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In general, this has been one crappy week. Volume has basically gone to zero in almost every market, many markets are in the throes of the worst possible pattern congestion. On the good side of the ledger, Grains and Cattle look great. Today's WASDE report is just a bump in the road and probably as accurate as the FED.
Equities have been in wide sweeping congestion which is the toughest pattern of all no matter what side of the market you are on. This has been a week of China, China, China. Perceived good news markets rallied, bad news they broke, basically were are running in place. The Grains were never fooled and have not fallen into the trap of the China news.
Grains were looking good until Thursday and the WASDE report. I wonder if these guys who make the report have ever left the office, I would doubt it. The report is the report but doesn't seem accurate. No matter what the news, Grains are solid. Although the selloff was a little bigger than we would have liked in Corn and Wheat, they both failed at resistance and held the lows. We are long and holding
Meats had an interesting week and Cattle looked great. Both Fats and Feeders are attempting a breakout to run to new highs. Fats have broken out, Feeders stalled at resistance. We would expect a much bigger rally on these breakouts. Hogs have whipsawed us a little as they broke limit on Monday forcing the algorithm to reverse and of course a rally ensued. We are long Cattle and Short Hogs.
The Dollar continues is ascent on PAR although did pullback to support on Thursday. This was expected and the march to PAR should continue. Gold is breaking down, making lower highs, and closing below 1500 on Thursday. Crude had the natural bounce we expected after 10 days in a row lower. Crude is at resistance and should head lower.
The Bottom Line: The markets are all in precarious positions and there are a lot of big moves on the horizon. Based on the charts and the algorithms we are positioned correctly. Too many are trying to trade the news tick for tick which is keeping the market in congestion.
Bubba’s Weekly Ag Report (Video)
CORN - Was off to a solid week and suddenly on Thursday the WASDE Report came out and like a boxer down went Corn. We look at this as another buying opportunity. I have no Idea what the report said, obviously a little bearish. We will stay long and add as long as the algorithm stays long.
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Long 200% - added at 380, will sell half at 395
BEANS - Had another solid week however after being up nicely on Thursday, Beans gave way towards the close. Beans look great and tested the 935-top end of the range. We expect the rally to continue and will use pullbacks as buying opportunities. The algorithm remains long as do we.
Hedge Recommendation: Hedged and Selling weekly Iron Condors
Position: Long 50% - will add at 910
WHEAT - Broke out to the high end of the range and like Corn and Beans was under pressure closing at support. The pattern is great, the algorithm is long, and we expect the next time up to break out to the upside. It looks like full steam ahead for Wheat and a run to 5.30 and higher.
Hedge Recommendation: Hedged and Selling Weekly Put Spreads
Position: Long 100% - Will sell half at 5.15
DOLLAR - Continues to do its thing as it heads to PAR. This week the Dollar pulled back to support as it prepares to make the next run higher. The bullish pattern has not wavered, and we expect the rally to roll on. No matter how hard the FED tries to manipulate the Dollar it keeps bouncing back
Hedge Recommendation: Hedge dollars against cost
Position: Long 100% - Will sell half at PAR
CRUDE - After going down 10 days in a row, Crude was going to bounce. It did but not very impressively, Crude is basically stuck in consolidation and the bounce was not very good based on how far it came down. We are expecting the high 40's and expect this market to break hard. We are short with the Algorithm.
Hedge Recommendation: No Hedge
Position: Short 100% - Will add at 54
S+P - The torture of consolidation ended and unfortunately a new one was born. The pattern has been torturing traders as we wait for the breakout in one direction or the other. Last week we wrote we broke out to the downside which we did but now find ourselves stuck in another brutal trading range. We are short
Hedge Recommendation: Portfolios should be Hedged
Position: Short 100% - Algorithm is short
GOLD - Has broken out to the downside although it has been stubbornly fighting at the 1500 level. The next move should be lower and 1460 is in play. For now, our target is 1440, subject to change most likely lower. The pattern is clear and a close below 1500 solidifies the next down move.
Hedge Recommendation: None
Position: Long 75% - Will buy at 1495
FEEDERS - The bullish pattern continues, down to support up to resistance. As we wrote last week, support should hold and a run to the tops were in play. Thursday Feeders closed at resistance as they pep to break out to the next target of 150. Algorithm long as are we.
Hedge Recommendation: Hedged
Position: Long 150% - Will sell 1/3 at 150
FATS - Broke out this week and look headed to 115. The action has been perfect since the Tyson fire puke out. There is nothing to stop the FATS from going higher. The action has been consistent, and the rallies have been coming late. Everything looks good. Algorithm long as are we.
Hedge Recommendation: Hedged
Position: Long 200% - Will sell half at 115
HOGS - Remain wild and in congestion as they tested the top end of the range. The Algorithm turned short on Tuesdays limit down move. We did exit on Wednesday at higher prices and are now short. This pattern looks to continue and we actually like Hogs but from lower levels.
Hedge Recommendation: Hedged
Position: Long 100% - Will cover half at 63
