Corn Bull Fails to Perform, Major Bear Could Resume

December 1, 2016 5:13AM CST

For the better part of the past two months we've maintained a count calling for a broader correction or reversal higher.  With today's failure below our short-term risk parameter defined by 14-Nov's 3.44, not only have the chances of a broader reversal higher been squashed, we believe the market has identified 20-Oct's 3.69 high as the END or upper boundary of a larger-degree correction ahead of a resumption of the secular bear trend to new lows below 31-Aug's 3.25 low in the Mar contract.  As a direct result of today's sub-3.44 break the hourly chart below shows that the market has defined Mon's 3.61 high as the latest smaller-degree corrective high and new short-term risk parameter this market is minimally required to recoup to defer or threaten a resumed bearish count.

Corn 60 min

Corn Daily

Today's break below 3.44 not only confirms AT LEAST the intermediate-term trend as down, it confirms Aug-Oct's 3.25 - 3.69 recovery attempt as a 3-wave affair as labeled in the daily log scale chart above.  Left unaltered by a recovery above 3.69 , this 3-wave recovery is considered a corrective/consolidative structure that warns of a resumption f Jun-Aug's collapse that preceded it.  The Fibonacci fact that 20-Oct's 3.69 high marks the exact 38.2% retrace of Jun-Aug's 4.53 - 3.25 decline reinforces this bear market correction count.

Historically bearish sentiment in Aug/Sep that contributed to at least an interim correction higher has acquiesced to relatively benign levels that won't inhibit a bigger move either way.

Corn Weekly

Corn Weekly

On an active-continuation chart basis shown in the weekly (above) and monthly (below) log scale charts, it would be premature to totally ignore the prospect of a larger-degree range of lateral-to-higher prices for the foreseeable future as part of a long-term base/reversal-threat condition similar to the 2008-to-2010 example circled in blue below.  But again and as a direct result of today's relapse below 3.44, the directional scales have tipped towards the bear where further and possibly steep losses should not surprise.

The market remains deep within the middle-half bowels of the past quarter's 3.25 - 3.69-range where aimless whipsaw risk could rule in the weeks ahead.  This makes for a poor risk/reward condition from which to initiate directional exposure for shorter-term traders with tighter risk profile.  But for longer-term players we advise moving from a bullish stance to a bearish policy with strength above at least 3.61 and preferably 3.69 required to negate this call.  A resumption of the secular bear trend to new lows below 3.35 in the Mar contract or 3.25 on a continuation basis could easily lie in the balance.

Corn Monthly

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