Futures Market Blog

COWS (Corn, Oats, Wheat and Soybeans)

The grain and soybean complex markets have given mixed signals. While the soybeans still read bullish corn reads short term bearish. Soybeans found support on some of my indicators and have rallied strongly. Despite the mixed short term signals, my cycle studies and my seasonals suggest that significant lows and/or rallies are due in many markets by the end of the first quarter of 2009. Seasonal patterns in soybeans agree with the current rally. Following a possible short-term decline the seasonal odds favor a further rally. Corn has dropped to long-term support while oats and wheat remain in short term bullish or bottoming trends. See charts below.

Soybean Complex: I warned you about the tops and coming declines well before they started. The corrections came and they were large and persistent, confirming my expectations. I also advised you that short-term buy triggers had developed. Soybeans gave me a trigger to go long but with large risk. I emphasize the “high risk” aspect of all grain and soybean market trades. Await recommendations. Seasonals in the cash soybean market are now ideally bullish.

Corn: Prior to the current declines I pointed out that my COT analysis had turned bearish. Seasonal lows were due and may well have been made on bullish momentum divergence signals. I believe that corn prices now have the potential to make a very large recovery, perhaps to as high as intermediate term resistance areas. Await intermediate term buy recommendations via the hotline. Cash seasonals are ideally bullish.

Wheat: I advised you “the short term trend may bottom within days, while weekly the trend remains bearish”. We saw signs of bullish life in the form of a huge recovery. There were short-term buy signals. Await wheat spread recommendations. As in all the grain and soy complex markets, the swings in wheat will continue to be large and wild. Seasonal is ideally sideways to bearish. .

Oats: The market remains short term bearish. The intermediate-term uptrend remains bullish. The decline has taken prices down to important support. There were short-term MOMENTUM divergence buy signals but no MAC signals as yet.

IMPORTANT REMINDER: ALL RECOMMENDATIONS GIVEN VIA THE HOTLINE WILL REQUIRE LARGE STOP LOSSES DUE TO ONGOING MARKET VOLATILITY. THERE HAS NEVER BEEN A TIME AS VOLATILE AS THIS – YOU WILL LOSE MONEY IF YOU USE SMALL STOPS. IF YOU CAN’T AFFORD THE POTENTIAL RISK THEN DON’T TRADE!

Meats

Cattle and Hogs: My analysis of the COT Commercials positions in both markets continues to project a LONG TERM bull move in both of the meats. A trigger is needed to spark the rallies. I REMAIN BULLISH BUT I AM WAITING FOR TRIGGERS. I believe that the RECENT decline in hogs is another test of my bullish LONG TERM forecast as well as an important test of long term technical support. NOTE THAT IN THE ABSENCE OF BUY TRIGGERS THERE ARE NO buy RECOMMENDATIONS.

The hotline recommended long Jun and short April hogs spread that should have been closed out when it reached its profit target. I plan to once again recommend this spread when and if it declines to short term support. The spread should continue to be valid until late May if history repeats. See seasonal table at right. Await buy signals. See chart.

Metals

Copper: Thin volume and erratic price moves make this a difficult market to trade other than for the long term. Therefore, I will not be giving specific hotline recommendations. The trend remains short term and intermediate term bearish BUT seasonal lows are ideally due now. We could get a significant short-term rally in copper (and all metals). Copper tends to make highs in March. There is bullish divergence. The coming rally could be HUGE!

Gold and Silver: Gold seasonals achieved their projected seasonal rally targets and you should have gotten out of longs as recommended. My longer term forecast based on the long term cycles and technical indicators currently suggests a $2000+ target once the current decline and cycle low are in place.

Silver triggered a short term buy as did gold but long-term buy signals are pending. I advise waiting until the first few months of 2009 before taking on long term buy (investment) positions. Gold and silver continue to rally in response to deteriorating economic conditions all over the world. Massive amounts of liquidity injections will, in my view, eventually result in inflationary pressures.

Platinum/Palladium: My long-term forecasts for platinum and palladium have been bullish and I am still long term bullish in spite of the recent corrections down which were discussed in this newsletter well in advance. This overdue correction has brought prices back to rational levels and I believe that new buy triggers will develop soon. I believe that over the next 12 months we could witness considerable turnarounds in platinum and palladium prices and I want to maintain long-term holdings in PAL.

The severe corrective declines were long overdue and are, in my view, a positive development in the long-term picture. There are signs of bullish life in platinum and in palladium. I recommend holding on to long term positions, in palladium which may take time to move higher but which, I feel, has significant upside potential. I am holding my personal longterm positions in PAL (North American Palladium). There are initial indications of a short term low in PAL.

Currencies

Aussie $: I advised you clearly and well ahead of the fact that a MAJOR decline that was coming in the Aussie / Dollar. The market crashed against the US dollar. I also advised you that it was “not unreasonable to expect a short term low” in the Aussie. The hotline suggested a short term sell in the US dollar index which should have been closed out at a profit and another short sell should have been established as recommended via the hotline. See chart below. My cycles suggest that a major low against the dollar is due VERY SOON, however, there are no timing triggers as yet! See weekly BTI chart below.

Eurocurrency/Swiss Franc: There were persistent and significant technical and cyclical warnings on my indicators of a major low in the US dollar vs. the Swiss and the Euro. I was bullish on the dollar, however, a short-term top in the dollar was expected and it developed. See the BTI short-term chart at right, I advised you “the US dollar rally is not over yet” and that advice was correct. Is a seasonal low due soon? See seasonal chart in last issue.

