentum, and likely the trend, of a market/contract has changed.

Those of you familiar with my analysis know I also use trends to indicate changes in fundamentals (supply and demand). In the case of sugar, this is complicated by the fact that July is still old-crop (2014-2015) while the next contract, October, is new-crop. Showing that spread activity bottom study, green line) can be like comparing apples to oranges, but in this case the uptrend (weakening carry/contango) that began that same week of March 30 reflects increased commercial buying of old-crop versus new, usually due to a short-term change in supply and demand.

Activity from the other side of the market, noncommercial traders, is reflected in the trend of the futures market, and confirmed by weekly CFTC Commitments of Traders reports (bottom study, blue histogram). In the case of sugar, this group held a net-short futures position of 16,673 contracts the week of March 30. This group then not only covered their net-short, but moved to a net-long of 43,219 contracts through the week of April 27.

If buying from both sides continues the contract could soon test its initial price target of 14.60, the 33% retracement level of the previous secondary downtrend from 19.74 through the 12.03 low. However, an increasingly bullish view of old-crop fundamentals could lead to a 50% retracement up at 15.88.

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

Posted at 8:59AM CDT 05/11/15 by Darin Newsom
 

Saturday 05/09/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, up 2 cents for the week. The secondary (intermediate-term) trend now looks to be sideways following the establishment of a bullish reversal by the NCI.X. However, weekly stochastics have not completely crossed into oversold territory below 20%. Technical support remains at $3.42, a price that marks the 38.2% retracement level of the previous uptrend from $2.81 through the high of $3.80.

Corn (Old-crop): The July contract closed unchanged at $3.63 last week. The secondary (intermediate-term) downtrend looks to be nearing its end, with the futures contract stabilizing and weekly stochastics below the oversold level of 20%. This sets the stage for the establishment of a possible bullish crossover in coming weeks. Initial support is at last week's low of $3.55 3/4, then the contract low of $3.46 3/4. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests moving to a net-short futures position, a move that could ultimately prove bullish if short-covering buying begins.

Corn (New-crop): The December contract closed 2.00cts lower at $3.78 1/4 last week. The secondary (intermediate-term) trend remains down though the contract continues to hold above its low of $3.64 1/4. Weekly stochastics are below the oversold level of 20% and nearing a potential bullish crossover that would indicate a change in momentum.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.39, up 12 cents for the week. The secondary (intermediate-term) trend of the market remains sideways. Support is at the series of lows near $9.12, with initial resistance at $9.57, then $10.02. Weekly stochastics remain neutral to bullish, holding above the oversold level of 20% with the last signal a bullish crossover in oversold territory the week of October 13, 2014.

Soybeans (old-crop): The July contract closed 11.50cts higher at $9.76 1/4 last week. The secondary (intermediate-term) trend remains sideways. Trendline support is calculated this week near $9.51 1/2, then the contract low of $9.32 1/4. Initial resistance is pegged at $9.73 1/2 (trendline), then $9.97 1/2. Weekly stochastics remain neutral-to-bullish the most recent secondary signal a bullish crossover below the oversold level of 20% the week of October 6, 2014.

Soybeans (new-crop): The November contract closed 11.25cts higher at $9.52 last week. The secondary (intermediate-term) trend remains sideways. Support is at the contract low of $9.27 1/2 while initial resistance (trendline) is calculated at $9.49 1/2. Beyond that, resistance is between $9.67 1/2 and $9.78 3/4.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.53, up 7 cents for the week. The SR.X posted a bullish reversal last week, possibly indicating a move to a secondary (intermediate-term) uptrend. Weekly stochastics remain below the oversold level of 20%, though the last secondary signal was a bullish crossover in oversold territory the week of March 16, 2015. If this proves to be a false signal, initial support is at last week's low of $4.38, then the previous low of $4.25.

SRW Wheat (new-crop): The July Chicago contract closed 7.50cts lower at $4.81 1/2 last week after posting a new low of $4.60 3/4. Weekly stochastics established a secondary (confirming) bullish crossover below the oversold level of 20%, the previous occurring the week of March 16, 2015. This would indicate that last week's move by the futures contract was a spike reversal and that the secondary (intermediate-term) trend is now up. Friday's CFTC Commitments of Traders report showed noncommercial interests increasing their net-short futures position by 7,493 contracts, setting the stage for support from potential short-covering in the coming weeks.

