The Weekly Call provides perspective on high-quality setups and trading strategies focused in the Commodity world.. My current performance shows a 410% return since October 2016. The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high-quality setups and manage the trade with our risk management approach.
The Phase 1 China deal is in the rear view mirror and there are three impacts to consider: 1. US Corn is the lowest priced corn on the global market and China needs Ethanol, 2. Lean Hogs in China have increased in price by 150% since January and they need to purchase our stock given their situation, and 3. Soybeans may be the market that has the most to gain from the deal depending in the price of the Brazilian Real. Cotton is a close 4th as we are the largest exporter and China the largest importer. These commodities should have a tail wind and may see rallies consistent with the imports and purchases made by China. Watch these four commodities for price action over then next few weeks. Our Gold trade is doing well so far and the expectation is lower prices and a positive D setup on a lower low. I will be looking for a partial exit on the short calls this week as the cycle date is 12-18. More information on my entries can be found below and on our Private Twitter Feed. My track record is posted below under Completed Trades. See some of my completed trade videos below.
The Weekly Call can now be auto-traded on Striker.com. Just call Striker Securities and open an account of at least $25,000 and every trade I make here will be made for you automatically there. I am planning to use the same methodology and risk management approach with the auto-traded account at Striker that I have been using here. If you have a Daily Update or Trader Triple Play membership, there is no subscription fee for the auto-traded account at Striker. For more information, call Striker.com and speak with William at (800) 669-8838. For more information, you can also watch this video from our subscriber Q&A HERE.
The trades below are discussed on the Daily Update: – Click Here for a FREE Trial
Sugar
5-26 – A nice setup on Sugar. On the daily chart, COT Commercials are positioned well as is retail. The 4 hr chart shows positive D and a higher low. Now the bulls just need to show up and prove it to me. As mentioned in the Commodity Advisory Newsletter with a special focus on Sugar there is also a fundamental reason for the long. Nice to have a tail wind, looking for an entry this week.
6-2 – The rally is confirmed, I am expecting $13 by mid July. The rising support trend line is the area to legg into the trade. Positive D has room to run on RSI.
6-9 – Nice rally last week and retracement expected this week back to the mid-line of the channel. Once seen, look for the next rally higher into $13.00
6-16 – No pull back last week and still expecting continuation higher. Support at 12.25 and looking for a retest this week and higher into 13.25 by mid-July. The market dynamics of Sugar are changing this year as we have a few countries that will miss their production targets.
6-23 – The pull back nearing completion now and against the support trend line. Should see continuation higher this week and a test of 12.65. Break and convert and we are on to the upside into 13.20. Fail at the support trend line and watch the 50% back area for the next buy area. The longer term lean is long sugar.
6-30 – We have reversed in Sugar and we have a nice setup here for a long against the monthly pivot. Looking for my next high window in Mid July and a target of $13.20. We should see a supply deficit this year in Sugar as mentioned in my previous Commodity Advisory Newsletter.
7-7 – Entered Sugar long last week as I was expecting a turn higher and gap support. I have been stopped out at 12.30 for a small loss. Sugar has the strength of the Real behind it and also the supply deficit that I am expecting this year. I am waiting for the next setup as I still like Sugar long into the $13.60 area into the end of July.
7-14 – Sugar currently in a compression pattern here that appears to be a triangle. Waiting on a clear resolution. There is risk to $12.00 and a possibility we could see a fall to this level. If seen, this is a strong buy. I am expecting Sugar to go higher directly into $13s as the compression should resolve higher directly. As mentioned in the Commodity Advisory Newsletter with a special focus on Sugar there is also a fundamental reason for the long. Looking for a possible entry this week.
7-21 – Sugar has resolved the compression pattern lower and likely will see $11.28 before the reversal higher. This is a last legg and likely we will see a reversal pattern later this week. CIT data shows a large number of fund shorts here which is fuel for a short covering rally when the reversal occurs. I am waiting on a setup lower to enter.
7-28 – When COT data shows an extreme reading often you will see a pop like we did last week and now a retest of the low. The pop is not an automatic reversal sign, it shows the fuel I mentioned last week with the funds being fuel for a short squeeze. A retest of the low is the next step in the reversal and needs to be proven for a reversal to be in place. Once a 50% back area is seen in the 11.70 area with support then we should see the rally continue higher into the $13 area. Watching for support this week and looking for an entry.
8-4 – Retest of the low is now taking place. We are three back and this a decent entry against 11.75. Looking for a long into $13 by the end of the month.
