05/07/10: After many weeks of reporting 'nothing happened this week' we are now seeing some volatility come back into the market. The greenback had one of its biggest moves to the upside in years as money flees Europe and the commodity related currencies. As reported previously, I would avoid anything to do with the Euro until we see governments there step up in earnest to deal with the 'PIGS' nations debt issues. Stock index's took the European uncertainly hard and many of the long standing bull trends are starting to break. Keep in mind seasonality too and the old saying, 'sell in May and walk away'. Elsewhere, Crude and its' products have broken their bullish patters, the metals look 'toppy' while food prices in general moved little. One interesting market this week, Soy-oil, has put in a tight weekly double top. Is this the end of the bean oil run? We will examine this more closely in this week's CTS spotlight...
Soy Oil: This market (like move around the world) has been slowly moving higher since the meltdown of late 2008 / early 2009. That rally has run into a fair amount of traffic near 40.00 and indeed we have recently failed. While a weekly double top price pattern has been confirmed, my expectations for the pending correction are limited.
From a weekly perspective, the current 50% level happens to be right where there is a gap that needs to be filled in. The fact that these two levels are near each other suggests that the market does want to go down into the 35 area but that expectations for a substantial move beyond that should be limited.
From a monthly perspective, the peak from 2004 shall represent support as well as the uptrend line from the lows of 2005. Again these points come together between 30 and 35.
These two charts suggest to me that any correction in bean-oil (back into the low 30's) ought to be considered as a buying opportunity and that the pending correction (and short trade if you so choose to participate) will be limited at best.
That's all for this issue of the CTS Spotlight,
Brian Beamish FCSI
the_rational_investor@yahoo.com
http://www.the-rational-investor.com
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