So You Want a Contrarian Play…… Try Corn

• Posted by Greg Harmon
• on July 9th, 2014

Everyone want to be a contrarian. To be a superstar and pick a bottom. Become famous for calling the top. It is not easy to do and in my view a fools game, unless you are not really involved in the markets day-to-day. I wrote a little bit on my thoughts of being a contrarian in When To Be A Contrarian last week.

But if you want to be a contrarian there is a scenario setting up in Corn ($ZC_F) worth watching. The chart below starts at the large gap down that happened in July last year. Since then it put in a rounded bottom that got many traders interested as it started higher earlier this year. But the failure in May has led to a steep pullback and a possible double bottom. The signs that suggest this may be are the pennant falling 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 it reverse traders will be looking for a ‘V’ to the upside to complete and 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 three could be quite a bit of upside. Lots of room to be a hero.

The Corn ETF ($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 future pundits.

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