Signs of a Top from Past Bull Market Rallies

More charts from the May/June cover story 'Weather Markets.'

Here are some of the charts cited in the cover story "Weather Markets" from the May/June 2008 issue of Farm Futures.

The 1980-81 corn rally ended with all sorts of technical alarms. First, it gapped below the 25-day moving average (green line), then broke the red trendline at the bottom of the uptrending channel. When the market rebounded off the December lows it failed at the 61.8% retraceement of the correction.

The December 1983 futures rally also ended with trendline (red) and moving average (green) violations. The long tail provided plenty of rebound rallies to sell.

Selling the 1988 rally was difficult to say the least. The July rebound that failed with a one-day island top at the 61.8% retracement level provided at least some clues, along with the violation of the 25-day moving average (green line) that held since the Memorial Day breakout. Remember, the best price is a good price, not necessarily the top.

The 1991 corn rally featured all sorts of volatile action, spurred by dry weather in the east and the coup in Russia. The island top/double top in August confirmed the high.

The 1993 crop rally topped out in January 2004 with violation of the 25-day moving average (red line).

The 50-day moving average (red line) proved to be the one to watch for the December 1996 corn rally, with the island top back in July signaling a high alert.

December 2007 corn provided clear signs of a top last summer on the June rally. Prices surged to tick to a new high, then closed lower on the day with a bearish reversal that confirmed the double top.

May 2008 soybeans provided a selling opportunity when they rallied up and failed twice to take out the 61.8% retracement level just above the psychologically important $14 level in April.

The Minneapolis March wheat contract was the classic example of a blow up top, with confirmation provided by the bearish island when prices gapped lower on the second day after the day.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish