TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Options play: How long will this soybean slide last?
There are many different factors that have contributed to the slide in soybean prices over the last week.
Fundamentally, some of the factors that have had an impact on the slide in soybean prices from a high of about $10.61/bushel on January 12 all the way down to a low of $9.67/bushel on January 23 are too many to mention here, but I will cover a few. I’m hearing from conversations with traders and farmers that the South American crop that will come to harvest in the coming weeks should be a big time bumper crop, if not a record crop. Although I’m reading that our number one buyer the Chinese have had some very good overall economic signs over the last week which could lead to very solid demand price action is showing me that might not be enough to push prices up. In fact according to morning Hightower commentary on Friday, “China’s Shanghai Composite was also higher and advanced into the highest level in five years, with an added source of support coming on a slight beat in Chinese manufacturing activity in January.” That’s great news for their economy, but will it actually translate into solid bean purchases by China? As of now prices are telling me not.
Technically, I have added my favorite technical indicators to the gold chart below. They are the 9 (red line), 20 (green line), and the 50 (blue line) period simple moving averages or SMA’s. I have also added Bollinger Bands or BB’s (the light blue shaded area) and Candlesticks (the red and green bars). On the daily chart below each bar or Candlestick represents one day of trading. These few technical indicators tell me 6-12 different characteristics about the market at a quick glance. I have them saved on my charts in MARKETHEAD so they can populate any chart, any market, and any time frame at the click of a mouse.
MOVING AVERAGE FORMULAS AND STRATEGY GUIDE:
Also from a technical standpoint this is a break out to the downside on the chart below in my view. We also have what I have coined a “SUPER-TREND” down on this March soybean chart. In order to achieve this what we need to have happen first is a cross of the 9 period SMA (red line) down and under the 20 period SMA (green line) as both indicators point lower on a fairly sharp angle while the market itself trades below the 9. Now we have the 9 period SMA as our first area of resistance, then the 20, then the 50 SMA’s and finally the top line of the BB’s.
I figured this out by pulling up and studying a daily and weekly chart with my indicators by the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne , which is a web application that we have developed for our clients called MARKETHEAD where I get about 80-85% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 15 years. So if I’m using it then maybe my reader’s should check it out. Yes?
March daily soybean chart
Some good plays I think could be to buy puts or bear put spreads with a call for a hedge or “insurance” in case the trend changes to up dramatically. I would recommend this in a 3 to 1 ratio as always. Puts or bear put spreads have a limited risk. Another play could be to sell deep out of the money calls to collect premium. This tsrategy requires a well-funded account and a high risk tolerance. But as they say, no risk no reward.
For exact details on strategies, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or firstname.lastname@example.org .
It is also important to note that I am not married to a market, but to trends. So I make recommendations with options on futures and commodities like the energies, metals, currencies, softs, financials, and more. So whether you are a hedger or a speculator I believe I can help by putting together strategies and recommendations present them to you, then as always leave the final decision in your hands. We work as a team. Also recommending when to get in and when to get out while watching the trade every step of the way as I keep you updated personally. May all the best trades be yours and mine.
Super Trend Simple Moving Average Report:
FREE QUOTE- “Diamonds are made under pressure.” -Peter Marshall
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