Soybean meal futures (CBT.SM) rallied a 'big' 2.6% on Wednesday to close the session at $343.70 per ton. Meal also recorded a 'large'* five day gain of 3.1% on the day. Moreover, soybean meal experienced a bullish MACD crossover, where the daily Moving Average Convergence Divergence indicator line (the difference between two exponential moving averages) crosses above the slower signal line (an exponential average of the MACD line).
* Five-day percentage gain is more than one standard deviation stronger than the average five-day percentage change measured over the last 30 trading days.
Q: How has CBT.SM performed in the past, omitting repeat occurrences within 10 trading days, when it records a 'large' five day gain while experiencing a bullish MACD crossover?
A: According to the nine previous occurrences of this event, EventEdge indicates that CBT.SM has shown a strong bearish edge that peaks seven trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Wednesday, May 28, 2008) is Friday, June 6, 2008.
CBT.SM declines in 89% of the cases (8 of 9) by an average of 2.7% relative to the close on the event date. The average of the one rally is 1.4%. The overall return of the 9 cases is -2.2%, which, based on the close of CBT.SM on the event date ($343.70), provides a target price of $336.10.
To view this idea in our EventEdge® analysis tool click here .
Ronish Patel is an analyst with MarketHistory.com.
