Hog & Corn Comments – 11/23/09 Feed grains show signs of a short-term top
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CORN – Dec ‘09 Electronic
Open – $3.91, High – $4.03, Low – $3.85, Close – $3.87 1/4 Down $.03 3/4
Thoughts – Long Term (into December ‘09) – Sideways/Lower
Dec ‘09: The Dec '09 corn contract looked like it was going to make a run at last week's high of $4.09 1/2 but it only made it to $4.03 then fell to new a new session low. The weekly chart is currently showing three potential signals of a top in the corn market. We need to see confirmation but if the Dec '09 contract settles below $4.03 on Friday then one is confirmed. $3.84 1/4 is a 50% retracement back to the $3.59 1/4 low we saw on Nov 2nd, 2009. The $3.84 area should provide some support but if it doesn't we could see $3.78 and then back to $3.59 1/4.
We are on the sideline with corn at this time; we made an early purchase of corn this morning but by the end of the day were stopped out. The Dow Jones was higher, crude oil was higher and the dollar was much weaker this morning but it seems as though index funds must be scaling back on their purchases because the recipe was ripe for higher prices today.
Bottom line: I am looking for the market to experience an early low tomorrow.
Dec ‘09 Corn – Support/Resistance for 11-24-09
(R3) Resistance 3: $4.27 1/4
(R2) Resistance 2: $4.09 1/2
(R1) Resistance 1: $3.91 3/4
Today’s close: $3.87 1/4
(S1) Support 1: $3.80 1/2
(S2) Support 2: $3.73 3/4
(S3) Support 3: $3.55 3/4
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MEAL – Dec ‘09 Electronic
Open – $316.90, High – $322.50, Low – $314.10, Close – $315.60 Down $1.50
Thoughts – Long Term (into November ‘09) – Sideways/Lower
Dec ‘09 meal: Meal posted a sell signal today at $319.50 with a risk management buy stop at $324.00. The Ag markets had a tough day today trying to get something going to the upside and with the sell signal we had today I want to be very cautious about meal. The tough part about saying this is this sell signal goes out the window if the funds decide they want to own more! If profitability works for you then you should purchase some call options or if you are happy with your profits then lock in the price, always do what is right for your operation.
Like corn we entered some long positions in meal today but by the end of the day we were stopped out and are on the sidelines again. Today's close concerns me from a price perspective because it looks like we could move lower for the time being.
Bottom line: I’m looking for the market to experience an early high tomorrow.
Dec ‘09 Meal – Support/Resistance for 11-24-09
(R3) Resistance 3: $325.80
(R2) Resistance 2: $320.70
(R1) Resistance 1: $317.40
Today’s close: $315.60
(S1) Support 1: $312.30
(S2) Support 2: $309.00
(S3) Support 3: $300.60
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HOGS – Dec ‘09 GLOBEX
Open – $58.825, High – $56.75, Low – $57.975, Close – $58.30 Up $.70
Thoughts – Long Term (into December) – Neutral
Dec ‘09 hogs: The Dec '09 hogs continued to climb today off of a weak dollar and packers being short bought for this week. The opening was a negative one in the sense that the market opened above Friday's high (gap higher) and typically when the market does that it is a warning that a top may be close by; however, the actual sell signal comes when the market trades below the previous high. Friday's high was $57.85 but the market never traded that low today so now there is the POTENTIAL for an island top if the market opens below today's low of $57.975.
The Dec '09 contract still has a good lead on the cash index which is at $53.92 so the market must be pretty comfortable thinking that the cash will come up to meet the futures into the December expiration. The intra-day charts suggest that we will have an early high and a late low tomorrow. Cash was higher at noon and I would expect it to be higher this afternoon as well which could lend more support to the market.
We continue to hold our short futures long call option position in the Dec '09 contract for now and will do so for the time being so we have downside risk protected in the market and the upside opportunity is completely open.
Bottom line: I’m looking for an early low tomorrow.
Dec ‘09 Hogs – Support/Resistance for 11-24-09
(R3) Resistance 3: $59.825
(R2) Resistance 2: $59.10
(R1) Resistance 1: $58.70
Today’s close: $58.30
(S1) Support 1: $57.975
(S2) Support 2: $57.65
(S3) Support 3: $56.925
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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