FOR FRIDAY: (9/30) Last of the month is often short-covering and profit-taking for funds no matter what the USDA comes up with. Hard to imagine anything friendly. Rallies will continue to need to be sold with harvest pressure and hard to imagine beans having a good number. We’ll continue to play cycles and patterns. We probably still need to be short corn and beans next week unless there’s a huge surprise. Cattle close to being done and hogs may be lower all of next week if the report goes poorly, as cycles are there for problems.
T-notes look lower one more day
FOR THURSDAY: (9/29) Still lots of data coming out and now we’re moving toward position squaring by fund managers at the end of the quarter. They push often stocks lower into the end of the month so they can buy them back for the seasonal October buy. T-notes look lower one more day. Everything is starting to get a bit more overdone.
Cattle getting close to being done
FOR THURSDAY: (9/29) Hard to be short grains but market may continue short-covering on Thursday, and Friday’s report reaction may also continue with short-covering. Harvest selling should pick up by Sunday. We may have to continue to take profits on grains if we can get lower. In the end, we’ll have to sell any rallies on Friday or Sunday if they manifest. Cattle are getting very close to being done but still a few more days left to sell. Hogs are sideways before Friday’s Hog and Pigs report.
Harvest selling should pick up by Sunday
FOR WEDNESDAY: (9/28) Crop fundamentals remain bearish with harvesting under way in much of the Midwest this week and forecasts call for dry weather the next few days. The seven-day forecast also favors dry conditions for much of the Midwest, while the 6- to 10-day outlook has above-normal chances for rain in Iowa and for much of the northwest quarter of the country.
Not sure what the late rally was about except some short-covering before Friday’s report. Hard to be short grains on Wednesday but market may continue short-covering on Thursday and Friday’s reaction may also continue short-covering. Harvest selling should pick up by Sunday. We may have to continue to take profits on grains. Meats gave up gains late and not sure what to do with them now. Cattle close to key targets so a recovery could happen on Wednesday.
Month-end profit-taking on S&P?
DEC. E-MINI S & P 500
ANALYSIS FOR WEDNESDAY: (9/28) Resistance overnight at 2157-2159.50. Much above 2160 and we may have to rethink the pattern and what’s happening. The most bullish scenario and would probably project 2122 on futures. Cash still wants to fill the 2164 gap from Monday. Deutsche Bank isn’t any better and that will still hang over the market.
OVERALL: Key support at 2122-2125. Three larger waves down could easily go to 2087 or 2072 this week and we had started to give up on that scenario after the Yellen save last week. Open to more if news gets messy but usually you can’t get too bearish in October. We’re waiting for the Merkel save after her practical and realistic announcement this week. Given the EU bail-in capacity and the impact on the economy, she is not thinking like a businessman.
WEEKLY CHART All the patterns and seasonals point to higher prices into October, with 2218 being the next larger target. Will need some major unexpected news item to rattle the markets and so far it may be Deutsche Bank but maybe more coming.
SHORT-TERM: (9/26) Market may consolidate before Oct. 7 employment report and then take off, with Oct. 17-19 possibly being a pullback area. Until we see lows in Sept. 30, we’re not totally sure and what the pattern is saying. Given at least a 3-3-5 pattern happening, the 2100 region is a minimum target if 2125 holds, we bounce and then fall another 50 points or so.
LARGER PICTURE: (9/22) The proportions of the weekly and monthly charts from the 2009 low suggest that the whole move up won’t be complete until 2018 at around at least 2409. For those waiting for a crash or major bear market, we think they will be disappointed. The wave-one low from 2009-2011 took three years. We have been looking for a January high toward at least 2320 once the Sept. pullback is over.
Will be hard to take out S&P 2149 and 2153
FOR TUESDAY: (9/27) Lots of news this week and lots of Fed Governor speak and Deutsche Bank bubbling in the background. Hard to tell would tip DB over the cliff or when it will happen and would really have to do some work on it. Sometimes these news events just gather momentum out of escalating fear that is unfounded. Who know? We always worry about sucker punches as the powers that be do not let these markets fall for very long. Will be hard to take out S&P 2149 and 2153 now. Have to take one day at a time. Not sure how much the debate will really mean except big points for the media.
Corn needs to take out 327 to project 323 and 320 into Wednesday’s low
FOR TUESDAY: (9/27) Storms are moving across the eastern Midwest this morning, their punch diminishing as the system moved east. Maps over the next seven days indicate little behind that front, which should increase the pace of harvest after a somewhat slow start. Official 6- to 10 and 8- to 14-day forecasts call for above average precipitation in the western half of the growing region, with the east drier.
Growers reporting lower average corn yields though soybeans are coming in good, with concerns about weather damage noted for both crops. Corn needs to take out 327 to project 323 and 320 into Wednesday’s low and then we have to deal with the short-covering rally before stocks report.
Grains lower into Wednesday
FOR MONDAY: (9/26) Weather forecasts continue to call for a wet weekend that will delay harvest in some areas. October outlook is for bouts of rain which will make harvest a challenge for producers across the Midwest. Still, while storms continue to fall across parts of the Upper Mississippi River Valley, maps over the next seven days turned drier for the eastern Midwest and official 6- to 10 and 8- to 14-day forecasts also show less rain for the eastern two-thirds of the growing region. Early week rallies on rain concerns are eroding.
We show grains lower into at least Wednesday and then maybe short-covering may develop before the stocks report. We would take partial profits on multiples. Cold storage had a 132% year over year increase in pork belly storage but month to month totals were not bad. Cattle on Feed report showed a larger placement on feed than expected and marketings were higher than expected. This may help the unrealized pattern completions from this week come in on Monday for sales and hedges
Grains should continue to stay below Wednesday’s highs
FOR FRIDAY: (9/23) Not much really happened on Thursday to give us many new clues but we should continue to stay below highs put in on Wednesday and at some point a harvest break will come. Usually the Sept. stocks report is not very important and can’t think that the trade will be sideways a week waiting for it.
Downpours and flash flooding were reported in parts of northern Iowa and southern Minnesota overnight and more rain is due there the next few days. Clear skies east of there likely had combines in the fields. The seven-day and 6- to 10-day forecasts are wet for Iowa and Minnesota. This still may be too small an area to worry about. Trade waiting now for COF reports and quarterly hog and pig report on Sept. 30 so not much action coming there. Cold storage on Friday after the close may also release pent up energy. (For details and recommendations see our full Timer.)
S & P patterns and cycles indicate upward action
FOR THURSDAY: (9/22) While the chances for a Dec. rate hike seem high now, not sure the trade will worry too much with projections for only 2 hikes next year. BOJ is out of the way and they disappointed and not sure Draghi can do much or will want to on Thursday. S & P patterns and cycles are good for upward action for at least one more day, and we can sell rallies in notes and the dollar on dips; gold and silver should reverse from overdone conditions on Thursday. (For details and recommendations see our full timer.)