HRW Wheat (new-crop): The July Kansas City contract closed 8.00cts higher at $5.08 1/2 last week. Weekly stochastics established a secondary (confirming) bullish crossover below the oversold level of 20%, the initial crossover seen the week of March 16, 2015. This would indicate that last week's move by the futures contract is a spike reversal, initiating a secondary (intermediate-term) uptrend.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 5.

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

Posted at 10:25AM CDT 05/09/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $2.325 higher at $151.50 last week. The secondary (intermediate-term) trend is up, with resistance between $150.75 and $154.825. These prices mark the 50% and 67% retracement levels of the previous downtrend from $162.925 through $129.425. Weekly stochastics are bullish indicating an extension to the high-side of resistance is likely.

Feeder Cattle: The August contract closed $2.55 higher at $217.625 last week. The last clear secondary (intermediate-term) technical signals are bearish, meaning the secondary trend remains down. However the contract could look to test resistance near $222.20, a price that marks the 61.8% retracement level of the initial sell-off from $237.95 through the low of $196.675. This would also test the previous high of $221.45 from the week of April 6 when the contract posted a bearish reversal. Weekly stochastics are nearing the overbought level of 80%.

Lean hogs: The June contract closed $3.575 higher at $84.825 last week. The secondary (intermediate-term) trend remains up. Next resistance is pegged at $85.85, the 50% retracement level of the previous secondary downtrend from $99.65 through the low of $72.05. Weekly stochastics are bullish indicating the contract should continue to extend its uptrend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, up 2 cents for the week. The secondary (intermediate-term) trend now looks to be sideways following the establishment of a bullish reversal by the NCI.X. However, weekly stochastics have not completely crossed into oversold territory below 20%. Technical support remains at $3.42, a price that marks the 38.2% retracement level of the previous uptrend from $2.81 through the high of $3.80.

Soybean meal: The July contract closed $1.50 higher at $313.40 last week. The secondary (intermediate-term) trend looks to be sideways as the contract continues to consolidate between trendline support and trendline resistance. Weekly stochastics are below the oversold level of 20% and nearing a bullish crossover. Support continues to come from commercial buying while noncommercial interests put pressure on the market. Friday's weekly CFTC Commitments of Traders report showed the latter reducing their net-long futures position by 2,205 contracts.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 5.

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

Posted at 9:45AM CDT 05/09/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.07 lower at $65.39. The spike to a new high of $69.63 was a test of resistance at $69.22, a price that marks the 33% retracement level of the previous downtrend from $117.34 through the low of $45.19. The subsequent lower weekly close looks to be a spike high, a signal confirmed by the establishment of a bearish crossover above the overbought level of 80% by weekly stochastics. Therefore, the secondary (intermediate-term) trend now looks to be down with support between $61.49 and $57.41.

Crude Oil: The spot-month contract closed $0.24 higher at $59.39. The higher close indicates the secondary (intermediate-term) trend remains up, though weekly stochastics are well above the overbought level of 80% and in position for a bearish crossover. Resistance is pegged at $65.41, a price that marks the 33% retracement level of the previous downtrend from $112.24 through the low of $42.03. The spot-month contract continues to hold above trendline support on buying from both commercial and noncommercial traders. Friday's weekly CFTC Commitments of Traders report showed the latter adding 10,862 contracts to their net-long futures position.

Distillates: The spot-month contract closed 2.85cts lower at $1.9537. Indications are that the secondary (intermediate-term) trend remains up though the spot-month contract was unable to close above resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Weekly stochastics are neutral-to-bullish meaning the market could turn sideways.

Gasoline: The spot-month contract closed 5.35cts lower at $1.0018. The secondary (intermediate-term) trend now looks to be down with last week's lower close. Weekly stochastics established a bearish crossover above the overbought level of 80%, confirming the possible spike reversal by the spot-month contract.

Ethanol: The spot-month contract closed 5.2cts higher at $1.6590. The secondary (intermediate-term) remains up as the spot-month contract continues to test technical resistance at $1.6637. This price marks the 38.2% retracement level of the previous downtrend from $2.2650 through the low of $1.2920. Weekly stochastics are above the overbought level of 80%, indicating a bearish change in momentum could soon occur.