8-11 – Looks like the low is in as per my post last week. Expecting 50% back support and a short trip to $13. Buy the next pullback with a stop below the low.
8-18 – This is the pullback mentioned last week and a triangle is forming. Decision coming Monday/Tuesday, break up from this triangle and we see $13.00 next. Stop below the low here.
8-25 – Looks like the break up has begun and we are now back testing the broken trend line resistance. Nice setup with a stop below the low. Bulls now need to step in and break the next trend line to open $13 as next target.
9-1 – No trend line break and the setup failed as they sometimes do. Price now against the lower trend line and likely this week we see a squeeze as we are within 5% of the all time short interest according to COT data. Convert monthly pivot and we have a confirmed turn.
9-8 – We are still in the 5% area of all time short interest and now have a bullish overthrow on Sugar. I am expecting a squeeze into $12.00 into the end of this month. Commodities in general are not catching a bid due to the trade war dynamics either due to direct tariff influence or indirect. We should see upside this wee begin in Sugar. Convert the red trend line and we have started a move.
9-15 – Sugar getting off the ground here, no reversal pattern yet but this week looking for a retest of the low and a conversion of the weekly pivot. This seen, we can rally into $14 by November. Mega short interest here sets up a possible find squeeze.
9-22 – Sugar now has a nice reversal pattern. Funds are near record short levels which creates a possible short squeeze situation. Expecting a rally from there into the next high window and continuation higher into November.
9-29 – Sugar has made the target area and needs a small wave 5 higher to set up negative D on RSI. Once seen a retest is coming before we see higher prices into November. Expecting the retest t last into the middle of October.
10-6 – Sugar we have seen the small wave five as discussed last week, we are in the retrace which should past a few more days int 12.20-30. I am still expecting a rally into $14 once the retrace completes.
10-13 – Retest in Sugar looks complete. This year we should see a production shortfall which is the first in many years. Looking for a squeeze higher into November and $14.00 next.
10-20 – Retest made a marginal lower low, the forecast is still the same, looking for $14.00 next and expecting a reversal this week.
10-27 – Sugar has reversed as discussed. We had a 5 day rally in the Brazilian Real which has helped Sugar. We have a daily stochastics buy signal and an increase in open interest which are showing the start of the next trend up. $14 is the next target.
11-3 – This week I am expecting a rally and a conversion of the monthly pivot into support. A stronger Brazilian Real will continue to support Sugar prices and with short falls in production in Asia, look for the rally to continue into $14.
11-10 – Approaching the trend line and likely see a pop in price higher. The rally should continue to the upper flag trend line. If you are long I advise you should have taken at least 1/3 in profit before the trend line and stop should be at even.
11-17 – So far so good, and a conversion of the trend line is in progress. Trend up into 13.26 and possible higher into the upper channel trend line. End of month high window is a timing guideline for the next high.
11-24 – Sugar has broken above the declining resistance trend line and is likely to see higher highs into the end of the month. Looking for 13.30-50 as target. Long term I am expecting the rally to last into February 2020.
12-1 – Sugar so far so good, 12-4 the next high cycle and looking for a high this week. Target 13.30 and then retest into monthly pivot and higher into February expected.
12-8 – Sugar has made target, well almost and very close. Looking for minor higher high and the end of this three wave sequence. Watching for support at the monthly pivot next, looking for a reversal pattern this week.
12-15 – Sugar has now made target and then some. Negative D setup and likely we see lower into the 12.70-80 area into early January. So far so good, looking for a reversal this week.
Coffee
6-2 – With the collapse of the Brazilian Real, we have seen a rally in Coffee. We have already hit target at 105 and I am expected a pullback into the monthly pivot area around 100 and will be looking for an entry. I am waiting on subscribers to finish their enrollment with Striker.com and will be starting new positions later this week.
6-9 – Made the retest to 100 per comments last week and now coffee is in the next impulse higher. Looking for 110 next for a 5th wave and the end of the first legg up. I will then expect a larger retrace back again to 100 before the next big step up.
6-16 – Last week the retest to 100 was broken and now we are in a larger three down. Most of the movement is currency related and I am looking for support at 97 then higher prices. No reversal pattern yet, but should see one this week. Higher high expected into the end of this month.
