Good afternoon Ladies and Gents,
How is your weekend? Hope you're all getting rested and having a relaxing and positive weekend!
Alright lets get going with the weekend updates.
We'll start by looking at the Friday's close in the US.
The Dow closed down -137 points or -1.05% to close at 12,850
The S&P500 closed down -17 points or -1.25% to close at 1,370
The Nasdaq closed down -44 points or -1.45% to close at 3,011
Then we will look at the economic reports for next week that might effect the stock market:
On Monday, we will have Core Retail Sales m/m, Retail Sales m/m and TIC Long-Term Purchases, Tuesday we have Building Permits, Thursday we have Existing Home Sales and hilly Fed Manufacturing Index and nothing on Friday but we have IMF meeting.
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The market closed back down in Friday's trading reacting negatively to the economic numbers and Bernanke's talk. In the price action last week, both the bulls and the bears had their fair share of fight as indicated by the upper and lower tail in the weekly candle. But in the end, it was the bears that had the last say as we closed the week down but not as conclusively as the bears would have liked. The body of the candle was somewhat in the middle of the whole candle's action.
So, whats in store for us next week? After breaking down from the support of 74 last week, we went to touch our second level of support at 54. Then we went back to test the lower channel trend making a week high of 88.50. Although we were knocking at the front door of the lower trend channel line, we were not able to break into the channel and close inside of it and closed back down at 1365. The level 65 is actually a support level for one of my friend in the US. We fondly call her the Nprfreak.
The buyers demonstrated clearly last week that they are not to be written off yet and are pretty much still in this game. So I think the support levels will hold and there won't be a mother of reversal at this point in time. In the long term outlook, the bullish trend is still intact. Last week's pullback swing was a little bit less than half of the up swing since the start of this year. The mid point would be about 1340 and last week's low was 1352.50. We are also still trading above the 20ema and have some real support levels to break through before a full fledged reversal to materialize.
So my view of next week is that we will try to test the support again. And if the bears demonstrate a lack of willingness or inability to push further down, it might be the beginning of the second leg up to test the most recent highs of 1419 again. In any case, we will let price action guide us and use our daily support and resistance levels to trade each day accordingly.
The possible upper weekly range is: 1404
The possible lower weekly range is: 1328
The support levels have been marked as horizontal black lines with the price on the right side of the chart.
We will now look at the 4 CME grains and how it will effect of FCPO.
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Soybean Oil Futures
As we have mention in our earlier post, the Soybean Oil Futures tested our upper resistance level and pulled back into the triangle pattern. We have now formed a doji bar with a long upper tail. There are many types of doji bars. Doji usually indicates indecision by the buyers and sellers at that level of price. Some indicate balance, some slightly bullish and some slightly bearish. Reading a candle is as much an art as the accuracy very much depends on a lot of other factors too.
In this case, price of the Soybean Oil Futures tried to push past the resistance levels we have indicated in the charts last week but each time were push back by the sellers overhead. With the poor performance of the Wheat and Corn, the price of this contract was not spared too and we lost most of the gains we gained earlier in the week. The price action indicate a range trading to a slightly downside bias for next week.
The possible upper weekly range is: 57.40 still
The possible lower weekly range is: 55.50 and an outside chance of reaching 54.80.
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Soybean Futures
Ok, so Soybean Futures is still our strongest performer thus far. We were still not able to close above the 1450 resistance level. But out of all the 4 grains that we are following, I think this contract stands a higher chance than the other grains product to lead the upward march.
We closed the week with a small body. Although it was not a doji bar, we do have the hallmark of a doji with tails on both end of the candle. But make no mistake about it, we did close the week up. For this contract, I think we are still going to try to pound on the doors of the resistance ahead and we'll see if price is able to break through, and close outside of the resistance levels. We are already trading above the triangle pattern which itself is quite a bullish signal. Should Soybean price perform bullishly, I think it will be able to pull up the prices of Soybean Oil and perhaps, Wheat and Corn too which will in turn effect the price of our FCPO too.
So we will be following this contract closely to see if it can overcome the upper resistance and then make a judgment on how our FCPO price will react accordingly.
The possible upper weekly range: 1465
The possible lower weekly range: 1400 and an outside chance to 1391 should we pull down further.
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Wheat Futures
Alright.. nothing new with the Wheat Futures.. We did in fact broke down from the smaller triangle inside the larger triangle pattern and are heading to test the bottom of the flag/triangle bottom trend line at 611. One of the reason the Soybean Oil and Soybean futures couldn't push further ahead was due to the drag from Wheat and Corn.
We close as a bearish bar and we will see if we will go down to test the support next week. In my opinion, if we wish to have any hope of pushing further in the Soybean Oil, Soybean or our FCPO, we need the Wheat and Corn to be in line with the others too. Otherwise, price will be sluggish if Wheat and Corn remains a downward pull for the other products.
The possible upper weekly range: 671
The possible lower weekly range: 611, 605
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Corn Futures
Corn also closed as a big bearish candle last week. We broke our of the lower bottom triangle trend line and closed outside of it. This is quite a bearish indication. However, there will be a few levels of support below to go through before the floor gives way. As we have said above, Corn is one of the products that have a drag on the prices on the other grains product, including our FCPO.
So we will want to watch this product closely.
Here are the weekly range for Corn next week.
The possible upper weekly range: 665
The possible lower weekly range: 605
Alright, I will update the weekly range for the FKLI and FCPO tomorrow morning.
Wishing everyone a great weekend and talk to you tomorrow! :)
Sincerely,
Tech Trader
