Formerly NE North Dakota, now NW MN | Mho-
Picking bottoms and attempting to trade them has some very daunting risk/reward factors. When dealing with market-glut type scenarios, the volatility tends to evaporate. I'll credit Tara for his statement that bottoms here tend to be processes not events. I agree with that, and think it's more true of wheat than corn. If you hit a financial shock, or if you have moderate stocks to use ratios, so your supply is a little bit more vulnerable to shocks, you can start to look for key and island reversals on the bottom and stuff like that. Those events, though, are as likely to occur anywhere on a chart, not necessarily at contract lows (unless you've been in a very long downtrend), so they are a just as likely to happen in the middle of the range and show up as a trend reversal instead of a true "bottom" (contract low). Meanwhile... it doesn't take much of a positive supply shock to have an out-sized affect to the downside. Basically, you can wait a long time to get then 10 or 15 cents of profit on a sideways market, but in the meantime, probably not a big deal for stats can to find another 800k MMT and drop the works another 20.....
I didn't dig real far into the numbers yesterday, but I did look at domestic spring wheat. Stocks to use went from .3 to .4. That's not unprecedented for wheat, but that's just plain ulgy. Add to that the possibility that hrsw reclaims a number of acres from corn and PP up here next year... and well..... I need to see something a lot more exciting than a tick up in corn to get bullish.
Only stocks to use that was even kinda happy to me was domestic soybeans. IIRC i think it's still somewhere below .05. IIRC global is like .16 or .18 which is what I would say is fairly moderate, though I'd be interested to hear others opinions. |
Bottom Pickers
