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Grains longer term and soya right now. Stocks still making top signals

There was a bottom extension in soya oil a week ago that caught a low point. At around the same time, soya beans made a daily-scale compression, from which the price moved up. It has since settled back onto that compression area where we expect to find support, as usual. This is enough evidence to warrant buying some soya here.

Bean oil, soy, wheat poss bottoms

Wheat has also shown signs of 'bottoming' by making weekly-scale bottom extensions after the drop from early July into the late August lows. There has been a multi-year decline in grain prices since the highs made in 2012 and these signals probably mark at least the beginning of the end of this long slide. Rallies are likely and we will try to catch some as they develop. There are no other daily-scale signals in grains to report but we are on high alert.

Meanwhile, stocks in the US continue to generate top extensions and the first signs of weakness are now starting to emerge. Picking the tops of rallies is a dangerous game, so we continue to advise caution but there is some evidence from two non-traded indices that the strength has abated for now:

Trans, NYSE, Dow poss tops

As the third chart shows, there has also been a weekly-scale top extension in the Dow. This is unlikely to lead directly to a major 'leg' downward as some longer-term 'topping' formation is almost certainly necessary before this bull market ends - there is also a good deal of 'background bearishness' that will inhibit major weakness. There is a good chance of a decent drop from hereabouts however, so we would now  adopt some short positions.

All signals generated by software supplied by our friends at Parallax Financial Research www.pfr.com