Natural Gas: The spot-month contract closed 10.4cts higher at $2.88. The secondary (intermediate-term) trend is up with the spot-month contract closing near its new 4-week high of $2.888. Initial resistance is pegged at $3.39, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $2.443. A test of this resistance would also be a test of the lower end of a bearish price gap ($3.351) left the week of December 22, 2014.

Propane (Conway cash price): Conway propane closed 4.75cts lower at $0.4250. The secondary (intermediate-term) trend remains sideways. Support is at $0.3775, the previous low from the week of January 5, 2015.

The weekly Commitments of Traders report showed positions held as of Tuesday, May 5.

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

Posted at 9:14AM CDT 05/09/15 by Darin Newsom
 

Monday 05/04/15

Dec Cotton's Price Resistance

As most of you know, I'm one of the analysts that rotate through the Iowa Public Television show Market to Market. This last weekend was my turn in the analytical chair, discussing the various goings on in the markets. When it came time to discuss cotton, I mentioned the new-crop December contract was having trouble breaking through technical price resistance. Host Mike Pearson asked what that price was and I, true to form, could not recall off the top of my head. I told him though it would be discussed on DTN.

Source: DTN ProphetX

And here it is.

The secondary (intermediate-term) trend remains up with resistance on the weekly chart for new-crop December cotton at 68.50 (that wasn’t so hard after all). This price marks the 33% retracement level of the previous downtrend from 82.95 (high the week of May 4, 2014) through 61.28 (low the week of January 18, 2015). Buying from both sides of the market has been seen, with commercial interest reflected in the strengthening inverse of the December to Marc futures spread (bottom study, green line) and noncommercial activity showing up as larger net-long futures holdings in weekly CFTC Commitments of Traders reports (third study, blue histogram).

One technical factor that could start to slow the market is its weekly stochastics (second study). Notice how both the faster moving blue line and slower moving red line are approaching the overbought level of 80%, in conjunction with the futures contract's struggle to reach its initial price target (68.50). If selling from either commercial or noncommercial traders increases due to ideas the contract is overbought, Dec cotton could move back into a sideways trend, or possibly a secondary downtrend.

If the U.S. dollar index stays under pressure (see my blog posts from last Wednesday and Saturday), noncommercial buying could continue. That leaves commercial traders to put pressure on new-crop cotton, most likely due to larger than expected planting progress estimates in Monday's weekly NASS report. Keep an eye on the trend in the Dec/Mar futures spread for signs that this (commercial selling) may be starting.

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

Posted at 7:39AM CDT 05/04/15 by Darin Newsom
 

Sunday 05/03/15

Weekly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 4 cents for the week. The secondary (intermediate-term) trend is down with the NCI.X closing below its previous low of $3.44 and technical support at $3.47. The latter marks the 33% retracement level of the previous secondary uptrend from $2.81 through the high of $3.80. Given that weekly stochastics remain bearish the NCI.X could look to test support at the 50% retracement level of $3.31.

Corn (Old-crop): The July contract closed 6.75cts lower at $3.60 last week. The secondary (intermediate-term) trend remains down dating back to the bearish reversal from the week of December 29, 2014. Weekly stochastics are bearish, but below the oversold level of 20% as July corn extends its sell-off under technical support near $3.66. This price marks the 76.4% retracement level of the previous uptrend from $3.46 3/4 (low the week of September 29, 2014) through the high of $4.31 1/2 (week of December 29). Major (long-term) support on the continuous monthly chart remains at $3.56.

Corn (New-crop): The December contract closed 8.00cts lower at $3.80 1/4 last week. The secondary (intermediate-term) trend is down with the contract extending its sell-off below support near $3.84 1/2, a price that marks the 76.4% retracement level of the previous uptrend from the low of $3.64 1/4 (week of September 29, 2014) through the high of $4.40 (week of December 29). Weekly stochastics dropped under 20% indicating the contract is in an oversold situation.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.29, down 2 cents for the week. Despite posting a bearish outside week the trend of the market remains sideways. Support is at the series of lows near $9.12, with initial resistance at $9.57, then $10.02. Weekly stochastics remain neutral, holding above the oversold level of 20%.

Soybeans (old-crop): The July contract closed 6.00ct lower at $9.84 3/4 last week. The secondary (intermediate-term) trend remains sideways despite last week's bearish outside range. With weekly stochastics below the oversold level of 20% the contract continues to hold above trendline support, pegged this week at $9.51. Trendline resistance is calculated at $9.78 1/4.

