Wednesday’s ETF Chart To Watch: Teucrium Corn Fund (CORN)

by on July 6, 2011 | ETFs Mentioned:

Wall Street got off to a fairly tame start as investors came back from a long holiday weekend, as domestic equity indexes closed near the breakeven point and the NASDAQ edged out a small gain. Moody’s rating agency downgraded Portugal’s government debt to a grade of Baa2 from Baa1, almost immediately sending the euro lower versus the U.S. dollar in the currency market. “A further downgrade could be triggered by a significant slippage in the execution of the government’s fiscal consolidation program, a further downward revision of the country’s economic growth prospects or an increased risk that further support requires private sector participation,” Moody’s said in its report.

While equity markets managed to stay fairly calm despite ongoing debt fears from overseas, gold and oil were the centers of attention as both commodities soared upwards of 2% during Tuesday’s trading session. Gold jumped by more than 30 points, settling back above the $1,500 level, while crude oil futures climbed to $97 a barrel. The week is fairly light in terms of domestic economic data and investors will keep a close eye on the European Central Bank as it announces its interest rate decision on Thursday. U.S. unemployment is also slated to come out Friday and Wall Street may soon see volatility again if investors are not pleasantly surprised by the upcoming data.

Chart Analysis

The past few months have been quite unkind to commodities, and while last week’s major market rally did create a buying spark, as a whole agricultural commodities have been lagging behind [see Agricultural Commodities Category Report]. Corn has been a major laggard within the agricultural space and recent sell-offs have created attractive buying opportunities for those with a stomach for volatility. CORN, issued by Teucrium, which tracks the price of corn futures traded on the CBOT, has lost around 8% over the past 3 months alone. Consider the daily chart of CORN below.


Click to Enlarge

CORN’s recent under-performance is noteworthy because over the past year alone the fund has returned close to a staggering 60%, suggesting that any big dips are great buying opportunity for long-term commodity bulls [see Ultimate Guide To Corn Investing]. As you can tell from the chart above, buying after major sell-offs has proven to be quite profitable as CORN has managed to continue marching higher [try our Free ETF Screener]. Currently, CORN is trading right around its 200-day moving average (yellow line), which suggests that the fund might be due for a bounce higher given it’s longer-term uptrend and recent (healthy) correction.


Investors are advised to wait until CORN definitively establishes support above its 200-day moving average over the next couple of days before jumping in [see Commodity ETF Investing: Four Strategies For Fighting Contango]. The fund could slip further towards $37 or even $35 a share if weakness in the commodities market persists and investors are reluctant to buy even on the dips [see CORN Technicals]. For conservative traders looking to go long, the $40 level is an appropriate stop-loss marker since the fund will likely tumble much lower if support doesn’t hold over the next week or so. In terms of upside, CORN can easily get to $45 a share over the next two weeks, while longer-term bulls most likely have their eyes set on the $48 level.

As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

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Disclosure: No positions at time of writing.