Weekly Chart’s In Grains Look Indecisive

  • Posted on: October 28, 2009

I just took a look at the longer term weekly charts for Corn, Wheat and Beans…Looking for Support in the wake of the recent 3 day retracement fueled by Index Fund Selling… On the SX charts to begin with, there is s band of support, first and foremost on the daily chart between 961 and 938 *as of this writing, we already had a flush down to the 968 3/4 level*.

A pullback down to the 940 level wouldn’t really be terribly surprising, and it may be necessary to clear out weak longs, get the psychology bearish, and then flip bullish and whipsaw the new bears…Typically we can have this type of whipsaw trade when just when you think about buying it, it cracks off a 40 cent move in your face, and vice versa.
If markets didn’t do that, if they acted rationally, then all traders would retire with 20 million after 4 years on the job… But the market doesn’t do that … Instead it punishes both bulls and bears with volatility on the way to its larger moves…

That being said, lets move on to the Corn.. ON the Daily charts there are bands of support at 375, 350 and then 325… Each of these levels is worth attempting to establish long positions, as long as you are protected with sell stops…At some point the harvest will be finished, and we will know exactly what kind of supply we really truly have.. It may not be until January, but when we do, no amount of currency devaluation or re-inflation or what the vagaries of crude oil is at the time, will be able to change the laws of supply and demand and we will then have a market based on fundamentals again instead of “carry trade” and currency fluctuations.

Ditto for the Wheat Market, however, looking at the weekly Wheat chart and it still looks kind of dismal…We have had a protracted down trend, spiked with some viscous 1 dollar and dollar fifty cent rallies just enticing enough to get trend followers long, and then pull the rug out from under them…The Wheat Chart looks in one word, funky….We have dropped 75 cents in 3 days down to the 500 support band on the charts, but below that there is support at 481, 455, and then 428 to 436…Honestly, since Wheat looks like the ugliest market, it most likely is setting up for the most dramatic move… Patience is needed to wait for the real move to become evident on the weekly charts.

For now, I would look for Support in the Wheat at the 480 levels, assuming the current 500 level does not hold water…

Again, at some point, crop supply/demand fundamentals will rear its head and that will determine the direction of the market.. Not currency speculators, not crude oil prices, not Clarence Beeks and the Dukes…. just supply and demand…
Good Trading