The Grains could not hold on to early gains. The Wheat finally ran out of buyers at a new high of 583 1/2, then promptly melted 20 cents to settle on its low at 565 1/2.
Jan Beans led the way this morning, posting a new 3 month high at 1049.. It couldn’t get the 1050 print, and then had a gradual melt through the afternoon down to the 1025 level, bounced ten cents higher and then chopped through that ten cent range in the afternoon to finally settle -1/2 cent on the day at 1029.. A definite bearish hook reversal, where we had a new high, hook a lot of new longs, and then shattered their dreams with a 25 cent correction.
The wheat was the most suspicious, and it looks like today was the day when the options traders threw in the towel on the calls they were short. I definitely looks like an exhaustion top.
I wouldn’t be surprised if today was the high for the rest of the year in Wheat, Corn and Beans…The Holiday’s are almost upon us, and typically there are less players and more volatility.
Today we seemed to be trading crude oil in the bean market anyhow. So much of this rally was fueled by funds re-balancing.
Today was the first day in a while where we didn’t have 11 AM buying show up. The lack of that buying left the door open for hedgers and short sellers to wreak some vengeance on the bulls after the last few weeks of inexorable rallies.
Today just felt like a blow off top for this move. I would look for sideways chop for the next 6 weeks, unless we get some more fund buying stepping in. We may have to wait for the first of the year to see exactly what these grains have left in them to the upside.
The Stock indexes broke early, but have rallied back to almost unchanged as of this writing. Its around 1:30, and since the fireworks this morning after the higher CPI, the trade in the indexes had been choppy as well.
I would continue to keep an eye on the metals as they drift higher, and to watch the crude oil to see if it can challenge the 81 dollar mark.
Good Trading