Over the past year, the financial media has followed around the commodity sector like the paparazzi pursues celebrities, tweeting: "OMG! Sugar soars to 30-year high," and "Grain Prices Busted: Corn caught with other crop supply!"
In fact, paparazzis do have something in common with most mainstream financial observers: They also focus on the externals. With their lens pressed up against the window of action, it's a matter of "see-and-wait" -- and then react. First the story breaks -- and only then it's a race to put the rapidly changing pieces together, AFTER the fact.
Take the recent news reports regarding the long-term commodities outlook -- or, lack of one, to be more exact. See, according to the usual sources, the "waters" of foresight surrounding the commodity sector have been muddied by a number of growing uncertainties: unclear crop conditions in Australia; chaos in Egypt and across the Middle East; instability in emerging markets; unknown future demand in China; unclear status of the US economic recovery...
And the most unreliable factor of all: the fluctuating swings of Mother Nature. On this, the February 14 news item below sets the scene:
"Weather is now a factor that is analyzed before anything else is taken into consideration simply because it has become so unpredictable that any other analysis becomes almost irrelevant if you get the weather component wrong." (gulfnews.com)
It's true that weather-related supply fluctuations play a role in commodity prices. But if you watch commodities closely, you know how often market participants will disregard a weather-related factor and buy or sell the market anyway, throwing the logic of "fundamentals" completely out the window. Look at the weather before anything else, you say? I don't think so.
See, all too often, what determines commodity price moves is not the news or weather reports per se, it's how traders and investors interpret them -- i.e., with a bullish or bearish bias. But while you can't predict the day-to-day news, you can predict people's bull-or-bear biases. How? By using Elliott wave analysis, which tracks and forecasts collective psychology of the marketplace.
Wave analysis doesn't look at the externals. It looks at the markets from the inside-out by studying chart patterns, not the headlines. Elliotticians use objective markers rooted in pattern recognition and mathematics to identify specific wave patterns underway -- often even BEFORE they begin.
Here at EWI, the go-to-guy for that job is EWI's chief commodity analyst and veteran Futures Junctures Service editor Jeffrey Kennedy.
It so happens that Jeffrey recently put the finishing touches on a brand-new webinar that provides what he calls, "The big, big, big picture in commodities." At the very start of this 1.5 hour-long webinar, Jeffrey shows you 100 years of commodity price data going back to 1897 via this riveting chart of coffee (some Elliott wave labels have been removed for this article):
Pausing on this chart for a good few minutes, Jeffrey lets the gravity of this observation sink in: The Elliott wave trend in commodities is "clearly identifiable going back to the 1800s," he says.
After revealing to you the maturity of the commodity bull market since 2000, Jeffrey then explains why he expects a certain "market event in 2011" that should be "reminiscent" of a prior episode in the not-too-distant past of just a couple of years ago.
Following this eye-opening introduction, you then get Jeffrey's 70+ slides showing you the near- and long-term trends underway in 15 key commodity markets.
Don't take the "see-and-wait" approach. Get instant access to Jeffrey's educational and entertaining commodities webinar today via a risk-free Futures Junctures Service subscription. Just look in the "Traders Toolbox" for the "2011 Commodity Outlook Webinar" once you're subscribed.