As the exchange traded fund for soybeans, Teucrium Soybean (NYSE: SOYB), has soared due to the drought in the Midwest farm belt of the United States, so has the short position in recent market action. From June 29, 2012 to July 13, 2012, the short position rose from 12,348 to 24,647, an increase of 99.6%. The United States is the world’s largest consumer of soybeans, so the drought in the Midwest has sent prices for the grain skyward due to the fundamental economics of supply and demand.
The SOYB was up 2.66% Friday along with the rest of the stock market due to a rally in anticipation of more stimulus action by the Federal Reserve as the United States reported that economic growth had fallen to 1.5 percent for the second quarter of 2012. Over the course of Quantitative Easing 2, from in its announcement in August 2010 to its conclusion in June 2011, like so many other commodities, the SOYB soared from around $14 to over $23 in trading.
In trading on Friday July 27, the SOYB opened at $26.12 after closing Thursday at $25.58 due to the pre-market announcement of the falling US economic growth figures. It hit an intraday high of $26.60 around 11 am after gapping up, before dipping to around $26.15 at 2 pm; and then finishing the day on an uptick at $26.26. Volume for Friday was heavier than normal at 1.16 times relative volume. The SOYB is now trading above its 20-day, 50-day and 200-day moving averages.
While Friday was bullish for Teucrium Soybean, recent market action reveals technical patterns that portend a share price decline. While up 5.53% for the month and 5.54% for the quarter, Teucrium Corn is off 5.47% for the last week of trading. Recent candlestick patterns have been very bearish with a dominant long engulfing pattern earlier in the week before Friday’s rally. The doubling of the short position in a two week period is a very bearish indicator in itself. Closing at $26.26, the SOYB is very close to its 52-week high of $27.58
Eventually it will rain again, and when it does, the share price for Teucrium Soybean will come falling down like a torrential downpour.
SOYB – Soybean ETF Fund
Get Our Free Daily Technical Trading Take Newsletter: http://www.thetechnicaltraders.com/2963-2/
