May 11, 2012

The Corn debacle has begun?

The charts following are a repeat from a piece I did last year to demonstrate how sharply Corn does tend to move when it is going down…With my belief that this week’s action has pushed Corn off a major cliff, and with my expectations of a fairly straight down trade down to $4.50, I figured it made sense to again show you some evidence, going back 50 years, as to WHY I look for a selloff of this magnitude…The bottom line, which should be clear from these histories, is when Corn IS going down, a 25-30% drop, often VERY quickly, is almost the norm.

First up though…Here’s how the July 2012 contract looks as of today’s close…which I believe is going to trigger the initial stages of an avalanche of farmer selling as we enter next week…

 And here are some examples of Corn declines going back over 50 years…

What I see, over and over and over...?

WHEN IT GOES, IT JUST GOES…RELENTLESSLY.

Here is the big picture I keep putting out there…One more piece in the puzzle that has me so firmly in a bearish posture…

Considering those 50 years of history, and considering how ULTRA bullish the whole agricultural world has so WRONGLY been, I think a 25% break from here is the minimum selloff we will see…meaning specifically, from $6.00, you get a target of $4.50…

And here is one option I would recommend on Monday morning…

 Please do NOT let yourself think, "It is too late to get on". NOTHING has happened yet. In my opinion, all we really do have is a confirmation this trade is ready to move…I KNOW there are 1000’s of farmers out there sitting on inventory from last fall who have probably only just BEGUN (literally in the past 24 hours) to sell…and there are many MILLIONS of bushels that WILL get sold.

Call me now. As one of my wall reminders tells me: ONE GOOD TRADE IS ALL IT TAKES…But when you do have a good one, you do have to take it…This is not a “wait and see”  situation. You DO have to pull the trigger when you have a great setup and the trade starts to happen…

As another of my reminders states: THE BEST WAY IS GOING WITH IT…and going short this market, here, IS going with it…AND going AGAINST about 99% of the opinion out there.

If you do have money you would ever risk on a trade…PICK UP THE PHONE…I really, honestly, truly do not think you get a better risk vs reward than this.

Thanks,

Bill

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