Scan commodity markets' news headlines right now, and chances are you won't find too many stories about cotton.
And if you look at a chart of cotton futures, you will see that prices have been in a slow decline for a few months now.
Coincidence? Hardly. It's fairly typical for the mainstream financial media to only focus on the markets that are making the strongest moves right this minute. Nothing wrong with that – except, if the headlines are all you follow, you inevitably end up showing up late for most "parties."
News stories, by definition, lack forward-looking abilities. Their job is to inform you about what has just happened, and they do that job well. But it leaves you, the investor or trader, almost always one step behind market's action.
Enter the Elliott Wave Principle. It's based on the premise that markets – commodity futures and other liquid markets – are patterned. There are 13 known wave patterns; once you learn them, chances are, two things happen:
- You will learn to recognize the patterns in your market's charts, and
- When you've identified what part of the wave pattern you market is in now, you will be able to predict – with a high degree of confidence – what part should come next.
And that means that you can now forecast the trend before it's even begun. Now you're not behind the market – you're ahead of it. For a good example of this, look no further than the June 23 Daily Futures Junctures.
In that issue, editor Jeffrey Kennedy focuses on cotton futures as a strong potential opportunity. As usual, his reasons for picking cotton have nothing to do with the news. As we've already established, news is always one step behind the curve, and Jeffrey's goal is to make you aware of opportunities before they arrive.
And cotton futures flash all the signs an Elliottician needs to get excited. In Jeffrey's own words,
"[Cotton] We have three waves down in Cotton from 84.04 to 78.46… Moreover, this selloff is contained by parallel lines. Simply put, the recent decline in Cotton has all the earmarks of a countertrend move…"
Jeffrey then proceeds to give you two exact Fibonacci-derived price targets for the anticipated move. He also shows you three potential price "hurdles," which, if prices manage to overcome them, "will increase the probabilities that" the next big move in Cotton is indeed "in force."