We advised buying Soya meal on a bottom extension in the edition of 14th/15th October (first published by email, secondly on our site). It has bounced nicely, as have Soya beans and Corn too, which has now extended, so you should protect profits on the Meal trade and think about selling something short. This will only be the first advice to buy Soya, as there was also a weekly-scale bottom extension in Meal (second chart below), which will have a boosting effect for some months to come. A summary:
Soya oil did not rally in the same period so this was probably an ‘adjustment’ in Soya meal prices price due to Soya oil’s expense, because of its politically-driven status as a bio fuel. As we pointed out on the 14th, to some extent meal has lately been relegated to the status of ‘by product’ which will now tend to make its price sag relative to oil – an interesting reversal from only a few years ago, when Meal was the fashionable product to feed all those new Chinese pigs.
As a short candidate, we favour Cotton over any of the grains. Cotton competes with grains for acreage in some geographies and prices have risen sharply. The recent rally/dip/rally produced weekly-scale top extensions and the secondary rally produced slight new highs. This is a good ‘setup’ for a short and the new top extension in Corn makes this seem like a good moment:
Elsewhere, there have been compression signals in the $ index, which may be breaking upward, after a false break down – which is why we don’t like to ‘trade the break’ – and that calls into question our ‘buy Yen’ advice given on the 14th October:
Bonds have also compressed, at a daily scale. We have an outstanding ‘buy bonds’ recommendation, also given on the 14th October (actually it was to buy Bunds to cover shorts and reverse into longs). The bottom extension in Bunds that led to that advice is also getting a bit old, so the best tactic is probably to tighten stops on any long positions you may have taken – this new Bond compression may break upward, but if it breaks downward, we don’t want to be long any more:
All signals generated by software produced by our friends at Parallax Financial Research www.pfr.com
