Big Moves in Markets No-One is Paying Attention to

A lot of attention has been on equities and precious metals in the past week but the biggest movers right now are the softs [e.g. commodities like grains, oils, sugar, etc.).

 

wheat_field-1000x523We actually are in Kansas now, Dorothy!

Photo via agriculture.ks.gov

 

I’m seeing large moves in wheat pushing the June contract above weekly and even monthly resistance. The daily (panel on the very left below) is now crossing the upper 100-day BB and although this looks like a tasty short candidate I would caution you against trying anything silly.

 

1-2016-04-20_wheat_LTWheat detail – this market is not for the faint of heart – click to enlarge.

 

Futures and especially those smaller commodities contracts do not act like stocks and they can keep running way beyond anyone’s expectations. IF you want to play here then wait for signs of profit taking – at minimum a spike high or something on the hourly. Also keep in mind trading hours they are closed much of the afternoon (relative to EST).

 

2-July Wheat dailyWheat daily (July contract): pulling back now after the big spike higher, but there are clearly defined lateral support levels on the daily chart. Recently the fundamentals of ag commodities have turned more bullish, as the El Nino/ El Nina combo effects begin to impact their prospects – click to enlarge.

 

Corn is also on the move and boy it is a beauty. I snoozed a good entry there in late March after it painted a spike low underneath the lower Bollinger. The 100-week SMA is now being breached and it’s even trading above the 25-month SMA. That’s a huge move folks and not surprisingly so as I saw a lot of bearish talk in the past week or so.

 

3-2016-04-20_corn_LTCorn details – click to enlarge.

 

As the old saying goes – never listen to what they say, only watch what they do.  If I see a good setup on that front I’ll let you guys know.

 

4-July Corn, dailyJuly Corn, daily – everything said about wheat above applies to this market as well. The current pullback could be setting up an interesting short term trading opportunity – click to enlarge.

 

In the interim I will be looking further into IV crush scenarios, but we are still working on that. It is a complex topic and needs to be presented clearly as most people are not option addicts.

 

Addendum by PT

The Evil Speculator’s missive above regarding a potentially developing short term trading opportunity in agricultural commodities is straying a bit from our usual fare. We actually don’t have the time to write about all markets, but we do think investors and traders should keep abreast of as many of them as possible. Even if one’s investment horizon is more long term oriented, markets such as these can offer interesting opportunities for diversification. One doesn’t have to buy futures after all – nowadays ETFs are available for nearly every actively traded commodity.

Judiciously timed additions of small positions in commodity ETFs to a portfolio can actually lower its volatility and risk. This is not a recommendation, we are merely stating a fact. Whether such investments make sense depends of course on everyone’s personal circumstances, risk tolerance, goals, etc., but generally speaking we think it is well worth it to now and then look beyond equities, bonds and precious metals.

 

Charts by Evil Speculator / Ninja Trader, BarChart

 

Chart and image captions by PT

 

Originally published as “Softs On The Move” at evilspeculator.com.

 

 

 

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