COWS (Corn, Oats, Wheat and Soybeans)

The grain and soybean complex markets have dropped sharply from their record highs and are now testing or have recently tested critically important support areas. The most important consideration in what is now developing is whether this is a major buying opportunity or the end of the biggest bull market in commodity history. I predicted the bull markets and I warned about the tops. My expectation is that we will be making lows within a few weeks based on seasonals as well as several timing factors. Initially these lows will be short term as well as seasonal but they could easily lead to much bigger and better trends. This issue will cover long-term support levels in the grain and soybean complex as well as all other markets. SEE CHARTS BELOW and commentary.

Soybean Complex: All soybean complex indicators turned bearish prior to the large declines. I advised you of the pending bearish trends before they started. Now that the corrections have come its time to await confirmation of soybean complex lows but note that the seasonals are ideally BEARISH until October. No bottoms yet but we are close. Support levels are being tested. The long term charts below shows my evaluation of current support. Seasonal lows are due very soon. Watch for triggers!

Corn: Several weeks ago I pointed out that my COT analysis had turned bearish. I advised you, prior to the record top, to lock in some profits whether you were a speculator or a producer. I warned you repeatedly of the coming drop in prices. The weekly trend has been and remains intermediate term bullish. The hotline will give you specific short-term recommendation to buy at or near weekly support. See chart below for long-term support. WAIT FOR NEW BUY TRIGGERS. Let’s look at long-term support. See below.

Wheat: I advised you as follows “the short term trend may bottom within days, while weekly the trend remains bearish”. We saw signs of that bullish life last week in the form of a huge recovery. Lets take a look at the long-term chart below.

Oats: The market remains short term bearish. The intermediate-term uptrend remains bullish. The decline has taken prices down to important support. There are no long-term sell signals on my indicators.

IMPORTANT NOTE: REMEMBER THAT ALL RECOMMENDATONS GIVEN VIA THE HOTLINE WILL REQUIRE LARGE STOP LOSSES DUE TO ONGOING MARKET VOLATILITY. THERE HAS NEVER BEEN A TIME AS VOLATILE AS THIS – YOU WILL LOSE MONEY IF YOU USE SMALL STOPS. IF YOU CAN’T AFFORD THE POTENTIAL RISK THEN DON’T TRADE!

Meats

Cattle and Hogs: The rally in hogs and cattle supports the validity of my long term forecast. My analysis of the COT Commercials positions in both markets continues to project a LONG TERM bull move in both of the meats. I remain bullish on all meats for the intermediate and long term in spite of the declines that have recently affected many markets. I believe that the recent decline in hogs constitutes a good test of my bullish expectations. The chart at right shows long-term trend support area in cattle futures. I remain intermediate and long term bullish on the meats. If my work is on target then we are likely to see new all time highs in both markets in the not too distant future. We will now wait for daily buy. The markets have declined in sympathy with declines in commodities and stocks. See cattle chart below.

Metals

Copper: There are no long-term sell signals as of this writing. Thin volume and erratic price moves make this a difficult market to trade. Therefore, I will not be giving specific hotline recommendations due to intraday volatility and risk. A decline to important support is developing. Stand aside..

Gold and Silver: I advised you to “Consider gold shares as well such as HMY. Gold seasonals made their move and you should have gotten out of longs. Short-term trends in both gold and silver exploded to the upside but the ideal seasonal tendency now points lower.

As long as seasonals point lower I will remain bearish. As we go to press gold continues to trade lower the odds that long-term support will hold BUT there are no buy triggers as yet. SEE GOLD AND SILVER CHARTS.

Platinum/Palladium: My long-term forecasts for platinum and palladium have been bullish and I am still long term bullish in spite of the recent corrections down which were clearly predicted in this newsletter well in advance. The severe corrective declines were long overdue and are a positive development in the long-term picture.

Platinum has not participated meaningfully in the precious metals rally and has reacted to major longterm
support levels that are critically important holding levels.

I believe that palladium is a good choice due to the potential for major supply disruptions. Consider longs in PAL for the long term as well as the pending long term cycle low. Note that my palladium recommendation is a LONG TERM play (2-3 years).

Disclosure – either I and or my family own shares in PAL. Note that the recommendations for palladium are long term. This is not a day-to-day thing. PAL is clearly in a bearish trend but I remind you that this is a long-term proposition.

Currencies

Aussie $: I warned you repeatedly and persistently of a MAJOR decline that was coming. My bearish warnings were correct. The Aussie dollar has “crashed” against the dollar. The last short term bear market rally did not change my expectations. See chart at right and the US dollar commentary below. The chart at right shows that we are now just slightly below major long-term support in the AD/USD. It is reasonable to expect a short-term low but there are no buy triggers yet.

Eurocurrency/Swiss Franc: There were persistent indications of a major low in the US dollar vs. the Swiss and the Euro. I warned you about them repeatedly. The forecast was correct. Currencies have been staging a brief seasonal rally against the US dollar. My cyclical patterns suggest that long tops are developing. There is no change in my long-term expectation. The dollar has soared as expected. I remain bullish on the dollar; however, I advised you there were signs that a short term low might be developing in the Swiss and Euro. The short-term lows have been made.

Japanese Yen: I have been bullish for many months and I REMAIN BULLISH. The long-term bull market continues as predicted. Buy on declines to weekly support such as the drop that is now in process. I will likely give you a buy recommendation via the hotline as soon as there is another buy trigger. I have been and I remain bullish on Yen vs. US Dollar. The market has confirmed my forecasts.

