Corn is Ready to Fall…..

….well at least when priced in Gold. That is the good news! Looking at the ratio chart of the Teucrium Commodity Trust Corn Fund, $CORN against the SPDR Gold Trust Shares, $GLD, shows it rolling over and it looks to continue. The Relative Strength Index (RSI) has worked off the technically overbought condition and is now trending lower, with a Moving Average Convergence Divergence indicator (MACD) that has crossed to negative after trending lower for two weeks. Both support a continued move lower. There are a lot of gap areas in the chart, so many places where it may stop. The not so great news is that this move lower can happen because Corn is falling or Gold is rising or both. As it turns out this time is due to Gold rising. No relief from high Corn prices yet. But it does present a pairs trade.

Trade: Long 100 shares $GLD and short 300 shares of $CORN

Use a ratio of 0.325 as a stop and target to take off the first profits at 0.29 with the next piece off at 0.275.

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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.

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