RJO FuturesCast

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Agricultural

Top in Soybean Meal

Posted 05/30/2018 10:24AM CT | RJO Market Insights

Not only does today’s relapse below 17-May’s 374.3 low confirm the past week-and-a-half’s recovery attempt and 38.2% retrace of this month’s 406.1 – 374.3 decline as a correction within the still-developing downtrend from that early-May high, its break of our key long-term risk parameter defined by 24-Apr’s 373.8 larger-degree corrective low confirms a bearish divergence in daily momentum that arguably breaks the 9-MONTH uptrend from 23Aug17’s 304 low. 01-May’s 406.1 high is left in the wake of this proof of larger-degree weakness and vulnerability that could expose weeks or even months of downside vulnerability that could easily extend to the 350-area or lower. Yesterday’s 387.6 smaller-degree corrective high serves as our new short-term risk parameter for still-advised bearish exposure for shorter-term traders.
Soybean Meal Jul '18 60min Chart
Soybean Meal Jul '18 Daily Chart

The daily log scale chart above shows the market’s break of 24-Apr’s 373.8 low that breaks AT LEAST the uptrend from 19-Mar’s 360.9 low. But given the:

  • • recent whopping 99% reading in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC- its highest since the 100% that warned of and accompanied 2012’s all-time high at 541 and massive peak/reversal
  • • prospect that the entire rally from Aug’17’s 304 low to 02-May’s 406.5 high is a complete 5-wave Elliott sequence and
  • • the market’s rejection thus far of the upper-quarter of the past FOUR YEARS’ 258 – 432-range

traders are urged to bias towards a count calling for a more extensive correction or reversal lower with a minimum recovery above 387.6 now required to stem the threat.

The daily log scale chart above shows the 38.2% and 50% retraces of the 304 – 406 rally cutting across at 363 and 351, respectively, while the weekly log active-continuation chart below shows HUGE former resistance from the 348-to-353-range that, since broken back in Feb, now serves as an equally huge support candidate. For these reasons we believe this market could easily correct to the 350-area in the weeks or even months ahead.

These issues considered, a bearish policy remains advised for shorter-term traders with a recovery above 387.6 required to threaten this call and warrant its cover. Long-term players have been advised to neutralize previously recommended bullish exposure on today’ failure below 373.8 and are additionally advised to move to a near bearish policy at-the-market with strength above 387.6 required to pare this exposure to more conservative levels. Commensurately larger-degree strength above 406.5 is required to negate this bearish count and reinstate our even longer-term, multi-year base/reversal count. In lieu of such strength we anticipate further lateral-to-lower prices to the 350-area in the weeks and possibly months ahead.

Soybean Meal Weekly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
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