Corn : Update

We have been following the progression of price in Corn futures. If you missed my original thoughts on this market I recommend reading them before continuing. You can find that information by clicking here.


The following series of charts are of the ETF of Corn, ticker symbol CORN instead of corn futures due to the fact that I took a position right before the futures market closed and I didn't want to carry a position overnight given that futures actively trade between 6 pm - 3 pm est., (the bulk of the session while I sleep) and  the potential for further downside risk as you can see from the following charts.


My initial work called for a w.(ii) decline after the completion of w.(i). There are two possible counts for the termination of w.(i) that give rise to two possible entry points into the market. The following chart analysis is from an actual trade in CORN. I will be sharing this trade and thoughts with readers so that they can learn how I am using elliott wave.

NOTE: THIS IS NOT A TRADE RECOMMENDATION (see risk disclosure and disclaimers) before proceeding.

The following chart is my preferred wave count where w.(ii) is unfolding in a zig-zag correction. W.c = w.a @  $48.68 and terminates in the vicinity of the previous 4th wave of one lesser degree. This would be a text-book trade if my analysis is correct. Notice that the .618 retracement of w.(i) lies just below at $47.53 as well as an open gap. Both may provide support if the price continues to subdivide to the downside. 

The Trade

Buy:  200 shares @ $47.62

Filled at 47.66

Slippage (.04)

Initial Target: $52.71 with much higher potential. 

Stop: $47.50 

Nothing is perfect or guaranteed in speculating in the market and this chart shows that there is another downside target that I must account for. In this alternate count, w.(ii) unfolds in an expanded flat , as w.(i) terminates at $48.6 instead of $48.68. The w. (ii) bottom isn't expected until $47.04, where w.c = 1.618 w.a. That's certainly a deep correction but it is a valid count so long as w.(ii) doesn't exceed the origin of w.(i) at $46.85.

Under this interpretation, I would place my stop at $46.75 with the full knowledge that I'm wrong in a big way if $46.85 breaks. As such, prudent risk management calls for the actual trade under the preferred count because it offers me less initial risk and if wrong my maximum exposure is $24 + commission and slippage. 

As always, I'll continue to follow this trade so readers can see how I manage the trade. 

I hope you found this post helpful and ...

Best of Trading

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Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blogsite.   

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Fair Disclosure Notice: I am LONG CORN but don't have any position in corn futures markets related to this article. 

Heard On The Street

Announcement:

This weeks edition of Heard On The Street will not include a video as I had to travel over the weekend.


Identifying, the wave pattern in the $ES_F remains challenging and the market refuses to show it's had. Until it does, all we can do is focus on one wave at a time until enough data enables the wave structure to be clearly identified.

As of the close, my best interpretation remains an expanding diagonal. If you have been reading my posts you know that the pattern has flaws. See last Wednesday's blog post for details. As of the close of Friday's trade, the weekly chart level shows the current wave labeling. Notice this week's price bar , called a "spinning top" to candlestick traders. The small real body shows that neither the bulls or bears were able to gain control. The implication is that a spinning top immediately proceeds trend losing momentum.  If this was the case we would expect a move up for the early part of next week.

The above chart shows the bullish expectations, given the spinning top at the weekly chart level. However, when I look at Friday's session, I see weakness as price closed near the lows of the session. Add your favorite momentum indicator and you will see trending momentum to the downside that contradicts the weekly implications of the spinning top. RSI is currently 44.66 and hasn't broken the 40 level which would imply that a larger decline was unfolding.  Also note that the decline from w.iii circle has been contained within a corrective price channel; is choppy and that four waves have been completed within it. The structure SHOULD be viewed as corrective.

Ok, corrections can't end in four waves so here's what I think will unfold under a near term bearish scenario. I've only labeled the waves from w.4 red low but I want you to focus only on what unfolds from 1367.25 high. If a double zig-zag unfolds as I have indicated, then I'm looking for w.(a) of w.z to terminate near 1318.25- 1317.75 for tomorrow's trade that will be followed by w.(b) up and a final round of selling to where w.z = w.w at 1294.25. Note nearby structural support of 1290.25 and the .618 retracement of 1290.50 are nearby.

In conclusion, I've given a bulls and bearish view. What should be exciting to you if you are a bull is that we know that eventually the market will make a new recovery high under either view. Only a loss of 1290.50 would imply that a more significant decline was underway and that a more aggressive bearish posture would be adopted.

I hope you found this information helpful and best of trading.

The Market Pulse

Previously I left readers with bullish and bearish wave counts. The above chart has been eliminated as the 1305 low was reached beyond the maximum extensions for corrective patterns. Secondly, the ensuing price action is corrective rather than impulsive.

Therefore, the following chart(s)... contain scenarios for tomorrows session.

The preferred count has w.(i) complete where w.(ii) is unfolding in a sharp zig-zag correction that should terminate at 1320.5 to 1324. This interpretation is invalidated with a print below critical support or 1305.

Other alternates include:

Under this alternative, w.(ii) ended and prices should decline from the onset of tomorrow's open as w.(iii) down draws price significantly lower. Watch the ON session for hints that this interpretation was unfolding. As before, the interpretation is invalidated with a print above critical resistance or 1317.50.

The final alternative also has prices moving to the upside tomorrow as w.(ii) is an expanded flat correction, although not perfect in form, that should terminate between the heavy resistance levels surrounding 1320.5-1324. Once again, as in each scenario, this interpretation is invalidated with a print below critical support or 1305.

In summary, a break of 1305 opens the down to significantly lower prices while a rally to 1320.5-1324 only postpones the fact that the direction of the market is clearly down at this point.