Wheat Futures (CBT.W) have been down in 11 of the last 13 trading days, including Wednesday, when wheat lost 0.7% of its value, dropping nearly 5¢ to close at $7.06’6. This fall was actually less than what could have been, as wheat futures opened at the low of the day and closed at the high of the day, although there was very little movement overall, as Wednesday was an inside day, which occurs when the day's high is lower than the previous day's high, and its low is higher than the previous day's low. What has happened in the past when these events occur in the third quarter?
Q: What has happened in the past when, in the third quarter, wheat futures have an inside day, opening at the day’s low and closing at the day's high, omitting any repeat occurrences within the next 10 trading days?
A: According to the nine previous occurrences of this event, EventEdge indicates that CBT.W has shown a strong bullish edge that peaks one trading day after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, Sept. 10, 2008) is Thursday, Sept. 11, 2008.
CBT.W rallies in 89% of the cases (8 of 9) by an average of 1.1% relative to the close on the event date. The overall return of the nine cases is 1.0%, which, based on the close of CBT.W on the event date ($7.06'6), provides a target price of $7.13'7.
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Jeffrey Garceau is an analyst with MarketHistory.com.
