SOYBEANS: While the development of a “five-wave decline” at any point here in the beans would be cause for “concern”, especially in light of this week’s “penetration” of the Jan low in corn, the internal-action over the past few days (in the beans) actually looks QUITE BULLISH to me. In essence, because the Wednesday-to-Thursday drop in the May beans was about TWICE the size of any other setback since the March 2 low, the implication here is that WE HAVE CONFIRMED A COMPLETED, “five-wave rally” ,i.e., off the March 2 low. Thus, IF a “five-wave decline” had followed this “juncture”, then we would’ve been able to make a case for A SIGNIFICANT, “Primary wave-PEAK”. However, considering that this “juncture” resulted in A BULLISH, “a-b-c decline”, AND prices have now also scored a new rally high, the STRONG IMPLICATION HERE IS THAT WE’VE ONLY FINISHED AN INITIAL, “wave-1-of-(c)section up”. In which case, IF we happen to get one more decent “shot-down” in the next several days, aggressive traders should probably look to ADD ANOTHER LONG-POSITION. Note, while it’s certainly possible that Thursday’s 8.96 low has already marked the END of a “wave-2 setback”, the overall drop is so far a bit SMALL in terms of “time”? Anyhow, under this count, once a “wave-2 low” is confirmed, then the stage should be set for the usually POWERFUL, “wave-3-of-(c)ADVANCE”! In which case, by the time we trace-out waves “3-up”, “4-down” and then “5-up”, prices should EASILY REACH OUR MINIMUM TARGET AT 9.57-9.87. However, in the event a “9-wave extension” occurs here, then the OPTIMUM OBJECTIVE WILL BE AT 10.24-10.46 3/4. Longer-term, however, assuming it’s possible to label a completed, “Primary wave-advance”...when prices reach EITHER of these resistance areas, then we’ll probably REVERSE-AND-GO SHORT? At that time, our Preferred Count will presumably call for A FINAL, “Primary wave-DECLINE”...TO 8.32-8.06 ½. Once this drop ends, however, THEN THE MOST BULLISH-POSITION SINCE 2008 WILL BE AT HAND! Support is at 9.10-9.08, 9.04, 8.97 ½-8.94 ½(good), 8.85-8.81(good/key), and 8.72 3/4-8.70, with resistance at 9.20 1/4-9.32 (good/key) and 9.41-9.44.
CORN: Although I DON’T see how my intermediate-term, “Bullish Counts” could be right in the beans and wheat, BUT WRONG in the corn, Thursday’s SLIGHT PENETRATION of the Jan continuation chart low at 3.48 1/2...certainly appears to have placed the corn market in a rather “precarious” position? If we DO NOT witness a near immediate, “five-wave rally”, then I guess we’ll have to figure that the entire Oct 2014-to-March 2016 wave-progression...could’ve COMPLETED the “CYCLE-WAVE-B ADVANCE” ,i.e., at the March 2016 high of 3.74. In which case, since this scenario indicates that we’re now in a “CYCLE-WAVE-C DECLINE”, of the same-degree as the entire 2012-2014 drop, I guess prices could be headed for OUR LONG-TERM OBJECTIVE AT 2.92-2.88...NOW? However, because this would have to be THE WORST, “Contracting Triangle” in a “CYCLE-WAVE-B” position that I’ve EVER SEEN, AND this count obviously DOES NOT FIT-IN with our interpretations in the beans AND wheat, I still think the more likely scenario is that the decline from the July 2015 peak...is just a “Primary wave-[b]correction”. In which case, presumably within the next couple of days, we WILL indeed witness A BULLISH, “five-wave RALLY”. If so, then our Preferred Count will still indicate that we need to trace-out A SUBSTANTIAL, “Primary wave-[c]ADVANCE”, of the same-degree as the entire 2014-2015/”[a]-wave rally” ,i.e., BEFORE the stage will actually be set for A MAJOR, “CYCLE-WAVE-C DECLINE”. Anyhow, given this scenario, it still looks like the MINIMUM, UPSIDE TARGET WILL BE AT THE 4.39 3/4-4.44 LEVEL, with a move as high as the 5.15-5.19 ½ area also quite possible. Support is at 3.48 ½-3.45(good/key?), 3.40 ½ and 3.36-3.33(good), with resistance at 3.56-3.58 ½(good), 3.64 ½-3.65 3/4(good/key) and 3.72.
