Soy Meal/Bean Oil Spread: Lock In the Profits

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.

July Soy Meal Bean Oil spread daily

July 2016 Soy Meal Bean Oil spread daily

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.

Trade Strategy:

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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s