BUY DEC CORN

I've been looking for a place to get long the grains and I think the time has come. Let's look at what has happened in the Corn market, which happens to be one of my favorites, and I'll show you how I analyze the market from a trend follower's point of view. One thing that I'm always looking for in my analysis is divergences. This is where a market makes a new low but a technical indicator that I'm using fails to make a new low. This can many times signal that a reversal could be imminent. Looking at the daily chart and using the Williams %R oscillator, the divergence is obvious. The Williams %R bottomed with a reading of 98.00 on August 11th with the market trading at 241 3/4. The market made a new contract low at 233 1/2 and closed at 235 3/4 on 8/18 and the oscillator reading was 93. Here's the divergence that I was looking for. I BOT DEC CORN MOO on Monday, August 21st at 236. To translate, I bought the December Corn contract at the market on the open (MOO) and was filled at a price of 236. The market closed the session at 237 1/2, up 1 3/4 cents on the day or a gain of $87.50 per contract from the prior day's close. If I'm right and this signal is validated by further gains then Corn should rally from this point to at least the first resistance area at around 248. That would give me about $550 profit per contract. With the current margin for Corn at $608, that would give me a cash on cash return of over 90% if the market reaches the area of resistance at 248.

Dale F. Doelling
Chief Market Technician
Trends In Commodities