Posted on May 03, 2023, 06:56 by Dave Toth
Although not yet reflected in the hourly chart of Globex day-session prices above, overnight’s break below Fri’s 5.72 low shown in the daily log chart below reaffirms the major downtrend and leaves yesterday’s 5.91 high in its wake as the latest smaller-degree corrective low this market is now minimally required to recoup to even defer, let alone threaten our bearish count. Per such, we’re identifying this 5.91 level as our new short-term parameter from which the risk of a still-advised bearish policy and exposure can be objectively rebased and managed by shorter-term traders with tighter risk profiles.
On a long-term basis pertinent to longer-term commercial players, 03-Apr’s 6.46 larger-degree corrective high remains intact as our key long-term bear risk parameter.
Today’s continuation of the major bear trend from 10Oct22’s 7.06 high leaves only 22Jul22’s 5.62 low as the level this market needs to break to confirm our major, multi-quarter peak/reversal count introduced in 17Oct22’s Technical Blog that warned that Jul-Oct’22’s recovery attempt was a B- or 2nd-wave correction that warned of a resumption of Apr-Jul’22’s (A- or 1st-Wave) decline that preceded it. Below 5.62 are NO levels of any technical pertinence to hold it up.
A break below last summer’s 5.62 low will confirm the major reversal from Apr’22’s 8.25 high that we’ve compared to the entire 2011 – 2012 topping process the ushered in the next multi-YEAR secular bear market that saw corn prices lose 63% over a whopping EIGHT YEARS. It is obviously indeterminable whether this new secular bear market will be as deep and prolonged as that previous bear. But we believe the important takeaway is that, like most major trends, the (3rd-wave) brunt of the entire trend typically come quickly and violently, with the subsequent countering bottoming process taking many quarters or even years.
These issues considered, a full and aggressive bearish policy and exposure remain advised with a recovery above 5.91 required for shorter-term traders to move to the sidelines and commensurately larger-degree strength above 6.46 for longer-term commercial players to follow suit. In lieu of such strength, further and possibly accelerated losses should not surprise. And knowing that this old crop Jul contract will end long before the new secular bear market in corn is over, the prospect of and risk/reward opportunities for severe losses in new crop Dec remain compelling.