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MARKET UPDATE - GRAINS, MEATS, SOFTS


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TRADE ALERT
JUDY CRAWFORD
TRADES FOR MONDAY, SEPTEMBER 16, 2019
888-301-8120
jcrawford@zaner.com

EMOTION is your enemy more than any market will ever be.

GRAINS: the funds have started to lower their net short position in corn.

MEASURING GAPS & HOGS: Several markets are forming gaps currently (bean oil, sugar, hogs, crude) and most are eventually filled. But there is one sequence of gaps that can give you a target for that markets move. If a market forms two gaps in a row, the first could qualify for a breakaway gap with the second gap being a measuring gap. Hogs have that potential. Assuming Fridays second gap was a measuring gap, then Dec. hogs have a potential to 76.47 for this rally.

But these gaps do have some technical problems. So far the first hog gap formed by the limit up move last week, could be a breakaway gap. The problem is that a breakaway gap usually occurs when a market breaks away from previous consolidation. Last weeks first gap formed within the consolidation. But a lot of technical formations these days are not as clean cut as they used to be. And that is a problem.

Assuming the second gap is a measuring gap, you compute the projection as follows. First you take the low of the move, for December hogs that was 57.77. You subtract that from the low of the measuring gap. To be conservative Im taking todays low that actually started to work into the gap formed on Friday. Thats 67.12. Subtract that from 57.77 and you get 9.35. Add that to 67.12 and you have a projection to 76.47. (You can actually use the middle or high end of the measuring gap if you want. But for simplicitys sake Im using the low).

So is this a true breakaway and measuring gap for hogs? Not really. But, as pointed out, since technical formations tend to have more deviations than they used to, I prefer to recognize it as such just in case but assuming at the same time the probability of follow through being much lower. In a true breakaway/measuring gap setup, the market today should not have started to fill the actual gap formed on Friday. Plus the so called breakaway may not be one after all because of where it occurred. But in case this is what the hogs are doing, then, yes, 76.47 is feasible.

GOAL OF THE MARKET UPDATE: To give traders a technical explanation of market behavior with the goal to educate and better understand and trade the markets. What I convey to readers is not a personal opinion but what the markets are suggesting by their technical formations and action.

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TRADE SUGGESTIONS FOR TUESDAY: None.

GRAINS:

Dec corn it continued to rally today. Minor resistance at 375. Keep stops at 353. Dec wheat it formed an inside day today. If it takes out 490 tomorrow it will be triggering a second buy signal. Keep stops at 473. Nov beans yesterday I said they should have a setback to go long. So far that isnt happening. They held 895 today and rallied but now have some resistance around 905 to deal with. Still waiting for a setback to go long. They are pushing into long term resistance. Dec meal in spite of todays selloff, it held at support and the buy is still intact. Keep stops at 294.80. Dec bean oil it continued to rally today and took out the Aug. 13 high of 30.25. Its 100 avg. on its weekly chart comes in at 30.35. But on the monthly chart it is just now over its 20 avg. with no real resistance until 31.00. This current rally has a potential to 30.60. Waiting for a setback to go long.

MEATS:

Dec hogs switching to December. They started to fill Fridays gap today but stopped. Instead they rallied and closed over their 200 avg. on their daily chart and formed an outside day. The tough part is that they are now at/near resistance on their long term charts. On the weekly its their 20 avg. at 71.15, on their monthly up at 71.75. Just watching for now. Nov feeders switching to November. They have not done much since first trying for 135.00 resistance last week. Normally when a market keeps failing to get over a resistance, it will back off and try from a lower level. If they do so, it would be a buying opportunity. Waiting for a setback to go long. Dec cattle switching to December. They are still struggling with their 105.00 market resistance and may end up backing off and trying from a lower level. Waiting for a setback to go long. They should test the current 98.20 contract low.

SOFTS:

Dec cocoa it reached its 100 avg. on its daily chart today and stopped. It is up against its 20 avg. on its weekly chart. But on the monthly it doesnt have any real resistance until 24.00. Move stops from 23.19 up to 23.73. Dec cotton It is trying to hold 62.00. On the daily 63.00 is resistance, increasing the potential for it to back off and test the breakout over 60.00. And on the weekly it has resistance in the form of its 20 avg. at 63.47. These factors could increase the potential for a setback to test 60.00. Watching closely to buy again. Dec coffee: a new high close today. It formed a huge outside day in the process and it closed near the high end of its range. Near term it could go either way as it has been consolidating. A setback would be a buy. If it takes out 104.95 tomorrow it would be triggering a buy from todays outside day. It is in a market resistance area and for that reason plus a recommended buy over todays high would require too much risk, I will not suggest a buy yet. Oct sugar it gapped up today but an attempt to close over its 20 avg. on its daily chart didnt work out. It sold off again and closed near the low end of the days range. Considering that action, it suggests it will fill the gap tomorrow at 10.98.


CURRENT POSITIONS:

Long December corn. Long 368 (9.13). Protective stop 353. Projection 393.
Long December wheat. Long 488 (9.13). Protective stop 472. Projection 515.
Long December meal. Long 302.50 (9.13). Protective stop 294.80. Projection 314.00.
Long December cocoa. Long 22.93 (9.9). Protective stop 23.73. Projection 24.25.
Exit December cotton. Long 59.35 (9.10). Exit 62.05 (9.16). Profit $1295 (including costs).

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. Opinions are subject to change at any time and are a solicitation or recommendation to buy or sell futures contracts or options on futures contracts. The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness. All known news and events have already been factored into the price of the underlying commodities discussed.

Futures, options and forex trading is speculative in nature and involves substantial risk of loss. These recommendations are not a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives.



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Trading is not easy. The two major comments I hear from traders is the lack of basic information from their broker to help them trade and that their broker does not spend enough time with them. In my thirty years of working with traders, I have seen all the common patterns that lead to trading failure. So my goal is to help my clients understand what they are doing, give them the information they need and the time they require. Even experienced traders need this. My strongest asset to you is my willingness to help and my experience.

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Toll Free Number:  888-301-8120; 312-277-0133.  jcrawford@zaner.com

BACKGROUND ... Thirty years experience as a commodity broker has given me an insight into the needs of traders that only comes with experience. Originally from Minnesota, I started my career as a stockbroker in New York but moved to Chicago, the center for the commodity industry. I have found that no matter where a client lives in the world, all traders have the same needs.

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