As the equity markets have been consolidating since April 21st, today may be the potential for the next leg up in the market. This may have happened earlier in the week, but the Swine Flu scare caused many financial and commodity markets to fall. However, the flu scare is the one component that could come back to haunt us if the situation gets worse.

Today the Q1 2009 GDP will  be released at 8:30 am and the Fed will conclude their meeting at 2:15 pm today. The market is expecting the GDP to be -4.7% as more consumers were shopping than many had initially anticipated.

Stay tuned folks as the news is released.

Below is the recent USDA's grain planting progress report.

Corn:
Current: 22%
Last week: 5%
2008: 9%
Avg of 2004 to 2008: 28%

Soybeans:
Current: 3%
Last week: N/A
2008: 2%
Avg of 2004 to 2008: 5%

Cotton:
Current: 16%
Last week: 11%
2008: 19%
Avg of 2004 to 2008: 20%

Spring Wheat:
Current: 15%
Last week: 65
2008: 32%
Avg of 2004 to 2008: 36%

Oats:
Current: 61%
Last week: 48%
2008: 52%
Avg of 2004 to 2008:  65%

Since our last writing of grains on 4/19/09, we saw the markets find support and begin to rally or at least come off the lows. As we have been viewing the May contracts, will will now be focusing on the July contracts. However the word of the week is Swine Flu. This seems to be on the mind of all markets as it may cause the global economy to take longer to recover and have an impact on travel related and commodity related industries.

Coming into the weekend the grain markets were focused primarily on the USDA's planting report released yesterday. However the immediate discussion of Swine Flu took priority as the weighing component on the grain and commodity markets. Yesterday China announced they were banning pork from Mexico and parts of the U.S. until further notice due to the flu. This would lead to a reduced demand for feed grain and it caused the grain markets to move sharply lower. And as the equity markets fell on the flu news, a slower global economy will only reduce the needs for many commodities.

Unitl recently there was no stopping soybeans. Since bottoming on 3/2/09 (basis the May contract) the market rallied over $2.34. 4/21/09 we received a sell signal on the May contract. On 4/24/09 we received a sell signal in the July contract. There is major support in the $9.82 to $9.61 range. If that should break, we would be seeking $9.40 to $9.20 as the next major support level. On the upside there is major resistance at $10.1. The market settled today at $9.83.

Wheat (basis July) had a sell signal 4/13/09. On 4/20/09 the market bottomed at $5.1250 and tested the lows of 4/3/09, where the market bottomed at $5.1075. On 4/27/09 the market topped at $5.5050. Due to the flu scare, the market sold off heavily yesterday. There is major support in the $5.12 to $5.04 level. If this should be broken, the next major support level is $4.94 to $4.50 level. However we believe the market is currently seeking a bottoming process. The next major resistance level is $5.30 to $.5.40. The market settled at $5.22.

Corn (basis July) received a sell signal on 4/13/09. The market then bottomed on 4/20/09 at $3.70. By 4/24/09, the market had rallied up to $3.95 which is a major resistance level. Due to the flu scare the market fell on 4/27/09 back to $3.70. There is resistance in the $3.86 to $3.95 area. If we break above this level we could be setting the stage for the next up leg. On the downside there is major support in the $3.70 to $3.54 area testing the lows of 3/2/09. The market settled today at $3.8350.

As noted previously, equities were overbought and did consolidate last week. In both the S&P500 and DJ index futures contract (basis June) , the markets were close to reaching their recent highs, but then sold off in the last minutes of trading on Friday. There is more talk that a few of the major economies may have already experienced the worst of the recession. However, it still could be several months before this point is confirmed.

In the DJ contract, there is support in the 7955 to 7880. We still believe there is a possibility the market could consolidate down to the 7560 to 7420 area before the market takes out the highs of April 17th.

The S&P 500 futures contract has support in the 850 to 827 range. Currently we need the market to break above 870 to determine if the market will be staging the next up leg.

After the markets dropped sharply on Monday (as we noted on 4/19/09 may happen this week), the markets triggered a sell signal early Tuesday morning. As we noted on 4/4/09, the equity indices may be a bit choppy during the  current earnings season and they are proving to be just that as today the markets were making new highs and then selling off in the last hour to make new lows.

Since bottoming on 3/6/09, the market is more than due for a bit of consolidation. We believe it is in the process of consolidating at this time, thus choppy non-directional day to day trading is to be expected, especially as these markets have become so headline sensitive. It almost appears that market participants are taking very short term positions and may be jockeying for position on both sides of the market.

For the DJ futures contract (basis the June contract), if the market continues to head south and takes out the lows of April 21st, the next major support level would be 7570 to 7420. There is probability the market could fall to 7150 to 7200, if the 7420 area is not held.

If the DJ contract should move sideways from here, then currently we would need to see the contract rally above 8100 before we could be convinced this market is ready for the next up leg. If so, 8300 to 8450 and then onto 8600 would be our next resistance to the upside.

S&P500 futures contract (basis June) has found support in the 830 price range. Just like the DJ contract, the S&P contract also gave us a sell signal on 4/21/09. If the market breaks the low of 4/20/09, the next major support would be 803 (testing the lows of 4/8/09) to 786.

Stay tuned as this yo-yo market (not to be confused with the great musician Yo Yo Ma) continues its saga.

The grain markets have had an interesting run lately. With the release of the USDA report on March 31st, it appeared initially to have a bullish result on corn, wheat and soybeans. However only the soybean market really moved. And moved it did!!

The corn market (basis May) on March 31st triggered a buy signal just above $4, but over the following days the market only rallied to $4.075. On April 13th we received a sell signal. There is major support between $3.63 and $3.73. Ultimately the market could fall to $3.41 to $3.51, thus testing and possibly taking out the lows of late February.

