Gann Global Financial

In the July soybeans, which is now the trading month, the market surged higher the last two days.  The divergence with the May contract which advanced above the January 7th high, as did the cash price – in previous videos we showed the cash has significantly exceeded the January 12th high the May contract exceeded that high – but as you can see in this chart, the July fell about 12¢ short of that high and there should be a significant number of buys stops building above this level. I really like the technical condition of this market.

Key Observations of Recent Trade Action in the Soybean Market

Thus far we have two measured corrections, two sell-offs; the first one , and the second 8.4% in six days.

Soybeans are really what I would call a classic market during very aggressive advances for experiencing minor corrections,  so we can be assured this 975¼ is a very key low which I believe at this point does need to hold, absolutely needs to hold, if we are in as aggressive of a position as I hope we are. That does remain to be seen.

The next favorable indication is that there was a minor buy signal on the break of the 978¼ low followed by the reversal higher. You can see that as of April 8th, we declined to 978¼. We just clipped that low by 3¢ the other day without follow through to the downside.

In light of the reversal to the upside that is a very good sign. It means that essentially there was a stop raid beneath that low which was followed by an immediate reversal. That’s always a good indication, particularly as I say here, very impressive reversal on Wednesday, April 29th with follow through today, the 30th.

We’ve got this follow through to the upside, and needless to say the shorts have a lot to think about at this point in time with respect to the implications should we exceed that 1076 high.

Looking at the July soybean oil, a number of observations. A break beneath 34.71 with follow through to the downside in the pit session would be problematic for our bullish stance in our long positions that we currently hold for subscribers.

If we are to replicate the more aggressive of our projections, I believe we must move higher from here. I like how we’re situated. Soybean oil is not experiencing the kind of percentage advance that we have in the soybeans over the last three to four days so in my estimation it will be playing catch-up.

As in the July contract in the soybeans, you can see that we have this lower top in the soybean oil so there is going to be a very significant number of buy stops building above that level.

Since I believe that we’re in a bull market in the soybean complex, I expect that those stops are going to be hit en route to a continued advance in what is a second leg up in a bull; the first leg up being off the December low, second leg off this March 16th low.

Dropping down to our next observation. The soybeans fractionally broke beneath the equivalent of the 34.71 low so that in the previous chart we broke this 978¼ in the soybeans, but you can see in the soybean oil we made a slightly higher bottom by .16 so we did not run the stops there.

If we were to break that 34.71 that would be problematic but I believe this is a bullish sign overall in taking these two contracts – the July contract in the soybean oil and the July contract in the soybeans – taking them in tandem. I like the near term trade here.

Looking at the nearest futures in the soybeans, these were our four closest fit projections in history; the primary one being the 60-year cycle in 1949. We dipped down to what would be the angles of ascent during 1978 and 2005. This surge is likely going to carry us higher if we’re right in the market so that we can track this 1949 market.

We have long July call option positions in the soybean oil which expire almost exactly when the projected 1949 advance would be complete. You can see how far we have gotten so far, and if we were to replicate this 1949 advance then we would have significantly further to go to the upside.

Is that going to happen? I don’t know but we’re still very early in terms of the time period of this leg up. Legs up do not complete in this as abbreviated of a time period as we’ve experienced so far to the upside.

I like our prospects to the upside. I like the technical condition of the market.

In the soybean oil, as a result of this recent sell-off we can dismiss the 1976 precedent as the precedent which is going to dictate trade.

The 1949, I experienced a comparable percentage advance. It was up 61%, it just took a longer period of time, but as I mentioned, since we’re holding call options, the 1949 market would top out, let’s say here. The same price objective as the 1976, actually a little bit more, but there is still the time left in our options.

If we were to see, for example, the July soybean oil advance to 46.00 then we would be experiencing a 12:1 risk/reward on our long positions that we’ve recommended for subscribers.

We’re also long futures positions and have a pretty significant position overall in this market so I believe that is justified. We’ve been adding two profitable positions, adding on the way up. At the end of this move it is going to be very interesting.

There is also going to be opportunity on the other side of the mountain. There is a lot of research that we’ll be giving subscribers with respect to that, as well.

I really like the prospects of this market particularly in light of the last couple of days of trade.