In a recent update we looked at a spread trade in Corn, citing the upside move was overdone and the spread had the potential to narrow dramatically. See here.
Over the last few weeks, the spread has done exactly that.
This illustrates a very interesting point – unexplainable or extreme moves are often followed by very obvious moves. As traders we sometime have to project forward and think what is the market about to do that in hindsight we will say “Oh yeah, that was obvious”. It sounds a bit silly, but we need to forecast what our hindsight will be.
Analysts can talk about the obvious. Traders turn it into cash in the bank. The next time you see a move that seems extreme, rather that sit and scratch your head looking at what has happened, think “what is going to be the next obvious move?”. Big money can be made from this point alone.