Soybeans (new-crop): The November contract closed 11.75cts lower at $9.40 3/4 last week. Though the contract posted a bearish outside week, the secondary (intermediate-term) trend remains sideways. However, follow-through pressure could lead to a test of support at the 4-week low of $9.33, then the contract low of $9.27 1/2. Weekly stochastics are already below 20%, indicating an oversold situation.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.46, down 15 cents for the week. The move below its previous low of $4.55 indicates the SR.X has resumed its secondary (intermediate-term)) downtrend. Next support would be at the low of $4.25 from the week of September 22, 2014. However weekly stochastics are below the oversold level of 20%, indicating an oversold situation, an opening the door for a potential change in trend.

SRW Wheat (new-crop): The July Chicago contract closed 14.50cts lower at $4.74 last week. The move to a new low ($4.64) indicates the contract has resumed its secondary (intermediate-term) downtrend despite weekly stochastics already calculated below the oversold level of 20%. Major (long-term) support is at the April 2015 low (continuous monthly chart) of $4.64.

HRW Wheat (new-crop): The July Kansas City contract closed 7.00cts lower at $5.00 1/2 last week. While the secondary (intermediate-term) trend looks to still be down, the contract was able to rally off last week's low of $4.89 1/2. With weekly stochastics already below the oversold level of 20%, the stage is set for a potential spike low on its weekly chart.

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

Posted at 10:23AM CDT 05/03/15 by Darin Newsom
 
Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $2.025 lower at $149.175 last week. The market remains a mix of technical signals. Weekly stochastics remain bullish following the establishment of a crossover below the oversold level of 20% the week of February 23. On the other hand, the contract itself posted a bearish reversal the week of April 6 with its high ($154.675) a test of resistance at $154.825. This price marks the 67% retracement level of the secondary downtrend from $162.925 through the low of $129.425. The for the market to continue its sideways with resistance between $150.75 and $154.825, and support at $146.175.

Feeder Cattle: The August contract closed $0.60 lower at $215.075 last week. Despite its recent strength, the secondary trend remains down. However, the futures contract has given mixed signals of late, most notably a bearish reversal the week of April 6 followed by a bullish reversal the week of April 20. Resistance remains between $217.30 and $222.20, with support between $209.10 and $206.10.

Lean hogs: The June contract closed $1.80 higher at $81.25 last week. The secondary (intermediate-term) trend remains up. Initial resistance is pegged at $82.595, then $85.850. These prices mark the 38.2% and 50% retracement levels of the previous secondary downtrend from $99.65 through the low of $72.05. Weekly stochastics are bullish indicating the contract should extend its uptrend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.43, down 4 cents for the week. The secondary (intermediate-term) trend is down with the NCI.X closing below its previous low of $3.44 and technical support at $3.47. The latter marks the 33% retracement level of the previous secondary uptrend from $2.81 through the high of $3.80. Given that weekly stochastics remain bearish the NCI.X could look to test support at the 50% retracement level of $3.31.

Soybean meal: The July contract closed $1.40 lower at $311.90 last week. The market remains in a secondary (intermediate-term) downtrend though July meal continues to hold above minor trendline support pegged this week at $308.90. Weekly stochastics are below the oversold level of 20% setting the stage for a potential bullish crossover that could signal a change in trend.

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

Posted at 9:55AM CDT 05/03/15 by Darin Newsom
 
Weekly Analysis: Energy Markets

Brent Crude Oil: The spot-month contract closed $1.18 higher at $66.46. The secondary (intermediate-term) trend is up, with next resistance pegged at $72.75. This price marks the 38.2% retracement level of the previous downtrend from $117.34 through the low of $45.19. However, weekly stochastics are already above the 80% level indicating the market is overbought.

Crude Oil: The spot-month contract closed $2.00 higher at $59.15. The secondary (intermediate-term) trend is up with the spot-month contract priced above initial resistance at $58.60. This price marks the 23.6% retracement level of the previous downtrend from $112.24 through the low of $42.03. While the next target remains the 38.2% retracement level at $68.85, weekly stochastics have climbed above the overbought level of 80%.

