Soy Meal/Bean Oil Spread: The Reversal System Buy Signal Was Triggered

Soy Meal/Bean Oil Spread

On June 30th the IMC blog entered a hypothetical short position in the December soy meal/bean oil spread at approximately +$13,664 (premium meal). This was the initiating of a reversal system that keeps us in the spread at all times either long or short. The goal is to always be short on a close below +$13,500 and always be long on a close above +$15,500.

December Soy Meal Bean Oil spread daily

December Soy Meal Bean Oil spread daily

Yesterday the spread closed at +$15,818 and set off the buy signal. The short position was exited with a loss of approximately -$2,154 and a long position was initiated at +$15,818. In keeping with the reversal system, a close below $13,500 will be the trigger to exit this long position and simultaneously go short again.

As long as the December soy meal/bean oil spread stays above the prior contract high from last November, there is no price resistance until it reaches the monthly nearest-futures double top at the 1973 historic high of +$26,580 and the 2014 record high of +$26,920. That’s another +$11k from here.

Soy Meal Bean Oil spread monthly

Soy Meal Bean Oil spread monthly

Conversely, a close back under the November 13th high of +$14,854 and the December 22nd high of +$14,582 would trigger a Wash & Rinse sell signal and indicate that the breakout was a failure. A close below +$13,500 would put us back into a short position and hopefully start the overdue return to the ‘even money’ level.

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