Short wheat?

[croker]

In my humble opinion wheat looks weak and might be a good short.
any opinions?

 

[trader_dante]

I am currently long and holding a net loss of 20 cents per bushel.

I took the long based on the pin bar at the bottom of this descending wedge in a long term uptrend.

It's failed to meet with any buying and I have my stop just beneath the pin bar lows. (Horizontal line on chart)

The picture is starting to look very bearish and a descending wedge is, infact, a bearish pattern.

 

[fibonelli]

The descending wedge chart pattern is in theory a bullish pattern because the steepest trendline is the most unsustainable one.

Source:
http://www.decisionpoint.com/TAcourse/Wedge.html

I would wait for a breakout and a successful re-test of the pattern just like, for example, a triangle or pennant formation.

Anyway, here's two charts of my interpretation.

 

[croker]

Thanks for your insights. We'll see how it goes, at the moment i've no position on it.(trying to be disciplined:cheesy: )

 

[trader_dante]

Has your bearish opinion changed in light of the recent sharp movement up, Croker?

Are you still on the sidelines?

 

[TWI]

Holding a short wheat position from here is a very tough game to play. The fundamentals are not so bearish and people have felt pain in outrights, calendars and the corn spread recently. Looks to be breaking up on the recent India business. I agree that wheat is a weed and ultimately new crop will kill the price somewhat but cannot underestinmate the power of money in old crop. Be careful, I am not going anywhere near the sell button at this time.

 

[trader_dante]

Holding a short wheat position from here is a very tough game to play.

I'm still long (see post above)

Currently +35 cents a bushel.

 

[croker]

Wow i hadnt looked at it in a few days, that's a pretty big move alright.
I didnt short because the aug 30 gap seemed to be acting as support.. in hindsight that was probably a good buy point.

 

[trader_dante]

From the CBOT:

Wheat has assumed full leadership of the grains. There continues to be talk of weather-related strength based on dryness in the southwest, but it is increasingly evident that this rally is mainly the result of short covering by small specs and trend-following funds which are massively short. Dry weather in the southwestern US wheat belt has persisted into today, and this is supportive. There also seems to be growing evidence that many farmers in the western wheat belt, particularly Kansas, are basically sold out of old crop supplies and that increasing numbers of end users are nervously canvassing the region for supplies they need to have on hand starting in March, 2008 and extending through the end of the crop year.

Sitting on a huge profit right now...December closed for +35 cents and March is up 55 cents and 35 cents on two lots.

Let's see where this goes

 

[hrokling]

Currently long some March contracts...

 

[trader_dante]

Currently long some March contracts...

I bought more on the close.

Running 3 lots now now and looking to add another on a break of 911.

 

[NARBONNE]

Me too. Currently long @ 876 WH08. Have been riding this one since 834 but closed at 900.

 

[trader_dante]

How are all you Wheat longs holding?

News out of the CBOT is bullish. Consensus seems to be that there is going to be buying on dips but I am wondering whether 865 will hold or whether there could be a stop run.

 

[trader_dante]

Wheat broke heavily overnight.

There seems to be good resistance coming into 900.

865 held yesterday but its no doubt going to come under pressure again today.

Long from 826, 877 and 898 now.

Looking like I could be placed a little top heavy coming into this.

If 865 goes, next stop is approx 830.

 

[hrokling]

Strong opening with follow-through upwards today, although it was sold down towards the close. Yesterday I escaped with profits as I sold some of my positions in the premarket. Today I ended up VERY long and took the positions just before the close (avg 892 1/4). Much more long than I normally would have been. It's setting itself up nicely and pounding away on the 900 resistance.

 

[trader_dante]

Strong opening with follow-through upwards today, although it was sold down towards the close. Yesterday I escaped with profits as I sold some of my positions in the premarket. Today I ended up VERY long and took the positions just before the close (avg 892 1/4). Much more long than I normally would have been. It's setting itself up nicely and pounding away on the 900 resistance.

Hrokling, we're on the same side then

I bought even more at the close.

900 is getting eroded.

I've got pretty much all the Wheat I can hold with the margin in my account and carrying 2/3 of the speculative limit with my broker.

Tomorrow will be interesting.

 

[hrokling]

So far in the light overnight trading it's at 900 bid with 903 as the high - just above 920 it would be limit-up

 

[trader_dante]

Adjusted stops and freed up enough margin for another position at 914

Got no charts right now so having to remember all the pivot levels in my head is a bit stressful.

 

[trader_dante]

Up 17 full points overnight!!

 

[trader_dante]

According to the CBOT, trend following funds are not only STILL heavily net short but actually increasing their positions...

Price is stalling as we come into the highs...