Why’d They De-Couple?

  • July 23, 2001
  • Marc Dupee

Soybeans surged while wheat and corn
languished. Still, the rally in beans spilled over into wheat and corn, setting
up an interesting pattern in basis December wheat. 

Grain markets are being whipped by weather-related
volatility during a critical phase (pollination) in the growth cycle that could
materially impact the year’s harvest. November beans
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back from last week’s steep selloff after scattered rains during the weekend
were lighter and patchier than many grain bears had hoped. 

Rains or pattern — grains may still be in momentum
phases. As mentioned in Friday’s Futures
Market Recap, soybeans also rebounded off and closed above critical support
on Friday. Switching from August to November beans yields the same pattern:
beans held at the 50% retracement and at their 20-day moving average. They also
could ratchet another leg higher — above the current high – if a
five-wave Elliot wave pattern plays out (see Friday). Also take note that
although today’s bar did not close Friday’s gap, it did cover almost all of the
prior day’s body on a candlestick, in a Kings & Queens
reversal-of-a-reversal. November finished 11 1/4 higher at 497 1/2.

While December wheat
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the Midwest and only finished with fractional gains, wheat left the most
promising pattern. Note that wheat has left two bullish tails in four days. Today’s
tail was a successful test of the July 16 tail, and also occurred right above
the 50% retracement of the early-summer rally and the 50-day MA. These
“turbo-tails,” as I’ve called them, can be power signals in the
direction of the close (in this case, up). 

Stock index futures all left outside bars down while
triggering Pullback From
Lows setups.
Nasdaq 100 futures
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S&P futures
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Dow futures
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make headway in fulfilling measured moves out their bigger-picture head-and-shoulder top formations. Outside bars down here are bearish. 


Japanese yen
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prospects for economic recovery. Investors doubt the Tokyo government’s ability
to perform the structural reforms necessary to streamline business practices —
thereby enhancing efficiency –  and are doubting that Prime Minister
Koizumi will be successful in implementing a plan to write off the billions in
bad loans weighing on the economy. Technically, the yen reversed off a 20-day
high in an imperfect Turtle Soup Sell pattern to close down .0107 at .8082.

From the Implosion-5 List,
Sept. natural gas
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below Friday’s last-hour lows to trigger an Off The Blocks
short entry but recovered after carving out a one-year low in the contract. Look
for a reversal if resistance in the 3.120 area fails to cap gains
tomorrow.