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Mascoutah, Illinois | Numerous technicians look for patterns and try to apply their findings to a chart in an effort to determine future prices. Some folks hate charts, some folks love charts, and somebody can call me a retard for trying to connect a few dots. To each their own.
One thing I have been taught along the way is charts tend to act symmetrically over the course of time. You can throw those items out the window when something dramatic happens fundamentally. The USDA Report last week was one of those moments in time. A weather event can positively or negatively impact fundamentals dramatically.
I have studied the December 2010 corn chart quite extensively today looking for a price point for this current rally. Yesterday I threw out $4.29 as my target after doing some minimal work. I am refining that target to $4.20 and here is why.
Corn is still in a longer term downtrend dating back to January of 2009. We peaked around $4.80 in January of 2009, traded lower, and it took us till the beginning of June 2009 before we rallied back to $4.70. A ten cent lower high.
From $4.70 in June of 2009, we traded lower until we reached January 2010. We peaked this time at $4.50 in January of 2010. A twenty cent lower high.
Where do we head from here? With the downtrend line still in tact dating back to the beginning of 2009 we reach $4.20 in the December contract with a late July to early August timeframe. This would equate to a thirty cent lower high which keeps the longer term trendline in place without being violated to the upside.
Keep in mind, we rallied a quick 13% since the $3.43 low prior to the release of the USDA Report. I thought the price action today was very encouraging heading into the weekend. We were basically "flat" today, and in my opinion "flat" was a good thing. We closed today at $3.95, and my belief is we still have another 25 cents higher which gets us to $4.20 in December corn.
Folks on this site are going to argue for higher prices based upon weather, some will argue for lower prices based upon weather. We can debate that until we are blue in the face. One party will be right and one party will be wrong. In the end, you have to respect the price action and the tape which is being traded. Keep in mind this is a very sharp rally and some of it is short covering. Don't let the prices of 2008 affect your decision making. It was a unique period in time just as the "internet bubble" was at the turn of this century. Will we see those astonomical prices again someday? You bet we will. It just won't be this year unless something dramatic happens fundamentally.
I am also adjusting my November 2010 price target in beans from $10.27 to $10.13.
Edited by djmcountryboy 7/10/2010 12:26
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December corn 2010