WHEAT: Since the last “shot-up” in the May wheat DID NOT get close enough to the mid-March high at 4.79 ½...to constitute a completed, “three-wave rally” off the March 2 bottom, the LEAST BULLISH COUNT here continues to indicate that we need to see a “wave-c advance”; presumably to ABOVE the 4.79 ½ high. At which point, I guess a “critical” wave-position could be at hand? At that time, IF we happen to witness a “five-wave drop”, AND the corn market has also “broken-out” to the downside of it’s 10-month/Contracting Triangle” formation, then we’d presumably have to at least EXIT OUR LONG WHEAT POSITIONS...just in case? With that said, however, considering that the long-term count indicates that we’ve STRONGLY CONFIRMED THE COMPLETION OF TWO, “Diagonal Triangle Declines”...from the July 2012, and July 2015 highs, I still think there’s ABOUT AN 85%-CHANCE THAT THE MARCH LOW AT 4.35 1/4...WILL NOT BE VIOLATED. In fact, as long as the aforementioned, “critical” wave-position IS NOT immediately followed by a “five-wave decline”, aggressive traders will probably want to consider ADDING ANOTHER LONG. At that point, the stage ought to be set for a potentially POWERFUL, “wave-(3)-of-[a]ADVANCE”! In which case, by the time waves “(3)-up”, “(4)-down” and then “(5)-up” have been traced-out, I still think our BARE MINIMUM TARGET WILL BE AT 5.53 3/4-5.57 3/4. However, due to the extended duration of BOTH “Diagonal Triangle” formations, we probably have to figure that there’s BETTER THAN A 50%-CHANCE that we’ll actually see a “(9)-wave rally/extension” (instead). In this event, prices should easily reach the next higher resistance area at 6.30 3/4-6.40, with the BEST OBJECTIVE AT 7.50-7.58? Support is at 4.70, 4.63-4.58(good/key), 4.49-4.47 ½ (max?) and 4.39-4.31 3/4, with the resistance at 4.74 ½-4.76, 4.81, 4.87-4.91 and 5.06-5.10(good/key).
COTTON: Considering that the March continuation chart low at 55.66 in cotton VIOLATED the Jan 2015 bottom at 57.05 by a decent amount, one obviously has to “question” whether or not the “odds” still favor a “CYCLE-WAVE-B RALLY”...from last year’s low? Well, given that the Jan-Aug 2015 rally was RIDICULOUSLY SMALL, as compared to the GIGANTIC 2011-2015 DECLINE, AND we now also appear to have CONFIRMED AN UPSIDE “BREAKOUT” on both the continuation chart, AND basis the May contract, I DO THINK the “odds” have now shifted-back IN FAVOR OF OUR BULLISH COUNT. Consequently, as long as the next multi-day setback DOES NOT result in a “bearish-five”, we’ll try and HOLD LONG. Under this count, which now indicates that we’re in a larger, “Irregular Flat Advance” from the 2015 low, the current, “Primary wave-[c]advance” would have to AT LEAST “BLOW-OUT” THE AUGUST 2015 TOP AT 68.30. However, because this would still represent a very SMALL retracement of the overall bear-move, the far more likely TARGET WOULD HAVE TO BE AT THE 80.64-81.42 LEVEL. This area incorporates the KEY, 14.58%-61.8%-retracement combination from the 2011 and 2014 highs. KEY SUPPORT is at 58.35-57.05, with resistance at 59.41-59.72, 60.57-60.96 and 61.45-61.74.
