Friday, July 13, 2007

Volatility Increasing In The Soybean Market



Has anybody taken a look at the soybean chart lately? Soybeans are in a strong uptrend fueled by concerns about drier weather in the northwestern Midwest.

I haven't traded soybeans in years but now must be a very exciting time to be trading them given the recent volatility.

Above is a daily chart of soybeans and below is a 30 year monthly chart.
If you remember my post from yesterday about Average True Range, I explained how commodity markets tend to make tops on high volatility whereas stocks tend to make lows on high volatility. The chart below is a good example of this increase in volatility seen at market highs in the grain markets. You would almost never see tops look like that in the stock market.. It just goes to show you that markets have their own distinct characteristics.

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