Tag Archives: soybean rally

Weekly Commodity Strategy Review 11/14/2014

This week’s theme was the same as last week, expecting that some of these markets had gone too far, too fast and were ripe for a turnaround. Like last week, our strategies have continued to be on the wrong side of the markets.

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Continue reading Weekly Commodity Strategy Review 11/14/2014

Weekly Commodity Strategy Review 10/31/2014

Our published pieces this week for Equities.com and TraderPlanet focused on lean hog futures and soybeans respectively. The hog market fell through the support we were leaning on and stopped us out with a loss. The Commitment of Traders Report continues to suggest that long hedger buying will continue to support this market as packers ensure their future supplies at these prices.

Buying Opportunity in Lean Hog Futures

Meanwhile, the soybean market appears to have peaked. Commercial selling has been consistent through the October rally. This is exactly what we expected to happen as we near the expiration of the November soybean futures contract.

Soybean Rally Out of Gas

Our primary article this week focused on trading system development and the possibility that the new meat market hours will return a technologically outdated trading program back to its former glory in the lean hog futures market.

Mechanical Trading Program Data Issues

Finally, one piece of information about today’s markets. The Japanese government elected to inject further economic stimulus into their domestic markets in an attempt to reach their 2% inflation target and stave off 25 years of deflation in their economy.

This announcement pushed the Nikkei 225 up more than 5% for today’s trading. The S&P500 is currently higher by 1%. The overnight rally in the S&P500 pushes the rally from the October 15th lows to our current price, more than 11% higher in 11 sessions. This has only happened 3 times since 9/11. Twice in 2009 and once in November of 2011.

Fortunately, we saw that the sell off in the stock market was being used by the commercial traders to add onto their long positions. We discussed this in October Market Volatility Scared No One.

Here’s the chart from our commercial long only, mini Russell 2000 trading program. This program cleared more than $7,000 on its last trade and currently holds an open position worth more than $13,000.

COT Signals Mechanical Systems

cot trading program
Russell 2000 trading program based on the Commitment of Traders Reports.

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Soybean Rally Out of Gas

The Commitment of Traders report has shown a significant shift in commercial trader sentiment in the grain markets. The oat market seems to have had the most dramatic reversal with wheat following closely behind. We chose to focus on the soybean market this morning due its significantly greater liquidity. Commercial traders have sold about 45,000 contracts over the last few weeks of this gradual rally.

We based this morning’s piece for TraderPlanet off of our Mechanical COTSignals program.

 

soybean commitment of traders chart
Commercial traders’ soybean selling 45,000 contracts over the last four weeks shifts commercial trader momentum to negative.

See the rest of our analysis at TraderPlanet.

COT Data Shows Soybean Rally Out of Gas

Mechanical Cattle & Corn system equity curves.