New crop Corn, (CZ) settled at a new 8-month high today at 4.36 1/4. A good close and one which opens the possible door to a move back up to 5.55. That being said, there are any reasons why the rally could collapse. However, with the Funds long 360K contracts as of the start of trade today ,adding another 10K contracts long today, its looks like, for now, the funds are right and they are going to push the commercials.
Certainly we will have a lot of trade around the key psychological level at 4.50.
I will say I would rather be long corn now, after this good settlement.
Like all long positions, however, I’d keep a tight sell-stop below it. Trading decisions are best when they have a clear entry and exit point, much like a land war in Asia.
Without a defined exit prior to engagement, it can turn into a protracted nightmare. Just like a land war in Asia.
Soybeans took the sell side of the corn/bean spread today. Apparently the stories of sudden death in a percentage of the bean crop were not enough to keep the beans from giving back 40 cents on the week for new crop beans. A disappointing move after an 8-month high settlement last week.
SX was never able to rally and settle above the key 10.50 level.
In comparison, CZ was able this week at an 8-month high settlement above its key resistance at 4.30.
Next week is critical, but I would rather be long corn. With a sell stop. There is no reason corn could not mirror beans this week. We have to keep feeding the bull. With the funds now long 360k contracts of CZ, if they are wrong, the turn around could be rather sickening.
AS for the Cash Dow, Interestingly enough, today we traded through the 50% pullback which I had talked about earlier this week…. 10168. Today’s session low was 10147, 20 ticks past our target.
We proceeded to rally bounce 79 points from that low up to 10226 to settle at to settle at 10211. Target for next week would be is 10,037. However, I can’t imagine a scenario where we get within 37 ticks of the 10,000 level and the bears don’t push it to get the 10,000 print out, if only to search for sell stops.
These levels were good targets if you had been reading this blog, hopefully you used them profitably.
As for the crude, I would stay long, but lower the buy stops. At some point here, we could spike up. Protect those profits from our shorts.
Enjoy the weekend. Remember, a trade has two parts. 1) decision to initiate, either long or short. and 2) The most important… managing the position. Use your stops to manage your risk.
Good Trading
