Another light volume day as the market struggled to get through heavy scale up resistance at 66.50 c/lb. The spreads have also come in 30-40 pts on this rally which continues to raise concerns on whether there will be a big taker on the H'08 contract or not.
Cert stocks remain stable with 550k in stock, but open interest is slowly growing as the specs continue to add to their long position on any dips. Volume was average with 13,000 futures and 6,000 options as the market looks like we are heading to a strong year end close.
Volatility has picked up as we are approaching the long Christmas holiday 4-day weekend. This explains also the drop off in export sales and shipments as we fell considerably below last weeks numbers with only 137k in new sales and 150k in new shipments.
We may be in for a few more weeks of this type of activity especially with NY trading near the top of the range. The stock market as well as grains, energy and metals were mixed to lower as the market looks hesitant to make any big moves before the year end finale.
Technically we broke the resistance at the 65.50 cent level, and continue to hold the upside trend line started last week. RSI is back over 50% and the specs are adding back to their long position. The demand has been steady but not overwhelming as the market looks like it cannot find enough ammunition to retest the contract highs any time soon at 70.50 with such heavy trade selling.
We may see the market trade sideways in a 63/67 cent range as we get through the holidays and into the new year. We expect heavier scale up selling from the trade as we move higher.
marketing@alchempro.com