6-23 – Support found as discussed and a larger reversal pattern now formed. Looking for support at weekly pivot at 100 and higher into my cycle high date of 7-2. Brazil’s production is declining this year and we may have a global deficit in Coffee of 1-3 million bags. The Brazilian Real is up which is helping the rally. The outside day on June 19th was a solid clue. Should see the rally develop this week. From the 7/2 high, a pull back and higher to test the longer term declining resistance trend line is coming.
6-30 – As discussed last week in the Commodity Advisory Newsletter, Coffee may have a 1-3M bag deficit for the first time in many years. This combined with the strength in the Real and we have a formula for higher prices. At this point we are topping out and I am looking for a minor new high and negative D on RSI and then lower prices into my next cycle low window. Likely we find 104-105 as support and another opportunity to buy.
7-7- Cold weather and fear of frost has pressed Coffee higher. The weather has not caused any crop damage yet, but if it does we can expect traders to bid this higher. Currently expecting a retest into the 107-108 area and we have 105 below that as support. Watch for the gap to hold price up, looking for an entry when seen and higher prices into the 120s. We will break the weekly declining resistance trend line which will be the end of the longer term down trend in coffee.
7-14 – Coffee has been holding in what appears to be a wave 4 and a lower low is a clear buy. I like the next legg higher into the early August time frame and would like to see it retest the high. Weather and crop yield continue to be concerns in Brazil. The lower low completes the structure so watch for support on the 104 area.
7-21 – Coffee is still in the retracement pattern and I am still looking lower into 104 at a minimum for a setup long. I will wait on a lower low first. Volatility seen in recent weeks is weather related and there has been little damage due to frost. Demand is still solid so the supply side is in questions which should drive prices higher into 120s.
7-28 – Coffee made target and then some. No reversal pattern yet and once seen I like the long here. Against the lower trend line and also a gap just below in the $98s, we have reached a critical support area on Coffee. Looking for a reversal pattern this week and a break of the upper trend line.
8-4 Coffee now setting up for a long. The trend line is broken and the retest of the low in progress now. A break and conversion of $100 and we wil head higher into the next cycle high window 8-21. Consider a ratio call spread here 105/115.
8-11 – Looking for a retest here to complete the setup – 96 support and long against the low. The pullback should be seen sometime Monday. Next high window and 110 area the area to take profits.
8-18 – No support at 96 and a lower low here creates a stronger setup. Increasing pos D in RSI and chances are we turn this week and break the declining resistance trend line. $110 the target for the rally.
8-25 – The wedge has broken up and now a retest into the broken trend line, a similar setup to Sugar. This has good upside potential here with a stop below the low. The Brazilian Real needs to cooperate to move this market into the 104 area next.
9-1 – As we did last week we are now in a larger structure with the same setup, retest of the support trend line and looking for support and the next step higher. Bull are in must perform mode Tuesday. Once the larger three up is in place, we have a flag and likely a retest of the low is coming.
9-8 – The larger three up is playing out as expected and 99-100 should be seen this week. A retest of the low and possibly a lower low can still happen. The double bottom will support a rally once seen. Day trade the long into Wednesday and look for a reversal.
9-15 – Coffee reversing and a retest is in order. Two supports to watch – 98 and a full retest of the low. The Real is critical to this advance, watch for the USD to fall which will help this rally. Retest is next.
9-22 – Coffee reaching the retest area as discussed. Key here is a reversal in the next few days. Break the trend line and we have a full low retest coming. The next high window in my cycle method is the end of October, we should begin that move sometime this week.
9-29 – Coffee did not break the trend line, found support and rallied last week. Watch for support at 99.50 and higher prices into the 10-20 window next.
10-6 – We are at a critical junction on Coffee as we are approaching the support trend line. I am still expecting 106 and key support at the trend line needs to hold. Looking for a rally starting on Monday/Tuesday.
10-13 – Coffee has broken key support and with the news from Brazil with exceptionally high flowering, chances are we have a bumper crop year. The Real is not fairing well against the dollar and likely we see lower lows into $90. I will be looking for a reversal pattern once we get into the target area. Coffee is at multi-year lows.
10-20 – No change from last week, we are printing a flag which is likely a wave 4 and expecting a wave 5 lower to $90. This will be a strong setup when seen. Hunting a long position for a trade higher into 99.
10-27 – The flag has converted into a 5 up which is the first legg higher in KC. We finished a wave 5 last week and I am expected a retest into $96 or so for a long entry. Expecting higher prices into the next high window into early December. The Brazilian Real rally has helped prices here too. Find support at $96 and we look for $112 next.
