Waiting on Wheat
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published, the S&P Globex Futures are trading .10 points higher and the bond market is trading up 3 ticks.
Today, I was asked if wheat was a buy as it hit multi-year lows. My answer, yes and no. If you have extremely deep pockets and can afford to tie up/ lose capital while waiting for it to eventually recover, then yes wheat may be a buy. However, as a short-term risk adverse trader, I’d wait for some sort of sign that the contract has bottomed and then and only then attempt to buy the first pullback.
February Lean Hogs [LHG0>LHG0] hit new 10-day lows (a) today but reversed to close well (b). This suggests that its longer term uptrend may still be intact and it may take one more stab at old highs. Look for a buying opportunity here.
February Gold [GCG0>GCG0], on the Pullbacks Off Lows List, is consolidating at lower levels and looks poised to make another wave down. Look for a shorting opportunity here.
Volatility Watch
Even with today’s rally, March Silver [SIH0>SIH0] remains on two of the Volatility Explosions Lists. Continue to watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
Best of luck with your trading on Wednesday!
PS-Reminder: Protective stops on every trade!