Money Printing is Coming, So Why Are the Softs Soft?

The US Debt situation is no closer to being solved than it was a year ago and the European Debt Crisis is moving markets everyday with a solution acceptable to 17 nations unlikely to be detailed anytime soon. The most credible solutions to both result in Global Quantitative Easing. Yet a look through the weekly charts of the soft commodities, Corn ($ZC_F), Soybeans ($ZS_F), Sugar ($SB_F) and Wheat ($ZW_F) show them all testing support. Isn’t money printing supposed to lead to inflated prices? Take a look.

Corn, $ZC_F

Corn is testing support at 600 for the 5th time. As it does it, this time comes from a series of lower highs with the Simple Moving Averages (SMA) starting to roll lower. The Relative Strength Index (RSI) is also trending lower. The Moving Average Convergence Divergence (MACD) indicator is still negative but flat and moving sideways. Not diverging but also not confirming. It is working on printing a Hammer for the week, a possible reversal, but the topping and trending lower is unmistakeable. A move below 600 has support at 555 and then 525 and it needs to get over 660 to break the downward bias.

Soybeans, $ZS_F

Soybeans have broken through support at 1150 and look ready to retest that breakout level from below. The RSI also has been trending lower while the MACD moves sideways. With the 20 and 50 week SMA’s rolling lower it appears set up for more downside. The next stop lower comes at 1075 and then 1050 and it will take a move above 1150 to 1200 and then 1225 before anyone starts to think bullish on anything other than a short timeframe.

Sugar, $SB_F

Sugar has been in a symmetrical triangle and is now testing the lower rail. As it does so the RSI continues to trend lower while the MACD is moving sideways. The shorter SMA’s are turned lower adding weight to the last move lower continuing. A break of the triangle lower finds support at the 0.20-0.205 area followed by 0.18 and 0.17 lower. It will take a move higher over 0.24 and towards resistance at 0.26 to get any Sugar bulls excited.

Wheat, $ZW_F

Wheat may be the exception. It has broken the Double Bottom at 607 but found support at 590. The RSI is still in a downtrend but the combination of the larger candles the last two weeks and the MACD diverging higher may be sings of a reversal. It will take a move back over 650 to confirm it and a break below 590 down to 575 would negate the possibility, but it is a lone glimmer of hope.

These charts are not showing any signs of Quantitative easing or a ramping of the printing presses in the next few months. Is this an opportunity?

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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