Chicago Board of Trade corn futures rallied 3.4% on Monday to close the day at $5.12 per bushel. The gain came on a 'gap up' pattern, where the day’s low price was higher than the previous day’s high price. During the session, corn crossed above its 52-week high; reaching an intra-day high of $5.15. Furthermore, corn also recorded an extra large* five-day gain on Monday.
* Five-day percentage gain is more than three standard deviations stronger than the average five-day percentage change measured over the last 30 trading days.
Q: How has CBOT corn performed in the past, omitting repeat occurrences within 10 trading days, when it has gapped up to hit a new 52-week high during the first quarter?
A: According to the eight previous occurrences of this event, EventEdge indicates that corn has shown a strong bullish edge that peaks six trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Monday, Jan. 14, 2008) is Wednesday, Jan. 23, 2008.
CBOT corn rallies in 100% of the cases (8 of 8) by an average of 2.4% relative to the close on the event date. The overall return of the eight cases is 2.4%, which, based on the close on the event date ($5.12), provides a target price of $5.24'2.
We also asked the MIM how CBOT corn performs after recording an 'extra large' five day gain in the first quarter and got similar results but with lesser number of occurrences.
In this case, according to the six previous occurrences of this event, corn has shown a strong bullish edge that also peaks six trading days after the event. COrn rallies in 100% of the cases (6 of 6) by an average of 1.9% relative to the close on the event date and provides a target price of $5.21'6.
If you would like to see more details of this historical edge, go to www.markethistory.com
To see these ideas in EventEdge® click either 1st Graph or 2nd Graph. HYPERLINK "http://www.markethistory.com/staff/detail.html?s=ronish" Ronish Patel is an analyst with MarketHistory.com.
