The first leg of the bear market in the grain complex looks to have completed last Thursday.
There is telling confirmation all over the place that this most recent decline was not simply a corrective move, but in fact the start of a major bear market with the hardest hit to be wheat.
The two largest signs of this being a blow off top in the grains is:
1. The Commercial Traders Have Been Massive and I Mean Massive Sellers of the Grains
2. The Small Investor is Jumping Into The Grains With Both Feet, Just In Time To Get Slaughtered.
So now we look at how to capitalize on this secular shift in these markets.
What I am going to do is let the grains rally from here and look to sell them short on the next indication of running out of gas.
Some prices of interest in the grains are as follows:
Wheat - Sell Short 11.63 , 12.07 with a stop loss at 12.75
Soybeans - Sell Short 13.96, 14.41 with a stop loss at 15.06
Corn - Sell Short 5.43, 5.52 with a stop loss at 5.66
Now obviously as these reach the preliminary targets (lower price targets), I will assess the market and determine if in fact the odds face a reversal in trend. I am not simply going to sell these short at the prices I have listed. The reason for this is quite simple also. With the power of the bull market the grains just went through and the always present possibility that anything can happen, we do not want to be sitting ducks for the bulls just in case they are not done running the prices.
So keep the grains on your watch list, because if in fact the bull is over, we stand to make a mountain of money in a very short period of time with the bear market. Bear markets in the grains, especially the Soybeans, have a tendency to get very ugly on the downside.