See This Elliott Wave Pattern In Lean Hogs? That's What Opportunity Looks Like

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See This Elliott Wave Pattern In Lean Hogs? That's What Opportunity Looks Like
EWI's Daily Futures Junctures sticks to its Elliott wave guns to reveal where hog prices are headed in the days ahead

By Nico Isaac
Tue, 22 May 2012 18:00:00 ET

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Is there any job in the world in which consistency does NOT matter?

You're in the hospital for a health issue. Your doctor insists that one certain surgical procedure is the most effective approach for fixing your problem. Then, you're on the operating table, counting back from 20. Doc comes over and says, "What are you doing? This is the worst, most dangerous possible treatment for your condition."

Now let's say you're strapped to a bungee cord. The last thing you hear your guide say before you jump is, "This is absolutely the safest equipment money can buy."

You get the picture. That kind of flagrant inconsistency would never fly in the real world. Yet, in the world of fundamental market analysis -- it exists all the time. The reason being, mainstream analysts use external events to determine the near-term trend in financial markets. Their interpretation of the events is always changing, and so the outlook is always changing, too.

Take, for instance, the pair of recent news items below regarding lean hog futures:

Bullish demand picture in hogs: "Hogs Climb On Outlook For Rising US Pork Demand. It looks like we're finally getting some seasonal pork demand for grilling."

Bearish demand picture in hogs: "Hog futures are called to open lower. Hog futures continue to see added pressure from weak demand for pork products."

Now contrast that with the objective framework of Elliott wave analysis. In brief: There are 13 known wave patterns that appear on the price charts of financial markets. Each of these structures adheres to specific rules and guidelines that can not be bent or amended at will. When you know how each pattern develops, that allows Elliotticians to anticipate upcoming price action before it occurs. All without even a glance at the external supply-demand factors.

Take the April 9-May 7 selloff in lean hogs to a 16-week low. In EWI's April 9 Daily Futures Junctures, EWI's chief commodity analyst Jeffrey Kennedy painted a bearish picture of hogs based on the fact that a 3rd wave decline was about to begin. Elliotticians know 3rd waves to be the strongest wave among the three impulse waves 1, 3 and 5.

On April 9, Jeffrey presented to the subscribers the following chart of price action and wrote:

"Lean hogs have formed an advance into Fibonacci resistance at 93.57-94.74. Ideally we'll see prices begin turning down tomorrow as the larger decline continues to unfold."

The next chart comes from the May 21 Daily Futures Junctures. Price action in hogs has clearly followed the Elliott wave script.

Find out where hog prices could be in the days ahead via a risk-free subscription to Daily Futures Junctures.

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Tags: Elliott wave, Elliott Wave trading, futures trading, Jeffrey Kennedy, lean hog futures

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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.