When Cows Fly

• Posted by Greg Harmon
• on November 2nd, 2016

Who says that cows can’t fly. Well maybe that picture is photo shopped. But even if it is there is still evidence that cows can fly. Where? In the chart of the Livestock Total Return ETN ($COW) below. This chart shows that the ETN has been moving lower since June. But in mid-October something changed.

The candlestick on October 19th was not extraordinary. But that day was very special. The important characteristic is the volume. On the 19th it was the largest since February 22nd and nearly 6x the monthly average daily volume. That spells capitulation. And the scenario has played out since. Buying began the next day with above normal volume and has followed through ever since.

Momentum has shifted too. The RSI is now in the bullish zone and rising after being oversold on the 19th. And the MACD has moved into positive territory after crossing up that day. It now sits at the 50 day SMA with a lot of room to the 200 day SMA above before any major trend reversal can be proclaimed. But until then a short term trend higher looks legitimate and ready for more.

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