Soybean Futures—Soybean futures in the July contract is trading lower for the 2nd consecutive session down another 15 cents at 8.75 a bushel hitting a 6 month low as the bearish trend is accelerating to the downside.
The next major level of support is the contract low which was hit on September 18th at 8.63 and I believe that will be tested possibly this week as I see no reason to be bullish soybeans or the grain market in general.
The planting progress report was released yesterday showing that 1% of the crop has been planted as the majority of soybeans are not planted until the month of May as that had very little impact on prices today. Weak demand coupled with the fact of huge supplies continues to weigh on this commodity as I still remain bearish over the next 3/4 weeks.
Soybean prices are trading far below their 20 and 100 day moving average as the trend clearly is to the downside as the trade agreement with China looks to be on hold at this time and that is also having a negative influence on prices so if you are short a futures contract stay short in my opinion.
Corn futures are hitting a fresh contract low in today’s trade as the large money managed funds are short across the board and look to be right in my opinion.
CHART STRUCTURE: POOR
Orange Juice Futures–-Orange juice in the July contract settled sharply lower finishing down 425 points at 105.55 hitting a 7 year low and in my opinion looks to break the 100 level in the coming days ahead.
Juice prices are trading far below their 20 and 100 day moving average as the trend is bearish as fundamentally & technically speaking I see no reason to own orange juice as weak demand and large supplies should continue to weigh on prices.
If the 100 level is broken prices could drop down to the 90 area as the trend is strong to the downside and if you are short a futures contract stay short in my opinion.
The soft commodities at the present time remain bearish as the agricultural markets across the board are having a very difficult time rallying due to the fact that there is no agreement between the United States and China on trade.
If you are short a futures contract I would place the stop loss at the 2 week high standing at 114.35 as an exit strategy, however the chart structure will improve later this week therefor the monetary risk will also be reduced.
CHART STRUCTURE: SOLID
S&P 500 Futures—The S&P 500 in the June contract is sharply higher this Tuesday afternoon in Chicago up another 24 points at 2937 looking to break the all time high of 2961 which was hit on September 21st in my opinion.
If you have been following any of my previous blogs you understand that I have been bullish the equity market for quite some time and if you are long a futures contract continue to place to stop loss under the 2 week low standing at 2885 as the chart structure is outstanding due to the low volatility. Earning season is upon us as I still believe the U.S economy is doing extremely well as I think corporate earnings will surprise to the upside so continue to play this to the upside as I see absolutely no reason to be short the stock market at this time.
The Nasdaq 100 has hit another all time high today up another 100 points as crude oil has also rallied to a 5 month high which tells you strong demand continues due to economic growth.
The S&P 500 is trading for above its 20 and 100 moving average as the trend clearly is to the upside as the Trump tax cuts have certainly helped large corporations as I still see this bullish trend lasting for quite some time.
CHART STRUCTURE: EXCELLENT
Corn Futures—Corn futures in the July contract traded lower for the 2nd consecutive session down another $0.03 at 3.60 a bushel hitting a 7 month low as the grain market across the board remains bearish.
Corn prices are trading below their 20 and 100 day moving average as the trend is lower & if you take a look at the weekly chart the downtrend line remains intact as it looks to me that 3.50 will be tested soon. Large money managed funds are heavily short corn and the rest of the grain market as they have been spot on this trade as I think prices could possibly go down to 3.30 / 3.35 as fundamentally & technically speaking this market has nothing in its favor.
Volatility at the present time remains average, however we are starting to enter the extremely volatile summer months as weather problems can arise such as drought which happened in 2012 sending corn prices up around $8.50 a bushel which were all-time highs.
This market still does have the possibility of turning bullish, but that will not happen until the hot and dry season arrives as weather conditions in the midwestern part of the United States at the current time are ideal as planting should be in full swing over the next week.
CHART STRUCTURE: SOLID
Natural Gas Futures—Natural gas futures in the June contract finished down 6 points to close around 2.50 hitting a 3 year low as weak demand coupled with ample supply continues to put pressure on prices in the short term.
I have talked about natural gas on multiple occasions and once prices broke the 2.65 level if you had a bullish position it was time to move on as technically speaking this market looks to head towards the 2.30 level soon and if that is broken prices could test the 2.00 in the coming months ahead.
Volatility is starting to increase as prices continue to bleed on a weekly basis as we are trading far under the 20 and 100 day moving average as the trend remains weak as I’m certainly not recommending any type of bullish position as that would be counter trend trading.
Crude oil prices hit a 5 month high today experiencing a remarkable rally in 2019, however you must remember that natural gas and crude oil can move in opposite directions as that is exactly what is occurring at this time.
CHART STRUCTURE: SOLID
Soybean Oil Futures—Soybean oil futures in the July contract finished sharply lower this Tuesday afternoon in Chicago down another 63 points to finish at 28.37 hitting a 4 month low continuing its bearish momentum.
I have talked about soybeans and the grain market for quite some time as I still think lower prices are ahead and if you are short a futures contract I would continue to place the stop loss above the 2 week high standing at 29.47 as an exit strategy as I still see lower prices in the coming weeks ahead.
If prices break the contract low which was hit on November 26th at 28.00 then there is the possibility we could test the August 2015 low of 25.38 as the grain market at this time looks overpriced in my opinion.
Oil is trading below its 20 and 100 day moving average which tells you that the trend is lower as I see further weakness until mid May as that’s when the weather situation in the midwestern part of the United States can change, but in the meantime I would be very surprised if the 28.00 level holds so stay short.
CHART STRUCTURE: SOLID
How Can You Use Moving Averages To Your Advantage? A simple moving average is calculated by adding the closing price of a commodity such as crude oil for a number of time periods and then dividing this total by the number of time periods.
Short-term averages respond quickly to changes in the price of the underlying commodity, while long-term averages are slower to react.
I generally follow the 20 and 100 day moving averages when commodity prices break below or above in my opinion that establishes a trend which in my opinion should always be followed as the saying goes the trend is your friend.
If the 20 and 100 day have crossed to the downside and you have a long position that is telling you that you are trading against the trend which can be dangerous over the course of time.
I generally like to buy a commodity or sell a commodity when the price has hit a 20 day high or low and the simple moving average also should have crossed at that point confirming or establishing that the trend is starting.
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