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Today we thought we would look at soybeans. We have included the daily and monthly charts here for reference. While considering how to describe what we are thinking regarding the soybeans we thought cutting and pasting our soybean section from the last (Sept.30) edition of our Trade Focus would help get the job done.
SOYBEANS (NOV.) – The monthly data shows that the soybeans have corrected to very near the 50 month moving average as well as an uptrend line. We believe we can begin to look for a long entry from this price area. We realize harvest is upon us but price pattern and action we believe is what will dictate. We believe we can suggest a long entry with intraday penetration of 94400 or a close at or above 93900. Looking ahead, if this should begin to proceed higher, we suggest new or additional long entries can be initiated with a close at or above 96200. Retracement resistance levels are approx.: 95830; 97870; 99930.
Since we wrote that a week ago Wednesday there was a new low made that slightly penetrated the 50 month moving average before the price did turn around and elect both long entries first by pushing through 94400 and then with today’s 96400 close electing the second long entry. There has been concern over potential frost conditions for northern portions of the corn and soybean belts and there was a USDA Crop Production report released this morning.
The report was considered by traders as less bearish than expected but the weather concerns provided the energy needed to extend the soybean market’s gain not only from the opening today but also has helped to fuel the move off the lows made on October 5. Since that date the November contract has gone from the low price of 878.75 to today’s high of 968.50. Many analysts have said that a freeze would not be as deadly for the soybeans as such a large percentage of the crop is “made.” But there still is that small percentage that could be greatly affected and there is the problem the weather has caused in delaying the harvest. This puts pressure on near term supplies.
A quick update on a previous blog topic of this week dedicated to the T-Bonds. The trigger price for the second short entry approach was elected with the intraday penetration of the 121-22 level on Thursday the 8th. Today’s low was all the way down to 119-20. Much of the reason for the quick and large break in price seems to be credited to remarks from Fed Chairman Bernanke regarding the Fed’s plan to reverse the extraordinary measures taken since the financial crisis began. He may not have said anything new but we believe the market senses the timing of such action is becoming closer than what had been previously anticipated. It also seems, from various comments by various analysts, that there is a growing number of hawkish Fed Governors. We saw that term hawkish more today than in many many months.
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Good trading and happy week end
Jeff and Diego
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