Post-Market Wrap-up – May 13, 2019

It was a turbulent day in the markets, as the Chinese announced their retaliatory responses to the tariffs imposed by the US on Friday. Below are our trades for the day.

Wheat – July 2019 Contract (10% Daily Return)
A nice recovery in the price of wheat allowed us to get in for a day trade. We were able to enter and exit for a 10% daily return.
S&P June 2019 Contract (3.4% Daily Return)
With the large overnight plunge in the S&P and the continued pressure to the downside, we had a Sell signal hit and were able to enter the market for a Short which netted a 3.4% daily return.

Pre-Market Set-up for Monday May 13, 2019

We are watching the following markets on this trading day:

S&P – June 2019 Contract
Having fallen over 2% this past week amid concerns over trade negotiations between the US & China, I believe this market will enter into a consolidation pattern this week. If I am correct and the market moves sideways, we will remain on the sidelines. If, however, the S&P shows strength and trades above 2930 (above the current area of congestion) or continues to breakdown and trades below 2826 (breaking the current levels of support), we will be looking to enter the market for a trade.

Soybeans – July 2019 Contract
Amid trade talk concerns, Soybeans fell 3.92% over the past week. Based on market fundamentals, this sell-off has been over-done and I am looking for a retracement of these looses to fill-in the gap left at 336 – 340. I will be looking to enter this market on the Long side if it recovers above 806.00.

Wheat – July 2019 Contract
Similar to Soybeans, Wheat has been a casualty of the current US-China trade talks. I am looking for a recovery above 438.00 to enter this market on the Long side.

Crude Oil – WTI July 2019 Contract
Amid growing world tensions and strong demand, Crude is trending upward. I am looking for a push above 63.00 where we will be looking to go Long.

Wheat Surges Higher

Our Shubie Partners AG Growth Fund saw a nice run in Wheat today.
As shown on the hourly Wheat (May 2019) chart above, Wheat surged 28.50 cents or 6.65%. As the Ag markets await news on a China trade deal, the only apparent reason for this move was a lack of bad news. Additionally, no doubt there was some fund short covering here as well, as the Wheat market has fallen a full cent over just the past month due to pressure from short selling.

Crude Oil Shows Strength

Coming off of last week’s two day OPEC + Russia meeting where the decision was to pull 1.2 million barrels of oil daily from the markets, Light Sweet Crude has begun to show strength.  The proof of this agreement will however ‘be in the pudding’, as we wait to see if each of the parties involved, uphold their end of the agreement.

Over the past couple of weeks, Crude has tested the $50 level but failed to close below it.  Therefore from a trading standpoint we are looking for a breakdown below $50 or a meaningful push above the $55 level.

S&P Remains Weak

Given the magnitude of last week’s decline and the lack of follow-through in the recovery on Friday, there is potential for further market decline.  With this in-mind we will be watching downward momentum early in the trading session, to gauge the potential for further profitable trades from this market correction.

We Remain Long November Crude

This week the EIA (Energy Information Administration) reported 1.9 million barrels were added to supply which surprised the market who expected a draw-down in  supply.  Despite this, we remain Long November Crude as our expectations are that prices will continue their upward march, as the  Iranian sanctions soon take effect.