FuturesFiles Market Newsletter

Technical Outlook for Grains and Products

March 12, 2010

Name: Alan Bush

Company: Archer Financial Services

Years Trading: 32

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Technical Outlook for Grains and Products
By Alan Bush, Archer Financial Services

Compared to the massive rally that took place from the middle of 2007 to the summer of 2008, the recovery rallies have been rather unimpressive. It now appears that there may be another test of the $3.00 area. With so many lows in that area, it would not be a huge surprise to see the likely resting sell stops that may be under that "rock bottom" support level to be taken out. Sometimes major buying opportunities present themselves after the "very last" chart support is taken out. It is possible that grain futures will be able to embark on a new bull market only after all of the perceived major support has been penetrated. From a technical point of view, it is likely that futures will come under additional pressure in the near term.

CORN - MONTHLY

In spite of the recent weakness over the past ten months, there appear to be no technical signs of a bottom. The trend line below the market is probably attracting sell stops that most likely will be hit. The next major support comes in at the late 2008 low of 776. After that, the high end of the next major support level comes in at the 757 level. The near term trend appears to be lower.

SOYBEANS - MONTHLY

One of the oldest and most reliable technical signs of weakness is the double bottom downside breakout. From a technical point of view, it appears that the double bottom at the 236.9 to the 237.9 level will be penetrated. This is likely to be another example of the rule of thumb that double bottoms seldom hold. The near term direction for this market appears to be lower.

SOYBEAN MEAL - MONTHLY

Although this chart looks a little better than the soybean meal chart, the near term outlook appears to be lower, as well. The recent advance to new highs for the move could not follow through to the upside. Now there is a very clear cut trend line that has formed under the market that, most likely, is attracting sell stops. Expect lower prices with this trend line under the market to be taken out.

SOYBEAN OIL - MONTHLY

Recent breakouts to the upside have not followed through and short covering rallies appear to have less and less bounce in them. We are also seeing a pattern of lighter volume on rallies and heavier volume on the breaks. It now appears that the trend line under the market will be taken out. Expect lower prices.

WHEAT - MONTHLY

One important rule of thumb worth remembering is prices usually break out of a congestion pattern in the same direction that they came into the pattern about 60% to 65% of the time. Since the price trend was lower before we came into the flag congestion pattern, it is likely that prices will break out to the downside.

OATS - MONTHLY

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If you have any question or comments about this article, please send an email to alan.bush@archerfinancials.com or contact us at 1.877.690.7303.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.

About the Author

Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@archerfinancials.com.