Corn Now Extremely Oversold
Tiho Brkan | Oct 28, 2013 02:16AM ET
Chart 1: Agricultural commodities like Corn are extremely oversold
Here is an interesting fact: Corn spot price currently finds itself at an extremely oversold level. Over the last 20 years or so, Corn prices have only traded 30% below the 200 day moving average on three occasions. First two were in 1996 and 2008 and the third is right now, at the current price level.
Chart 2: Corn is the worst asset performer over the last 52 weeks
This type of an oversold condition has placed Corn in the worst performer category. Over the last rolling year or 52 weeks time frame, Corn is down more then 40% from its peak. If we compare that performance with in favour assets like the stock market (Nikkei 225, Nasdaq 100 and so forth) we can see a dramatical difference.
The reason so many investors are unsuccessful in this game is because they rarely if ever chase bears when supply is high and prices are low. Instead, they jump on the bandwagon near the end of the trend, when supply is scarce and prices are high. This is just before a major sell off or crash.
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