In This Issue
Reports and Expiration Notices
Like an athlete, seasoned and new traders alike should always return to the fundamentals of their game to evaluate and improve their performance. How does your trading stand against these time-tested Top Ten Trading Rules?
Several Factors At Work in Grain Markets
As the year winds down there are several key factors at work in the grains futures markets. With the move to a 25-plus year high in the Continuous Commodity Index (formerly the CRB Index) this week, there are ideas new speculative monies will flow into the recently beaten-down grain futures markets. Early this year the grain futures did see an unexpected sharp rally in prices due to the influx of new cash on the long side of the markets--most of which was from the commodity index funds.
There have been ideas the index funds would come on board the long side of the grain futures, and other raw commodities futures markets, shortly after the start of the new year--after they had closed out their books on 2005. However, some funds may now be trying to "beat the crowd" and get into position early.
This week the grain futures have rallied in the face of bearish fundamental data issued by the U.S. Agriculture Department last Friday. The ability of the markets to rally in the wake of bearish fundamental news is one early clue that lows are in place, as the bearish fundamentals may already be factored into the futures price structure.
However, the end of any sustained downtrend in prices does not necessarily mean a fresh and solid uptrend will develop in a market. Remember that in markets prices can trade in three directions: up, down and sideways. The recent clues that suggest the downtrends in the corn, soybeans and wheat markets have ended may only portend a period of choppy, sideways and even some volatile price action in the coming days and weeks. This price action could indeed frustrate both the bulls and the bears by chewing them both up.
Following are some other observations that could shed more light on price direction in the grain futures in the coming days and weeks.
Wednesday's sharp losses in gold, silver and coffee prices could temper gains in the grains. In fact, there are some very early clues the gold and silver markets are undergoing a significant downside price corrections, and may have even put in near-term market tops. Ideas of a top in the gold and silver futures market would be an underlying bearish factor for grain futures, as it would scare away some of the fresh speculative money that could flow into the grains on the long side.
Trading action the rest of this week will be extra important for the grain futures markets. Price closes near the weekly highs on Friday would be significantly bullish and would suggest the commodity funds are making a move to the long side of the markets.
The posture of the oats market, at present, should have the major grain futures market bulls excited. Oats prices are presently trading near contract highs. Veteran grain traders know that history shows the oats market can lead major moves in the grains. "Oats knows" is an old market adage.
Soybean meal is the strongest market, technically, in the soybean complex at present. Veteran traders also know that meal has led major market moves in the grains in the past. However, the soybean oil market is as weak as the meal market is strong. The technical posture of the soybean oil market will have to improve markedly if the soybean futures expect to see a solid and sustained rally in prices in the coming days and weeks.
"Seasonality" studies in the grains show the following: Wheat futures prices tend to rally from the June timeframe into the November-December timeframe, and then back off and decline into the June timeframe. Soybean futures prices tend to bottom out in the October timeframe and then rally into the summertime months. Corn futures tend to bottom out in the November timeframe and then rally into the February timeframe, see a "February Break," and then resume the price uptrend into the August timeframe. Oats futures prices bottom out in the July timeframe, then rally into the end of the year, followed by a price downtrend back into the July timeframe.
Jim has an EXCELLENT daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at JimWyckoff.com
Disclaimer: There is a risk of financial loss in futures and options trading. Futures trading is neither easy nor an easy way to make money. It takes hard work to have success. Please use sound money management when trading futures. Past performance is not necessarily indicative of future results. Nothing in this newsletter is intended to be a trading recommendation for you to buy or sell futures or options. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed. Readers are solely responsible for how they use the information in this newsletter.
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
|---|---|---|
| 12/15 Thu |
7:30 AM CST - NY Empire State Index(Dec)
7:30 AM CST - CPI & Core CPI(Nov) 7:30 AM CST - USDA Weekly Export Sales 7:30 AM CST - Initial Claims-Weekly 8:00 AM CST - Net Foreign Purchases 8:15 AM CST - Industrial Prod & Capacity Util(Nov) 11:00 AM CST - Philadelphia Fed(Dec) 3:30 PM CST - Money Supply |
LT: Dec Value Line(KCBT)
Dec DJIA(CBT) Dec Mini Dow(CBT) Dec S&P 500(CME) Dec Nasdaq 100(CME) Dec Russell 2000(CME) Dec Value Line Options(KCBT) Dec Crude Oil Options(NYM) |
| 12/16 Fri |
7:30 AM CST - Current Account(Q3)
8:45 AM CST - Michigan Sentiment-Prel(Dec) 2:00 PM CST - Dairy Products Prices |
LT: Dec Single Stock Futures
Dec Emini S&P 500(CME) Dec DJIA Options(CBT) Dec Nasdaq 100 Options(CME) Dec S&P 500 Options(CME) Dec Emini S&P 500 Options(CME) Jan Orange Juice Options(NYBOT) |
| 12/19 Mon |
|
FN: Dec Currencies(CME)
LT: Dec Coffee(NYBOT) Dec US Dollar Index(NYM) Dec Eurodollars(CME) Dec Eurodollars Options(CME) |
| 12/20 Tue |
7:30 AM CST - Housing Starts & Building Permits(Nov) 7:30 AM CST - PPI & Core PPI(Nov) |
LT: Jan Crude Oil(NYMEX)
Dec Canadian Dollars(CME) Dec US T-Bonds(CBT) Dec 10 & 5 Year T-Notes(CBT) Dec Muni Bonds(CBT) |
| 12/21 Wed |
7:30 AM CST - GDP-Final(Q3) 9:00 AM CST - Leading Indicators(Nov) 9:30 AM CST - API & DOE Energy Stats 2:00 PM CST - Cold Storage |
|
| 12/22 Thu |
7:30 AM CST - Personal Income & Spending(Nov)
7:30 AM CST - USDA Weekly Export Sales 7:30 AM CST - Initial Claims-Weekly 3:30 PM CST - Money Supply |
LT: Jan Soybean Options(CBT)
Jan Soybean Meal Options(CBT) Jan Soybean Oil Options(CBT) Jan US T-bonds Options(CBT) Jan 10 & 5 Yr T-Note Options(CBT) |
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!