When I graduated from college in 1973, the first job in New York City I could land was with a commodity consulting firm. My first love was the stock market but the 73-74 bear market was raging on Wall Street and firms were failing left and right. This was the beginning of the 70's commodity boom and I got a great OJT baptism as one commodity after another made parabolic rallies.
From time to time I check in on the commodity scene and today I want to point out a breakout in the price of corn.
In this weekly bar chart of the nearby corn future (also known as a continuous contract), below, we can see that prices have traded sideways for the past five years but now they have broken out to a new high over the peaks of 2019.
Chart resistance in commodity futures is not the same thing as with stocks. If someone owned a stock at $7.50 and it declined below $3.50 and stayed low for years, they might become a seller again at $7.50 if and when prices recover. With futures that does not happen as the contract expires. We might have psychological resistance around $7.50 but old longs are not waiting to become "even".
The weekly On-Balance-Volume (OBV) line is bullish and the Moving Average Convergence Divergence (MACD) oscillator is bullish too.
In this Point and Figure chart of the continuous corn future, below, we used weekly close only price data with a five box reversal filter. Here a longer-term price target is in the $11.60 area.
Bottom line strategy: I do not believe that Real Money is the right forum for trading commodity futures but equity traders should think a bit about the implications for food prices in the months and maybe years ahead. I am sure you can uncover some equity plays that sense.
