Providio's Daily Futures Market Comment for 11/29/11 ( Part 2)

[provitrading]

Grains: 29Nov The risk-on trade is still current on the day but the earlier material gains for Corn and Soybeans are proving ephemeral at best. Volume is difficult to read in Wheat and Corn due to the roll to March as front month. Inferring from Jan Soybeans, Volume is suspect, being down from yesterday’s modest post-holiday levels. Likely short covering in the face of the Euro-zone inspired moves.

Corn: 29Nov While a nice move in the early portion of the session was material, the fact that it retreated from the 38.2% retracement 11/17 highs and sell-off. Volume is up on March but within the context of additional volume related to the roll from Dec to March. With recent action, Mar has bounced off the major 5.90 support level. That traces back to late June’s test and again in late Sept. If a test of 5.90 produces a penetration and settlement below, the target is materially lower; likely below 5.00.

Seasonal Snapshot: The 15 and 30 year patterns are now in a general modest downtrend going into early December. The 5-year choppy, but with a modestly upward bias until early Dec when it rises precipitously until the end of the year.

Soybeans: 29Nov Despite today’s settlement higher, it’s on a Doji (indecisive day)and with lower Volume. Indecisive action points to looking at the bias and the bias is lower. In addition to our still relevant comment from 11/23, Jan has failed to convincingly bounce materially through the 11.20 resistance. Jan has 2 significant negative factors in addition to its generally negative technical bias. First, It has decisively broken support near 11.65 with lower lows and lower highs extending back to the 10/14 highs. Secondly, that high is an almost perfect 38.2% retracement of the 8/31-10/4 move. With the failure at that 10/14 high, the current falling Trend is strongly validated. This speaks to likely substantially lower levels. The 200-day Moving Average is clearly falling.

Seasonal Snapshot: The end of November marks the end of the upward seasonal bias in all three patterns. The 30yr consolidates and the 5&15yr patterns chop down until mid Dec, then rise until year’s end.

Wheat: 29Nov Mar is now front month and today’s Volume figures reflect the roll from Dec. While primary indicators are still negative, our secondary indicators are rising, indicating an easing of downward pressure. Mar ran into resistance at 6.20. Failure at that level, also showing from 11/20, indicates a likely test of the 5.85 support. Look for another test of the resistance.

(Be continued)