Distillates: The spot-month contract closed 5.39cts higher at $1.9822. The secondary (intermediate-term) trend is up with the spot-month contract testing initial resistance at $1.9841. This price marks the 23.6% retracement level of the previous downtrend from $3.2633 through the low of $1.5890. Weekly stochastics remain bullish indicating an extension of the uptrend to the 38.2% retracement level of 2.2286 is likely.

Gasoline: The spot-month contract closed 3.74cts higher at $2.0453. The secondary (intermediate-term) trend remains up. The recent breakout of the bullish pennant projects a high near $2.36, a test of major resistance at $2.3527 on the long-term monthly chart. This price marks the 50% retracement level of the previous major downtrend from $3.4789 through the low of $1.2265. However, weekly stochastics are already above the overbought level of 80%, a factor that could possibly limit new buying interest.

Ethanol: The spot-month contract closed 0.6ct higher at $1.6070. The secondary (intermediate-term) remains up after the spot-month contract posted a bullish outside week. However, the market has been unable to break through resistance at $1.6637, a price that marks the 38.2% retracement level of the previous sell-off from $2.2650 through the low of $1.2920, keeping in play a potential double-top formation with its previous peak of $1.6550. Weekly stochastics remain bullish but are approaching the overbought level of 80%.

Natural Gas: The spot-month contract closed 24.5cts higher at $2.776. The secondary (intermediate-term) trend turned up as the spot-month contract posted a bullish key reversal last week. Initial resistance is pegged at $3.39, a price that marks the 23.6% retracement level of the previous downtrend from $6.493 through last week's low of $2.443. A test of this resistance would also be a test of the lower end of a bearish price gap ($3.351) left the week of December 22, 2014.

Propane (Conway cash price): Conway propane closed 0.75ct lower at $0.4725. The secondary (intermediate-term) trend remains sideways. Support is at $0.4466, a price that marks the 67% retracement level of the initial rally from $0.3775 through the high of $0.5850.

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

Posted at 9:32AM CDT 05/03/15 by Darin Newsom
 

Saturday 05/02/15

Taking Left Fied on the US Dollar Index

Unless you're Alex Gordon, it's often not viewed as a good thing to constantly be stationed out in left field. Outside of baseball, this phrase is said to mean "unexpectedly", "odd", or "strange". This definition has morphed into a deeper meaning of "out of contact with reality".

Source: DTN ProphetX

(Baseball announcer voice): And now for your starting nine. Out in left field, Darin Newsom.

On the analytical field, I have frequently manned left field. This year alone I have been a member of the "Bullish Corn Club", "Society of Livestock Bears", "Gasoline is Going Higher Group", and now the sole associate of "TWTUSDXGD" (Those Who Think the U.S. Dollar indeX is Going Down).

Last Wednesday's I posted a blog discussing the completion of a double-top formation in the U.S. dollar index (USDX) projecting a sell-off back to support near 92.180. This price marks the 38.2% retracement level of the previous secondary (intermediate-term) uptrend from 78.906 to the high of 100.390. However, as April came to a close the indexes monthly chart indicated a stronger sell-off was possible.

In his book "Technical Analysis of the Futures Market", John J. Murphy lists the three common characteristics of a 2-day reversal. First, a market posts a new high and closes near that high on day one. Second, the next day sees the market open near the close of the first day. Third, the second day the market posts a sharp sell-off before closing near the low of the first day. Keep in mind something Murphy put in the book that I've used constantly over the last 25 years: The same patterns can be seen on weekly and monthly charts, gaining in importance the longer the timeframe.

Let's take a look at the monthly chart for the USDX. In March it posted a low of 95.063 before rallying to a new high of 100.390 and a monthly close of 98.357 (Characteristic 1? Check). In April the USDX opened at 98.398 (Characteristic 2? Check). As April progressed the USDX was unable to make a new high (99.990) before falling to 94.399 and closing at 94.600, near the March low of 95.063 (Characteristic 3? Check).

Therefore the USDX is now another market that, if I were to take the title off the chart and ignore what I think I know about fundamentals, would show me a clear, indisputable, technical signal. In this case, a classic 2-month reversal confirming the bearish crossover by monthly stochastics (bottom study) above the overbought level of 80% established at the end of March.

