The wild swings in thin markets continue. This week on very light volume we saw a lot of price volatility. The markets are preparing for a huge move which could be in either direction. Based on the algorithms that should be lower, however they are very close to changing. If the rally goes another 1% higher, we would be changing.
The week has been filled with depression, whipsaw and frustration. Grains have been very depressing with every rally failing, but this is also good bottoming action and we except our sadness to quickly move to joy. Meats have created a lot of frustration but look ready to trend which we expect to be higher and Crude and Equities have been in a whipsaw. All of these markets are prepping for the next big move.
Grains had a lousy week on light volume. However, Corn and Beans look to be in the bottoming process while Wheat still looks a little weak. Our Algorithms are all short but are close to changing which coincides with our longer-term opinion of a big move in the fourth quarter. Be patient, store if you can and be ready to rock.
Meats had some action this week, Fats and Feeders look like they are trying to recover from the Tyson fires. Feeders have done great and are now on a buy signal while Fats look like they are making a bottom. Hogs continue to struggle but should be bottoming with the current action.
Gold took a rest this week, although there was a couple of big swings it was a week of going nowhere fast. The Dollar has held the breakout and is headed to PAR despite the FED. Crude is working its way back to resistance but is still in backwardation and consolidation.
The Bottom Line: Not much has changed in the last week, markets are thin, and equities are having exaggerated moves on light volume. Grains are trying to Bottom along with Hogs. Dollar and Gold look strong as the FED is failing as expected. Crude looks to explode, direction unknown and Cattle looks like they have bottomed.
CORN - A depressing week in Corn, the slow dull drift lower continues. Wednesday saw an attempt to test the lows. Almost every day Corn was higher overnight into the morning opening and by the end of the day was lower. That is an ugly technical pattern but also signals that the bottom is getting closer. Although we remain short, we feel long term we are bullish and looking for a reason to buy.
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Short 50% - Bottoms are getting closer
BEANS - Last Friday could have been the low in Beans. After making the low Friday, Beans have looked stronger making higher lows every day since. We remain short but can see the end of the selloff which may already be here. The next couple of days will determine if the bottoms are in. We are also close to a reversal which ties in with the bottoms possibly in
Hedge Recommendation: Hedged and Selling weekly Put spreads
Position: Short 50% - Possible bottoms are in
WHEAT - Had a rough week making a 4-month low. A Couple of weeks ago Wheat looked like it was holding but like the rest of the complex gave way to the sellers. We remain short and believe Wheat still has more room to go on the downside. Like Corn and Beans, Wheat will find a bottom but for now there is room on the downside.
Hedge Recommendation: Hedged and Selling Iron Condors
Position: Short 50% - Looks like more selling to come
DOLLAR - Has broken out to the upside and has held support on every attempt to sell off. The FED continues to try and do its part and has failed. The global economy is melting down which attracts foreign money into US treasuries and Dollars. PAR is coming sooner than we think and the Dollar strength looks here to stay.
Hedge Recommendation: Hedge dollars against cost
Position: Long 100% - Will sell half at PAR
CRUDE - Is churning in wide consolidation between 50 and 60. Although we are long Crude the overall pattern is ugly, add to that the backwardation should lead to bearish action. However, we are trading mechanically and will watch the action waiting for the Algorithm to change. All signs are bearish, and a sell signal is close, for now Crude is being driven by fear.
Hedge Recommendation: No Hedge
Position: Long 50% - Will not add
S+P - Trading in wide sweeping congesting and is failing from the top end of the range as expected. Markets are setting up for a huge move in either direction, based on our algorithm that should be lower, however a rally from here would lead to a signal change. We will stay short but watch closely as the markets set up for a huge move.
Hedge Recommendation: Portfolios should be Hedged
Position: Short 100% - Looking for a sell off
GOLD - Has calmed down and is now in consolidation as it resolves the overbought conditions preparing for the next leg up. 1500 is solid support and the rally should continue. The metals look strong and the rally should continue. We are buyers on support and will continue to do so as long as our algorithm stays long.
Hedge Recommendation: None
Position: Long 200% - Will sell half at 1550
FEEDERS - As we move into October Feeders not much has changed. After the crushing on the Tyson fire, Feeders have worked their way back into a consolidation pattern. Today our algorithm has turned long. We are long and expect at worst a run at the top end of the range. We are looking for a big rally from here
Hedge Recommendation: Hedged
Position: Long 300% - Long Algorithms long
FATS - Found a bottom but has not had the bounce we have seen in Feeders. However, support is holding, and Fats look like they are getting ready to make a run. Our first target is 104 but we expect to see 106 and higher. The action has improved, and higher prices should be coming
Hedge Recommendation: Hedged
Position: Long 400% - Looks like a rally is starting
HOGS - Broke hard last Friday and quickly bounced back into consolidation. This is a key moment for Hogs, they should continue to rally from here. Although we are short with the Algorithm, the buy signal is getting closer. We are short for now but ready to change if called for
Hedge Recommendation: Hedged
Position: Short 50% - Looking for the market to turn