Tuesday, August 24, 2021

#Grains Review #Corn #Soybeans #Wheat #Ag - Defining Cause Building & Running Corrections

Grains Review
Those that view the message of the market on a daily basis are likely confused by trading noise. While trading noise contributes to the long-term trends, it does not define them. Human behavior tries to explain trading noise as a meaningful trend. This confuses the majority which, in turn, contributes to their role as bag holders of trend transitions.

Grain's overall trend, revealed by trends of price, leverage, and time, are defined and discussed in The Matrix for subscribers.

Definitions from the Q&A page.

Cause Building

Cause defines the building of energy to fuel the next move. For example, consolidation patterns, either demand or supply driven, provide a graphical representation of the accumulation of potential energy that drives the next move. Potential energy is proportional to kinetic energy. The longer the consolidation pattern or cause building phase, the greater the potential energy stored. The greater the potential energy stored, the greater the magnitude and duration of the kinetic energy released. In other words, an asset consolidating and storing (potential) energy for three months that will produce a stronger and longer rally than one consolidating for three weeks.

Running Correction

Not all corrections, however, are obvious. Consolidations, often delayed or difficult to recognize by as much as six months, can occur as price declines, chops sideways, or increases. The latter, the observation of strength when weakness is expected, is called running corrections. They're a sign of strength (SOS) that often setup powerful rallies once completed.

Can you explain the explain the difference between these two and how they apply to grain markets right now?

Subscriber Comments

Cause building and running corrections are often citing in our Reviews, so lets talk about them in further detail, and I'll use the grains markets to talk through them.

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