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Home / Futures Blog / Beyond the “Spotlight”: Soybeans and Soybean Meal, 01/27/2014

Beyond the “Spotlight”: Soybeans and Soybean Meal, 01/27/2014

January 27, 2014 by Don DeBartolo

For the Week of January 27, 2013

The Trade Spotlight advisory service applies the GBE trading methodology (buying or selling commodity contracts based on breakouts of chart formations and technical indicators) to identify one to two trade setups per week.

Highlighting This Week’s Potential Breakouts:

Let’s review the Soybean complex:

Soybeans

The May 2014 Soybean contract is trading sideways and setup for a Neutral Market Strategy. This strategy involves “writing” (selling) call and put options on either side of the resistance and support levels. The potential upside resistance is the 1349’4 high (2/05/13). The contract tested this high on 9/04/13 but failed to follow through. The potential downside support is the twelve-month contract low of 1175’4 (8/07/14). The goal is to collect premium on both sides as the contract continues its sideways trading pattern. On Friday, the contract broke through albeit closed above a lower trend line. There are touches on the lower trend line at 1175’4 (8/07/13), 1177’2 (8/08/13), 1248’6 (1/08/14), 1249’0 (1/09/14), and 1250’0 (1/13/14). This lower trend line is acting as support as well. A 20-day Exponential Moving Average and 50-day Simple Moving Average are flat. MACD, a trend indicator, and Stochastics, a Momentum indicator, are flat as well.

Soybean Meal

The March 2014 Soybean Meal contract has formed a Double Top Formation and Trend Line Formation. Both of these formations potentially setup a trade opportunity to the downside. Though currently the Trend Seeker (a US Chart Company tool to help identify market trend) is Up. In addition, the MACD, a trend indicator, and Stochastics, a Momentum indicator, are bullish. Along with the indicators reversal, a close below the lower trend line will trigger a trade to the downside. There are touches on the trend line at 378.8 (11/05/13), 403.4 (1/02/14), and 409.0 (1/13/14). A potential downside target is the 378.4 low (11/01/13).

Soybean Oil

The March 2014 Soybean Oil contract setup a Hi-Lo Breakout Formation. A close below the twelve-month contract low of 37.42 (1/08/14) will trigger a short entry opportunity. On Friday, the contract made a new low at 37.09, but failed to close below 37.42. The Trend Seeker (a US Chart Company tool to help identify market trend) is Down. In addition, the MACD, a trend indicator, is extremely bearish. Stochastics, a Momentum indicator, is bearish in the “over sold level” RSI, another Momentum indicator is strong to the downside. A potential stop loss can be placed above the pivot point of 38.45 (1/21/14) and 20-day Exponential Moving Average (38.20). A potential target of 33.46 is calculated using a Wave Projection Price.

Risk Disclosure

WHEN INVESTING IN THE PURCHASING OF OPTIONS, YOU MAY LOSE ALL OF THE MONEY YOU INVESTED.

WHEN SELLING OPTIONS, YOU MAY LOSE MORE THAN THE FUNDS YOU INVESTED.

STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: Trade Spotlight

About Don DeBartolo

Don C. DeBartolo is a Series 3 licensed broker registered with the National Futures Association (NFA). As a former arbitrage clerk in the S&P 500 futures pit at the Chicago Mercantile Exchange (CME), Don has floor trading experience. Taking his trade execution expertise and ability to navigate a fast-paced environment, Don transitioned to the brokerage side of the business. Since 2005, he has worked at Daniels Trading, a brokerage firm in the heart of the financial district in Chicago. His responsibilities as a broker include providing market analysis, trade execution, and money management to his clients around the world. In March 2010, he developed a formal trade advisory for clients of the firm seeking specific trade recommendations and subsequent risk management.

Due to his widespread proficiency and experience with the futures and commodity options markets, he is able to offer his clients timely insight, specialized trade recommendations, and educational information through various videos and writings.

Studying at Loyola University Chicago, Don discovered the international sport of rugby. Still today, he plays for the Chicago Griffins, a member of the highest league of rugby competition in the United States. Skill and discipline are two traits that carry over from the pitch to the trading screens.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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