If the USDX has established a major (long-term) top, how far might it fall? As I pointed out earlier, initial support on the weekly chart is near 92.180. However, initial support on the long-term monthly chart is at 89.048, the 38.2% retracement level of the previous major uptrend from 70.698 (March 2008 low) through 100.390 (March 2015 high). If you turn back to my discussion of the weekly chart, you'll see that the secondary 50% retracement level is pegged at 89.648. Given the similarity between the major 38.2% retracement (89.048) and the secondary 50% retracement (89.648), the major target seems likely to be tested.

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

Posted at 8:12AM CDT 05/02/15 by Darin Newsom
 

Friday 05/01/15

Monthly Analysis: Grain Markets

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, down 10 cents for the month. The major (long-term) trend remains up while the secondary (intermediate-term) trend is sideways-to-down. Support remains at $3.31, a price that marks the 50% retracement level of the rally from $2.81 (October 2014 low) to $3.80 (December 2014 high).

Corn (Futures): The July contract closed at $3.66 1/4, down 10 cents on the monthly chart. While the major (long-term) trend remains up, the secondary (intermediate-term) trend is sideways-to-down. Support is at $3.56, a price that marks the 61.8% retracement level of the rally from $3.18 1/4 (October 2014 low) to $4.17 (December 2014 high).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.36, up 7 cents for the month. The major (long-term) trend remains sideways, with initial support at the October 2014 low of $8.50. Resistance is at the November high of $10.08. The NSI.X continues to hold near the 50% level (midpoint) of this sideways range at $9.29. Monthly stochastics remain neutral below the oversold level of 20% indicating the next breakout could be toward the upside.

Soybeans (Futures): The July contract closed at $9.76, up 2 3/4 cents on the monthly chart. The major (long-term) remains up, based on the key bullish reversal at the end of October 2014 coinciding with a bullish crossover by monthly stochastics below the oversold level of 20%. However, the secondary (intermediate-term) trend remains sideways-to-down with support pegged near $9.65 3/4, a price that marks the 67% retracement level of the initial rally from $9.04 (October 2014 low) to $10.86 1/4 (November 2014 high). If this support fails to hold, soybean futures could fall back to test the previous low of $9.04.

Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $4.42 down 43 cents for the month. The major (long-term) trend remains sideways with support at $4.25 (low from September 2014) and resistance at $6.23 (high from December 2014).

SRW Wheat (Futures): The July Chicago contract closed at $4.74 1/2 down 37 1/2 cents on the monthly chart. The major (long-term) trend looks to have turned down again following the establishment of a bearish outside month and a new low of $4.64. Monthly stochastics are below the oversold level of 20%, but could continue to trend lower.

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

Posted at 6:00AM CDT 05/01/15 by Darin Newsom
 
Monthly Analysis: Livestock Markets

Live Cattle: The June contract closed at $149.70, down $2.625 on the monthly chart. The major (long-term) trend remains down with support between $141.85 and $137.30. These prices mark the 33% and 38.2% retracement levels of previous uptrend from $79.975 through the high of $172.75. Secondary resistance is pegged at $155.65, the 38.2% retracement level of the initial sell-off from the $172.75 high through the March 2015 low of $145.075.

Feeder Cattle: The August contract closed at $21.70, down $2.20 on the monthly chart. While the major (long-term) trend remains down, the market has seen a retracement rally leading to test of resistance at $219.375. This price marks the 50% level of the initial sell-off from $245.75 through the low near $192.375. The latter marks the 33% retracement level of the previous uptrend from $85.50 through the $245.75 high.

Lean Hogs: The June contract closed at $81.425, up $5.625 on the monthly chart. The major (long-term) trend remains up with resistance pegged between $83.00 and $86.725, prices that mark the 33% and 38.2% retracement levels of the previous major downtrend from $133.425 (March 2014 high) to $57.85 (March 2015 low).

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.45, down 10 cents for the month. The major (long-term) trend remains up while the secondary (intermediate-term) trend is sideways to down. Support remains at $3.31, a price that marks the 50% retracement level of the rally from $2.81 (October 2014 low) to $3.80 (December 2014 high).

Soybean meal: The July contract closed at $316.10, down $10.70 on the continuous monthly chart. The major (long-term) trend remains down with support pegged at the previous low of $295.10 (October 2014). The market's forward curve remains inverted reflecting a bullish commercial outlook.

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

Posted at 5:59AM CDT 05/01/15 by Darin Newsom
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