Market Update - 13 Jan 2012

The Grain Report put to rest any attempts technically that the grains made early this month to regain some positive hope for an extended rally. On the weekly charts the attempts to get over the 20 day ma has failed. The gaps on the daily charts that suggested possible "break away" gaps have been filled on the corn chart but not the beans - yet. Even though they are pushing into some support on the daily chart, the long term indications suggest much lower prices - especially in the corn and wheat.

WHAT IS CRUDE OIL TELLING US?

More than one client called me today regarding the sell-off in the crude. It surprised me too. It is important because of where it sold off from - an important resistance area (103.00) and the degree of the sell-off. It did technical damage
too.

Crude is an economic indicator and it could be telling us or confirming further the economic slow down that is spreading around the world. First it was in the U.S. and Europe. Now China is facing a slump and even India.
If that be the case, and if crude follows through, it should start to be reflected in many other markets.

Sell February cattle.

Sell 120.65 stop. Protective stop 121.80. Potential projection 119.20.

Reasons for the Trade:
1. On the monthly chart cattle continue to back off from the 123.00 resistance.
2. The weekly chart has two sell signals.
3. The macd is negative on all three charts.
4. The daily chart has a previous sell signal that is still intact.
5. A sell would push cattle back under the 20 day ma. They closed right on it today.
6. Today was an inside day that can trigger a signal and market direction.

Sell March cocoa.

Sell 22.95 stop. Protective stop 23.77. Potential projection 21.65.

Reasons for the Trade:
1. Both the monthly and weekly charts rallied to the 24.00 resistance and stopped.
2. Both the weekly and daily chart rallied up to the down trend line formed since the August high and stopped.
3. Cocoa is in a major down trend on all three charts.
4. On the daily chart, cocoa rallied up to and stopped at the Bollinger band resistance. That has gone on for three days.
5. On the daily chart the macd has turned down.
6. Today was an inside day that can trigger a signal and market direction.
 GRAIN COMMENTS:

MAR CORN:
Corn opened up almost down limit and quickly locked limit. This changed the long term scenario. Long term corn had succeeded in getting over the 20 day ma on the weekly chart which was constructive. That was abruptly ended today. It is now under it by approximately 26 cents. The last time it made this attempt to overcome that average was in August. That failure produced a sell-off down to 572 1/4. That was from a high of 775 1/2. There should be more follow through. The weekly shows a projection near term to 550. Longer term to 500. Closed

MAR MINI WHEAT:
The success in getting back over the 20 day ma on the weekly chart was quickly negated today after the grain report. Any positive signs technically are gone. Wheat is now back under the 150 day ma on the weekly too. It is most likely starting another major wave down that should take out the current weekly low at 572 1/2. Long term projection still remains down at 500. Closed

MAR MINI SOYBEANS:
With the report today beans are back under the 100 day ma on the weekly chart. On the daily chart they sold off to the 1150 support.

MAR MEAL:
The serious resistance referred to last time on the weekly chart - the intersection of both the 100 and 150 day ma at approximately 324.00 on that chart became a "wall" to meal's rally attempts. Those averages stopped meal and it now appears to be starting another major wave down - most likely to 265.00.

MAR BEAN OIL:
On the weekly chart it is back under the 20 day ma but is holding the 50.50 support. It is the only one in the bean complex that has formed a preliminary buy signal on the monthly chart this month. On the daily chart it managed to rally to close back over the 20 day ma.

MEAT COMMENTS:

FEB HOGS:
This is the strangest sell-off I have ever seen. Each down day is followed by an aggressive rally day. At least the sell-offs keep making lower lows and the rallies lower highs. What concerns me is that the low made yesterday (82.77) could not take out the contract low at 82.62). It came awfully close. Keep stops at 84.60. Closed 83.95, up 1.05.
Position: Short 83.60 (1.9).
Projection: 79.50.

FEB CATTLE:
A trade could be developing. See Trade Alert for details. Closed 121.25, down 7.

SOFTS COMMENTS:

MAR COTTON:
It has tried most of the week to get over the 97.00 resistance on the daily chart. Unfortunately that is where the 100 day ma also intersects. It is another case of double resistance. It also formed a key reversal top today to the recent rally. The macd is also turning down. It also has both the 20 and 150 day ma stopping it on the weekly chart. They both happen to intersect at the same level. All those issues suggest a sell-off from this level. The problem is that because of the huge outside day today, the risk required would be a lot: over $1600. Closed 95.69, down 1.18.

