COWS (Corn, Oats, Wheat and Soybeans)

The grain and soybean complex markets are beginning to find some good support. I advised prior to the declines that the record-breaking rallies would end. And they did. The bubble has burst as predicted and declines have been huge, also as predicted. We are in the ideal time frame for seasonal lows in the soybean complex as well as in corn. I have given you a short term, high-risk buy signal on March corn via the hotline. I believe that the grain and soybean markets have the potential to recover quickly to long term and or intermediate term resistance levels. NOTE: I will be giving you SPREAD recommendations in the grain and soybean complex markets provided that risk levels are reasonable. See charts below. See also spread commentary in this report. ATTEND MY SPREAD WEBINAR this weekend!

Soybean Complex: I alerted you of the bearish trends and potentially large corrections before they started. The corrections have come and some short-term buy triggers have developed in some cases. The seasonals were ideally BEARISH until late October which meant that we were getting close to lows. The charts below illustrate my assessment of current signals and indicators. Soybeans have given a high-risk trigger to go long but with HUGE volatility. I emphasize the “high risk” aspect of all grain and soybean market trades. As noted above, I will be recommending spreads very soon via daily hotline.

Corn: Prior to the current declines I pointed out that my COT analysis had turned bearish. Seasonal lows are now due. There is bullish momentum divergence. The hotline has given you a specific short-term recommendation to buy at or near support. I believe that corn prices now have the potential to make a very large recovery, perhaps to as high as intermediate term resistance areas. The hotline has recommended a long on the recent buy signal. Await corn spread recommendations as well. See below for short-term charts.

Wheat: I advised you that “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. There were short-term buy signals. Await wheat spread recommendations. As in all the grain and soy complex markets, the swings in wheat will continue to be large and wild. A small stop loss in such an environment will only work against you. My weekly COT Analysis newsletter pointed out the very bullish implications of large Commercial long positions.

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. There are no short-term buy signals. IMPORTANT REMINDER: 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: My analysis of the COT Commercials positions in both markets continues to project a LONG TERM bull move in both of the meats. I believe that the recent decline in hogs constitutes a good test of my bullish LONG TERM forecast. The end of the month October has often marked the start of a higher probability seasonal long trade in lean hogs and seasonally bullish trends in cattle. The seasonals were marginally effective this year. On a spread basis we believe that hogs are undervalued relative to cattle. Hogs futures were close to a short term buy signal and they have triggered. A seasonal rally is now likely and it could develop into a much bigger move consistent with my longer-term expectations. The next few weeks should be bullish for hog prices if the seasonals are on course. The hotline recommended a long in Feb hogs.

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. The trend remains bearish. Seasonal lows are ideally due in December.

Gold and Silver: Gold seasonals fulfilled their projected seasonal rally and you should have gotten out of longs. Short term trends in both gold and silver exploded to the upside, however, the ideal seasonal tendency was clearly lower and prices then fell sharply also as predicted. There is no change in the short term down trend as of this writing in spite of attempts to rally on economic weakness.

The panic selling in stocks worldwide combined with the anticipated financial crises should have taken gold and even silver to new all time highs. But because they DID NOT DO SO, I warned you that this was bearish for the precious metals. If the precious metals can’t rally strongly in response to the largest economic crisis in history (post the Great Depression) then something is very wrong and it’s not bullish. Silver shows bullish divergence but gold does not.

As long as seasonals still point to lower prices I will remain bearish. Silver is also not behaving well despite the negative economic background. The odds are that long-term support will hold BUT there are no significant buy triggers as yet in either market.

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 discussed in this newsletter well in advance.

As the chart below shows, palladium has triggered a fairly lengthy bullish divergence and remains in an up trend. The severe corrective declines were long overdue and are, in my view, a positive development in the long-term picture.

Currencies

Aussie $: I advised you well ahead of the fact that a MAJOR decline was coming. The decline has been devastating to the bulls. The market has literally crashed against the US dollar. I told you that it was “not unreasonable to expect a short term low”. A brief rally developed as expected but the major trend remains bearish. A short-term dollar sell signal has developed. The bear market rally did not change my expectations.

