Wednesday, July 22, 2015

"Red hot grains, hit resistance, cooling off"

In a case eerily akin to Janus' Bill Gross' "making the call but not making the trade" we noted in March 9ths:
"Hedge Funds commodity exposure slumps to six-year low after 29% cut"
We're thinking the most likely market for an upside surprise is the grains, watching the weather closely.  
And then followed it up with March 18ths "Crops The Worst Bet Among Commodities, says Goldman":
One of the reasons we flagged them for a possible upside surprise....
And then, relying on my squirrel-like inability to focus on boring, sideways markets* moved on to zinc or something in the collapsing base metal complex, promptly forgetting to post anything; a total of four posts on corn since June 1st. Four? Four.

*Sure, you can harvest time premium from straddles or strangles but what are you going to tell the Investment Policy Committee on the Monday after the options rip higher? "At least we made eight nickles" to cover the four million bucks we paid out on the options?

From Kimble Charting Solutions:
Over the past month, the grains have done really well. Of the Top 10 assets to own the past month, the grains dominate this category!
Below looks that the patterns of Wheat, Corn, Soybeans and Grain ETF JJG
grainresistancecoolingoffjuly20CLICK ON CHART TO ENLARGE
The strong rally in the grain complex took each of these up to falling resistance lines that have been hard to get above for the past few months.

As of last week, these grains created reversal patterns at key falling resistance line....MORE