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“Shootin’ The Bull”
Commodity Market Comments
by Christopher B. Swift
May 25, 2017
Aggregation of basis remains the goal. How remains the question to achievement. Nothing was done yesterday to narrow it and today, even though June rallied, cash appears to have traded a dollar higher as well. The USDA will release the cattle on feed report at 11:00am cst on Friday the 26th. This will make for some hyper volatile trading. Looking out into the world, nothing has changed to impact consumer spending. Equity indices across the spectrum have set new historical highs. Gasoline is sharply lower today in response to OPEC’s decisions, as well has remained at the lower retail level for some time now. Employment appears to continue to climb and the weather this weekend appears good across a large portion of the north east. That’s where the people are.
The wave count remains unchanged. In my opinion, it appears the algo traders were out in full force Tuesday and Wednesday. My perception is that when they came to the table this morning, there wasn’t enough volume for them to work their programs. Hence, once they quit, prices moved higher, which is perceived the path of least resistance anyway. The close today on October puts it to $2.05 of contract high close. That is within striking distance for tomorrow. Since June is still spot month and active, we’ll look at it for a comment. Intra day, June has created two peaks. One at $126.87 and the other at $125.12. Draw a line across the two and today’s high bumps its head on this line. A trade above this will begin to lead me to anticipate a reversal.
August missed filling the gap by a tic. A trade above Monday’s high of $153.70 will be anticipated to send bears scrambling. Again, with so much volume of inventory having been traded the past 60 days, in all sectors of weights, those cattle may need a little time where they are. Were yards anxious to keep replacing marketed inventory, it may take a higher bid to attract them off their current home. A point of interest would be a close above $153.42 August. This was the first low close from the contract high close. That makes this low either a wave 1 or A. Currently, there isn’t a 5th wave yet, so the overlapping of this on the way back up would make the initial decline to $147.32 close a 3 wave move and hence only a correction. It’s a little uncanny the resemblance between current price action and the action from January to March. This has been mentioned before, but with the more time, it is following closely.
Still, nothing new again in corn today.
Crude was murdered today and left for dead on the road side. Traders shucked long crude positions like a dog scratching fleas. While today was extraordinary, it appears all that transpired was a wave 2 correction of the up move from the $44.13 low. It just happened to be all in one swoop. When charts produce a “falling off a cliff” type pattern, it leads me to anticipate the next most probable move to be to climb right back up again. If you have fuel needs , one may want to use this decline to secure a portion of those needs.
US Dollar Index:
Very little activity in the dollar today.
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