It appears that speculative forces may have overheated and overbought the wheat futures markets. Now, prices have not only reversed, but are approaching the daily lock limit down price, after having reached double the daily lock limit up price during night-time trading. The settlement price last Friday is the turquoise dotted line, and the lock limit up and down prices are shown in the chart as turquoise lines at the top and bottom of the chart. So far, wheat prices have reversed more than 80 cents today! Astounding!
The chart shown here on the left is the 15-minute chart today for wheat approximately 40 minutes before the end of the session. I do not personally expect this reversal to last very long, perhaps for a few days -- tops! I have learned that any price trend that rises or falls too rapidly often burns itself out quickly. Five days of lock limit up prices may have burned out the demand for wheat, especially the speculative demand. The increase today by the CME of margin requirements has also forced many long positions out of the market. (Personally, I never max out my margin account; this is one reason why.) Once the froth bubbles down, the trend may continue. We'll be ready if it does.
Monday, February 11, 2008
Major Reversal Today for Wheat