11-3 – Coffee is in a squeeze as funds were caught short and we did retest but only made it to 96.97. We are extended on RSI so look this week for another re-test to the monthly pivot then higher into the 12-6 window. There is a significant trend line on a weekly basis that is about to convert if we see the high window as planned into December. This could signal a significant trend change in Coffee. More on this next week.
11-10 – Coffee and other commodities have been in a 20 year cycle lower and the weekly trend line that has been the definition of the last legg down in the 20 year cycle is now being tested. Likely we see a move lower into the 102 area first then a push higher. This past week has been a further squeeze, breaking negative D on RSI multiple times. The pullback is a chance to reposition long for the early December high window.
11-17 – Coffee retrace is incomplete and expecting a lower low. On the daily chart we are converting the longer term weekly trend line and likely will see higher into 116s next as the first 5 up. Watch 106 for support this week.
11-24 – Coffee 106 was made and a big rally with continuation expected into the first week of December in a 5th wave likely. We are printing a flag now which is likely a triangle or it may morph into a three back. Once complete looking at the next pullback into the 108 area.
12-1 – Coffee finishing the 5th wave now, marginal higher highs expected and a reversal into the middle of December or Wave X. This is a clear break of the weekly declining trend line resistance and further upside is expected after the pull back into 108-110.
12-8 – Coffee may have reversed and is in the retracement. Looking for a larger 50% back type move as we have negative D on RSI and the completion of a 5 wave sequence. Looking for a break of the support trend line and 110 area.
12-15 – Coffee reversal is in and lower prices as expected, likely wave A is done and watch for a small retrace and lower into the golden ratio zone as marked on the chart. We are still in an inverted market and likely more premium will come out of the front month.
Live Cattle
6-2 – With the front month toting a hefty premium we have seen it collapse last week and I have been stopped out at the previous low. I leave the trade with a small profit and will look for an entry into the August contract in the next 5-7 trading days.
6-9 – Looking like a nice setup here for higher prices. Little risk with a stop below the low. Leaning long here for an entry next week and a move into 110s next.
6-16 – Live Cattle has a nice setup long, expecting a conversion of monthly pivot as a confirmation of the long. Next legg is higher into 112. If seen we should see continuation higher into the end of July. Weights now are as low as they have been in three years.
6-23 – Live Cattle did not convert monthly pivot and has made a bull flag in a three down. The low may hold and if it does the weekly pivot will convert which is the signal to buy. Weekly pivot is 103.75. Looking for a bullish stampede in the coming weeks.
6-30 – And the bullish stampede has occurred! A bullish engulfing candle printed last week on the daily chart and we likely have a reversal here. Follow though required and looking into August for at least a 112 print. Nice setup here against the weekly pivot.
7-7 – I entered Live Cattle last week in the front month, long 104.85. I am out one legg at 106.00 and expecting the last legg to finish somewhere in the 108.50-109 area. We are finishing a 5 up structure and likely will retest back into the monthly pivot area. I plan to add size on the pullback and may exit the first legg entirely if I see a good press higher into 109. For now, my stop is at even and we are in a risk free position.
7-14 – Live Cattle completed a 5 up last week and I took profit off my last legg at 108. Our Trading Boot Camp class got a better entry and made over a 100% profit on margin on this trade. First legg to the upside complete, looking for a modest retrace and the next leg higher. At this point we have negative D on RSI, no reason to buy yet. Cattle weights have been coming in low, we have a good reason to be long. We are overbought for the time being, so planning another entry lower in the 106.70-107.20 area.
7-21 – Last week I placed an order long in February for Live Cattle at 115.50 with a stop at 114.00 I like the X wave just one legg lower. I will modify this order if needed on Monday but I’d like to see it execute there.Target is $120. I see a meat theme here over the next few months with Lean Hogs and Cattle.
7-28 – Waiting on the retest and will be evaluating if my order is now out of play this week. Looking for an RSI of around 40 and the small retracement structure may find support at the trend line. If seen, then I will need to re-evaluate my entry price. For now, giving this a few more days to see what price decides. I expect Cattle to continue higher into our cycle date.
8-4 – I have initiated a Live Cattle position in Feb 2020 at 115.50. Support at 115.20 and I expect it to hold. Stop at 114. Looking for the next legg higher into the 8-19 cycle window. The front month looks for support at 106.725.
