Brent Harris Elliott Wave
Futures Market Advisory Service

Daily Service Sample Article (12/14/05)

ELLIOTT AG PAGE

SOYBEANS: [No Change] While Mondays sharp advance in Jan soybeans was obviously MUCH LARGER than expected, the 6.02 high did manage to hold BELOW the Nov 14 WAVE-[4]-OF-ONE-LESSER-DEGREE; at 6.02 3/4-to-6.05. Consequently, my preferred wave-count continues to call for a decline to AT LEAST the 5.32-5.22 level. At this point, however, because a more plausible case can now be made for a DOUBLE-THREE correction off the June top, there is a significantly better change that the next “leg-down” will mark a much more important bottom (see ALTERNATE COUNT from the Oct quarterly). Anyhow, in the event Jan beans do exceed the 6.02 3/4-6.05 level initially, then we’ll probably confirm a larger rally to at least the 6.25 3/4-6.32 level. However, because I am currently UNABLE to make a case for a MAJOR BOTTOM, even this development will probably NOT be enough (by itself) to turn me to the Bull camp. Near-term resistance for the Jan soybeans is now at 5.85-5.88 3/4, 5.92-5.99 and 6.02 3/4-6.05, with the support at 5.82-5.78 ½, 5.70-5.69 and 5.60-5.57 ½.
 

CORN: As long as the current rally in March corn does not exceed 4-to-5-trading days, AND key resistance at about 2.07 3/4-2.12 3/4 also holds, traders and hedgers should remain short. Note, that this resistance area yields the 5.7%, 9.1% and 14.58%-retracement combination from the 1996, 2004 and 2005 highs via the continuation chart, AND a 14.58%-retracement from contract high-to-contract low in March futures (2.10 3/4). Anyhow, assuming a “buy-signal” does NOT occur here, upon the Dec 14 expiration of the Dec contract, my projection analysis will indicate AT LEAST a re-test of the 1.91 ½-1.88 3/4 long-term support in March futures, with an eventual drop to 1.79 ½ possible. Near-term support, however, is at 2.04 3/4-2.02 1/4 and 1.97 ½.
 

WHEAT: Since last weeks 2.92 ½ low in the nearby Dec wheat not only FAILED to reach my next support area at 2.88-2.84, but a completed, (5)-or-(9)-wave-count is also NOT in place from the Sept peak, it appears highly unlikely that a significant bottom is at hand, yet. Thus, IF prices happen to trace-out another, a-b-c rally of EQUAL DURATION to the last 3-bounces, or 4-to-6-trading days, we’ll probably look to add to our short-position. By the way, traders should also note, that once the Dec wheat goes off-the-board on Wed Dec 14, I will have a very significant resistance cluster in the 3.20 3/4-3.25 range basis the March contract. At that point, the 19.1%-30.9%-retracement combination from the 1996 and 2003 highs will be at 3.22 3/4-3.23 1/4, AND the 30.9%-50%-retracement combination from the Sept continuation chart high and the equivalent high in March futures will occur between 3.20 3/4-and-3.25. Support for March wheat is at 3.03 1/4-2.99 ½ and 2.88-2.84.
 

COTTON: Considering that the intermediate-term pattern in cotton remains BEARISH, AND recent lows in BOTH the Dec and March contracts also FAILED to reach their 46.25-45.69 and 50.20-49.82 support levels, respectively, it certainly looks like the current rally ought to be SOLD. However, because my best resistance cluster at 55.22-55.70 is a substantial distance ABOVE the closest resistance area, or 53.66-54.08, I guess we’ll wait another day or two BEFORE giving a sell recommendation. Note, IF we can get a completed, a-b-c, or DOUBLE-THREE within the next few days, then we’ll hopefully be able to determine which resistance area to sell.
 

HOGS: [No Change] Again, provided the nearby Dec hogs do NOT fall back BELOW support at 61.60-61.27, or about 65.20-to-64.22 basis the Feb contract, the near-term pattern will indicate that a larger, wave-(c) advance is developing here. In which case, the MINIMUM OBJECTIVE for the Feb contract will likely be at the 70.85-71.25 level, with an eventual target at 73.65-73.77 possible. Traders should be aware however, that until Feb hogs EITHER exceed resistance at 68.05-68.70, OR the Dec contract goes-off-the-board (Dec 14), the nearby contract could still spike-down to the long-term support at 59.65-59.00.
 