US Dollar: The dollar gave me clear technical evidence that was expected to mark the beginning of the end to this bear market. The secular (i.e. long term) bear market as well as the persistent and extreme level of bearish sentiment gave me strong technical and behavioral reasons to persist in my bullish (and contrarian) point of view. Last week I stated “the dollar is now at long term resistance which is why there has been some hesitation”. A short-term top is being made and my forecast has been confirmed.

Canadian$: I EXPECTED A SHORT TERM LOW VERY SOON. It has been made. I have good technical and cyclical reasons to conclude that an important top has been made in the Canadian dollar vs. the US dollar. Divergence gave clear warnings of a top or, at the minimum, a considerable downside correction. The trend remains bearish but prices are now at long-term support. See chart at top right.

BrPound: The market has likely made an approximate 8.1-year cycle top as predicted. I am still bearish consistent with the long-term cycle projection. The market validated by bearish stance but the bear market is not over yet in spite of the fact that a short-term rally developed. I stated “the rally may take the market a few hundred points higher, where it should run into major resistance”. It has done so.

Tropicals

Orange Juice: Despite weather concerns and seasonal expectations for higher prices, there are NO buy triggers as of this writing. My work has been bullish and I continue to wait for buy triggers that could come at any time now. The series of hurricanes did not prompt a buy trigger which is, in and of itself, a bearish factor. Seasonals remain ideally bullish. My cyclical work suggests that lows are now overdue. I have been advising you to patient in waiting for a new buy recommendation VIA HOTLINE.

Sugar: My analysis of the long-term sugar data suggested that the major cycle, which has averaged approximately 7 years, low to low turned bullish. Short term buy signals developed and the price surge has been excellent. I recommended waiting to buy on a decline to short term (daily) support. The market is likely
to bottom near or at long-term support in sympathy with the overall decline in commodities. See chart below.

Coffee: My long-term cycles continue to tell me that coffee prices are overdue for a major rally that could
take prices much higher over the next few months. Coffee is in a major bull market still in its early stages
and it has recently tested short-term support. A seasonal rally has developed as shown on the chart at
left. Coffee is a very volatile market that requires considerable risk. Large stops that must be used or you will be stopped out quickly and often. Prices have fallen to important intermediate term support. All recommendations in coffee are high risk!

Cocoa: My forecast has been bullish and it remains so. My forecast has been correct. The major bull market
that I predicted many months ago remains intact.

Prices surged sharply higher as predicted many weeks ago, however, a test of support is now developing, ALSO AS EXPECTED. The long-term trend remains bullish as confirmed by the strong rally IN THE LAST FEW WEEKS.

Fibers

Cotton: My previous comments were as follows “In spite of the recent strength in sympathy with the grain
and soybean complex the technical picture is still NOT convincingly positive. There is short-term bullish divergence and a short-term buy trigger, however, I remain neutral to short term bearish.

Lumber: Based on my analysis of the cycles, trend, timing and COT data, I advised you that lumber is
positioned what could very well be the first stages of a record-breaking price rally. I believe that a long-term
bull market is imminent. No matter what I day it is utterly imperative to WAIT FOR A TRIGGER! The market has made new lows for the move but the cycles and my COT studies continue to give advance indications of a major low in the offing. Prices have made new lows and sentiment remains chronically low. I consider this to be a bullish indication.

Interest Rates

I believe that the next major move in US interest rates will be to the upside. The current Federal Reserve policy is to keep rates low as part of the economic bailout. But I think that will change. I have been advising
you that the US dollar was likely to rally with increasing US interest rates.

My analysis and forecasts have been and remain bearish for US interest rate futures. I also advised you that the dollar would decline to test support.. The financial rescue plan will likely result in significant interest rate increases. SEE CHARTS BELOW.

Short-term trends in futures are bullish based on seasonality (as predicted). I told you “The developing
financial crisis may force rates to remain low for the short term, however, I DOUBT that these low rates will continue”. Inflation is coming. It will be big.

Energies

The inability of prices to remain strong despite political and weather factors was a bearish factor. Note, however that a short-term rally was expected and it has developed. See charts at right for longterm
support areas.

I advised you THAT NATURAL GAS had TRIGGERED A SELL in spite of my longer-term bullish orientation. The
market has declined to important intermediate and long-term technical support levels where the odds of a bottom are fairly strong.

Natural gas has changed course and has triggered a short-term buy (see chart). The charts at right show that the declines have been large as well as persistent. I suggested longs in UNG which have, as of this writing, performed well on the upside.

I expected lows in the short-term energy down trends to be in place by late August in line with seasonals. These shortterm lows have developed but seasonals point lower after the first week of October. Here are my current expectations and forecasts:

• I expected all energies to find support at or near intermediate or long term support areas and this has taken place.

• I expected natural gas to outperform many other sectors of the energy complex on a percentage gain basis and this appears to be starting – consider natural gas stocks as well

• Look for volatility to increase dramatically toward the end of this month – this has happened.

• Consider spreads as a viable and lower risk alternative to net long positions in the energies.

• The energy bull market is not over. It is merely taking a much-needed breather. SEE MY LONG TERM SUPPORT AREAS BELOW.

• But note that seasonals HAVE TURNED BEARISH and another round of declines WAS EXPECTED.

• Natural gas remains is also testing long term support.