The grain markets may finally be perking up in spite of declining energy costs and record harvests. We’ve previously mentioned the oat futures as the first of the grain markets to budge in, “Combining Buy Signals in the Oat Futures.” Today, we’re looking at soybean meal and the set of indicators we use to drown out the voices of hyperbole both in print and on TV. Quantitatively speaking, the soybean meal futures have triggered a COT Buy Signal. More importantly, you can see the consistency and magnitude of these plays on the chart below.
We’ve been following the oat futures market carefully while waiting for an actual buy signal to setup for us to enter. There are multiple confirming factors of the market trying to put in a low before rallying through the expiration of the March contract. We initially began looking at this oat trade based on the seasonal pattern, commercial build in position and the sideways technical action in a declining volatility environment. This trade never materialized as the market feel through the bottom of its consolidation. This time around, the market has provided a classic COT long entry.