Meal Looks Mighty
This installment is written
by Futures Editor Marc Dupée. Dave will be back on Monday. Make sure to check out Carolyn Boroden’s analysis of T-bond futures below as well. Â
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Soymeal
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European Parliament and the Italian government said they favored banning the use
of bone and meat meal as animal feed. Soymeal is a high protein animal feed
substitute and could rally mightily if banned in Europe. Technically, soymeal
is set up in a two-month, upper-level base. Friday’s expansion bar, up 6.0 at
175.8, is still below the pivot (the top of the base) and the futures shows
plenty of gaps and laps, defining it as a possible runaway market. Look for a
breakout in soymeal.
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The December Japanese yen
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contract lows after a three-day 100-tick drop. The pause at lows and inability
of the contract to marshal a substantive rebound (the yen closed just nine ticks
higher Friday), is a sign of weakness. Fundamentally, the yen is under pressure
due to a no-confidence vote scheduled for next week that is likely to result in
the ousting of (the current) Prime Minister Mori. Leading indicators of Japanese
economic activity also showed a slowdown, another negative for the yen. This
contract could provide a shorting opportunity.
Also in the currencies, the euro FX
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franc
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Canadian dollar
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for the second straight day. Meanwhile, the December dollar index futures
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closed on their high of Friday’s session in reaction. Dollar index futures have
held up well in the face of a declining stock market, a slowing economy, rising
inflation, and presidential election uncertainty, underpinning the dollar in
what could amount to a test of the October highs.Â
December lean hogs
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also dovetails with an inverted head and shoulders, as well as a 1-2-3-4 pull
back from a 20-day high. Look for a buying opportunity here with a protective
stop just below the low of the pennant.
We are pleased to announce that Carolyn
Boroden will be providing commentary on the futures markets for TradingMarkets.com beginning next week. Carolyn uses time and price Fibonacci relationships to determine key levels in the markets. Just to wet your whistle, I’m providing Carolyn’s analysis of T-bond futures.
(By Carolyn Boroden) We are currently looking at an important price decision in the
December bond contract
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If you go down to a 60-minute chart in this contract, it shows
us a healthy price cluster of support between 100 03/32 – 100 07/32. If
the recent bullish symmetry in this market is going to remain intact, we need
price to hold above this key decision point. This zone includes a .382 retracement of
a prior swing-up along with the 100% price projections of the last three sell-offs
in this contract.
Also note that the time of the prior two corrections lasted
four trading bars. The most recent low in this contract was made at 100 07/32
four trading bars from the most recent high. This represents an important
“symmetry” in this market and therefore a key
price decision. If price holds above here, we are likely to see new highs for
the move early this week. If this same zone is violated, we start looking for a
deeper downside correction back towards the November 8th low.
