Hog & Corn Comments – 12/17/09 Commodities fall as the dollar rallies again
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CORN – Mar ‘10 Electronic
Open – $4.09 1/2, High – $4.10, Low – $3.93 1/4, Close – $3.97 Down $.13 1/4
Thoughts – Long Term (into February) – Sideways
Mar ‘10: Corn closed at the same price that it opened on Tuesday which I said is a warning signal of a potential reversal in trend and today would suggest this is the case. The U.S. Dollar Index has been on a crazy train higher and isn't looking back. As I've mentioned in previous posts the dollar is one of the key issues we need to pay attention to in the market because the buying that we've experienced has been based on selling the dollar and buying commodities.
The $4.25 double top is still in place for the Mar '10 corn contract and until we get two closes above this level I am skeptical of this market making any large strides higher especially if the dollar continues to rise. If we close the market below $3.92 then we could see a test of $3.80 in the near future and if $3.80 doesn't hold support you can look for $3.72 1/2 - $3.70.
I wrote about the dollar in my last post (12/15/09) and here is what I said: "The dollar rallied again today as it has been trending higher since Dec 1st 2009. The next level of resistance for the dollar is 77.47 and then 77.92, we are currently trading at 76.92 and our low was 74.175 on November 26th, 2009." The high for today as I write this is 77.943 which is just above the resistance point I gave the other day, my point is the market is moving FAST.
Bottom line: I am looking for the market to experience an early low tomorrow.
Mar ‘10 Corn – Support/Resistance for 12-18-09
(R3) Resistance 3: $4.27
(R2) Resistance 2: $4.16 3/4
(R1) Resistance 1: $4.06 3/4
Today’s close: $3.97
(S1) Support 1: $3.90
(S2) Support 2: $3.83 1/2
(S3) Support 3: $3.67
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MEAL – Jan '10 Electronic
Open – $316.30, High – $317.00, Low – $306.60, Close – $307.40 Down $9.50
Thoughts – Long Term (into February '10) – Sideways
Jan ‘10 meal: Meal was no different than any other commodity today as it fell to keep pace with the soybean market. As I mentioned the other day $319.80 is the area that the Jan '10 meal contract needs to close above before we need to get too excited about excessive buying. In my opinion today was more about the huge rally in the dollar and the thought that it may be for real and we could see strength in the greenback as we move forward in time.
Based on the trade action over the past few days I would say we should test the $301.40 area and if there fails to be support at this level we stair step down to $298.40 and $293.30 then support falls all the way down to $276.80. I think the $301.40 to $298.40 area is a realistic target but I need to see how we trade in the next couple of days to know if $276.80 is likely. I don't think a test of $276.80 is likely at this point unless we continue to see the dollar move higher by leaps and bounds.
Bottom line: I’m looking for the market to experience an early low tomorrow.
Jan ‘10 Meal – Support/Resistance for 12-18-09
(R3) Resistance 3: $320.70
(R2) Resistance 2: $314.00
(R1) Resistance 1: $310.30
Today’s close: $307.40
(S1) Support 1: $303.60
(S2) Support 2: $299.90
(S3) Support 3: $289.50
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HOGS – Feb ‘10 GLOBEX
Open – $66.425, High – $66.60, Low – $65.275, Close – $65.55 Down $1.275
Thoughts – Long Term (into February) – Neutral
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Feb ‘10 hogs: The hog market didn't have anything to stand on today either and in my opinion acted really well considering cutout was down $2.04 last night and the dollar trading higher. I realize that some of the cutout number was factored into yesterday's trade but non-the-less it was a reasonable day today in the hog market. $65.35 is an area the market needs to hold otherwise we could test $63.85 again in the near future. The other key number for the Feb '10 contract is $65.025 which is an intermediate trend line which warrants some attention.
I have mentioned in the recent past that most of my indicators were pointing lower for hogs but the market hasn't done any real damage to the chart to say it is going to head lower. The damage to the chart would be two consecutive closes below the $63.85 number I spoke of above. A cycle indicator that I use suggests we should move lower into the end of next week and then begin to move higher from there. I will remain cautiously optimistic the Feb '10 hog contract UNLESS we close two consecutive days below $63.85, then my bias should turn negative.
As always if you have good profits make sure you look at protecting them!
Bottom line: I’m looking for an early high tomorrow.
Feb ‘10 Hogs – Support/Resistance for 12-18-09
(R3) Resistance 3: $68.45
(R2) Resistance 2: $67.125
(R1) Resistance 1: $66.35
Today’s close: $65.55
(S1) Support 1: $65.00
(S2) Support 2: $64.50
(S3) Support 3: $63.15
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