Interesting action this week, the S+P has seen a temporary top, Crude is breaking out to the upside, Grains held support levels, Dollar is breaking down and Gold is trying to break to the upside. Volume and volatility have picked up indicating big moves are on the horizon.
The big question now: Are the highs in for Equities? There is no way to know at this point however there are warning signs. Seasonally this is a bullish time of year but there are no guarantees. Although we are starting to see some reversals in our algorithms for the most part they are still long.
Grains showed a little strength this week with Corn and Beans holding major support levels. Wheat is still running higher and also held support. We are short Corn and Beans but are concerned for farmers and producers, if they fall much lower in price you could see the banks force liquidation which would actually bullish for traders. A forced liquidation would create a bottom, however that would be very unpleasant for Farmers.
Meats had a rough week with Feeders lower and developing a small downtrend within the longer-term uptrend. There appears to be a little more downside in Feeders, and we are short. Hogs continue their wild ways but did hold crucial support. The bottom in Hogs appears to be close. Fats although lower are still in a powerful uptrend and we are expecting a rally from these areas.
The Dollar has once again come under major pressure which has made the trade very tough. Notice the big sell off in the Dollar did nothing to help commodities, proving the point that short term moves mean nothing. Crude has had a monster week to the upside recovering the beating from last Friday and has made new highs since then. Gold is at a critical point once again and could be changing directions.
The Bottom Line: Everything is about the tariffs and trade, but nothing seems to happen. Months ago, we said there would be a deal, we are now convinced despite the talk there will be no deal anytime soon. The biggest clue remains the Grains, once in all of these talks have, they rallied on a Sunday night but immediately failed. If you try and trade this news you lose.
Need help with you marketing plan email Bubba@BubbaTrading.com
CORN - Had a week of bouncing around in a consolidation pattern. After last Wednesday's breakdown, Corn immediately bounced looking like it was going higher. However, all said and done Corn is stuck in consolidation. The bottoms may be in, but we remain short. We are short with the algorithm
Hedge Recommendation: Hedged and Selling Weekly Iron Condors
Position: Short 50% - No bottom in sight, watch 370-375
BEANS - Continue to breakdown although has bounced the last couple of days. So far, Beans have failed at every major support level and is now at resistance. Beans will find a bottom however it looks like there is more room to the downside. As we know markets don't announce themselves, but we remain short and will do so until our algorithms turn long.
Hedge Recommendation: Hedged and Selling weekly Iron Condors
Position: Short 50% - 880 needs to hold
WHEAT - Made higher highs as we wrote last week. Wheat pulled back on Monday and Tuesday before bouncing on Wednesday and Thursday. The pattern looks extremely bullish and we are expecting this uptrend to continue making another set of new highs. We expect new highs, we are long with the algorithm
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Long 100% - Will add at 520 and are looking for new highs
DOLLAR - Here we go again, the Dollar appears to be breaking down once again. The pattern has been a real challenge, the failed breakout last week has sent the Dollar lower and is testing a major support level. We reversed to long last week with the algorithms which isn't looking great at the moment. There are two major levels for the Dollar to hold or we will be reversing again. For now, we are long with the algorithms
Hedge Recommendation: Hedge dollars against cost
Position: Long 50% - AT major support
CRUDE - Last Friday Crude got pounded down almost 3.00, now it's back above highs and looks headed to 60. The one day sell off was just that on a slow shortened trading day. On Wednesday Crude pushed through highs demonstrating the underlying strength in the short term. Long term we are bearish, but our mechanical method is bullish, and we will continue to play the algorithms. They are long as are we
Hedge Recommendation: No Hedge
Position: Long 100% - will sell half at 60
S+P - After making new highs once again the S+P found a temporary resistance and has fallen down to support. Since hitting support, the S+P has rallied back and is at a midpoint in consolidation. Volume has picked up a little with the sell off and should continue to make new highs. We are long with the Algorithm
Hedge Recommendation: Portfolios should be Hedged
Position: Long 50% - Holding
GOLD - After having some bullish action and failing it looks like we are seeing an instant replay. Gold is trying to push through its first resistance once again. There is no reason to believe that Gold is ready to break out, but we don't predict we watch the price action. We are short with the algorithm.
Hedge Recommendation: None
Position: Short 100% - Will add at 1490
FEEDERS - Continues to churn in a congestion pattern and is in a small downtrend. January Feeders look headed for 138 before possibly turning around. The pattern is not as bullish as we would like however we are short. We are not thrilled but we don't argue with the numbers. Algorithm Short as are we.
Hedge Recommendation: Hedged
Position: Short 50% - Watching
FATS - Broke out to new highs last Friday and have sold off every day since. We expect 122 - 123 to hold and more new highs. The selling was not a surprise in fact we expected a pullback. The action is solidly bullish, and the rally should resume any day now. Algorithm long as are we.
Hedge Recommendation: Hedged
Position: Long 150% - Will add at 122
HOGS - May have found a bottom although we are still short. The action this week showed a great hold of major support and is now trying to push through resistance. The wild swings continue which could lead to a bigger move in either direction. The bottoms should be near, but we will wait for the algorithms to turn. Algorithms are short
Hedge Recommendation: Hedged
Position: Short 100% - Bottoming action