Below is the chart I look at to find actionable places to make crucial marketing decisions for wheat. Keep in mind that this is just a tool and that there are a lot of things to consider. It is just that the behavior of the wheat market since September is nearly identical to the behavior of the wheat market from its bearish move that began in April of 2011.
I have referred to this chart a couple times. It is on the Tools page, and on the Preparation page from back in early January. The numbers correlate with marketing decisions you could make which I explained on the Tools page.
A couple days ago, I had made a colorful post on making sales in a waterfall decline market. The wheat chart was an attempt to show that the wheat pattern today was similar to that back in 2011. What I want to do on this post is to be more detailed with the explanation.
Right now, we are at #18 on the chart above. You would have to recognize that the price action today is eerily similar. Then, you had #3, 4, 5, 6 and 7 to the current pattern of 13, 14, 15, 16, 17 and 18. Prices then were able to rally modestly, but then they made a final plunge into #8. Wheat never exceeded that October 2011 level until June of 2012 when, carried by an intense drought, prices were lifted above those levels. Without that drought, we most likely would not have seen $8.00 wheat again.
If you look at the chart from the tools page, I said that #7 was " Useful. A buy signal on the CCI following a steep decline is a safer time to lift hedges. This signal would ultimately not work out." I wish I could find a tool that would give a sell signal between the 7 and 8 mark, but there is not one that I am aware of. Likewise, I wish we had something that would mark the next suitable place to sell.
You can see from the green and red rectangular boxes that the market usually sends multiple buy signals when it is in a bear market, and multiple sell signals in a bull market. Bear markets are much harder to sell grain in because the next signal to make a sale is lower than the previous signal. This is part of my reasoning to be an aggressive seller at the next modest bounce. I believe it could be a while before we receive the next sell signal. I will post some new targets keeping this in mind in the coming days.