Ags & the Smart Money Buying Compression Pattern

05/22/2020 9:45 am EST

Focus: COMMODITIES

Shawn Hackett

President, Hackett Financial Advisors, Inc.

Technical patterns in the grain markets shows exceptionally reliable set-ups for an important price turning point, discusses Shawn Hackett.

What is a "Smart Money buying Compression Pattern?"

Over many decades of measuring and discerning capital flow patterns in agriculture markets we have developed a few bullish patterns that we look for that have shown exceptionally reliable set-ups for important price turning points.

We call these patterns the "wheelhouse" for what we do and how we help producers, end-users and traders in the Ag/commodity complex take advantage of the few important bullish turning points that tend to take place in a given year in various soft, grain and livestock commodities.

Right now, we believe that we are seeing one of those important Smart Money Insider patterns developing in two key markets: Corn and Minneapolis Wheat.

Normally, the standard operating procedure is that as ag markets fall, the “smart money” will proportionally buy until such time that they reach the DNA buy signal point where the odds favor a bottom and a bullish turning point to form.

However, there are rarer times in which the smart money buys much more aggressively than normal as prices fall suggesting a sense of urgency that suggests a more powerful and enduring bottom or bullish turning point.

Even rarer than that there are times when smart money aggressively buys into a flat price trend. Meaning that smart money continues to aggressively buy despite the lack of lower prices to entice them.

This is a higher order of bullish urgency brought forth by the smartest people and suggests that there is something bullish the market is either unaware of or is grossly misdiagnosing.

The hardest part of this equation is that such bullish smart money buying patterns in ag markets tend to occur at times where bearish sentiment is at a fevered pitch and the human mind can't conceive as to why prices should rally anytime soon and in fact the human mind is anticipating even greater declines in the near future.

This sets up the "rogue" wave effect whereby massive speculative short positions get caught all leaning to one side of boat only to find they have done so in error and are now drowning to their impending death of never ending margin calls and financial ruin.

This "rogue" wave condition sets up a buying frenzy and a lack of willing sellers and causes a seller’s vacuum. The challenging part of this is one must have faith in this smart money behavior and bullish signals despite not knowing exactly what it is that they see that has made them act in such an aberrant bullish manner.

The only way to buy low is to buy before those bullish fundamentals surface and not after. That is why we pay very little if any attention to current fundamentals and we focus all our efforts on tools, indicators and datasets that help us attempt to predict what the fundamental picture will be six-months from now because that is what will be driving the price of any given ag market today.

Remember the corn market last summer in Late June early July? Massive bullish sentiment with an iron-clad bull case for much higher prices and yet our smart money readings were showing panic selling into a flat market. An extremely bearish signal.

That sell recommendation we made at that time, in hindsight, was an easy call but was met by great resistance and condemnation by many who scoffed at our bearish call at that time.

Right now, for whatever reason, both the corn market and the Minneapolis wheat market are exhibiting a very bullish smart money buying compression pattern that argues for important bullish turning points in the days and weeks ahead.

We find it very interesting that both markets have seen such a bullish profile ahead of such an important market moving report that is widely expected to be morbidly bearish.

Could a "sell the rumor and buy the news" be set up to take place here?

As we have shared with all of you in past reports, our best advice for those that want/need to buy corn and Minneapolis wheat is to average half of your desired position before the report.

We are also fully prepared, however, that the market may have already priced this bearish report in given the current dire bearish pandemic psychology and instead will turn up post report release.

Below the Smart Money Insiders Algorithm charts for corn and Minneapolis wheat for your perusal which illustrate the clear bullish Smart Money buying Compression Patterns that have developed.

corn and wheat

This is a special update of Hackett Agricultural Smart Money Insiders Report. Shawn Hackett is founder and President of Hackett Financial Advisors, Inc. hackettadvisors.com You can sign up for his bi-monthly Ag report here

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