Today, November 10, I performed a little experiment. First, I put myself in the shoes of investor A: Uses mainstream financial news for directional clues of the major markets. In this case, Corn.
And, within the first hour, I found more sides to corn's near-term story than a Rubik's Cube. Follow along:
- Bearish Outlook: The "October US Department of Agriculture crop report" revealed an 8% increase in corn production from the 2008/9-crop. Additional pressure came from expectations of a record yield. (South East Farm Press)
- Bullish Outlook: "Corn posted strong advances on bullish outside market influences; such as an expected decrease in corn crop from October estimates." (futuresource.com)
This completely contradicts the earlier report of an increase in production.
- Bullish Outlook: "Corn rises most since October 12. A moderately strong storm system is forecast to slide across the central U.S."
- Bearish Outlook: BUT... "There is only a low chance for substantial rain that could induce a more notable slowing" of corn harvests.
- Bullish Outlook: "Economists at the USDA turned bullish on the cash grain market."
- Bearish Outlook: "I don't see anything bullish in the corn. The USDA didn't tinker with demand..."
As Investor A, fundamental analysis brought me no closer to seeing clearly into corn's near-term path. So, I then stepped into the shoes of Investor B, who uses technical, Elliott wave analysis to beat the grain's prices to their next punch.
Here, the entire story comes from one, main source: The November 9 Daily Futures Junctures. In that publication, EWI's chief commodity analyst Jeffrey Kennedy presents four compelling charts of the grain, the first of which captures a major "Double Key Reversal Outside Bar Combination" in action. See the chart for yourself below.
As Jeffrey explains:
"By themselves, Key Reversals are not that significant. However, I find that Double Key Reversals tend to have a bit more reliability in identifying significant turning points in markets, especially when the reversal is an outside bar."