In the October 10th edition we made the case that the long decline in grain prices was at or near an end. Now there have been daily-scale compression signals in corn and wheat which (if they break upward) will be a good chance to buy. We already pointed out a compression signal in soybeans that had broken upward and a bottom extension in soya oil, so watch carefully over the next few days as an up-move may start to develop in the two other main grains. If prices don’t break upward, don’t buy. If they do, chase strength:
Soybeans should be bought right away as the old compression will offer support, as regular readers will recognise.
Now that a top extension in copper (see the October 17th edition) has brought the prior price rise to an end, we encourage trading from the short side. The extension marked the exact high of the move so far and there was a rally back toward the high on Tuesday this week. This was a better chance to sell short and we would look to take profits on any sharp lurch downward – trading bear moves requires more nimble manoeuvring than trading bull markets, so please stay on your toes. An update:
US stocks continued to show a rallying tendency until Monday this week, when a reaction finally set in. There was yet another top extension in a major index on Friday – a weekly version in the S&P:
We would continue to sell any little rallies for the immediate future (probably for three weeks and then we will comment further) and we would be ruthlessly tactical – sell the instruments that are performing poorly. Currently that means (among others) the Nasdaq futures contract which, alone among the traded indices, failed to make new highs in the last rush upward that ended on Monday.
All signals generated by software supplied by our friends at Parallax Financial Research www.pfr.com
