Brent Harris Elliott Wave
Futures Market Advisory Service

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Soybeans (Oct. 10, 2005)

Since the advance into the June 2005 high in soybeans (7.57 ½) not only traced-out a “perfect”, a-b-c pattern, but prices also peaked right at our optimum 7.41-7.50 ½ objective, my SLIGHTLY PREFERRED COUNT continues to indicate that a CYCLE-WAVE-B has topped. In which case, BEFORE we see another major rally, a 5-or-9-wave/C-wave decline should AT LEAST re-test the 5.00 ½-4.96 support level. Of course, because C-waves generally exceed the termination point of wave-A, the more likely scenario is that the February 2005 low of 4.98 ½ will be penetrated. In this case, the optimum objective will be at the next LOWER support cluster, or 4.69-4.62. This key area incorporates the 90.9%-retracement projection from the 1999-2004 advance, a post 2004 decline that would be 85.4%-the length of the 1988-1999 Bear cycle, AND depreciations of 56%-and-38.2% from the 2004 and 2005 highs, respectively. Because the decline from the June top has so far ONLY traced-out a 3-wave pattern, however, it is EXTREMELY IMPORTANT that traders remain “flexible” here. Since the February-June rally was fairly SMALL for a CYCLE-WAVE-B in terms of “time”, it is very possible that a FINAL, wave-c rally will occur BEFORE the longer-term BEAR resumes. In fact, given that we only need one more drop to new sell off lows (-5.56 ½), in order to label a completed, 3-wave drop from the June top, traders should probably be looking to take profits on shorts fairly soon...AND go lightly long. Then, depending on what happens on the next 2-to-3-week rally, we’ll probably have a good idea as to which count is actually unfolding. If the next [2-to-3-week rally] EITHER exceeds critical resistance at 6.06-6.17, OR a 5-wave-pattern-up unfolds, then we’ll have to figure that the “orthodox” peak of wave-B is not yet in place. In which case, over the next several months, a FINAL wave-c advance will likely re-test AT LEAST the 7.41-7.50½ resistance level; if not 7.92-7.98/8.33-8.48. On the other hand, however, in the event the next [2-to-3-week rally] traces-out a BEARISH, (a)-(b)-(c) pattern instead, which is currently a VERY SLIGHT FAVORITE, then we’ll probably have confirmation of a wave-B top. Under this count, a primary wave-5-of-C will likely drop to the 5.00 ½-4.96 level by December of January, with the eventual (2006) objective probably at the 4.69-4.62 level.
 

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