HOGS: Since ALL of the necessary waves for a potentially COMPLETED, “wave-(2) decline” are now pretty much “in place” in the nearby April hogs (AND via the continuation chart), AND prices have also reached our BEST SUPPORT-ZONE AT 67.55-TO-66.95, aggressive traders should consider GOING LONG EITHER THE APRIL OR JUNE CONTRACT (SEE New Trades). As long as we hold fairly close to this area, which incorporates the 58.85%-27.25%-retracement combination from the 1998 and 2015 lows, the “equal waves a-and-c” projection, AND depreciations of 50%, 21.345% and 7.29% from the 2014, 2015 and 2016 highs, then we stand a pretty good chance of seeing A STRONG RALLY between now-and-the April 14 expiration of the nearby contract? If this area IS EXCEEDED by much, however, then I may regret NOT buying the June contract instead. At any rate, due to the SIZEABLE PREMIUM that both the May and June contracts currently share over “spot”, once April goes off-the-board, its’ highly likely that we’ll already be in a “wave-(3)rally”...via the continuation chart. In which case, my guess is that the MAY contract will reach our MINIMUM TARGET AT 83.15-83.80
ELLIOTT WAVE FUTURES MONITOR
STOCKS: Since our expected, “MILD, 1-day pullback” in the June Mini S&P ended up being a bit BIGGER in terms of BOTH “duration” AND “size” than I would’ve preferred, the current wave-position is NOT as perfect as it could’ve been. With that said, however, if we can get one more “shot-up” to our KEY RESISTANCE AREA AT 2075.50-2085.50; preferably by late Monday, I still think most traders will want to CONSIDER GOING AT LEAST LIGHTLY SHORT. As long as we hold fairly close to this area, which, in addition to numerous other projections, also yields the upper channel-line from Nov 2015 top (actually at 2083.50), we should at least see A SHARP BREAK. And, of course, if our Preferred Count is right, AND we’re actually ENDING the advance from the Jan low, then we ought to witness A “five-wave decline”...THAT LASTS FOR MORE THAN 6-TRADING DAYS. If so, the stage ought to be set for A HECK OF A “FINAL DECLINE”! In the event the next “6-day plus drop” FAILS to produce a “five”, however, OR another move-up to new rally highs follows, then our highly-bearish count will be NEGATED, OR at least postponed...UNTIL the 2015 high at 2134.00 is exceeded? Near-term resistance is at 2055.75-2066.50, with support at 2060.50, 2052.25-2049.25, 2039.50-2038.00 (key?), 2027.00-2026.50 and 2015.25-2014.25 (good).
SILVER: Given that the initial decline from the March 18 high (16.17) in May silver appears to have produced a potentially BEARISH, “five-wave” pattern, AND the “bounce” off Tuesday’s low also has a “corrective” looking, a-b-c formation (so far?), aggressive traders could attempt A LIGHT, SHORT-POSITION, using a stop ABOVE our two closest areas of good resistance at 15.415-15.62 (best) and 15.84-15.93(max?). As you know, if our SLIGHTLY Preferred Count proves correct here, the stage should now be set for a “wave-(5)decline”; presumably to AT LEAST THE 13.65-13.39 SUPPORT-ZONE. However, because the pattern over the past year or so has be VERY HARD TO READ, AND we also DON’T have a clear, “three” OR “five-wave rally” in place from the Dec 2015 low, I’m probably going to officially STAY ON THE SIDELINES here? Note, because the long-term pattern in the GOLD does indicate that we’ve ALREADY FINISHED an initial decline of at least “CYCLE-DEGREE”...from the 2011 top, the implication here is that the “downside potential” may NOT justify the risk on the short-side? Anyhow, in order to CONFIRM A COMPLETED decline from the 2011 top in silver, the current drop will have to end-up yielding ONLY a “three” (OR, EXCEED the 16.17 high). Support is at 15.04, 14.86-14.44(good/key), 14.14 and 13.65-13.39
CRUDE OIL: Although the initial decline off the March 18 high in May Crude Oil (42.49) DID produce a potentially BEARISH, “five-wave” pattern, the subsequent bounce MISSED our best resistance area/sell-zone at 40.05-40.47. Thus, since Thursday’s drop to new sell-off lows has now actually turned the pattern into a possible, “7-wave/Double-Three”, I think we’ll hold-off on doing anything for at least another day or two. Note, IF another drop to new sell-off lows DOES NOT quickly follow the next small bounce, then the short-term formation could end-up indicating that the current decline is a “Bullish-Three (instead)? Anyhow, since we’ve EITHER already hit a long-term low, OR we still need to stage “a final, “wave-(5)decline” to at least the 24.81-24.52 AND/OR 21.98-21.50 SUPPORT LEVEL(s), we ought to have a pretty GOOD TRADING OPPORTUNITY ,i.e., once we CONFIRM which count is correct? Support is at 37.44, 35.51-34.76(good) and 33.42, with resistance at 36.97, 38.51-38.78 and 40.05-40.47.