8-11 – On Monday, I was stopped out of Live Cattle with the Yuan devaluation and concerns that there may be an impact on demand. In addition, this weekend a processing plant caught fire and there should be a negative impact on the tape tomorrow. Lower prices are a buying opportunity as I see fall prices for Cattle being much higher that they are now.
8-18 – Mentioned to subscribers that we would see potential limit down days as a result of the plant fire. We did limit down on Monday and have since then found our footing. A small wave 4 and 5 have printed and the decline here is over done. Looking for support at the fib marked on the chart and a break back into the gap is expected. I like higher prices into the fall and likely we see a reversal this week in Cattle.
8-25 – The retest of the low is in progress and likely a result of the 10% tariffs added by China which is not a major import market. Looking for the reversal here and the low to hold. Another decent setup and the bulls need to perform this week. Next stop is 110 by mid September.
9-1 – Like this setup here with Live Cattle which has been beat up badly from the processing plant fire. LE is are retesting trend line support with not much risk from the low. Bulls need to take the tape on Tuesday and perform. Stops below the low, looking for a rally here this week.
9-8 – Poor performance by the bulls Friday and a break of support. The setup for the long failed as setups sometimes do. Waiting on the next setup and higher low. Likely we see lower first to set up the next positive D on RSI. Cattle is near 2016 lows here and I am not expecting mush demand destruction and a supply shortage this year. A February play long is a good idea here using a simple call spread.
9-15 – Nice move off the bottom and a possible wave A in place. Looking for a B wave then C higher into 110. Find resistance in the gap and we head lower. Looking into the end of this month for the rally high. Cycles have shifted lower into January.
9-22 – Wave C in progress here and likely we see continuation higher this week into 110s. Once seen Cattle will be making a decision in the gap. Cycles are pointing lower at this point, i will be expecting a reversal in this market in the first week of October.
9-28 Target made on Cattle. We may see a smallish wave 4 and then 5 higher to set up neg D on RSI. I am expecting a full retest of the low after a reversal pattern. We are at the previous limit down area, likely we will see resistance this week and a reversal pattern.
10-6 – No change on the Cattle Forecast, retest required, 106 the target area and of we convert 106 then we open a full retest of the low. If we find support we can see the next legg up as the alternate. Next step is lower at 106.22.
10-13 – No change in forecast, price needs a retest into 106 as mentioned, neg D in place and once the retest is seen then a decision as to trend direction. Find support at 106.22 and we see a rally into February 2020 and 120s in Cattle.
10-20 – Reversal in progress into new cycle date of 11-4 and the 107 price target. I am looking for a long setup when seen. The structure is 5 up and likely the 50% back area is next then 122s.
10-27 – The reversal failed and we have a higher high in 5 waves. Looking for the next decline to confirm below the trend line which will target the 11-16 time frame and the 50% back into the108 area. Still expecting a February price target of $120.
11-3 – There is a LARGE premium to the cash market here as futures are inverted. We so have feed lots trying to boost weights in this environment to boost production weights. Tighter beef supply and strong customer demand are driving the rally. We have done the small wave 4 and 5 and have divergence, so expecting this market to turn this week and break the support trend line. USDA outlook for Q1 is fairly neutral. Watch for month pivot as first target and a pull back into the middle of November.
11-10 – As mentioned last week, the retest has begun and we should pick up some steam lower into the monthly pivot. Looking for a low in the 11-16 window and then continuation higher into 122s.
11-17 – The retest is still in progress and looking for monthly pivot next. Wave C missing, likely we see the move this week. The trend is up and looking for 122s next.
11-24 – Cattle still coming off, big premiums and likely we see a wave c into 121-122 or so before the next major rally higher. No setup long here yet, be patient as we can still see monthly pivot next.
12-1 – On the wrong side of this market as we have broken the flag to the upside and likely will see 128-129 before reversing lower into 121-122. The same idea applies, wave X needs to break the support trend line and then higher higher into 130s expected.
12-8 – The reversal we have been looking for is finally happening. Trend line break and now retesting that trend line. Likely path is lower directly into the 120-122 area. This is a retracement wave so expecting to see 7 swings lower.
12-15 – Looks like a Wave B and likely pulled higher as a result of the tariff news, even though cattle is not a prime market for the Chinese. Likely we see a lower low from here into the 120-122 area next.
