MARKET UPDATE/TRADE ALERT - JUDY CRAWFORD

MARKET UPDATE/TRADE ALERT

JUDY CRAWFORD

TRADES FOR FRIDAY, MARCH 26, 2020

312 277 0133

jcrawford@zaner.com

EMOTION is your enemy more than any market will ever be.

THE SOFTS & GRAINS HAVE WHAT IN COMMON? I have mentioned several times in my comments in my Update that there were certain markets that have been in major rallies for over a year without yet having any major retracement of that move and confirming their lows on their monthly charts. Normally markets do not do that. They will make a major low, rally for a short period and then go back and test that low for confirmation before resuming the move long term.

Some of the markets in the softs and grains have not done this. And most unusual is that all of them had started their major rally over a year ago in April 2020 to be exact. And also unusual is that they showed no interest in retracing until recently after finally reaching market resistance going back at least a few years, if not more. Yes, the daily charts would show minor corrections here and there but if reviewing their monthly charts – there was nothing.

In the softs the two falling into this category were cotton and sugar. Their move started in April 2020 and not until this month did either show signs of a “major correction” setting up on their long term charts. This month cotton finally took out last month’s low (after reaching resistance going back to 2014 in February). A first for the move.  A 50% retracement of its move would take it down to 72.00. It’s not there yet but is in the process of failing one support after another near term.

Sugar is the other candidate. The last time it had an aggressive move was in 2016. That was an eight month ordeal of higher prices. As of last month this move was on its fourteenth month. Now finally after reaching resistance going back to 2013 (in February) it is doing the same as cotton – it has taken out last month’s low. A first for the whole move. If it has a 50% retracement of this move, it should reach down to 13.30.

In the grain complex it is the meal and bean oil that fall into this category. They both bottomed in April 2020 (just as sugar and cotton did). And they have been rallying since. Finally in January meal reached resistance going back to 2014, stopped and sold off. It has taken out the previous month’s low – a first for the move. A 50% retracement since the April 2020 low would be down to 371.00. Bean oil is at its 2012 resistance and on its monthly chart starting to duplicate what meal did in January. It is over 3.00+ points off this month’s high. This is the most monthly correction it has had to date since the rally started. So is it setting up to do the same as meal? A 50% retracement since the April 2020 low would be down to 41.45.

To see this pattern in more than one market at the same time with the same characteristics is unusual. Isolated incidences are common. But being very similar in their pattern from market bottom to current tops increases the probability that what cotton is doing now could be followed by the others.

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TRADE SUGGESTIONS FOR FRIDAY: None.

CURRENT POSITIONS:

Short May wheat. Short 616 (3.25). Protective stop 625 3/4. Projection 595.

Short May meal. Short 397.50 (3.23). Protective stop 408.90. Projection 360.00.

Short May cotton. Short 89.87 (3.3). Protective stop 86.25. Projection 77.50.

GRAINS:

May corn: An inside day yesterday triggered a sell today on its daily chart. There wasn’t much follow through. It is still stuck in the same range since January. Nothing new.

March wheat. I shorted it today. It sold off to 609. Keep stops at 625 3/4.

May beans. An inside day yesterday triggered another sell today. They closed directly under their 10 & 20 avg. on their daily chart. There wasn’t much follow through. But they are still stuck in the middle of their current range. The sell signal triggered March 11 remains. Just watching.

May meal. It triggered a buy today from yesterday’s inside day. Keep stops at 408.90.

May bean oil. Yesterday’s inside day triggered a sell today. It failed its 10 avg. on its daily chart. It has done this before and quickly recovered. That was on March 18. But that time it did not have a fresh sell signal so this time there should be more pressure on the market.

MEATS:

June hogs. They took out the 102.50 high today. Long term they are in resistance going back to 2011. Just watching.

May feeders. They rallied further today. Next near term resistance 150.00. The reversal top and initial sell signal remain on the daily chart. The reversal top on the weekly remains and on their monthly chart they are in long term resistance. Just watching.

June cattle. They rallied further today.They still have a reversal top on their daily and weekly charts, putting into question how far this buy signal can go. They are also in major resistance on their monthly chart. Just watching.

SOFTS:

May cocoa. It held at its 200 avg. today and closed above it. This could trigger a rally just like it did when it reached and held that average in January. Watching closely to buy.

May cotton. It failed its 100 avg. support on its daily chart today. There’s some market support down at 75.00. Keep stops at 84.90.

May coffee. It finally reached its 100 avg. on its daily chart that I mentioned yesterday. It held and may try to rally from this level near term. It is also in market support going back to last January. Keep in mind the potential for this current wave down is at 121.30 so any current rally attempt should be near term only.

May sugar. It tested and held again at its 100 avg. on its daily chart today. If it can rally it should be an opportunity to short again. Watching closely to short again.

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