Lock In Profits
The IMC blog is currently short the July soy meal/bean oil spread from the equivalent of +$13,498. The position was entered on October 2nd in the December contracts and rolled over.
Historically, the soy meal/bean oil spread has a good track record of returning to the ‘even money’ level after an outlier excursion to the upside. This remains our macro target.
Near-term, the spread almost matched the 2015 low at the end of last month. It started the New Year with a rally past resistance at the mid-December bounce high. This is bullish behavior.
If the July soy meal/bean oil spread makes a two-day close above the declining 50-day Moving Average (currently around +$10,441) for the first time since mid-September it would trigger a bullish trend change. It may be prudent to cover the short position and book our profits if that happens. If so, we will get to the sidelines and look for a place to reenter.
On the hypothetical short position in the July soy meal/bean oil spread entered at approximately +$13,498 on October 2nd, exit on a two-day close above the 50-day Moving Average.