Corn futures (CBT.C) rallied a 'very big'* 4.7% during Thursday's session, the fourth gain in the last five trading days. Thursday's gain pushed CBOT corn to cross above its upper Bollinger band and to trade at a new 52-week high. Corn futures reached an intra-day high of $6.43'6 but closed slightly lower at $6.43'2¢ per bu. History suggests CBT.C will continue to 'pop' in the summer.
* One-day percentage gain is more than two standard deviations stronger than the average one-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 recorded a 'very big' gain to cross above its upper Bollinger band and trade at a 52-week high?
A: According to the 11 previous occurrences of this event, EventEdge indicates that corn has shown a strong bullish edge that peaks 48 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Thursday, June 5, 2008) is Wednesday, August 13, 2008.
CBOT corn rallies in 91% of the cases (10 of 11) by an average of 12.1% relative to the close on the event date. The average of the one decline is 6.4%. The overall return of the 11 cases is 10.4%, which, based on the close on the event date ($6.43'2), provides a target price of $7.10'1.
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Ronish Patel is an analyst with MarketHistory.com.
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