Soy Meal/Bean Oil Spread
On November 12th the IMC blog entered a hypothetical long position in the March soy meal/bean oil spread at +$17,044 (premium meal). This initiated the start of a reversal system where closings above +$17k trigger buy signals and closings below +$15k trigger sell signals.
On November 19th the March soy meal/bean oil spread closed at +$14,354 (premium meal) and triggered a reversal signal. Therefore, the long position at +$17,044 would have been liquidated for a loss of approximately -$2,690 and a hypothetical short position would have been entered at +$14,354. A close back above +$17k will trigger the exit signal for the short position and a buy signal for a new long position.
Currently, the mid-November breakout above the May 30th peak and the break back below it appears to be a failed breakout attempt. If so, the spread could be at the beginning stages of a multi-month decline. We shall see…