Wheat (basis May) gave a buy signal on April 1st and offered a small rally when it topped at $5.72.  On April 13th we received a sell signal and the market has since been caught in a trading range between $5.13 to $5.30. The market hit our initial resistance of $5.71. If the rally does continue, we would target the next leg up at $5.95 to $6.19 with a major resistance of $6.45. The market is currently holding in its major support of $5.10 to $5.15. If this area is broken the next support level is $5.05 to $4.94

On April 2nd we received a buy signal in soybeans (basis May) and the market never looked back as it rallied a $1. Since making a bottom on March 2nd the market has rallied about $2.35. As we noted on April 3rd, soybeans could rally to the $6.47 area. Now that it has rallied into this area we could see some consolidation. Initial support for the market is found around $10.43 to $10.23. If the market does continue to rally our next major resistance area is $10.73 with $11.39 as the next major resistance level. If the market breaks below $10.10 we could be seeking the next major support level about $9.60.

Since out last writing on April 4th, the equity markets did fall to our support levels and then rallied to new highs. Basis the June futures contract we stated the S&P 500 would find support at the 805 area. On April 8th it did find support in that area and then rallied into the 870 area.

The Dow Jones futures contract (basis the June contract) is once again looking a bit overbought. However it is possible for a market to stay overbought for many months before finally consolidating. Early into the week we could see the market consolidate. This would coincide with a large number of companies reporting earnings this week. For the stocks that have reported quarterly earnings so far, we have seen some positive surprises, especially for the large banks. But the markets may take a more cautious stance this week and consolidate as more data is released.

The next major resistance is about 8300 to 8450 and pushing into the 8600 area. There is support in the 7950 area. If the market breaks below 7730 then the contract may be heading to the next major support level 7590.

The S&P 500 (basis the June contract) has support in the 855 to 845 area. The next major support level is near 820. If the market breaks below 820, we could be looking at consolidation into the 790 to 770 area. Major resistance is in the 836 to 890 area. As we are in that price range and the market is showing overbought signals, consolidation this week would be plausible.  If the market should continue to move higher the next major resistance level is 905.

As many commodity and equity futures markets bottomed in late February and early March, many of these markets also consolidated and gave sell signals over the past week. By the later half of the week, most of these markets returned to their upward movement. The equity futures markets were no exception to these quick signal shifts.

After several weeks of rallying, the DJ (basis June) finally consolidated between March 27th and 30th by giving back almost 500 points. On March 30 we received a signal to go short. But it was a very short lived signal as March 30th was a bottom into the next up leg. On April 2nd we received a signal for the next leg up in what some are calling this rally as a bear market rally (dead cat bounce).  Some are saying its the process of forming a bottom. Of course differing opinions is what naturally causes price action in a market. Time will tell which it really is. However signs are beginning to appear that the economy may be seeking some sort of stabilizing process. But we will still need several months of data to determine if this is true.

Beware that the faster the market moves up without some consolidation, the greater the potential for a sharper consolidation. Or if unexpected bad news should arrive,  there is potential for equities to make a quick, sharp, downward move.

When the market first began to rally in March we had an initial resistance of 7539. This area has now become a support level. If this rally holds our next resistance level is 8300 to 8600.

The S&P 500 (basis June) has moved in tandem with the DJ contract. We initially received a buy signal on March 10th and had a major resistance level at 778. On March 18th the market surpassed this level and pushed a little over 800. The market then consolidated to sideways action until April 2nd. However the S&P 500 just like many other futures markets, gave a very short term sell signal on March 30th. We had 836 as our next resistance level. On April 2nd the market broke out of the sideways action and we received the next buy signal.  The market closed just barley above 836 on April 3rd.

Our next major resistance level is 894 to 905.  Its possible it could be reached sometime this week. As the market is technically showing signs of overbought, we could see more consolidation after this level is reached as these prices have not been seen since early January. We have an initial support in the 805 to 825 area. If it breaks that area we have major support in the 780 area.

A consolidation of the equity markets could coincide with the release of the earnings reports. Put on your seat belt folks, this could be a bumpy ride.

As we discussed earlier this week of receiving short signals over the past week in wheat, soybeans and on Monday in the corn market. Tuesday may have caused at least a short term bottom to form in the grain markets as the USDA released their planting and stock report. The report proved to be very bullish for soybeans and some what bullish for corn and wheat. But in recent weeks it seems to be a common story for many commodities including crude and copper to rally. As many commodities are quoted in dollars, the dollar index peaked on March 4th and had a recent leg down since March 30th.

The USDA report was released at 8:30 am on Tuesday. When the grain markets opened at 10:30 am all of the grain markets opened strong. Corn (basis the May contract) then quickly sold off to $3.8125 after which it immediately turned around and later that day we received a long signal. Support for May corn is in the range of $3.88 to $3.94. Corn has reached its initial resistance level of $4.04. If the market continues to rally, the next level of resistance would be $4.17. With another level at $4.35 to $4.65.

On March 27th soybeans (basis the May contract) gave a sell signal. After bottoming on March 30th, the market gave a buy signal on April 2nd. In a matter of a few days, the market rallied about $1. The market may be getting a little tired as its reaching prices that have not been seen since early February. The market may find resistance between $9.85 to $10.13 as it settled today at $9.955. If it should rally above this level we could be looking for a price objective of initially $10.60 and then onto $11.30 to $11.40.

In an earlier posting we reported receiving a sell signal in wheat (basis May) on March 24. The market then spent several days testing lows made on March 3rd. On April 2nd we received a buy signal. As wheat settled today at $5.6350, it may be nearing the first level of resistance of $5.71 to $5.86 and possibly $5.95. If the rally continues, the next level of resistance would be $6.19 and possibly pushing to the $6.45 to $6.73.