May Wheat - Steady
May Corn - 1 Higher
May Beans - Steady to 1 Lower
April Crude Oil was unable to sell all the way down to the 100% retracement at 72.25, as I thought last week. Instead, it reversed back up at 74.09 on a spike down and up, above Thursdays low at 73.83. Then, it managed to close above the 62% retracement at 76.45.
Because of this price action, I expect a probable up day on Monday. Check out Friday's crude chart.
May Wheat and Corn got hit hard with selling on Friday. Wheat sold down to close at 719.50, 7 cents above the 712.50 low on January 23rd. It will take a few weeks to develop, but I still expect a rally to 884, from the new W pattern target. A W pattern is where you have more of a double or triple bottom with the same projection as a head & shoulders. You will see what I'm saying on Friday's chart here.
I have never seen a selloff this far below a heavy volume bar in the middle of the session, such as we had on Thursday in March Corn, with a further decline on Friday. Perhaps some fund longs jumped in too early. All things considered, however, I feel the selloff is a flash in the pan. Check out the lower support levels on the corn chart.
The soy complex faired much better than corn and wheat on Friday. May Soymeal marked an outside higher close bar on the daily, which is bullish, while May Beans remained above the lower triangle line after it's small selloff. Check out Friday's meal and bean charts in this order.
The March S&P was not previously ready to begin another up leg, as I suspected. Instead, my current outlook is a combination of sideways trade with smaller rally's. In a typical up impulse wave, each successive leg extends a little longer as the 1-2-3-4-5 waves count up.
The S&P now appears to be marking a beginning diagonal. This kind of impulse is comprised of legs/waves which become shorter than the previous one as you count up. Unless a new big selloff is underway, I expect one more shorter upleg which eclipses the last high by a small amount, followed by an extended period of moderate down/sideways correcting.
You will see on the S&P chart that #1 was 610 points while #3 was 420. #5 will likely be less than 420 points.
To wrap things up, grain margins declined again a couple weeks ago. They are well below last spring and summers levels (up to 40% less, wheat more than 50% less), and grain options are still very cheap in relation to their strike prices.
This tells us the exchanges and clearing houses are not very afraid of any sharp, sustained selloffs - they have less risk of losing money due to under margined longs . If they were afraid, grain margins would be much higher. In fact margins are highest near market tops.
example: grain margins were much higher last February 24 when soybeans had a topping pattern. Crude Oil is still fairly high probably due to the geopolitical bull that's going on.
No guarantees of course, but margins are usually low during steady, stable, stairstep-like sideways to bull markets. This is good information to keep in the back of your mind while navigating these markets.