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Call or text: 312-837-3938 / Email: Oliver@BlueLineFutures.com
Corn futures struggled and ultimately failed against our resistance pocket in the first half of last week’s trade, 381 ¼-382 ¾. That resistance remains intact and is the pocket the bulls NEED to see consecutive closes above which could spark a short covering rally. Friday’s Commitment of Traders report showed funds bought 30,935 contracts, trimming their net short position to 85,137. All in all, the wires are slow and there is little new news to get people excited, this may be reason enough to be excited. There’s an old saying, “Never short a quiet market”, similar concept to being cautions when everyone is buzzing about a market. Our bias will remain neutral until we see the technical landscape shift.
Soybeans caught a bounce in the back half of last week’s trade after testing and holding our 4-star support pocket, 865-869 ½. We talked about that being a buying opportunity in our daily reports and tv interviews, looking for a relief rally towards 894-895 ¾ which was achieved on Friday. The bears remain in control, for now this is just a relief rally and we were working with some clients to flip short on Friday. Friday’s Commitment of Traders report showed funds sold 56,078 contracts, expanding their net short position to 99,019. Recent selling from the funds has been more aggressive than 2018, when the trade war was initiated.
Wheat futures drifted lower last week after failing to confirm a techinncal breakout above resistance. We have been very cautious and wary of Chicago wheat in the mid $5 range, we think there is more opportunity in the Kansas City contract, a narrative that we’ve had for several months now. The way we have been playing it with some clients is, only selling Chicago wheat (the only buying is reducing shorts) and only buying Kansas City (the only selling is reducing longs). Kansas City wheat came into technical support on Friday, presenting what we believe to be a good risk/reward buying opportunity. That support comes in near 430, representing trendline support from the contract lows, previously important price points, along with the 50 and 100 day moving average.
February live cattle managed to gain back some lost ground in the final two days of last week’s trade. The cash market has been on fire for two months, but there are signs that we could be stalling. If cash does stall out or even retreat, we would expect to see long liquidation put pressure on the deferred contracts. Friday’s Commitment of Traders report showed funds sold 3,444 contracts, trimming their net long position to 78,214 contracts.
The feeder cattle chart has been softening up for the better part of the last month, posting lower highs and lower lows, forming what looks to be a potential head and shoulders formation (bearish). The bears have the advantage until the bulls achieve consecutive closes above resistance, 142.85-143.65. Significant support comes in from 138.15-138.90, this pocket represents a key retracement, the 100-day moving average, and other previously important price points.
February lean hogs gaped higher on Friday but failed to hold those gains for longer than a few minutes. 70.025-70.40 is a significant resistance pocket for us, this represents a key retracement, support from October, and the ultimate breakdown point in November. If the bulls can achieve consecutive closes above here, we could see an extension towards 73.05-73.95, this pocket represents the 50 and 100 day moving average, along with a key retracement. On the support side of things, 66.50 is the line in the sand. This has been the low end of the recent range (give or take), a break and close below could take us to retest the August lows, 63.675.
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.