Oat Futures (CBT.O) rebounded nicely Monday, going up a 'very big' 5.2%, after an 8-for-11 negative trading run. Oat futures closed the day at $2.93, a gain of 14.5¢. A 'very big' gain occurs when the one-day percent move is more than three standard deviations stronger than the 30-day average of a one day percent move. What can history tell us about such an even occurring to oat futures in a bearish trend?
Q: What has happened in the past when oat futures have a 'very big' rally when the Daily Sentiment Index is less than 30, omitting any repeat occurrences within 10 trading days?
A: According to the 12 previous occurrences of this event, EventEdge indicates that CBOT oats has shown a strong bullish edge that peaks four trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Monday, Oct. 13, 2008) is Friday, Oct. 17, 2008.
Oats rallies in 92% of the cases (11 of 12) by an average of 2.3% relative to the close on the event date. The overall return of the 12 cases is 2.1%, which, based on the close on the event date ($2.93), provides a target price of $2.99.
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Jeffrey Garceau is an analyst with MarketHistory.com.
