Leonard Lumber Report: After five weeks of chop, futures finally broke out

Summary:

After five weeks of chop, futures finally broke out. The $20 move was a welcome sight and pulled cash along with it. Mills did their part keeping a lid on things—trying to build files rather than chase. Classic lumber pop. No one’s shocked that it is happening.

The question is what comes next.

Normally, this is where a market starts to build a run. But recent history says these moves have been one-and-done. So, at 608, I’m not ready to assume we’re headed for 618, then 628. This market still has to prove itself—and that likely means specs stepping in and buying strength, not just watching it.

There are a few things working in favor of this move:

– We haven’t had a real “fear buy” all year. It’s been fill-ins the whole way. Even with tight items, the trade has stayed patient. That leaves the door open—if demand picks up even marginally, this thing can go.

– Logistically, trucking remains a mess. The spread-out supply chain is limiting the typical fill-in business. That can flip the script quickly and turn into a short-term chase if availability tightens in the wrong spots.

– Seasonally, this isn’t the time to be defensive on cash. Summer shutdowns are more robust today and can tighten things up.

Bottom line: the breakout matters—but the market lacks any conviction . If the specs show up, we can extend. If not, we will be talking about the next “big one to come again.”

Technical:

On the technical side, it helps explain why these rallies struggle to stick.

An RSI pushing 78% on just a $20 move isn’t normal. You took a five-week dead market and drove it straight into overbought territory in a handful of sessions. That kind of compression + quick release tends to exhaust itself early—not build into a sustained leg higher.

That said, it’s been so long since we’ve had any real follow-through that fading this outright feels premature. That said, the Sept premium starting to widen should be at least looked at. 

This market needs to keep rallying.

Let’s start with a close above 610 in July. Hold that, and you can begin talking about extension. Fail there, and this risks being another quick pop that runs out of gas just like the others.