ELLIOTT WAVE FUTURES MONITOR
 

COFFEE: Since last weeks “timing” buy-signal in March coffee has now been followed by a STRONG PENETRATION of key resistance at 98.35-98.55, it is HIGHLY LIKELY that we have confirmed a completed decline from the Oct/Nov highs. In which case, prices should now stage AT LEAST a wave-(c) rally back to the 109.70-110.30 level. As you know by now, however, my PREFERRED wave-count actually indicates that prices are just now entering a primary-wave-[3]-section-up, within a MUCH LARGER, CYCLE-WAVE-C advance. Under this scenario, we should have some fantastic opportunities to add to our long-position, as the eventual (upside) objective ought to be well-above the 137.00 level. Anyhow, assuming a fully-pronounced, 5-wave rally does develop-off the Dec 5 low (94.00), we’ll soon be looking to ADD. Near-term support for March coffee is now at 98.40-97.60 and 96.90-96.45, with the resistance at 101.05-102.00, 103.20-103.85, 105.35-106.00 and 108.05-108.15.
 

COCOA: While the long-range pattern in cocoa continues to indicate that the current rally will present a excellent selling opportunity, Monday’s penetration of the 1461-1487 resistance area suggest that a considerably larger, wave-(c) section up is probably unfolding. Thus, once it becomes possible to label a completed, 5-or-9-wave pattern off the Nov bottom, we’ll attempt to re-enter the short-side. The next closest area of key resistance is at 1513-1519. However, there is a distinct possibility that prices will reach FAR BETTER RESISTANCE; at 1554-1582. This area yields the 23.6%-50%-retracement combination from the 2003 and 2005 highs, as well as a 38.2%-retracement of the Mar-Nov decline basis Mar futures. Near-term support for Mar cocoa is now at 1457, 1446 and 1436-1427.
 

OJ: Since the recent move to new rally highs in Jan OJ has been followed by yet another new high, the overall pattern continues to indicate that a HUGE, upward extension is probably unfolding. Note, because wave-[1] up was 39.45-cents in length, and wave-[3] will likely be AT LEAST 61.8%-to-76.4%-the length of wave-[1], the nearby contract could easily rally to at least the 139.80/145.55 level(s), BEFORE we see another multi-week set back. Of course, it’s always VERY RISKY trading during the “freeze season”. So, I guess we’ll just have to wait and see IF any decent buying opportunities develop. Near-term resistance for Jan OJ is at 127.30-130.35 and 137.10-139.80, with the support now at 126.65-126.50, 124.10-123.85 and 120.00-119.60.
SILVER: [Except for the *Support-No change] Since the advance in silver has now reached what should be VERY POWERFUL RESISTANCE in the 8.98-9.175 range basis Dec, and about 9.075-9.27 in the March contract, it looks like the LARGEST PULLBACK since the end of Oct will begin in the next few days. Note, that this key area yields the 14.58%-retracement projection from the all-time-high, as well as appreciations of 161.8%, 123.6%, 38.2% and 23.6% from the 1993, 2001, Aug 2005 and Nov 2005 lows. So, while aggressive traders could attempt a fairly quick play on the short-side, my primary focus is geared towards buying a multi-week/wave-[4] pullback. In essence, because the pattern now indicates that the next “leg-up” (wave-[5]) will likely penetrate the key 8.98-9.175 resistance zone (nearby contract), our eventual upside potential is now at 10.51-10.75 level. Key *support for the March silver is at 8.51-8.435.
 

STOCKS: Although the near-term pattern in the Dec S&P suggests that one more “pop-up” to new highs could occur here (+1274.50), we will effectively remain BEARISH as long as prices do NOT close much ABOVE the key 1265.90-1269.80 resistance level. Note, IF a strong close ABOVE 1269.80 does occur, then my projection analysis will indicate a rally to the next major resistance cluster; at 1295.35-1297.80. This area yields a 65.45%-retracement from the 2000 top, AND an appreciation of 69.1%-from the 2002 low. Near-term support for the Dec S&P is at 1250.30-1246.20, 1237.50-1235.40 and 1229.30-1228.80.
 

NEW TRADES AND OPEN POSITIONS 12/14/05
 

CORN: Traders/Hedgers (50%) keep the stop on short March corn at 2.14 3/4 (+$6,387).
 

WHEAT: Traders/Hedgers (50%) keep the stop on short March wheat at 3.26 3/4 (+$2,012).
 

COFFEE: Traders/HRT adjust ALL STOPS on long March coffee to 95.95 (+$675/ +$1,181).