| puff33m - 11/7/2015 17:27 Always enjoy reading your analysis and the others. I'm curious about your $3.18 level being met before having "energy" for higher levels. I think I get what you mean. What I don't get is what if we come out of a dry winter, into a dry summer. Say May and June rains don't materialize. Do you not think prices can go yo higher levels unless they've seen $3.18? Or are you saying we will see $3.18 before we see higher levels in a scenario such as I mentioned? I just don't get why in your analysis we couldn't see higher prices without seeing $3.18 first. Not trying to bust your chops, just get the thought process. Thinking about the scenario, I'm sure if we come into April with dry (good) planting conditions, we would see your $3.18 anyway I think. Hi puff33m, Great questions. First, regarding those May - June rains, the market will have told us long before that event occurs whether we are going up or to new lows on this swing or not. We won't have to wait nearly that long. The market is in it's defining leg. It will either fail to go lower or it won't. Every bar is scrutinized closely. What did it do, what didn't it do, what should have it done it didn't etc.? Basically, there are three prevalent energy sources at work down here. First, is the long in the tooth energy source stored in the market prior to the 2012 highs. Second, is the energy that is being stored in the market from the 2012 highs to the most recent lows. And third, you have the energy stored since the 2014 lows til today. The $7 "chatter" will require using the second energy source. The $5.25 corn can be achieved by using the third and most recent energy source. But the second source cannot be tapped with out number one being exhausted and "concrete". For example, say you are going to use a pry bar to lift a tractor tire back on the hub,..you slide the bar under the tire and step down on the bar. If the bar is on a hard surface, the tire will move up - if you are on a soft surface, the bar sinks into the ground. It's really as simple as that. For example, let's say that we had this year's rain event after we have a major pivot, price would have reacted differently. 2013 was a similar event with much tighter stocks, and again the pry bar was stepped on but price barely wiggled. The third energy source can be tapped with out exhausting the first or the second energy source, but exhausting that source short term, would only delay the first source exhaustion, not eliminate it. The first source will be "concrete" when we make a final pivot. And just like the market knew the southern midwest was going to drown 6 months before it did - by projecting the rally then, price action late in the last decade projected price to return sub $3 in the future. So, in essence, we can see higher prices - and the failure to go sub 3.18 will get you exactly that. But $7 is out of the cards with out a Lower Low..and IMHO, even with it, price will not reach $7. It will get stopped cold sub 6.50 best case scenario. As always time will tell. Take Care |
Hey jpartner below
