Offering technical & mechanical analysis of the commodity market, for the improvement of risk management.
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“Shootin’ The Bull”
Commodity Market Comments
by Christopher B. Swift
July 24, 2017
Demand appears to be so robust, that it took everything traders had to push it limit down, and by the close, could not lock it. While the placements are focused towards the November and December time frame, the current demand is anticipated to keep buyers busy. So, since it appears that backgrounders didn’t have to sell inventory under duress, and feed yards maybe wanted the inventory, as reflected in them paying up for them, shouldn’t that be a sign of strength and not weakness? While the increase in supply may seem burdensome, it hasn’t been all year. The industry will find out a great deal about its health over the next few weeks. A trade to new highs would suggest the environment to be as friendly as it has ever been. A trade under the June low would suggest the environment to be weakened from the additional supply and caution would be exercised. With multiple positions having been stopped out from last weeks recommendations, I am going to stay flat for another day to see what transpires. Lastly, the ability to trade today, whether the contract month you are in or wanted to spread, it allowed for no building of pressure. Not to say futures won’t be lower at some point tomorrow, but it won’t be due to left over sales from today.
Feeders were most likely impacted by the inventory number than the on feed. For this year, that may not mean as much. With the pull being so great on inventory, the likelihood of building another wall of cattle appears minimal. While there may be greater numbers in 2018, with such heavy placements this year, I have to wonder how many more there are out there that ready to go? The lower trade disrupted the intermediate wave count. Not to any great extent, but changed it nonetheless. Most likely this will be a prolonging of the wave 4. More clues are anticipated to be brought forth tomorrow.
Corn was lower, but has done nothing to suggest a higher or lower trade. One thing to keep in mind for corn is that it has been stuck for nearly 24 months in a $.64 range. With the bottom side limited to zero, and intrinsic value near $3.50, it appears the upside is the one to watch out for. Lastly, Dennis Gartman is an analyst I’ve known and followed for years. I respect his opinion and his comments today were refreshing. Dennis Gartman Comments.
Crude firmed today. It remains very range bound.
S & P 500 Stock Index:
The technical indicators are waning on the S&P 500. Were another new contract/historical high made, I will be looking to take an initial options position using the 2400 September puts. They are trading around $13.50 or $675.00 per option. They expire on the 15th of September. I chose the shorter time frame first to see how close, or not, to a top the market is. If you have an interest in hedging a stock portfolio, 401K or retirement plan, contact me and I will be glad to explain any details of this trade.
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Commodities Brokerage, Commodity Market Analysis, Hedging, Price Risk Management
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