I Do Not Believe We Have Missed Our Opportunity to Sell Wheat

While the fundamentals and the inability to do soft wheat business into Egypt plague buyers in the wheat market, the dollar remains the key factor. I am not bullish wheat, but the market has not reached my current upside objectives. Perhaps it is greed or perhaps it is my disinterest in being involved in a market that tends to trade up or down to a particular level early in the session followed by a relatively narrow trading range. Regardless, I was not an aggressive seller on the move higher.

No need to worry about a missed opportunity at this point. I am not a proponent of selling the wheat market at these levels at this time, but I will be evaluating the opportunities that present themselves, if the wheat market can rally back to the recent highs. It appears the sellers have backed off a little bit near these levels. I expect them back in a big way if the dollar index rallies through the recent high of 80.835, which was posted last Friday and again on Thursday.

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The Energy Report

Don't discount the impact of the discount rate increase.

The longest journey from the removal of extraordinary stimulus starts with the first step and that step has now been taken. As the US stock market closed the Federal Reserve raised the discount rate charged to banks for direct loans to 0.75 percent from 0.50 percent. The Fed wants to wean off banks from taking loans from them and push their lender back into the real world when they have to borrow money for their short term liquidly needs.  Oh sure the Fed is trying to say to not read too much into this and that these changes are only  intended as a further normalization of the Federal Reserve's lending facilities but come on. Who are they trying to kid? Let's face it the normalization of the Fed s lending facilities is a big change and perhaps a red stick pin in the chart of the history of the greatest financial crisis since the Great Depression. Or sure the Fed says that these so called modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy yet at the same time in the Fed Minutes the Fed said that the outlook for the economy was brighter and this would be the most likely next move towards getting us back to normal. You remember normal now don't you?

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S&P500 Futures Outlook

An important rule of thumb is a market often will bottom after the very last chart support area has been taken out and the chart pattern looks horrendous. This is a situation where the "last of the longs" have given up, after a long decline in prices and after a new chart sell signal has been generated. This situation took place in March of 2009 in the S&P500 futures, when prices fell below the October 2002 low of 767.25. An astute technician may have correctly predicted that a major buying opportunity would not present itself until the likely resting sell stops under this last and most obvious chart support area were taken out. Many times it is only after the longs have been liquidated, along with a period of new technically based selling, that futures can embark on a new bull market.

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