LEONARD LUMBER REPORT: There is malaise over almost every market out there
There is malaise over almost every market out there, whether it is corn or equities. Lumber is no different. The futures market has traded between 538 and 515 for 14 straight sessions. There is no energy and no real direction. The lumber market is flat, as is housing. The upcoming election may be a factor, but even that has gone flat. Economic uncertainty has put us all back into the weeds. That is friendly. Lumber gets bought in the fall. The longer one waits, the higher it will go. Today, the lumber futures are not showing signs of going higher. It shows signs of fatigue at the higher levels. The premium gets no help from the cash market each time it is up. That creates fatigue and the continued cycle of tight highs and lows.
Patience is key as we navigate these market conditions. The upcoming start reports on Friday could be the trigger we’re waiting for. Remember, hibernating till spring only works for bears.
Technical:
The technical read has been challenging in a flat market. Today, there is a flag pattern channel with $500 as support and $539 as resistance. The rules for flag patterns tell us that a close over $539.00 calls for a run to $578.00. We have had patterns in the past that call for a higher trade. The problem is the market can’t close over those areas. Maybe we are closer on this one. In any case, it is a buy lower market.
Daily Bulletin:
https://www.cmegroup.com/daily_bulletin/current/Section23_Lumber_Options.pdf
The Commitment of Traders:
https://www.cftc.gov/dea/futures/other_lf.htm
About the Leonard Report:
The Leonard Lumber Report is a column that focuses on the lumber futures market’s highs and lows and everything else in between. Our very own, Brian Leonard, risk analyst, will provide weekly commentary on the industry’s wood product sectors.
Brian Leonard
312-761-2636