MARKET UPDATE - GRAINS, MEATS, SOFTS



MARKET UPDATE
JUDY CRAWFORD
TRADES FOR FRIDAY, DECEMBER 13, 2019
888-301-8120
jcrawford@zaner.com


EMOTION is your enemy more than
any market will ever be.

BEANS ARE DOING WHAT? Since beans made a contract low in September 2018 their monthly chart shows them stuck in a range between 890 and 950 on a closing basis going nowhere. And, sure enough, after a new rally high in October, this month theyre right back down to the low end of that range and still doing nothing. Or are they?

Their weekly chart tells a very different story. Since the March bean contract made its 839 3/4 low in 2018 it have been in a continuing uptrend on that chart. Technically an uptrend means each rally high has been more than the previous one and every selloff less than the previous one. So far beans have met that criteria on that chart with three waves up and three waves down each involving several weeks. The selloff they had in November was the correction to the third wave up that topped in October. It went on for six weeks. And what did all of these corrections have in common?

Including the September low in 2018, every correction has ended with a reversal bottom. And the results have been worthy of attention in terms of the rally they produced. The first reversal bottom produced a rally totaling 121 points, the second 120 1/2 and the third (the most recent one that topped in October) 90 3/4 points before starting a correction. So what did beans do last week after selling off since the October high?

They formed a reversal bottom. Doing so technically suggests that the correction to that third wave up that topped in October may be over - with the overall uptrend still intact.

If that be the case, and last weeks reversal bottom is not negated, March beans should now attempt a fourth wave up according to the pattern they have adhered to on their weekly chart since the 2018 low. Will that occur?

On their monthly chart they also consolidated from June 2016 to March 2018 before collapsing to new lows. So why not again? During that consolidation you did not have higher highs and lower lows. In short that consolidation had the characteristics of a downtrend and, sure enough, they broke out to the downside from that consolidation to the September 2018 new low.

Considering that beans have clearly been in an uptrend (within this consolidation) in spite of the ups and downs of a potential trade deal to distract everyone but the beans, for technicians the probability leans towards a fourth wave up occurring.

So even though on their monthly chart they dont seem to be doing much, their weekly chart seems to be doing a lot. And most important, if this uptrend continues, beans could be technically setting up for a final breakout to the upside over 950 on their monthly chart with follow through. It has been at that level that they cannot close over since starting the consolidation. But with their technicals very different this time, probability leans towards the upside and an eventually breakout over that level. And, as we know, trading futures is all about probabilities. And beans seem to have probability on their side now.

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GOAL OF THE MARKET UPDATE: To give traders a technical explanation of market behavior with the goal to educate and better understand and trade the markets. What I convey to readers is not a personal opinion but what the markets are suggesting by their technical formations and action.

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GRAINS: The potential trade deal agreement with China fueled the rally today.

MAR CORN: After confirming another wave down yesterday, corn rallied right back into the previous consolidation today. The rally reached 380 market resistance and stopped. It then closed back under the 20 avg. Technically in spite of the rally, nothing has changed about the downtrend.

MAR WHEAT: It rallied today and not only reached the stops but rallied further to 534 where there is minor resistance. It then backed off. The sell signal on the weekly chart is still intact but todays action on the daily could mean a change. Too early to tell. Watching closely.
Position: Short 518 1/2 (12.11). Exit 528 1/4 (12.12). Loss

MAR BEANS: They attempted to sell off today but quickly recovered due to the potential trade deal. They rallied and closed over their 20 avg. They are close to resistance on all three charts so a close over 920 would clear those issues. Watching closely to buy.

MAR MEAL: Meal sold off again today but is holding the 296.20 low so far. Keep stops at 305.50.
Position: Short 300.10 (12.11).
Projection: 290.00.

MAR BEAN OIL: Switching to March. Yesterdays sell signal was quickly negated today as they made a new high confirming another wave up on the daily chart. Follow through could bring it up to 33.50. The reversal top on the monthly chart was negated today. And the weekly chart is triggering a buy. Every chart is positive. Watching closely to buy.

MEATS:

FEB HOGS: They continue to suggest a bottom as I have been suggesting for some time. Today was their best effort to rally and close over their 20 avg. on their daily chart. This could be the start of a second wave up since the Dec. 2 low. The earlier correction that bottomed on Monday suggests a test of that Dec. 2 low that is holding and, so far, suggesting a potential 1,2,3 bottom formation. I would like to buy but their reputation for volatility makes that difficult.

FEB CATTLE: I lowered the stop and it was reached today. Their inability to do anything is beyond belief. They continue to suggest a top but remain stuck in that range.
Position: Short 124.85 (12.4). Exit 125.55 (12.12). Loss $335 (including costs).

JAN FEEDERS: They held their 200 avg. support again today on their daily chart. But a test of 143.00 stopped the rally attempt again. The daily chart has been in a downtrend but the recent rally cut short a selloff that should have been a third wave down. Instead they are trying to change trend to the upside but it has not been confirmed yet. Just watching.

SOFTS:

MAR COCOA: Yesterday I said it continued to suggest a third wave down on its daily chart and todays selloff confirmed that. It reached its projection today and is holding so far. If it continues to hold, a near term rally could develop.

MAR COTTON: It finally has attempted a breakout to the upside again today with the most follow through so far. It rallied up to its 200 avg. on its daily chart. That stopped the advance. This rally has now triggered a buy on the monthly chart and the weekly chart and that is positive for further follow through. But, not to make it easy, it is up against the 67.00 market resistance on its weekly chart and its 10 avg. on its monthly chart. Watching closely to buy.

MAR COFFEE: Another new high. It reached the 200 avg. on its monthly chart that I mentioned yesterday. Thats resistance too so well see if this resistance finally produces a setback. Im not holding my breath. Just watching.

MAR SUGAR: The reversal top was already negated today. Yesterday I said the long term charts suggested the early phase of a bull market and todays action is supporting that. Theres some market resistance at 13.50 and then 13.60. Waiting for a setback to go long again.

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