Just like most of the physical commodity complex, grains suffered a steep decline in the second half of 2014.
In my opinion, soybeans are the leader in the grain complex...although not the market with the most volume.
Fundamentally, the market is awaiting some USDA reports, along with fresh supply hitting the markets from South America.
From a technical perspective, soybeans bounced from the lows made in September 2014 and were able to reach the 38.2% retracement level from the May 2014 highs/Sept. 2014 lows. That test failed and prices backed off a couple of times, and then started breaking lower.
My momentum indicators suggest we might test the lows from Sept. 2014 once more before the market makes a decision. I also think that strength or weakness in beans will have a major influence on the other grain markets, like wheat, corn and definitely the bean products: meal and bean oil.
At this point, I will be looking to short beans on bounces towards the $10 level or look to sell call option spreads on bounces and utilize the cash to buy vertical put spreads. Another idea to explore is the spreads between the different grains (e.g. wheat versus corn, meal versus oil etc.).
The daily chart below shows the market respected some indicators I use (the recent red "square sell," free trial available here) and did NOT confirm more than a few buy signals. This chart also provides a picture of a longer term trading model I use, which is short the market right now.
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