Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Corn – Smart Money Putting On Short-Squeeze Clinic

Commodities / Commodities Trading Jan 27, 2013 - 01:29 PM GMT

By: Michael_Noonan

Commodities

While most eyes remain fixed on gold and silver, and the stock market, to a
lesser extent, the Fed having driven the little investor away, we take a fresh
look at the corn market. It has been some time since we last visited grains,
and corn deserves some attention. What do traders in PMs, S&P, Natural Gas,
Notes, or Corn have in common? To them, nothing. Being chart-driven, for
us all charts are the same. An opportunity is what we look for, and it matters
not from which sector that opportunity arises. Nor does not matter what the
underlying product is in any chart. We are equal-seeking opportunists.


We reference this as a short-squeeze clinic because if it can happen in corn, it
can happen in any market, [and does!]. This analysis also conveys why the best
source for information comes from the market itself. Starting with the monthly:

This chart is bullish for several reasons. There are consistently higher swing highs
and higher swing lows, the essence of a trending market. The higher the time, the
more pertinent and reliable the information. Price rallied to the last swing high in
just 3 months. Since that high, the correction lower has taken 5 months, or almost
twice as long to retrace only half the gain, another characteristic of a trending market.
Where price stopped is also important.

A horizontal line is drawn from the last large bar down, followed by an equally
large up bar, the first of the three bar rally to highs. The solid portion of that axis
line covers the then failed highs and the gap between rally bars 1 and 2 leading up
to 3. The remaining portion of the horizontal line is dashed to show how it extends
into the future, six months before price came back to retest that level. It is an axis
line because it acts as resistance to the left and then becomes support to the right,
and this same line shows up on three different time frames, attesting to its validity.
The decline also stopped just under a 50% retracement. In futures, there are
different contract changes that account for “wiggle room” in some price areas. In
horseshoes, this would be a “leaner.”

In all events, the market is sending an important message. When it shows up in all
three time frames, then we have ourselves a trade potential, with an edge. Edges are
good, in fact, preferred.

We have to chuckle over this chart. Prior to commenting on recent developing market
activity since the last swing high, we drew channel lines to capture the down move from
the June 2011 high to the May 2012 low. It led to the breakout shown for June/July
2012 on the chart. The observation was added at the bottom to show how the failure
for price to reach the bottom of the support channel line was a clue that the breakout
was likely to be more reliable. A similar channel was drawn for current activity for
comment and we then saw the “deja vu” moment. Point? Patterns repeat all the time.

You see the same axis line and how price retraced right to it. The 50% area was at 797,
again, close enough and a validation that December/January may have formed a low.

The daily time frame echoes the likelihood of a swing low for corn. The market messages
are very clear throughout the varying time frames. The huge volume and price spike at 1
was a “What the hell just happened?” moment, at the time. It was a day of massive short-
covering by smart money, and it also marked a change in the market’s character. That day merits closer inspection.

You have to pay attention whenever there is a large spike in volume and/or price range,
more especially when the spike occurs simultaneously. It is even more relevant when
this takes place at important support. The fact that this happened at a low indicates a
change of risk from weak hands into strong. Smart money takes important action at
highs and lows. You can be sure that the public does not generate high volume. High
volume is created for a reason…the change in risk, just mentioned. It marks the effort
of controlling influences to get the public out of their positions. How can one be sure?

Controlling influences are not sellers at lows; they are buyers. The sharp increase in
volume is them accumulating a market position. This reflects the exchange of risk, and
it is a visibly classic example of a short squeeze. A thorough analysis of several intra
day charts bears this out.

Back to the chart. 1.was just explained. At 2, it looks like price is absorbing seller’s
attempts to get price lower so shorts can cover at more reasonable prices and curtail
their losses. We added the comment, “or not” because there was similar activity at
the channel line at area 5, where price failed to go higher. Anything can happen.

You can see from 3. that there has been very little give-back in the form of a correction.
Longs have shorts by the shorts, and they will make them pay up to get out, giving no
opportunity to get out at lower levels. “You play, you pay.”

The similarities of the channel line on the weekly chart show where the current swing
low is way above the lower support channel, [not visible on the chart], and that is a
measure of underlying strength gathering for a trend change. The 50% retracement
is more exact on this chart because it measures the distance between swing high and
low within the same contract month.

One has to like the potential for corn from the long side. So says the market. We are
mere messengers.


By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules