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Rich Nelson: No technical resistance to slow markets

By Rich Nelson

Allendale Inc., Director of Research

Soybeans:

Overnight saw the European wheat market making new contract highs once
again. With no change to their forecast, they were off to the races once
again. As was mentioned before new contract highs mean that there is no
technical resistance to slow their market. Overnight beans accomplished
a similar feat by breaking past the 992 ¾. That now opens the door on
the November contract all the way up to next resistance of 1035 ½. 

It is
not to say this move means a more bullish market ahead for beans. If
the European wheat falls off for any reason Sunday night then our grains
will as well. What this does mean is that additional gains in wheat
will be easier to follow until next resistance. We may see the
percentage gain compared to the wheat increase starting today through
next week. 

It will be a long weekend to wait and see what happens with
their wheat Sunday night. It is still evident that selling on a down
turn is not a bad way to approach this market. We may miss the high but
we are not guessing as to when weather will change, that is often a
loosing trade. Of course we can still scale in sell orders on the way up
and now that resistance is high above the market we can aim high on
each given day. 

Looking ahead to next week, all eyes will stay on the
weather both ours and overseas. A serious market break will be likely if
forecasts turn even slightly bearish. One thing is for sure and that is
that volatility will be high next week. Keep a close eye on this market
as one day not watching it could mean a 20+ cent move that will change
the direction for the rest of the week.


Direction:

Volatility is the word that will describe this market well next week.
Bullish forecasts can move this market higher quickly now that near term
resistance was taken out. A bearish forecast has always threatened to
take gains away quickly. On any given bullish day we can aim high with
our expectations with little technical resistance above. On a bearish
forecast be ready to pull the trigger on sales as we don’t have much
other fundamental news to back up recent gains…Ryan Ettner


Rich Nelson
 
Director of Research 
Allendale, Inc 
4506 Prime Parkway 
McHenry, IL 60050 
800-262-7538



Hypothetical performance
results have many inherent limitations, some of which are described
below.  No representation is being made that any account will achieve
profits or losses similar to those shown. In fact, there are frequently
sharp differences between hypothetical performance results and the
actual results subsequently achieved by any particular trading program. 
One of the limitations of hypothetical performance results is that they
are generally prepared with the benefit of hindsight.  In addition,
hypothetical trading does not involve financial risk, and no
hypothetical trading record can completely account for the impact of
financial risk in actual trading.  For example, the ability to withstand
losses or adhere to a particular trading program in spite of trading
losses are material points which can adversely affect actual trading
results.  There are numerous other factors related to the markets in
general or to the implementation of any specific trading program which
cannot be fully accounted for in the preparation of hypothetical
performance results and all of which can adversely affect actual trading
results.

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