Trend line violations can give a trader night mares. Just 2 days ago, I wrote about the 513 area and how a settlement below that trend line intersection would open the door to a test of the 5.00 level.
The key was the settlement. We settled right on that trend line. So, yesterday, when we traded clearly below it during the first ten minutes of trading, every one and his brother got short, speculating we would go down and get the 5.00 print, hit sell stops and then explore the space below. With the funds still long 360K contracts, that was pretty logical logic. Mr. Spock would have sold corn yesterday.
However, we found support at the 506 level and then proceeded to snap back like a rubber band, from 506 1/4 up to yesterday’s high at 531 1/2. That’s 25 cents of pain for anyone stubborn enough to sell it in the hole and not get out. 25 cents on a one lot is $1,250 bucks.
I had some left over longs from the Nov 17Th buy at 511. The final sell stop I had at 505 1/4 never got hit. I like 544 as an up side target and I will be exiting all longs and initiating short positions at 555.
Stay short the Stock indexes through the weekend, also with protective buy stops above, in case the European Union finally gets a handle on Ireland. Doing so successfully, would provide a blueprint as to how they will handled the rest of the PIIGS. (Portugal, Ireland, Italy, Greece, Spain)
On a final note, China’s Banking Regulatory commission urged China to take special measures to deal with China’s corn shortage. China has supply issues, which should be supportive for Corn for at least the next 2 years.
Happy Wednesday