Japanese Yen: I have been bullish for many months and I REMAIN BULLISH. I predicted without any hedging that the Yen would become one of the strongest currencies in the world. It has done so. The long-term bull market continues as predicted. The Yen exploded against many currencies as predicted. There are sell signals in the Yen but and the anticipated bearish divergence that was expected to trigger has done so. I advised you to “watch for a short term top at any time now”. There is no change in my analysis. See seasonal chart below. The long-term Yen rally may not be over yet.

US Dollar: The dollar gave me clear technical evidence that was expected to mark the beginning of the end to this bear market. A short-term top is being made but there are no clear cut sell triggers as of this writing. The dollar rallied to long-term resistance which is why there has been some hesitation. The hotline recommended a sell that should have been closed out quickly as recommended as a profit. The long-term trend remains bullish as predicted many weeks ago!

Canadian$: I have good technical and cyclical reasons to conclude that an important top has been made in the Canadian dollar vs. the US dollar. Divergence gave clear warnings of a top or, at the minimum, a considerable downside correction. That has happened.

BrPound: The market has made an approximate 8.1-year cycle top as predicted. I am still bearish consistent with the long-term cycle projection. I advised you last week that a short-term rally is now due. I ADVISED YOU THAT IT WAS not unreasonable at this time to expect a strong recovery rally in this market vs. US dollar but the major trend remains clearly bearish.

Tropicals

Orange Juice: There are NO buy triggers as of this writing. Prices continue to decline in sympathy with ongoing and persistent declines in many other markets. I continue to wait for buy triggers that could come at any time. The chart at left shows how deeply entrenched the bear trend has become. My cyclical work continues to suggest, however, that lows are overdue. Wait for buy triggers. Seasonals are ideally bearish in January. The BTI/MA indicator is beginning to show signs of a low.

Sugar: My analysis of the long-term sugar data suggested that the major cycle, which has averaged approximately 7 years, low to low turned bullish. Short term buy signals developed and the price surge has been excellent. I recommended waiting to buy on a decline to short term (daily) support. The market is likely to bottom near or at long-term support in sympathy with the overall crash in commodities. The shortterm trend is bearish. There are NEW BUY SIGNALS. The hotline has given specific recommendations.

Coffee: My long-term cycles continue to tell me that coffee prices are overdue for a major rally that could take prices much higher over the next few months. Coffee is in a major bull market still in its early stages and it has recently tested short-term support. Coffee is a very volatile market that requires considerable risk. Large stops that must be used or you will be stopped out quickly and often. My BTI indicator is now bullish on coffee. I expect higher prices. See chart below.

Cocoa: the trend remains strongly bullish as we go to press. There is no indication at this time of a shortterm top. The intermediate and long-term trends remain bullish.

Fibers

Cotton: My recent comments were as follows “In spite of the recent strength in sympathy with the grain and soybean complex the technical picture is still NOT convincingly positive. I remain short term bullish. See BTI chart at below.

Lumber: Based on my analysis of the cycles, trend, timing and COT data, I advised you that lumber is positioned what could very well be the first stages of a record-breaking price rally. Daily indicators are bullish. I believe that a long-term bull market is imminent. No matter what I say it is imperative to WAIT FOR A TRIGGER! The market has once again made new lows for the move but the cycles and my COT studies continue to give strong advance indications of a major low in the offing. The limit up move on Friday may be the first sign of a major low.

I have been saying for some time now that lumber is due to explode on the upside – be patient in waiting for triggers. When markets make major lows the process that is involved in the lows can often give several losing signals in a row. .

Interest Rates

I have been telling you “the next major move in US interest rates will be to the upside” (i.e. futures lower). My expectation and forecast are based on the 50-60 year long term cycle which now points to higher rates. See my comments on pages 1 and 7 of this report. A bubble is developing – a major bubble. The ever-expanding financial rescue plans all over the world will likely result in huge interest rate increases in the next few years or even longer as inflation rises. With short term rates at or even effectively below zero the odds of an eventual upside explosion in rates increases daily. I told you that there were “initial indications of bearish divergence”. The decline continues on a short-term basis. My indicators and trading systems are short.

Stocks

I was specific and clear in my advice to go long on the close of trading 27 October. I showed you the history
of this seasonal back to 1901! S&P futures surged to the upside. Stock market lows that were expected in late October based on seasonals were initially correct. My indicators suggest that short term and seasonal lows are in place. Wait for weekly buy triggers in order to be more certain of lows and if you are an investor as opposed to a short-term trader. Stocks continue to ignore most bad news which further makes my case for a short term and seasonal rally in stocks. There are numerous and utterly fantastic opportunities developing across the board in many quality stocks. Wait for WEEKLY TIMING triggers for entry. Remember that market bottoms are a PROCESS and not an EVENT! By mid February we enter yet another important bullish time frame for stocks. Bargains abound. Pessimism abounds. Bearish talk persists. Dire forecasts continue. The media are now talking about a “Japan style 10 - 20 year recession”. I doubt that. See charts above also.

Energies

The energy futures markets collapsed following a period of excessive bullish sentiment and runaway bull move. Given the length and severity of the decline in all energies the odds of a major recovery rally are significant. I do not believe that these bull markets are over as yet and I suspect that a rally back to the $90 level is possible Seasonal factors suggest lower prices or a bottoming process until May. On the other hand, technicals are now turning bullish. Majority opinion has turned clearly negative and we are getting wild forecasts of prices as low as the $25 level the time has come to look at the long side but NOT WITHOUT TRIGGERS which are NOW developing on the momentum charts! Natural gas remains my best bet in the energies but we need triggers.