Everyone wants to be a contrarian. To be a superstar and pick a bottom. Become famous for calling the top. None of this is easy to do and in my view it's a fool's game, unless you are not really involved in the markets day-to-day.
But if you want to be a contrarian there is a scenario setting up in Corn that's worth watching.
The chart below starts at the large gap down that ocurred in July last year. Since then, corn's price put in a rounded bottom that got many traders interested as it started moving higher earlier this year. However, the failure in May has led to a steep pullback and a possible double bottom. The signs that suggest this may be happening are the falling pennant that's formed over the last week, with a RSI that is technically oversold and a price that is very extended to the downside from the 50 day SMA.
Should price reverse, traders will be looking for a ‘V’ to the upside to complete and an Adam-and-Eve bottom. The contrarian play would be to get long now against a stop at new lows and play for a rise to the 520 level. From there if the Adam-and-Eve bottom does play out, there could be quite a bit of upside. Lots of room to be a hero.
The Corn ETF (NYSE:CORN) looks much worse. If you are not going to trade the futures then you are taking a bigger risk, or looking to become a bigger hero. Good luck.
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.