MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR FRIDAY, JULY 30, 2010)
888-301-8120
jcrawford@zaner.com

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. 

GRAINS:  In an earlier Update I mentioned that the grains were starting to act like the early phase to a bull move.  Once they get themselves going, their sell-offs never follow through but the sell-offs that they do have are not enough to make one feel comfortable going long.  When I tried to short the beans the other day, technically their sell-off should have just been starting.  They didn't even get near my sell price but triggered a buy instead. 

Once grains start a bull move, fundamentals can be thrown to the wayside as the grains ignore them even if they are negative.  But I suspect there is more to it than that.  If the big commodity funds decide to be long, I suspect that is the major influence that makes it appear as though fundamentals are being ignored.  And they are getting interested.  In checking the commitment of traders report today, in one month their bullish stance in corn, beans and meal have increased appreciably to now being: in corn - 71%, beans - 76%, meal - 80%.  Bean oil is only 47%, actually down a couple of percentage points from last month.  No wonder it can't get going.  Wheat is now 51%.  It had the biggest jump from a month ago when it was 39%.  If they decide to get interested in bean oil that could be setting up for a good move.  Obviously their 47% bullish stance doesn't reflect much interest yet.

The big commodity funds trade pretty much technically and if they are looking for a product to go long and are cruzing through all the major markets, there is one resource group that never did have a strong bull move as the majority did in 2009.  That is the grains.  In short, they could be the best buy on the Board for , all of this remains them plus they have the volume and open interest to handle their potential participation.  Of courseto be seen but the behavior of the grains lately is sure starting to point in that direction. 

Looking at the long term charts and assuming the grains continue to rally with their periodic setbacks, this is what the charts suggest as near term potential:
Corn:  assuming it gets over 400, near term 450.
Wheat:  assuming it gets over the 645 resistance, near term 700.
Soybeans:  they are already over their 1000 resistance.  Near term 1100.
Meal:  325.
Bean oil:  assuming it gets over 40.00, near term 45.00.

EMOTION is your enemy more than any market will ever be. My Market Update employs a trading plan that a trader can understand and trades that have reasons so that a learning process evolves - helping you combat emotion and establish discipline.

The Market Update is designed to not only help you learn how to trade but also improve your trading approach. By reviewing technically all the major markets as well as give trade suggestions that include the reasons for the trades, you are able to follow and/or compare my work with yours. Or, if you do not have the time, as many don't, simply use my guidelines for placing your own trades.

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TRADING COSTS: All closed out positions include a trading cost of $49.00 round turn plus a maximum potential for exchange fees of $6.00. Most exchanges do not have total costs of that amount but to consider the maximum potential, it is included. Commission costs can be less if full service is not required. 

TRADE ALERTS: 

Important information regarding placement of trade alert orders:
1.  They are placed during the day only (and not at night).   All trades are placed in the electronic markets only.
2.  They are placed on a buy stop or sell stop basis.  That means the market must rally up to the stop price to go long and/or sell off down to the stop price to short.
3.  All orders are good for that day only.

  
Buy December corn.  Buy 402 1/4 stop.  Protective stop 389 1/4.  Potential projection 440.
Reasons for the Trade:
1.  On the monthly chart, corn is back over the 20 day ma.  That is the first time since September 2008.
2.  The monthly chart formed a key reversal bottom last month.
3.  The weekly chart formed a key reversal bottom in late June.
4.  On the daily chart, corn formed a double bottom to the sell-off this week - suggesting a trend change from down to up.
5.  On the daily chart, corn rallied over the 20 day ma yesterday with follow through today.
6.  On the daily chart, corn appears to be starting a second wave up.

Buy December bean oil.  Buy 40.16 stop.  Protective stop 39.23.  Potential projection 45.00.
Reasons for the Trade:
1.  The monthly chart has been in an uptrend since the Dec. 2008 low.  The recent sell-off held at that trend line and formed a key reversal bottom.
2.  On the monthly chart bean oil continues to hold at the 20 day ma on sell-offs.
3.  On the weekly chart, bean oil is now above the 20 day ma.  That is positive.
4.  The daily chart has two previous buy signals that are still intact.
5.  On the daily chart, bean oil triggered another buy today.

Sell December cotton.  Sell 75.90 stop.  Protective stop 77.46.  Potential projection 73.00.
Reasons for the Trade:
1.  The monthly chart has a previous sell signal that is still intact.
2.  On the monthly chart, the macd is turning negative.
3.  The weekly chart has a previous sell signal that is still intact.
4.  On the weekly chart, cotton rallied up to the 20 day ma and stopped.
5.  On the daily chart, cotton rallied up to the 77.00 and sold off aggressively - forming a key reversal top.
6.  The macd on the daily chart is turning negative.

