In a van, down by the river... | I'm posting a chart comparing the DEC 2015 corn chart against a re-scaled version of the DEC 2001 chart. There are certainly many other years that a person could use as the "ideal" analog, but I chose 2001 because it has traded with very high correlation for nearly 500 sessions (I'm not making any assumptions as to why...just saying they're eerily similar). I'm not suggesting that prices will do what they did in 2001, but I find it interesting how the market slammed higher, presumably for good reason, but within just three days lost nearly half of the move. Can anyone tell my why we should be trading so similar to 2001? You can see very similar market action in 1993; in that year the July peak was just as sharp, and also led to a quick selloff. Based on this chart, and looking at the longer-term resistance around $4.50, I like the suggestions I've seen from others to have targets on DEC corn just below $4.50.
On a side note, I took a little bit of teasing on here for buying call options a month or so ago, but so far it's been a pretty good experiment. I used the current rally to price a large chunk of my production, so now I'm guaranteed over $4 for the crop, with blue-sky above if this thing goes further, and no more worries about harvest basis. With the implied volatility so high at this point I am hoping to sell one of the calls with a target order a bit higher than here, and leave the other in place through pollination time. In retrospect, I was really a fool for not following the same strategy with my beans. At least there's next year...
 (2015 vs 2001 Dec Corn.JPG)
Attachments
----------------
 2015 vs 2001 Dec Corn.JPG (69KB - 225 downloads)
|
Fun with Numbers
