The great bull market of 2008!
Jul 15, 2008
Today’s higher open and sharp correction has now broken important technical support levels. The longs are aggressively moving to the sidelines to preserve equity and sellers are getting confident that they need to press the market for lower price action.
The big question on one’s mind is whether or not the great bull market is over! In a word MAYBE!
Some of my bearish concerns are:
Today’s technical failures, the great uncertainty regarding our banking industry, continued equity losses, the tapped-out consumer, improving crop conditions, and finally crude oil is taking a big hit, a move back to $100 can put a lot of pressure on ethanol usage and subsequently corn demand.
In general, the demand side of the equation looks weak ahead and could be sharply lower if we are not careful.
On the bullish side:
The dollar continues to slide due to the concern about the U.S. economy. This should help to keep the slide in exports down.
While the crop has stabilized, I’m convinced yield potential has been lost. The seasonal trend is for the crop to decline over the next 30 days. All it’s going to take to get the trade excited after a $1.34 sell off in December corn is about 5 to 8 days of 90+ degree temps.
In summary: Right now the trade is acting like corn yields are going to be around 150 bu. to 152 bu. per acre. If this is correct, the highs are in. If, as I suspect, the crop has more yield variability and any risk is seen with an early frost, we have a solid chance of seeing and even making higher highs in the January to March time period. Right now it all comes down to weather. The problem is the bull will not be able to prove his case until the combines start to run. So fighting the market right now if you are long is more than likely going to be difficult at best.
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