Corn
6-30 – I have initiated a position in December Corn last week and am looking at a longer term swing trade. I started with a DEC risk reversal Long 500 calls and Short the 430 puts. As long as the December future prints above 430 the position is not at risk. As mentioned last Friday, the Crop Report was a shock with the USDA Corn acreage unplanted at 1.1M acres. In the coming weeks this will be clarified and expect high volatility until then. At this point I want long exposure and will hedge on a move below 430 to minimize risk. Likely we see a marginal lower low for a wave 5 of a flat and a reversal and higher prices into 480. I think most traders are in the boat that the USDA numbers are low and the damage due to rain and late crop plantings will play out into the end of this crop year. More to come as this story unfolds.
7-7 – We have reversed in corn and last week I added a hedge in the front month by buying the 410 puts. This provides event risk coverage in case of a sudden move lower and higher gamma so a downside move below that strike will quickly bring the position back onside. I have already discussed the Corn situation…. the USDA numbers are likely wrong, we won’t know the real numbers until August. Emerging numbers are low and yields should come in between 155 and 163 bushels per acre. This means that this crop year is likely going to be at least tightest since 2013. If we hit the mean for the yield around 159 bushels per acre then we may see the second tightest market in history. I am a hold on the position and I want long exposure into the August 24th high window.
7-14 – For the reasons I mentioned last week, Corn has rallied as expected. This does not mean we go straight up, there will volatility here especially with the weather in the coming week or two. We are topping out for now and overbought at this moment, so expecting a retrace this week and continuation higher in the coming months. The trade believes the USDA numbers are wrong so their August report will likely have better planted acreage numbers. Until then it is anyone’s guess where the numbers will come in. My estimation is that this will be in one of the top 5 tightest years on record and I want the long exposure in this swing. No modifications planned, just a hold into at least August and looking for a $5.00/bushel print. I may hold this into November. This trade will be volatile so watch for the crop conditions report to continue to come in poor and if we have a hot dry weather window the next 10 days, the planted crop will become stressed so expect more weather premium to get built in.
7-21 – Reversal as expected last week and we are close to the low window on 7-23. Likely we see another legg lower and Corn continues to be volatile due to all the data point at different plated acres which should resolve on August 12th with the next USDA report. I am expecting price to climb into that report ad the 410 area to hold as support. My hedge expires on Friday which I put on due to event risk and the volatility. I am planning to carry a hedge after Friday with futures. I will wait on the low and may take profit on the hedge if it occurs and place a futures order when needed.
7-28 – In the low window and we could still make the target of 410 in the next few days. A reversal is expected and the August 12th USDA report should contain adjusted acreage to reflect somewhere between 5-8M unplanted acres. This along with the poor conditions should see a significant bounce in Corn. I am still expecting a bid into the report and then upside into 4.75-5.00 a bushel. Last week my hedge expired and I added another hedge in the new front month in case of event risk. When the retrace is complete I plan to remove part of all of the hedge after the turn is confirmed.
8-4 Trump’s tariff increase hit the commodity sectors hard last week. Oil, Corn, Wheat, Soy, Natural Gas all lower based on demand concerns. Likely we see a recovery from these lows this week and specifically Corn I am expecting the August 12th report from the USDA to show a 5-8M acre shortage in planting. More importantly the silking of the current crop is late which leaves the back end of the season at risk due to possible frost damage. The USDA’s best guess is 8 days away and I am expecting some buying before the event. I an hedged and holding into the announcement.
8-11 – The USDA crop report is tomorrow and I am expecting volatility. I will be covering the 450 short calls and taking a small profit leaving the upside open for greater profit. If the numbers come in with a 5M acreage shortfall from last year, we see a rally. Anything less is cause for concern. China is now threatening to not purchase grain from the US, this would be difficult as the Army Worms are now invading their smaller corn farmers and there should be a shortage in their production this year. Overall I am expecting this year to be one of the tightest in the last seven. If the survey is wrong again, they can be a long liquidation tomorrow. I am staying hedged into the announcement.
8-18 – Last week a busy week for Corn. The USDA report last Monday drove a long liquidation based on the new yield numbers that were published. With the weather issues and reduced planted acreage, the yield may be too high as it is early and any estimates may be inaccurate. As the crop develops we will see more updates in the Crop Progress reports. We went into the report completely hedged with a small negative delta. We exited the whole position last week near the low and took a small loss. We minimized risk with the hedge and made a small amount on the bearish drop. After closing the position we are now re-positioned long with a simple low risk call spread in December 380/430. We are likely to see a retest of the low early this week. The position has no downside risk.
