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When the Word "Safe Haven" Can Actually Mean "Run!"
In September 2011, EWI's Commodity Specialty Service foresaw that corn's Elliott wave pattern did not add up to its supposed economic "fall-out shelter" status

By Nico Isaac
Thu, 10 Nov 2011 15:45:00 ET
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As the harvest season of Indian corn husk-centerpieces draws near, it's the perfect time to look back at a time when corn prices were the centerpiece of the commodity table.

That wasn't that long ago; think: two months. In August to early September, corn prices were enjoying a spectacular rally to new contract highs. And according to the mainstream experts, alls well that ends... "yellow."
 
Here, the following news item from the time observed a newfound "safe-haven" status for the grain king:
 
"The yellow metal is not the only commodity that can offer a refuge for investors... The long-term supply/demand fundamentals for grains are quite strong. Corn futures trade 13% higher year-to-date, including a 7% jump month-to-date." (MarketWatch)
 
YET -- after peaking on August 29, corn prices went from supposed economic "fall-out shelter" to just plain fall out. When September was over, corn prices had endured their steepest decline (a 23% drop) since at least 1959.
 
Where did fundamental analysis go wrong, you ask?
 
Well, its main flaw was in expecting corn prices to respond primarily to "external" news events -- such as drought-damaging weather and Chinese growth -- to bolster the market's bullish "supply/demand" backdrop.
 
But, as Elliott wave analysts know, financial trends are not driven by outside factors; but rather, the internal "waves" of the market's collective psychology reflected in price charts via Elliott wave patterns.
 
That is how EWI's Commodity Specialty Service stayed one step AHEAD of corn's historic sell-off while the mainstream was caught with a grain roof collapsing over their head.
 
On August 31 Commodity Specialty Service first alerted its readers to the downside potential in corn via the following chart and insight (some elliott wave patterns added for clarity):
 
"Prices may be registering a lasting top. December corn at the June 9 high completed a diagonal triangle wave C from the November low last year and a zigzag advance from the June low.... Yet another zigzag advance could complete at any time perhaps at Monday's [August 29] high."
 
Bearish confirmation came on September 1. That day, Commodity Specialty Service moved securely into a bearish corn view and wrote: "Prices appear to have registered a lasting top at Monday's high... that could be followed by a substantial decline."
 
Don't wait another second. EWI's Commodity Specialty Service provides daily analysis of several of the world's most-watched markets. Click here to get started >>>>

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