FOR FRIDAY: (7/7) Wheat has been leading the market higher and hit a sell signal yesterday and the trade continued liquidation today. Wheat has pulled the corn and beans up and we have to wonder if it will now pull the grains lower and it is a big yellow flag. Beans didn’t allow us to get filled but we still feel better buying beans. You may want to lighten up on some of your corn if you are nervous and we suggest being out of ½ of longs by the close of Friday. Continue to use strength to get into Nov. bean puts and Dec. corn puts.
DEC. CORN (electronic ok)
SWING TRADING RECOMMENDATION: Hold Dec. corn longs from 400.50 and 401 with a 389 stop. Exit ½ of longs at 410 oco market on close. Exit rest of the corn at 421.
TODAY’S COMMENTS: (7/7) Market needs to take out 407 quickly or will be very vulnerable early next week when cycles turn ugly. We would take profits near 410 and then move stops on the remainder of the market over the weekend break.
OVERALL: We could see Dec. corn hit 425 if wheat keeps going and it would be a gift but now it’s early July and the crop will pollinate soon and the forecast is hot and dry. Luckily we had banked great profits on July corn shorts last Tuesday. Cycles for wheat are strong into Friday and that market is leading the way but at some point commercials will jump in and grab these corn prices. If we see 420-22, we’ll probably jump at hedges. Given the size of the crop, hard to imagine 450. Corn will have to take out 387 to issue a sell signal.
WEEKLY CHARTS: Continuation charts had pointed to 405 earlier in the year and that is still 35 cents higher which would take Dec. corn up to 425. That is possible if Sept wheat takes out 555 and starts heading for 600 this week. We have to hedge with these prices but have to watch the crazy funds with eyes behind our head. Continue to use strength and buy Dec. puts to withstand the volatility.
CYCLES OVERVIEW: Higher into Friday; volatile/lower Monday.