CHANGE IN OPEN STOPS:
Short December cattle from 96.90 down to 96.57.

GRAIN COMMENTS:   

DEC CORN:  Last time I mentioned that the sell-off had formed a double bottom and if it wasn't taken out, we could be looking at the bottom to the sell-off.  That is what occurred.  In spite of corn's overall weakness in the sense it can't seem to breakout of the base it has formed, it may now be starting a second wave up from the contract low established on June 29.  If that be the case, this wave up has projections to 440.  A trade could be developing.  See Trade Alert for details.  Closed 393 3/4, up 3.

DEC MINI WHEAT:  Last time I mentioned the huge outside day.  It gave another buy and wheat made a new high today at 664 1/2.  It is over bought but when a market gets itself going, that may not mean anything.  Going to the monthly chart, it seems headed for 700-750.  How it will go about that remains to be seen.  Closed 659 1/2, up 12 1/2.

NOV BEANS:  I tried to short the market but they never reached the price.  They rallied instead.  This shows even more that these grains sure smell like a major up move in the process.  The sell-offs start but never follow through as they should.  You don't buy because you think they should sell off more and they don't.  I have seen it many times in the past.  On the monthly chart they look as though they are just breaking out and headed for 1100 near term.  The November contract has resistance around 990.  That is the area to watch now.  Closed 988, up 10. 

DEC MEAL:  Stops were lowered and reached yesterday.  It has continued to rally with a new high today at 288.10.  Closed 286.90, up 2.70.
Position:  Short 279.90 (7.26).  Exit 280.90 (7.28).  Loss $280.90 (+comm.&fees).

DEC BEAN OIL:  It has made another attempt at the 40.00 resistance today and closed right on it.  It may make it through it this time.  A trade could be developing.  See Trade Alert for details.  Closed 40.00, up .43.

MEAT COMMENTS: 

DEC HOGS:  They have rallied up to their resistance area established in April on the daily chart.  That high was 75.15.  Today they reached 75.32.  That area caused a huge sell off at that time down to 68.75.  This time they may sell off but they now have established a lot of support under them from roughly 72.50 up to 73.50.  Long term they could go higher and appear to be in the process of testing the new historic high made in May.  If this current rally fails at some point prior to the 90.17 high, it would further confirm a major top as the monthly already has a key reversal top - suggesting a major trend change from up to down.  Closed 74.92, up .42.

DEC CATTLE:  Please note typo error re the stop in the last Update.  It should read 96.90.  Today they rallied and attempted to get over the 96.25 resistance that goes back to last March.  They could not sustain it and sold off, forming an outside day.  They closed near the low of the day's range.  They do have some support at 95.00 plus the 20 day ma intersects in that same area.  That 95.00 support is to be watched.  Move stops from 96.90 down to 96.57.  Closed 95.35, down .52.
Position:  Short 95.62 (7.27).
Projection:  93.75.

SOFTS: 

DEC COTTON:  I tried to short it today.  It rallied instead.  I'll try again tomorrow.  See Trade Alert for details.

SEPT ORANGE JUICE: It has not done much since my last report.  It continues to hold at 145.00.  Just watching.  Closed 145.20, up .70.

SEPT COFFEE:   I tried to short it but it rallied instead.  It made a high today at 174.60.  The contract high is 176.50.  That is the area to watch.  If coffee takes it out, it could try for 180.00.  Just watching.  Closed 173.05, up 5.65.

SEPT COCOA:  It triggered a buy today and rallied to 30.64.  Keep stops at 29.74 for now.  Closed 30.46, up .36.
Position:  Long 30.31 (7.29).
Projection:  32.00.

OCT SUGAR:  Since I took profit on the long position, it has continued to rally.  It is now over the 19.00 resistance and is, most likely, headed for 20.00.  Just watching for now.  Closed 19.50, up .63.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.  Opinions are subject to change at any time and are not a solicitation or recommendation to buy or sell futures contracts or options on futures contracts.  The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness.  All known news and events have already been factored into the price of the underlying commodities discussed.

Past performance is not indicative of future results.  All suggested trades are based on technical signals/indicators and do not include slippage or cost.  Not all trades suggested are taken.  Results are based on what the signal indicates not necessarily an actual trade. 

Actual results may vary.