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
January 17, 2017
Further evidence of the subtle changes came today. The ice storm wasn’t as damning to cattle as anticipated. In the recent past, this would have been anticipated to have produced a near limit down day. However, due to the subtle changes, not only were cattle not lower, but they closed higher. Of the most interest today came from the creation of a “Morning Star” candlestick chart pattern. From Wednesday to Thursday of last week, prices gapped lower, traded Thursday and Friday before gapping up today. This left air between Thursday and Friday’s trade. This leads me to anticipate further upside movement. To what extent, I do not know yet. A move to $122.00 February is anticipated as the most likely place considering Fibonacci extensions. With the markets having provided the price rally, and time to execute trades, there shouldn’t be too much “woe is me” this spring. Using the options will keep expenditures low and protection adequate until we wait for further information to decipher.
Only $.13 from a new high close in the March contract. Even more evidence of the subtle changes is the strength found in the feeders. Recall that previously, most comments on strength were cash and front month fat cattle futures led, that pulled the feeders higher. Today, the feeders appear to be standing on their own four legs. Recent sales have been noted as exceptionally good. The ability of the feeder cattle index to sustain its gains lends credence to that. Missing from the feeder market is clearly volume and an increase in open interest. I continue to anticipate that when, or if, the fat market begins to lose some steam, the feeder market will fall faster and further than the fats. However, I continue to not anticipate a new contract low.
The flicker of light at the end of the tunnel grew a little brighter today. I was struck by how quickly memories of the ’03 – ’07 time frame came back to me. The US dollar was falling like a rock and commodity prices were moving in tandem with one another. With all but one or two being the exception, commodities and currencies were higher while the US dollar and equities were lower. Corn, wheat and beans were all higher today. Corn was able to set a new high on the weekly continuation chart. This, coupled with the break out on the daily chart leads me to anticipate some continual firming in the corn. Wheat is moving higher as well, but beans and meal are the stellar performers today. Both set new high above their respective end of November highs. Technical indicators are pointed due north and I anticipate the up trend to have resumed in beans and bean meal.
Crude continues to hover at the upper end of the trading range. I anticipate crude to break out of the trading range to the upside and move towards the $60.00 area soon.
Bonds remain forming a correction.
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