Soybean Futures (CBT.S) gapped lower on Wednesday, where the intra-day high was lower than the previous day’s low price. Soybeans dropped a 'big' 3.9% during the session while opening and closing at its intra-day low price of $12.51 per bu. History suggests even more bearishness after Wednesday's price action.
Q: How has CBT.S performed in the past, omitting repeat occurrences within five trading days, when, during the third quarter, it gaps lower while opening and closing at its low?
A: According to the 10 previous occurrences of this event, EventEdge indicates that CBT.S has shown a very strong bearish edge that peaks one trading day after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Wednesday, Sept. 3, 2008) is Thursday, Sept. 4, 2008.
CBT.S declines in 90% of the cases (9 of 10) by an average of 4.1% relative to the close on the event date. The average of the one rally is 0.2%. The overall return of the 10 cases is -3.7%, which, based on the close of CBT.S on the event date ($12.51), provides a target price of $12.04'6.
Note that the skip has been changed from the normal 10 days to only 5 in this idea due to short duration of the peak. To view this idea with a 10-day skip in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
