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“Shootin’ The Bull”
Commodity Market Comments
by Christopher B. Swift
February 24, 2017
Futures traders opted for the attitude of “sell it or smell it” today. I can’t recall such disparity in price. If I were to interject anything it would be this, the Elliott Wave Theory is based upon repetition of traders to do the same thing over and over again. Hence the pattern formations that we see and attempt to decipher future movement from. It has been noted in books I’ve read concerning this that the consensus of the wave 2 can actually be higher than at the actual wave 5 high or low. As in this case, the pessimism appears to be greater at this point, than when prices were at the contract lows in October ’16. The wave 2 is the transitional wave between the factors of, is the bull/bear market still intact, or has a reversal materialized. The industry is perceived at this juncture. The question building every day is, will the consumer absorb the increase of inventory, or will the inventory overwhelm the consumer? The industry has been pulling cattle to meet current demand. With all the expectations of supply, I’ve seen nothing yet that suggests demand will be quelled. I continue to perceive the current price action to be a major wave 2 correction, and the back months discounted too severely for the demand anticipated. This is not to say December can’t, or won’t, trade back down to $97.42 for a full .618% retracement. However, with the on feed numbers coming out as anticipated, This does not appear to be a surprise to anyone. Demand, and length of time it has been sustained continues to surprise the market. This is not a recommendation, but I will be looking for signals to own the December contract.
Although ugly, the feeders cleared up the question as to whether the wave 2 was complete or not. It is not as of today. Come Monday though, with the vacuum still perceived on, I would anticipate yards to continue to want to acquire inventory. The next two weeks may remain soft due to the seasonal tendency, but after that, the seasonality’s turn higher through July. I continue to perceive the price action to be a major wave 1 and 2 with anticipation of a wave 3 rally.
Grains closed the week as lifeless as they were all week long. The softer trade did little to analysis of beans and wheat. Corn remains in the same place it has been for weeks. No US dollar movement of significance is potentially wearing the nerves thin of excessively long funds positions.
Traders continue to move crude sideways with no discernable price moves. Like the grains, a great deal is built upon the anticipation of a weaker US dollar. I’ve read some encouraging news, but it apparently had no impact today.
Bonds were higher today. Nothing else has transpired to make me think one way or the other. The correction continues in bonds and I anticipate upon completion, the down trend will resume.
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