MAR ORANGE JUICE:
Last time I pointed out that it tops this time of year. Well, the rally seen on Tuesday, ended on Tuesday. It was down on Wednesday and down limit today. The high on Tuesday was 207.75. Today's low 178.10. The extreme ranges seen would make it very difficult to trade in the futures. Just watching. Closed 178.10, down 10.00.

MAR COFFEE:
Last time I pointed out that the daily chart was suggesting a possible rally to 230.00. It did do that and more. Today's high was 238.50. I also pointed out that it would be reaching some heavy resistance around 235.00. Today it closed back under that area. We may have seen the rally. If not, I would be surprised to see it get over 240.00 as that is the high end of the current resistance plus the 150 day ma intersects there. Closed 233.90, down 1.00.

MAR COCOA:
A trade could be developing. See Trade Alert for details. Closed 23.26, down .24.

MAR SUGAR:

Stops were reached yesterday as it negated the sell signal and closed over the 20 day ma. Today it sold off and closed back under the 20 day ma. It is still stuck in its range. Just watching. Closed 23.27, down .42.

Position: Short 22.86 (1.9). Exit 23.56 (1.11). Loss $839 (+comm/fees).

METALS COMMENTS:

MAR COPPER:
It continues to hold the 350.00 support and rallied well over the 100 day ma on the daily chart. It had been trading into a pennant and has broken out to the upside. The earlier potential suggested at 375.00 now appears more likely. Closed 364.90, up 10.30.

FEB MINI GOLD:
It is in a bear market rally and will meet the 150 day ma on the daily at approximately 1675.00. That is also pushing into resistance. Just watching. Closed 1647.70, up 8.10.

MAR MINI SILVER:
An inside day yesterday triggered a buy today. It rallied to 3012.40. The important aspect is that it closed over 30.000. How far can it go? Considering its pattern since the October high and the subsequent sell-off, the rally shouldn't exceed 31.500 at best. Closed 3012.40, up .234.

ENERGIES, CURRENCIES & BONDS:

MAR MINI CRUDE OIL:
On the daily chart it formed a huge outside day today from the 103.00 level. That is resistance and we could be looking at a top in crude. It also closed under the 20 day ma. Today's action was very negative. Long term, crude is starting to form a key reversal top on the monthly. All the macd's are turning negative too. Crude is an economic indicator and the action we are seeing is not good. Closed 99.31, down 1.78.

MAR MINI JAPANESE YEN:
I tried to buy it yesterday but it triggered a sell instead. Today it reversed, negated the sell signal and rallied. There should have been more follow through. Just watching. Closed 130.37, up .17.

MAR SWISS FRANC:
It finally rallied today until it reached the 20 day ma. That has kept a lid on this market since it went under it in early November. Just watching. Closed 106.07, up 1.26.

MAR DOLLAR INDEX:
After rallying yesterday,. It has resumed the sell-off today that I mentioned last time. It will reach the 20 day ma at approximately 80.800. Even though the dollar has "dipped" under that average during sell-offs, it doesn't last long. Time will tell! Closed 81.036, down .578.

MAR MINI EUROCURRENCY:
It is attempting to rally and finally managed to close over 128.00. This rally should be an opportunity to short. Closed 128.32, up 1.32.

MAR CANADIAN DOLLAR:
It has been trading into a pennant and has been attempting to break out to the upside. So far it has not been able to pull it off. Just watching. Closed 98.01, up 9.

MAR AUSSIE:
An inside day yesterday triggered a buy today but that was stopped by the 103.00 resistance. Not much going on with this market. Closed 102.60, up .33.

MAR EMINI:
I moved the stop up to 1279.00 yesterday. An inside day yesterday triggered another buy today. Closed 1291.75, up 3.50.
Position: Long 1278.75 (2.6).
Projection: 1300.00.

DEC 10 YEAR NOTES:
It is back to the high end of its range again. That is major resistance. There is conflict amongst the charts so it is best to watch. Closed 130.310, down .750.