MARKET UPDATE - GRAINS, MEATS, SOFTS

TRADE ALERT
JUDY CRAWFORD
TRADES FOR MONDAY, SEPTEMBER 9, 2019
888-301-8120
jcrawford@zaner.com

EMOTION is your enemy more than any market will ever be.

COFFEE ARE YOU SERIOUS? The pattern it has developed on it weekly chart defies technical behavior. Normally when a market in a downtrend (such as coffee) makes a new low after a rally it is suggesting another wave down. But just how reliable is this with coffee? Referencing the Dec. contract this is what has been going on since September of last year:

During the week of Sept. 17, 2018 the low was 95.10. It then rallied to 125.50. It then sold off and took out the 95.10 low and wentto 94.70- suggesting another wave down technically. But it didn't, it instead rallied to 119.50.
It then sold off again and took out the 94.70 low and went to 93.70 - suggesting another wave down technically. But it didn't, it instead rallied to 119.35.
It then sold off again and took out the 93.70 low to 93.40 - suggesting again another wave down technically. But it hasn't done it. Thats where we are with coffee.

When coffee has made these new lows, as in any market, the selloff should have continued but it hasn't. Each time it holds a week or even a few weeks on the weeklyand then rallies instead. It has now held that 93.40 low for three weeks.

Granted each rally was less than the previous one after all coffee is in a downtrend but the lack of follow through with new lows turned out to be a near term fake out instead.

So was the latest 93.40 low a fake out too? Well it has been holding that low for three weeks now on the weekly chart.

So far coffee has tried three times (the latest being the third) to produce another wave down and it hasn't pulled it off. Technically this lowers the probability that it will do so.

Part of the reason could be where it is historically - very low numbers.

But maybe coffee is trying to tell us something with these failed new lows that coffee is finally serious about bottoming. See below for a possible approach.

GOAL OF THE MARKET UPDATE: To give traders a technical explanation of market behavior with the goal to educate and better understand and trade the markets. What I convey to readers is not a personal opinion but what the markets are suggesting by their technical formations and action.

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TRADE SUGGESTIONS FOR MONDAY:

Buy December cocoa. Buy 22.92 stop. Protective stop 22.20. Potential projection 24.25. (Potential risk $720. Potential reward $2050). Margin: $1900.
Reasons for the Trade:
1. On the monthly chart cocoa continues to hold at the long term 22.00 support.
2. The weekly chart formed a reversal bottom two weeks ago suggesting a trend change from down to up. This reversal bottom occurred at the 22.00 support level.
3. The weekly chart has been in an uptrend since the 2018 low and is now suggesting a second major wave up.
4. The daily chart has a 1,2,3 bottom formation another technical indication of a trend change from down to up.
5. On the daily chart cocoa has been trading over both the 10 & 20 avg. suggesting a trend change effort from down to up.
6. The daily chart has a previous buy signal.

Buy December coffee. Buy 97.50 stop Protective stop 95.00. Potential projection 102.60. (Potential risk $937.50. Potential reward $1912.50). Margin: $2700.
Reasons for the Trade:
1. On the monthly chart coffee continues to hold above 95.00 since reaching that support September 2018.
2. On the weekly chart coffee is holding at the same level that produced a rally to 119.35 in May.
3. The daily chart formed a reversal bottom in August that is still intact.
4. The daily chart is suggesting a 1,2,3 bottom formation.
5. On the daily chart coffee closed over its 20 avg. on Friday for the first time since failing it in July.

GRAINS: The funds continue to push the grains lower but there is some difference in their technical condition. On their daily charts corn, wheat & meal all made new lows last week while beans have been stable since early August and holding 855. And then theres bean oil: it has been in an uptrend since May. To date is appears that beans have shifted from following or being impacted less by meal and more by bean oil. Otherwise you would be seeing beans making new lows and it isnt happening.

Dec corn continues to suggest 350. Keep in mind the funds are most heavily invested in the short side of corn vs. the other grains. Dec wheat the rally is struggling but the weekly chart formed a reversal bottom last week. Nov beans holding 855. Both the daily & weekly have reversal bottoms. Dec meal its close to taking out 291.60. Thats the May low. On Friday it triggered a fresh sell signal on its daily chart. Oct bean oil it held 28.50 on a closing basis again on Friday. Bean oil is holding up the best simply because the funds are almost flat in their position.

MEATS: Now live cattle look like a disaster in the making while feeders hold??

Oct hogs the heavy resistance mentioned on their long term charts got control and the selloff on Friday ended up being a limit move. The buy on the weekly is still intact but taking out 60.87 will negate that. Both long term charts suggest 62.00. Thats good support. Oct feeders they sold off on Friday but held 129.00 to rally and close near the high end of the days range. They continue to hold the Aug. 13 low of 127.32 on the daily. Oct cattle another new low Friday but they are very close to their Nov. 2016 low of 93.80.

SOFTS:

Dec cocoa it recovered most of Thursdays selloff on Friday. Ill try to buy it again. See Trade Alert for details. Dec cotton it continues to consolidate right above 58.00 on its daily chart. It continues to suggest a bottom at this level. Watching closely to buy. Dec coffee: it continues to consolidate on its daily chart. My buy has yet to be reached. Ill try again on Monday. See Trade Alert for details. Oct sugar it is testing the Sept. 2018 low of 9.83. But so far it is trying to recover over 11.00. It is suggesting a near term rally.


CURRENT POSITIONS: None.

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