No bullish news, so market goes down?

[Jim Meade / Iowa City]

I was talking to a grain buyer today who said that grain prices went down because there was no bullish news.  I asked him what kind of news does it take to have a steady market.  He didn't have an answer.  The idea of analysts that we have only ups and downs in the market  in reaction to good or bad news is a bit strange to me.  It would seem to me that if we have a perfect market and the job of the market is to achive the right balance between supply and demand, then there should be times when there is little or no price movement.  Needing to always have price movement is tantamount to saying the market is not efficient.

It should not take bullish news to keep a market where it is.  It shouldn't take more water in the bathtub to float the duck at the same level unless there is no plug in the drain, in which case we don't have equilibrium to start with.

I think at the end of the discussion he and I both thought the other was crazy.

[Palouser]

Jim, my friend, it's not nice to question conventional wisdom!!!! You know, like 'Volatility is your friend', and such.

I guess I can see markets moving either way with any given status quo that is lacking new market moving news. One example is where there was a question about adequate ending stocks and that question is still the question. Or another, a market where it's know that there are plentiful inventories and nothing changes. Then there is the moods of buyers and sellers. Maybe producers are ready sellers and maybe they aren't.

It may be that some holders of futures tend to take short term positions expecting some sort of development that doesn't occur, so rather than holding on for who knows what, they liquidate and wait until another position seems to look profitable.

[Red Steele]

I think you would be hard pressed to think that a corn market that has rallied from the low $3 mark back in July to almost double that is at any type of "equilibrium". We are in a bull market run....whether this was the last leg up, or a pause to reconsolidate and go higher yet,....that we do not know yet.

A lot of premium was built into this market over the last several months...this can vanish in a few days or weeks. Maybe the corn market will drop back to the $4.50 level and stay stable for a few months. I sure do not know. Maybe we have a bear market , and it drops to sub $3 as new bearish news hits the market.

What the grain buyer is referring to, can be best summed up by "you have to feed a bull...a bear can hibernate for months".

This means that you actually DO need bullish news to maintain a premium price level. Absent the bullish news, the market retreats.

[kraft-t]

It could be as simple as profit takers taking the profits in the new year before the next report comes out.

[nwobcw]

   The news on China ans SA is in play and still the market is drifting lower.  Selling beans in the low 13s and new crop in the low 12s is attractive.  I ask myself, "why wait when this opportunity is right in front of you?"

[oncearound]

"why"?

i read a good remark last night that sums it up pretty well.............do you sell here and win this battle? or do you hold on and win the war?

as far as chart patterns goes and waves on Waikiki? you can throw all the charts before 2001 out the window! and if you miss one wave, you paddle back out and try to catch the next bigger wave!

[nwobcw]

   Winning a war is never guaranteed but winning this battle is.

[oncearound]

winnning a war is based on an effective strategy so if you are speaking of just plain cash sales and done? then you never intended on waging "war"?

[ag678]

Everyone that is trying to win a war does so because they believe they have an effective strategy, but in reallity not everyone is a winner, and in fact I would say most are losers. 

[GoredHusker]

If the fund money flow wasn't there, we would have periods of little to no price movement.  However, funds can't make any returns if the markets do not move.  If you follow the Committment of Traders Reports, you will see we've pretty much been making records either long or short since 2004.