(C) Sub-$7.08 Failure Exposes Major Corn Reversal

Shorter-term traders with tighter risk profiles have been in a neutral-to-cautiously-bearish position since 08-Sep's break below 01-Sep's initial counter-trend low of 7.37 discussed in 08-Sep's Technical Blog in which we also highlighted the importance of 19-Aug's 7.08 low as a long-term risk parameter. With today's break below this 7.08 threshold detailed in the hourly chart below, the market has not only added to its developing impulsive decline from 30-Aug's 7.77 high, it has exposed a peak/reversal threat that may be major in scope.

As a direct result of today's continued weakness, we believe the market has defined yesterday's 7.29 high as the latest corrective high and tightest risk parameter it now is minimally required to recoup to even defer the developing downtrend, with further strength above Mon's 7.49 corrective high required to expose this month's sell-off attempt as a 3-wave and thus corrective affair within the secular bull trend. In lieu of such strength, further and possibly extreme losses are now expected.

Mid-Aug's breakout above prior 7.18-to-7.23-area resistance shown in the daily log scale chart above defined this area as new support one would expect to hold per any broader bullish count. The market's obvious failure to do so threatens the major bull trend and exposes a reversal that could be major in scope given the magnitude of the secular bull.

Cleaning out intra-day technical noise with a daily log close-only basis below and today's probable close below 18-Aug's 7.13 corrective low and area of former resistance-turned-support presents a similar picture of developing weakness and vulnerability.

In addition to the market's recent proximity to the extreme upper recesses of this year's range on an active-continuation chart basis below that had to be approached as a potentially precarious condition, the market's clear momentum failure below the 7.08 corrective low discussed above "activates" the extremely frothy sentiment indicators as applicable bearish factors that now contribute to a major peak/reversal environment. Indeed, with our whopping 93% MRT Bullish Sentiment Index reflecting 358K hot Managed Money long positions to just 26.5K shorts, we believe this market may now be vulnerable to considerable capitulating weakness at least of the extent of Jun-Jul's decline.

In sum and as a result of today's confirmed bearish divergence in daily momentum below 7.08 that arguably breaks the long-term uptrend, all bullish bets, regardless of scale, are considered off. Further and possibly accelerated losses are expected straight away with strength above 7.29 required to defer this new bearish count and strength above 7.49 required to threaten it sufficiently to expose the break from 7.77 as a slightly larger-degree bull-market correction ahead of what then could be a resumption of the secular advance. But again, in lieu of such 7.49+ strength and especially given the gross extent to which the masses remain bullish this market, a major reversal lower should not surprise.

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