market thoughts 8/26
grainsLooking ahead at the upcoming week, I'm thinking about the yield prospects for corn and beans. Those prospects have likely improved significantly as of late, especially in the case of beans. Taking a step back from the near term price fluctuations--it truly is amazing to see where these markets have churned in recent months.
If corn has bottomed, then we could see an interesting dynamic begin to take shape with the longer-term bullishness returning sooner rather than later. The market could also languish or have a hard push lower. The Monday afternoon crop condition reports have been showing an improving crop condition rating for corn in all of the key states. This points to excellent yield potential and possibly much lower prices. There is reluctance for the market to stay down for very long at all. Some analysts are hopelessly attached (in love with) the position of being long corn because of the ethanol craze. The market looks ahead.
If the USDA turns out to have been low in their Aug-11 report then the market could have a longer-term bullish premium built back in over time as the demand keeps chewing through supplies. The market has reserved the right to break through on the downside as well, so this one could be tough to play. Technical indicators and general feeling about where the market psychology will take us is begging me to re-establish a fairly sizable bought position. Confirmation of strength in the coming week will offer some reassurance to me that the 238.50 resistance level breakthrough was significant intermediate to longer term. If the market is just playing around in the 240 area throughout the week without any noteworthy strength back in the mid-240 area then we could have a lull for the time being.
sugar
A little strength but no followthrough buying emerged, so we could see some more weakness. The chart is telling me to wait on the short position to unfold further. There is still a target in the 11c area.
cattle
The strength that bulls were looking for was hit and miss this week. With the October feeder contract down to 116.70 just the other day, there is potential to just play around in the earlier defined trading range.
Technically, the case is reasonably strong for cattle to continue with their uptrend. Fundamentally, it feels like they've been overdone at this point. As noted before, be careful for a sudden burst of strength that comes out of nowhere. The uptrend from April-06 is intact dispite a intra-day spike.
trading sidenote "let your winners ride"
The positions that are winners are the hardest to hold on to because there is a natural impulse to book profits. While some argue that booking any profit is a good thing, oftentimes a trader can prematurely exit a trade without a sound reason for the exit. Just as is the case when an entry point, a trader needs an exit strategy... and the trader needs to follow that plan.
Entering a market when resistance or support holds and placing an exit stop just above or below that line has worked well in the past, but setting a somewhat arbitrary stop behind the market doesn't make a lot of sense because market "noise" will oftentimes knock you out of a position that would have been much more profitable with a more scientific approach to stop placement. Watch for support and resistance stop setting locations and don't cheat yourself by putting the blinders on just to book a profit. It'll pay off over time.... this is a hard one.
posted by jared @ 7:28 PM
0 Comments:
Post a Comment
<< Home