8-25 – Corn is probing the low and with the new trade deal with Japan, we have a possible rally brewing this week. We need to see 380 break and then 370 back test and hold as support. This seen we should see upside action into mid-September. As the crop matures I think we will see more information about yields and they should be revised lower.
9-1 – Corn has priced into it weak demand and high yields. Chances are that at least one of these is wrong. 60 minute buy signals are fixed, looking for 380s and a pull back before we see a larger rally. Stops below the low, corn long here this week. Convert monthly pivot and we have a confirmed reversal.
9-8 – No reversal yet on Corn, we are probing the low and all the statements I made about yield and demand are already priced in. Anything shifts, expect a rally. this week we should see a reversal pattern and a break of the red trend line. If we break the red trend line, we have a reversal in Corn. USDA crop report is this week.
9-15 – Reversal in progress and a retest of the low this week. Find support and we should rally higher into mid October. By then the question on yield and this year’s crop production should be clarified. So should the current ethanol demand issues with China. Looking for a resolution on Corn here in the next two weeks. Lean long on the retest that finds support.
9-22 – Managed fund traders have a very large short position here on Corn and traders continue to see smaller harvested area and lower yields due to ear weights. The previous USDA report raised yields and the expectation was to produce as much Corn this year as last year. By the middle of October, yields should drop and if there is any progress with China on a trade deal, we could see a rally.
9-29 – We are approaching a retest in Corn this week and the first five up is almost complete. Watching for support at 368 and higher prices into the end of October. As mentioned, yields should continue to drop and prices should climb.
10-6 – Retest is on on Corn, not much farther to go, looking for 76-80 then higher into 410. There is a good spot to take some profit. This week is the trade war talks, looks like is not getting off to a good start as the Chinese have said to to industrial concessions. Watch out for the head line minefield this week.
10-13 – Headline Minefield last week played out with additional volatility. Corn slumped due to USDA report which raised the already high yields for the year. Planted acreage is at a multi-year low and ear size is small due to the late plantings this year and now we have frost damage expected in the Dakotas this week. The yield numbers by the end of the crop year should adjust lower. The China tariff phase 1 agreement is a tail wind. Watch for higher into 410 this week then a retest of 385 before we see the next major rally into the end of the year and 450.
10-20 – Corn is in a retest and expecting 410 once complete. Retest target 385, support expected then next legg up should begin into 450 into November. Frost and small ear sizes going to shrink yields.
10-27 – The October freeze damage was enough to push yields down to 165 bushels per acre. As of the last Crop Report, maturity was at 85% which is behind the average of 97%. Michigan 62% mature, North Dakota 65%, South Dakota 74% and Wisconsin 61%. Some prime growing area will see their season end before full maturity. If we get a China Trade deal, expect the wide difference between US and China Corn to close rapidly. Managed money traders were net long last week. Technically we have seen the retest as expected, the next rally requires a break of $391 and open $410 next. Looking for a December price in Corn of $450.
11-3 – This week on Friday crop reports and WASDE at 12pm on Friday will create volatility. With the cold weather and freezing conditions in the mid-west and the late crop harvest as mentioned last week, yields will be impacted. Funds have been accumulating over the past few weeks and any trade deal with China will have a big impact here. Not expecting much price action until Friday but I am expecting a rally into the end of this month. Producers are focused now on harvesting Soy in the cold weather first, Corn is secondary.
11-10 – USDA reports created some volatility Friday but the net net is supply and yields are falling and consumption is out pacing production. So anything that increases ethanol demand (which is weak right now) like a China Tariff deal, will press this market much higher. Consumption outweighing production is not large so there is a bullish bias here, which needs more of a push with an ethanol deal with China. I am still leaning long here and looking for the flag break up this week.
11-17 – Corn moves lower this week and the funds are very short here and we are at the bottom of a flag. Support at 371 and 366. I have added a new Corn trade this week as I believe we are near a low, a ratio spread using Feb Calls the 2X4 ratio spread long 2 385s and short 4 410s – 69 DTE. This trade was put on for next to zero and should expire next to zero if we continue lower. No risk to the downside.
11-24 – Not much progress yet on our Corn trade, we have a few good signs. Positive D in place and an inverted head and shoulders, looking for a test of 387 or so and if it breaks up we have a trend change. Look for the rally to last into early January. Any deal signed by China and the US, even if it is a limited deal should generate a relief rally in Grains.
