Electronically, the market was unchanged to lower prior to the opening as the volume was better today and traded in a wider range. The spec/hedge report was basically unchanged @ 30.9% long as the funds have not been too concerned about liquidating their position.
However, the 64.00 bottom of the recent trading range was violated today as the uptrend line was broken. We are also getting close to the 40 and 50 day averages as the market looks like it may have further downside as we look for scale down trade buying. Futures volume was over 16,000 contracts and options were over 14,000.
The narrow trading range between 65 and 64 cents based Z'07 finally broke lower today and it is hard to say how much lower we will go before good demand enters the market.
We are entering the summer slowdown as most mills are covered through the third quarter and are not in a hurry to buy Nov/Dec shipments until the market comes down. Grains were up slightly today and the stock market held strong despite the Fed decision to leave the discount rate unchanged.
Technically the market is approaching the 38% retracement level to see if that will hold, but we did have a double top at 65.00 cents over the recent trading sessions. We also closed below the 9-day moving average and are getting close to the 40 and 50 day.
Specs still have a significant long position and may start to liquidate before the potentially bearish S&D report to be released on Friday.
marketing@alchempro.com
