COWS (Corn, Oats, Wheat and Soybeans)

The grain and soybean complex markets found support on some of my indicators and have rallied consistent with year-end seasonal patterns and my short-term timing triggers. I advised you IN ADVANCE of the major price declines that the record-breaking bull markets would NOT continue. I told you that declines could be 60% or more from the highs. The forecast was correct. My work suggests that significant lows are due in many markets by the end of the first quarter of 2009. I do not believe that the liquidation is over yet but I do have ample reason to believe that a second wave of commodity bull markets is coming. I am not yet certain that the next big move will eclipse the all time highs but I do believe that the rallies will be huge. The large price drop in reaction to the USDA production report is a very good test of the short term up trend, Await possible buy recommendations. SEE BTI charts below.

Soybean Complex: I warned you of the bearish trends and potentially large corrections before they started. The corrections came. I also advised you that short-term buy triggers have developed. Soybeans gave me a trigger to go long but with HUGE volatility. I emphasize the “high risk” aspect of all grain and soybean market trades. All short-term profit targets in my indicators were met prior to the current decline. Await recommendations.

Corn: Prior to the current declines I pointed out that my COT analysis had turned bearish. Seasonal lows were due and may well have been made on bullish momentum divergence signals. I believe that corn prices now have the potential to make a very large recovery, perhaps to as high as intermediate term resistance areas. Seasonals remain bullish until early January. Await recommendation to go long on a valid test of support.

Wheat: I advised you “the short term trend may bottom within days, while weekly the trend remains bearish”. We saw signs of bullish life 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. See 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 were short-term MOMENTUM divergence buy signals but no MAC signals as yet. See chart below.

Take a look at the long term RATIO CHART for SOYBEANS vs. CORN…the perspective is amazing! 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. A trigger is needed to spark the rallies. I believe that the current steep decline in hogs is another test of my bullish LONG TERM forecast as well as an important test of long term technical support.

Cattle futures appear to have made a short term low with the current decline seen as a test of short-term support. Some of my indicators have triggered a buy on cattle. The hotline recommended long Jun and short April hogs spread that should have been closed out when it reached its profit target. I plan to once again recommend this spread when and if it declines to short term support. See chart below.

Metals

Copper: Thin volume and erratic price moves make this a difficult market to trade other than for the long term. Therefore, I will not be giving specific hotline recommendations. The trend remains short term and intermediate term bearish, however, seasonal lows are ideally due at this time. Watch for what could be a significant short-term rally in copper (and all metals). Copper tends to make highs in March. There is bullish divergence. The coming rally could be HUGE!

Gold and Silver: Gold seasonals achieved their projected seasonal rally targets and you should have gotten out of longs as recommended. My longer term forecast based on the long term cycles and technical indicators currently suggests a $2000+ target once the current decline and cycle low are in place. Gold and silver have separated their trends from the decline in crude oil. I advised you that the last few weeks of December were likely to be seasonally bullish and that was correct. The long term gold and silver forecast is based on the assumption that inflation is coming. I think this is a reasonable assumption given the massive injections of capital now in process worldwide. I do not believe that the time has yet come for new intermediate or long term buy positions in gold. Recent short-term weakness confirms my expectation. Silver triggered a short term buy as did gold but long term buy signals but I advise waiting until the first few months of 2009 before taking on long positions.

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 discussed in this newsletter well in advance. This long overdue correction has brought prices back to rational levels and I believe that new buy triggers will develop soon. The severe corrective declines were long overdue and are, in my view, a positive development in the long-term picture. There are signs of bullish life in platinum and in palladium.

I advise holding long term positions, particularly in palladium which may take time to move higher but which, I feel, has significant upside potential. I am holding my personal long-term positions in PAL (North American Palladium). There are initial indications of a short term low in PAL.

Currencies

Aussie $: I advised you clearly and well ahead of the fact that a MAJOR decline was coming in the Aussie / Dollar. The market crashed against the US dollar. I also advised you that it was “not unreasonable to expect a short term low” in the Aussie. The hotline suggested a short term sell in the US dollar index which should have been closed out at a profit and another short sell should have been established as recommended via the hotline. The huge decline dropped prices to long-term support and hence the recovery is justified. Another seasonal sell in the dollar was due and it was also correct. See chart at below.

Eurocurrency/Swiss Franc: There were persistent and significant technical and cyclical warnings on my indicators of a major low in the US dollar vs. the Swiss and the Euro. Short-term lows were expected to develop and they did. There is no change in my long-term bearish expectation. The dollar first surged and then fell sharply, both as expected. I was bullish on the dollar, however, a short-term top in the dollar was expected and it developed. The rallies have been HUGE and so will be the coming declines.

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 exploded against many currencies as predicted. There are no sell signals in the Yen but there is bearish divergence that could trigger very soon. I advised you to “watch for a short term top at any time now”. There is no change in my analysis.

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. The hotline recommended a sell that should have been closed out quickly as recommended as a profit. Another short position was recommended on the rally. See weekly 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. The short-term rally I expected has developed.

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. I advised you last week “a short term rally is now due. It is not unreasonable at this time to expect a strong recovery rally in this market vs. US dollar but the major trend remains clearly bearish.

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. The chart below shows how deeply entrenched the bear trend has become. My cyclical work continues to suggest, however, that lows are overdue. Wait for divergence buy triggers. Seasonals are ideally bearish in January.

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 crash in commodities. The short-term trend is bearish. There are NO NEW SIGNALS at this time.

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 must be used or you will be stopped out quickly and often. BTI is now bullish on coffee. See chart below.

Cocoa: the trend remains strongly bullish as we go to press. There is no indication at this time of a shortterm top. The intermediate and long-term trends remain bullish. See chart at left. BTI signals are still bullish.

Fibers

Cotton: My recent 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 up trend is in effect.

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. Daily indicators are bullish. 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 once again made new lows for the move but the cycles and my COT studies continue to give strong advance indications of a major low in the offing. I have been saying for some time now that lumber is due to explode on the upside – be patient in waiting for triggers.

I believe that the seeds of a huge bull market are being sewn, please DO NOT mistake a forecast with a trigger. I am still waiting for timing triggers of a bottom on weekly charts.

Interest Rates

I have been telling you “the next major move in US interest rates will be to the upside” (i.e. futures lower). My expectation and forecast are based on the 50-60 year long term cycle which now points to higher rates. The flight to quality that is now in process surged futures up to very high levels consistent with seasonals trends. The various and growing financial rescue plans all over the world will likely result in huge interest rate increases in the next few years or even longer as inflation rises. Seasonal trend continues bullish. With short term rates at or even effectively below zero the odds of an eventual upside explosion in rates increases daily. I told you that there were “initial indications of bearish divergence”. The BTI chart below shows that a short-term top has likely been made.

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 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 that were expected in late October based on seasonals were initially correct. My indicators suggest that short term and seasonal lows are in place. I advised you to “watch for a pre Christmas seasonal rally”. The forecast was correct. I told you to watch for a pre New Years rally. That forecast was correct. Although opportunities to buy quality stocks at very low prices will be and are numerous, 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. Stocks continue to ignore bad news which further makes my case for a short term and seasonal rally in stocks. See Dow Jones BTI chart.

Energies

The energy futures markets collapsed following a period of excessive bullish sentiment and runaway bull move. 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 but not easily achieved. SEE BTI chart at right SHOWING A BUY TRIGGER ON RBOB. Now that the majority opinion has turned clearly negative and we are getting wild forecasts of prices as low as the $25 level the time has come to look at the long side but NOT WITHOUT TRIGGERS which are NOW developing on the momentum charts! Natural gas remains my best bet in the energies.