LEONARD LUMBER REPORT: A Good Week

A good week. We saw a few negative economic reports, crude over $100, and interest rates creeping up. One would think futures traded lower, but they didn’t. It actually squeezed out a new high for the last three sessions. There is a slight appearance of things getting tighter. If it showed up, we would have been substantially higher, but it didn’t. It’s only the anxiousness fueling the buys. The trade can count. There hasn’t been a cash buy since the first week of January, and that was muted. We will need a spruce buy at some point. Is it only another fill in, or will it be better? Either way it will cause a rally from here in May futures. I normally would be nervous about the gap we left with the March expiration. Right now, May is in the middle of a momentum push. We can save the gap at a later date. For now, we have to see how far May can go. It is driven by tightness in supply and a need to buy. Nothing else.

Technical:

The futures trade has been condensed to small ranges and small moves. The May chart is very positive. It looks as if a $12 pop is in the cards. Yes, that is correct. A whopping $12. That’s as far as the market allows you to measure. The 21- and 13-day averages are starting to cross. The resistance points sit at 606 and 612. Clear those and now the 618.50 double top comes into play. There is a May gap from 632 to 635. By midweek the pattern will be defined, either one of continued upside or more of the same with a “slow cash” pullback. Stay with the hedge selling plan.

RSI 59.80%

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