COFFEE: Given that the “magnitude” of the Jan-March rally in coffee certainly appears to be enough to have CONFIRMED A COMPLETED, “Diagonal Triangle/SC-WAVE-(C)DECLINE” from the 2014 top, the implication here is that we’ve ALSO FINISHED the longer-term “Bear Cycle” from at least the 1997 high; if not from the 1977 all-time-high. Which, would be AN EXTREMELY BULLISH, LONGER-TERM COUNT! Consequently, while we still need to GET PAST the March high at 136.40, in order to CONFIRM that a larger up-move has indeed started, the current setback DOES look a bit more like a “bullish-three” ,i.e., as opposed to a “bearish-five”. Thus, high risk traders should probably go ahead and TAKE A SHOT AT THE LONG-SIDE (SEE New Trades). Support for May is at 126.05-125.75, 124.10-123.30 (best) and 122.20-121.50(good/max), with the resistance is at 128.45, 130.25-131.00(good/key), 132.15-132.95(good), 135.45-136.00 and 137.25-138.35(good).
COCOA: Since there’s still roughly A 35%-CHANCE that the current decline in cocoa is just a “wave-(b)correction”, traders should probably LOWER the stop on shorts...to a profitable position [SEE New Trades]. Note, if prices happen to turn back-up next week, then it’s possible that we still need to stage A FINAL, “wave-(c)ADVANCE”; presumably back to our BIG RESISTANCE AREA AT 3130-3165? However, because the initial decline from the March 18 high DID produce a pretty NEGATIVE looking, “five-wave” pattern, AND the last bounce also HELD KEY, INTERIM RESISTANCE AT 3016-3026, the BEST COUNT here indicates that we’re now in the early stages of what could be A HECK OF A “Primary wave--of-CYCLE-WAVE-C DECLINE”! Resistance is at 2895, 2931-29.57, 2991 and 3016-3026.
NEW TRADES AND OPEN POSITIONS 04/04/16
BEANS: HRT are long May beans at 8.83 1/4(+$1,675 w/rlvr). Use a stop at 8.77.
WHEAT: HRT are long May wheat at 4.49 3/4 (+$1,300). Keep the stop at 4.51.
COTTON: HRT bought May cotton at 58.96(+$120). RAISE the stop to 57.00.
HOGS: HRT bought the April hogs at 67.57 (+$90). Keep the stop at 65.17.
STOCKS: HRT can sell a June Mini S&P at 2074.75, using a stop at 2091.00.
COFFEE: HRT can buy the May coffee at 124.25, using a stop at 120.00.
COCOA: HRT are short the May cocoa at 3019 (+$1,380). LOWER the stop to 2995.
DISCLAIMER Futures and Option trading involves substantial risk and is not a suitable investment for all types of investors. This Futures Market Report is strictly the opinion of its writer. Information is obtained from sources believed reliable, but is in no way guaranteed. The author may have positions in the markets mentioned including at times positions contrary to the advice quoted herein. Opinions, market data and recommendations are subject to change at any time. Past performance is not necessarily an indicator of future performance. Prices displayed in this written update were taken from real-time price quotes that took into account all known activity up to the point in time the price displayed was quoted. Brent Harris is registered as an Associated Person of Southwest Futures, Inc.