Every month, Elliott Wave International’s Senior Commodity Analyst Jeffrey Kennedy scours the marketplace for the ONE price chart that stands out from the crowd like a ripened red tomato on a vine of pale green fruit.
Carefully picked, Jeffrey announces his findings to you in the opening segment of Monthly Futures Junctures. Today, May 23, a brand-new MFJ hits the virtual “stands,” and the page one “Featured Market” story is on ------ Feeder Cattle.
This morning, I sat down with Jeffrey Kennedy to discuss why he feels the need for Feeders.
Nico Isaac: There have been a lot of rumors in the financial media that Feeder Cattle prices will continue falling as the price of corn, the main ingredient in cattle feed, continues to rise. Do you agree with such a claim?
Jeffrey Kennedy: While there is some validity to this argument, from an Elliott wave point of view, Corn and Feeders have different wave patterns. The rising price of Corn will not necessarily negatively impact the price of cattle: It all depends on the collective mindset -- bullish or bearish -- of the traders who participate in each of these markets. In fact, I feel quite optimistic about both corn AND feeder cattle prices.
Get short and long-term forecasts for Corn and other commodity market opportunities on pp. 5-10 of the May Monthly Futures Junctures. See it risk-free, now.
Nico: Corn I can understand, but what makes you so excited about Feeder Cattle?
Jeffrey: There are two cornerstones of the Wave Principle - the motive wave, which subdivides into five smaller waves (labeled 1-2-3-4-5), and the corrective wave, which subdivides into three waves (labeled A-B-C). The importance of these two types of waves is that the motive wave indicates the direction of the larger trend, and the corrective wave identifies countertrend moves within that larger trend. This diagram illustrates this point:
Nico: Which brings us to the chart below, an unlabeled replica of the first of four charts of Feeder Cattle you are presenting in the May 23 Monthly Futures Junctures. I’m only a student, but even I can see that the September 2007 selloff into the March low unfolded as FIVE waves.
Jeffrey: Student schmudent! I’ve always said that at its core, Elliott wave analysis is simple. Still, we haven’t answered the next part of the puzzle: Has the rally from the March 2008 low unfolded in three or five waves? The first would suggest that a top has been registered and the larger trend is down. The second indicates that new price highs are forthcoming.
Nico: I think I’ll leave that part up to you, the one with fifteen years of experience counting Elliott waves -- for a living.
Jeffrey: Done, and done. Once you finish reading the four pages of commentary and see the four close-up charts of Feeder Cattle in the “Featured Market” segment of my May MFJ, there will be little doubt as to WHERE prices should “stampede” next.
Nico: I look forward to reading all the details today!