We are getting questions now about wheat. We are establishing stops on the wheat now at $5.00. After extreme oversold conditions such as what we just had, rallies run an average of 26 days producing 60 cents and a 19.71% average return.
As I am writing this, wheat is on day 7 off the low, has gone up 40 cents and is up 8.34%.
I understand most of you are breathing a sigh of relief today, especially after we turned the stops off last week. I suggest for now we put on some loose stops, say at $5.05. There is a WASDE (World Agricultural Supply Demand Estimate) report coming out Friday that will probably create volatility. We can tighten the stops up more Friday morning. Remember, an 8.34% return is way below the lowest return the past 3 years. 40 cents is still 11 cents away from the smallest rally. 7 days would be the shortest duration for such a rally by 3 days. There is no reason why prices should not continue higher into Friday's report.
We recommend keeping the stops at 5.05 for now and will look at increasing them later tomorrow or Friday morning. Heck, we could just exit some or all the positions ahead of the report.
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