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May 8 Dan Maltby Marketing Newsletter

May 8 Dan Maltby Marketing Newsletter

Kansas Association of Wheat Growers

Hello Kansas Wheat.

The Wheat Tour came and went, and did the futures market…

This KC July wheat (daily candlestick) shows the volatility injected into the market.

The chart looks different from last week’s chart in a couple of areas, most notably is the unfilled gap, from last Friday’s high of $4.395 to Monday’s early overnight low of $4.435.
Gaps are always interesting, although almost always they get “filled” and their significance fades over time. Some gaps are “measuring gaps”. This gap was about 25c off the $4.17 red line, projecting a short-term objective of $4.67, which was reached early Tuesday. (We see Tuesday’s settlement was $4.675.)
Other gaps are “breakaway gaps”, remaining “unfilled” for an extended time period, pointing to sharply higher prices.
I do not think that’s what we’re seeing, BUT you never really know. The longer this gap remains unfilled, the more intriguing it becomes.
I would point out the 200-day moving average is about $4.55; it’s rate of decent has really slowed. And I also need to point out that the blue line at $4.81 is 4c lower than last week, because that week rolled off my 11-week closing futures table. As the blue lines get lower, buy-stops become a little easier to hit. It’s not a factor yet, as the spread between the blue line and the red line is too wide, but the narrowing of these lines is important. The market has entered the coiling phase. Historical Volatility has increased. Big flat price positions are in the early stages of being reduced.


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Source: Kansas Association of Wheat Growers