Eurocurrency/Swiss Franc: There were persistent and significant warnings (and persistent ones at that) on my work of a major low in the US dollar vs. the Swiss and the Euro. Short-term lows were expected to develop and they did, but the major trend remains down. There is no change in my long-term bearish expectation. The dollar has surged as expected. I remain bullish on the dollar, however, a short-term top in the dollar was expected and it has developed.

Japanese Yen: I have been bullish for many months and I REMAIN BULLISH. I predicted without any hedging that the Yen would become one of the strongest currencies in the world. It has done so. The long-term bull market continues as predicted. The Yen has exploded against many currencies as predicted. A short-term top has developed in the US dollar but there are no sell signals in the Yen. I have been and I remain bullish on Yen vs. US Dollar. The market has confirmed my bullish forecasts dramatically.

US Dollar: The dollar gave me clear technical evidence that was expected to mark the beginning of the end to this bear market. A short-term top is being made but there are no clear cut sell triggers as of this writing. The dollar is now at long-term resistance, which is why there has been some hesitation. There are initial sell signals for a short-term decline. See chart below.

Canadian$: 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. Given the severity and intensity of the decline the odds favored a potentially large recovery rally and I advised you of that. A short term upside correction is likely over the next few days at the very least.

BrPound: The market has 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. A short-term rally is likely now that the US dollar has given a daily sell signal.

Tropicals

Orange Juice: There are NO buy triggers as of this writing. Prices continued to fall sharply in sympathy with ongoing and persistent declines in many other markets. I continue to wait for buy triggers that could come at any time. My cyclical work suggested that lows are well overdue. I advise you to wait for divergence buy triggers. See chart below.

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 buys 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 crash in commodities. A short-term buy signal has developed.

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. 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. A short-term seasonal bull trend was expected.

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.

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. I remain neutral to short term bearish. A short term low is developing but there are no buy triggers as yet. See chart below.

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. The chart shows that a buy trigger has occurred.

I believe that a long-term bull market is imminent. No matter what I say it is utterly imperative to WAIT FOR A TRIGGER! That trigger has been made on a daily basis. 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. There are indications that a short term low is developing. The chart at left shows bullish divergence. With lumber prices so low producers will slow down or stop production and this may be the first indication of a major low based on the fundamentals.

Interest Rates

I believe that the next major move in US interest rates will be to the upside. My expectation and forecast are based on the 50-60 year long term cycle which now points to higher rates. The flight to quality this week shot futures up to very high levels consistent with seasonals. But this panic into safety is not unlike other panics. It usually marks the end of a move rather than the beginning of a move. The financial rescue plan will likely result in huge interest rate increases. SEE CHART FOR A LOOK AT LONG TERM RESISTANCE. Seasonal trend continues bullish.

Stocks

Based on my cycles work, I advised you that the odds favored a significant low in the US stock market by the end of 2008. I was clear and specific in my advice to go long on the close of trading 27 October. I showed you the history of this seasonal back to 1901! S&P futures surged to the upside. Stock market lows were deemed likely in late October based on seasonals were initially correct. Markets are groping for a bottom. See my comments on page 1 regarding a possible pre Thanksgiving rally.

While opportunities to buy quality stocks at very low prices will be and are fantastic, you must wait for timing triggers or you must be willing to dollar cost average into quality stocks over the next few months. Wait for weekly buy triggers in order to be more certain of lows and if you are an investor as opposed to a short-term trader. There has been yet another divergence buy trigger for S&P. Remember that the bottoming prices after such a large decline is not a tame event but rather one marked by large volatility. Bottoming is a process not an event.

Energies

The energy futures markets collapsed following a period of excessive bullish sentiment and runaway bull move. Efforts by OPEC to shore up prices by lowering production will likely have only a minimal or limited impact, as has been the case in the past. I believe that short-term lows are likely very soon. The natural gas market has more upside potential on an intermediate and long-term basis than either unleaded gas or crude oil. The daily charts have shown bullish divergence and have, in some cases,triggered. See chart at right – it shows a clear bullish divergence set up.

Given the length and severity of the decline in all energies the odds of a major recovery rally are significant. I do not believe that these bull markets are over as yet and I suspect that a rally back to the $90 level is very possible.