Futures Focus presents an interview with Jeffrey Kennedy, Elliott Wave International's Senior Commodities Analyst and editor of Daily Futures Junctures, a publication for commodity futures traders and investors.
Futures Focus: Jeffrey, recently, despite the ongoing turmoil in the stock markets, commodities – such as grains, for example – have remained relative "safe havens" due to their strong rallies over the past few months. So you can imagine my surprise when I saw this headline on Bloomberg.com this morning: "Corn, Soybeans, Wheat Tumble as Equity Plunge Deters Commodity Investors." You think that commodities are finally succumbing to the same pressure that's been rattling stocks since last summer?
Jeffrey Kennedy: To answer this question properly, you have to make sure you differentiate between timeframes. Markets can stay down for a week, making you think it's time to get out, but then for the month, you may come out ahead – because the larger trend may still be up.
FF: So you think that grains are just taking a break from rallying?
JK: I do.
FF: How long of a break? And why then do analysts blame this sell-off in grains of a sell-off in the stock market?
JK: I'm going to answer the second question first. Fundamental analysts tend to assign a "reason" to market moves in retrospect. They believe that markets are only moved by cold, hard facts, so they naturally seek a logical explanation for every sell-off and rally. Technical analysts such as myself, on the other hand, recognize that facts and figures often matter a lot less for the markets than the mood of the traders. That's why I'm an Elliottician: This method studies market psychology, so it helps me to understand and predict the mood of traders – and thus, the trend in prices.
Now, as for the recent sell-offs in corn, soybeans and wheat – yes, I do believe that these three markets have further to go to the upside, but not before the ongoing correction is over.
FF: A correction?
JK: Yes. While wheat and soybeans, I believe, are just in the first legs of their corrective wave patterns (waves A), corn is already in wave C, the final leg. In Elliott wave terms, corn's particular type of correction is called an Expanded Flat. I explain this wave labeling in my tonight's Daily Futures Junctures (Ed. – March 17). I also show 6 charts and a 4-minute video to my readers, giving them my price targets and detailed forecasts, in several timeframes, for all three markets.
FF: Thank you for speaking with us, Jeffrey.
JK: My pleasure.
(Editor's Note: You can see Jeffrey's March 17 Daily Futures Junctures online right now -- risk-free for 30 days -- via the quick subscription steps you see below.)