Gann Global Financial

The soybean oil continues to follow very closely with the 1976 and 1978 historic precedents. That has been the case since the July high of 2008. I consider this quite remarkable.

Probabilities Favor Higher Commodity Market Prices in Soybean Oil

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We had a coiling price formation at the bottom most similar to 1976 in that the probabilities favor that we are in a runaway leg to the upside.

This is a market that we initially established long call options positions. For subscribers, the July of 38 call options we purchased at 60 points, as of today’s trade they are trading between 180 and 200. So we all ready have a 200% return on our money, but the prospect is that this market is going to continue higher.

The December 5th 2009 low was projected as a final low. The first leg up in a bull market continued into the January 7th high. Then a secondary correction, the first correction in an overall bull market took prices down into the low of 29.66. And now, if this is a second leg in the bull market, it should exceed the January 7th high, which is just a stone’s throw away.  I’ll say the next stop is a rally over the January 7th high in Soybean oil of 37.81.

Upcoming Trade Entry Point Using Futures and Options

Given the velocity of the advance so far, it’s overbought even for an extremely bullish market. The probabilities are greatly in favor of a minor correction of approximately 200 points.

We saw a very minor correction, a six percent decline. Since the crop report came out the market has been surging higher. Undoubtedly there are buy stops building above the 37.81 level basis the all-session chart. I believe the pit session is approx 37.73.

I would expect that this market is going to run above those buy stops and at that point we could get a very minor sell-off of as much as 200 points before the resumption of the advance.

The probabilities continue to increase for our being in the midst of a classic runaway advance. If so, we would expect only minor corrections on the order of the previous sell-off of 204 points.

We have long call options positions. We have long futures positions. We’ve been adding to positions on the way up. I don’t rule out the possibility of adding for a third time in a pyramid type situation if we rally above that January 7th high and then retrace beneath it. I’ll have more to say on that but this market is potentially in a very strong position.

The soybeans are in a very similar position as the soybean oil. We’re not too far off the January 12th electronic session high of 1069.

We are a stone’s throw from the January 12th highs in both the soybeans and the soybean oil. This is a very favorable position in that there will be a significant number of buy stops accumulating above these highs.

In addition, in both markets an advance to new highs would indicate a high probability we’re in the midst of a second leg up in an overall bull market. By definition, the classic bull market is a market that makes higher highs and higher lows.

We had a low December 5th, the first rally high, a higher low, and if we can push through and make a higher high that would confirm a bull market.

We don’t buy breakouts into new highs. Generally there are retracements after those breakouts occur. There is a lower risk opportunity standard in long positions so we’re definitely looking at that as a possibility to add to profitable positions or pyramid in this particular market because our projections are showing that we’re only about halfway to our overall objectives to the upside.