12-1 – Small pop last week and looking for the middle band to convert into support. Higher prices expected into the middle of December and a conversion of monthly pivot is a confirmation to the upside. Don’t forget about the Phase 1 China tariff deal that if signed could have an impact on agricultural commodities.
12-8 & 12-15 – China tariff phase 1 deal should stop fund managers from shorting this commodity and any whisper of the Chinese using US corn for ethanol and we should see a big rally. Expecting 390 next as a 5th wave then a retest of the low and then a rally into February. Keep in mind all the previous comments about yields, etc, we have a short supply this year which means if demand picks up we see a move higher.
VIX
11-17 – I trade the VIX and the Emini often but this blog has been focused on commodities primarily for the last three years. I’m sharing this trade as I think we have a good shot of a pop in the VIX in the next 10 days. The chart below shows my system for trading the VIX. Touch the lower bollie and you have an intermediate term sell equities signal, which means it does not turn immediately, but should turn in the next 5-8 trading days. Narrow bollies and a touch of 20 on BB width with compression of price as seen on the lower indicator. All in all, a nice spot to buy some out of the money VIX calls. So currently long the 5 – Dec VIX 18 Calls 31 DTE.
11-24 – Not much movement yet and the bollies continue to compress. The compression here is big and a pop is likely in the next two weeks. I’m not expecting much Thanksgiving week, but likely into the first week of December we should see an expansion on the VIX.
12-1 – Holiday tape and a collapse of volatility and a punch of the lower bollie. This strengthens the setup for this week. With the narrow bands, expecting a pop higher in Vol and a decline is likely in the S&P.
12-8 – A pop has happened on Vol and NFP last Friday was strong and Vol has collapsed. On the pop higher last week, I managed to take off 2/5s in profit on the position for a small profit. Looking for a Vol pop on Wednesday and will likely close the balance of the position.
12-15 – Yes – nice plan and I missed my exit…… happens to everyone and likely I will get a chance Monday or Tuesday to salvage the balance that I am carrying. Will be posting my exit on our private twitter feed. Watch for 3150 on ES and a pop in the VIX.
Gold
11-17 – I decided to enter Gold on Friday as the overall trend is up and we are still expecting a legg lower as the retrace is incomplete. So I bought at a February ratio spread 1 X 2 1480/1500 for a decent credit which provides coverage into 1510 and also has a negative delta of -27. This means as gold falls this position in the short term will grow in value. I have the option of exiting with a small profit on a lower low if seen or if we break higher, I will manage any risk above 1510 using futures or exit the position. Likely we see a lower low and in case we get a break higher, I have a starter position in metals.
11-24 – The Gold trade is doing well, and with the slight negative delta we have a small profit. A stronger move lower and we will take some profit and may reposition the trade. For now, we are a hold as lower prices are expected.
12-1 – A small pop higher and a likely flat with resistance at 1480. Lower prices here would open a lower low and a strong long setup. Looking for a low window towards the middle of December.
12-8 -Silver is ahead of Gold here as the lower low and positive D is already in place. I am expecting Gold to follow in the steps of silver and make the lower low between now and December 18th. Current position is in profit and am holding.
12-15 – Gold will likely have one more push lower on the next retest higher in the USD. Look for 1450 as support which would be a double bottom retest. My sense is that we see a reversal this week in Gold.
Come see what we are trading – Try our 30 day FREE trial – Click Here
COMPLETED TRADES
Track Record of Completed Trades
The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high-quality setups and manage the trade with our risk management approach. This track record is based on entries and exits as posted in this blog using a $50,000 account limited to a three contract position size until account size warrants an increase in position size. See the videos below for more information.
Track Record January 2018 thru December 2018 Click Here.
Track Record October 2016 – December 2017 Click Here.
*** Trading futures contracts and futures options involves substantial risk of loss, and may not be appropriate for all investors. By reading this web site, you acknowledge and accept that all trading decisions are your sole responsibility. Trading strategies referenced on this web site and associated documents and emails are only suggestions, no representation is being made that they will achieve profits or losses. Past performance is no guarantee of future results.. See our disclaimer here.
Completed trade in Cattle as of November 28th
We expect subscribers to have captured 60% of the swing in live cattle which is over $14,500 in profit using a margin of only $5,115. A great example of using leverage in futures.
Completed Trade in Coffee as of December 12th
The total swing was $37.00 and we expect subscribers to have captured 60% of a wing or $22 in coffee for a profit of over $25,500 using a margin of $8,850. A great example of using leverage in futures. See the video below for the review of the trade.
15th Dec 2019
