Once again, I sit down to talk with Jeffrey Kennedy, Elliott Wave International's Senior Commodity Analyst and editor of our Futures Junctures Service. In it, Jeffrey identifies for his subscribers daily and other opportunities in almost two dozen futures markets. (Some of the Elliott wave labels in the charts below have been erased for this publication – Ed.)
Vadim Pokhlebkin: Jeffrey, the ongoing credit contraction – a.k.a. liquidity crisis – has not spared commodities. Just glancing at the long-term charts you show in the Wave Watch section of your October Monthly Futures Junctures, I see that prices of markets like coffee, corn, wheat or soybeans that were flying high just months ago, are down hard – and I mean, hard!
Jeffrey Kennedy: Yes, while some commodities have suffered less, the declines across the board have been fast and severe. Corn prices, for example, got cut in half since June. I show long-term forecasts for all these markets in my new Monthly Futures Junctures. (Ed. – online now, here's how to get it risk-free.) But the good news is, it's in emotional markets like these where Elliott wave analysis really shines. Where others see chaos, I see wave patterns. And where there are patterns – that's where you can make forecasts.
VP: Are you saying you can make sense of the markets better when they are crashing?
JK: Yes and no. What I mean is that the Wave Principle teaches that markets are emotional, not rational. And those emotions unfold in patterns – Elliott wave patterns. The more emotions you see in the markets – either on the way up or down – the clearer the wave patterns get, usually.
VP: Are you seeing any promising wave patterns in commodities now, after all these declines?
JK: Sure; by the way, most of the declines are likely not over yet. Still, you have lots of short-term opportunities – for example, in tonight's issue of my Daily Futures Junctures (Ed. – Oct. 20; get instant online access now, risk-free) I talk about Coffee and Soybeans. Take a look at this Chart 1 of Coffee from tonight's DFJ:
As you can see, Coffee has traced out a three-wave A-B-C advance from 111.45 to 117.35. Three-wave moves are important in the Wave Principle because they are corrections and should be more than fully retraced once complete. Furthermore, this A-B-C advance ended at 117.35, just below the .618 retracement of previous impulsive decline at 117.40. This is also significant because the most common Fibonacci retracement for second waves is a .618 multiple of wave one. This wave pattern has strong implications for Coffee in the near term.
Also in tonight's DFJ I talk about Soybeans. While the most Fibonacci common retracement for second waves is a .618 multiple of wave one, the most common Fibonacci multiple for fourth waves is a .382 multiple of wave three. In Chart 4 below, notice that Soybeans have only a small distance to travel before hitting the .382 retracement at 972 ¾. That means that Soybeans can be finishing their 4th wave bounce very soon. I explain what all this means in tonight's DFJ:
VP: Thanks for another lesson in wave analysis, Jeffrey, and for talking with us.
JK: My pleasure.