Brent Harris Elliott Wave
Futures Market Advisory Service

Daily Service Sample Article (12/20/05)

ELLIOTT AG PAGE

SOYBEANS: Since the nearby January soybeans exceeded critical resistance at the Nov 14 highs, or 6.02 3/4-6.05, the best, long-term wave-count now favors an EVENTUAL rally back to the $7.00-$7.50 level. However, because it is still very difficult to make a decent case for a completed, wave-[b], or wave-[x] decline from the June top (7.57 ½), the most likely scenario is that the current advance is only part of an intervening, wave-(b) correction. In which case, once the FINAL, c-wave section up traces-out a 5-or-9 wave pattern, a fairly HIGH POTENTIAL selling opportunity will be at hand. Note, if my current interpretation is correct, an IRREGULAR FLAT, wave-(b) rally actually started back at the Sept bottom (5.54 ½), then a FINAL wave-(c) decline will still need to occur, i.e., BEFORE the actual move to $7.00-$7.50 occurs. In other words, once the advance from the Nov 28 low finishes, we should still see a decline to our longstanding target at 5.32-5.22 basis the nearby contract. So, IF the nearby Jan beans can now advance to the key 23.6%-38.2%-retracement/ resistance combination from the 2004 and 2005 continuation chart highs, or 6.25 3/4-to-6.32, we’ll look to re-enter the short-side. The closest resistance, however, is at 6.10-6.17, with the support now at 5.97 ½-5.94 and 5.85-5.78 ½.
 

CORN: Again, in light of last weeks gap ABOVE the key 1.95-1.99 1/4 continuation chart resistance in corn, it is likely that a completed decline from the July top has been confirmed, i.e., basis the continuation chart. In which case, at some point over the next couple of months, a CYCLE-WAVE-IV advance should carry the nearby contract back to about the 2.29-2.32 level (?). However, because a completed decline from the July top will NOT be indicated in March futures, UNLESS prices EITHER make a new rally high AFTER Thurs Dec 15, OR critical resistance at 2.07 ½-2.10 3/4 is penetrated, traders should NOT exit shorts, yet. This key resistance level yields the 9.1%-14.58%-30.9%-retracement combination from the 1996, 2004 and 2005 highs, as well as a 14.58%-retracement in March futures (2.10 3/4). Anyhow, IF this area holds initially, then we should see a drop to AT LEAST the 1.97 ½ level near-term; if not 1.91 ½-1.88 3/4. Near-term support is at 2.04 3/4-2.02 1/4, with near-term resistance (after 2.07 ½-2.10 3/4) at 2.14 1/4-2.15 1/4 and 2.19-2.21.
 

WHEAT: Given that last weeks rally in the March wheat peaked right at the upper-end of the key 3.22 3/4-3.26 1/4 long-term resistance area, and only a moderate downside reversal has developed so far, a rather critical wave-position remain at hand. Note, that this key area yields the 19.1%-30.9%-30.9%-38.2%-retracement combination from the 1996, 2003, 2004 and 2005 highs, as well as the 30.9%-retracement projection from the Sept peak basis March futures. Anyhow, IF my preferred count is correct, and this area holds, then we should see a 9th-wave decline to AT LEAST the 2.88-2.84 level, i.e., BEFORE a larger, primary wave-[2] bounce unfolds. However, IF the March wheat EITHER trades ABOVE 3.28 intraday, OR a close over 3.26 1/4 occurs, then we’ll have to conclude that wave-[2]-up has already started. In this event, presumably within several weeks, we’ll be looking to re-enter short at EITHER the 3.34 ½-
3.36 ½ resistance area, OR 3.44-to-3.47 max! Near-term support for March wheat is at 3.16-3.15 3/4, 3.09 ½ and 3.03 1/4-2.99 ½.
 

COTTON: [See New Trades] 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] Although another test of the key long-term support, at 59.20-59.00, can’t be ruled-out for the now nearby Feb hogs, this weeks expiration of the Dec contract should have DIMINISHED the probabilities. However, our MINIMUM, upside objective at 68.05-68.70 is now also MUCH CLOSER, so the upside potential may NOT be worth the risk. Note, while it is entirely possible that the Feb hogs will rally to the 70.85-71.25, or 73.65-73.77 resistance clusters BEFORE the long-term BEAR CYCLE resumes, it will be possible to make a case for a completed rally...once Feb hogs exceed the Dec 2 peak (+68.30). Pivotal support for Feb hogs is now at 64.22-63.72.
 

ELLIOTT WAVE FUTURES MONITOR
 

COFFEE: While Mondays sharp rally MAY HAVE negated the need for a final drop to new lows in March coffee (-93.50), there will be a significant change in the support numbers-AFTER Dec goes off-the-board on Monday, Dec 19. Beginning Tuesday, Dec 20, the critical support for March coffee will rise to the 95.30-94.25 level. Thus, IF another drop to new lows is going to occur (-93.50), then prices will probably “crash” to the next major support level, or 90.00-
to-89.25, i.e., before a major upturn actually begins. Anyhow, depending on how the intraday pattern develops over the next couple of days, we’ll probably be looking to go long; at EITHER of the aforementioned support levels. Key resistance for March coffee is now at 103.75-104.65
 

STOCKS: [See Chart] Since the nearby contract in the S&P 500 finally closed well-above the 1265.90-1269.80 resistance level, we should have confirmed a rally to the next key resistance area, or 1295.30-1297.80. This area yields the 65.45%-retracement projection from the 2000 top, AND an appreciation of 69.1%-from the 2002 low. Anyhow, since a move to this area in the March S&P will likely coincide with a rally to the key 85.4%-retracement level in the March Dow Jones contact, or 11085-to-11160, a HIGH PROBABILITY/HIGH POTENTIAL selling opportunity could occur in the next 1-to-2-weeks. By the way, traders should also note, because the Dow Jones Industrial Average has finally penetrated the March top, this is actually the first time (this year) that I can make a case for a completed, DOUBLE-THREE, i.e., from the 2002 low. Near-term support for the March S&P is now at 1269.50-1266.00, 1260.00 and 1255.00-
1252.50.
 

SILVER: Since last weeks day-session low in the March silver (8.42) occurred right at the low-end of the key 14.58%-retracement projections from the 1993 and 2001 lows, or 8.50-8.425, a major upturn may have already begun. However, because the “time” and “pattern” analysis in BOTH gold AND silver indicates that we have probably only finished the INITIAL, wave-(a) section down, the odds favor one more sharp drop, i.e., wave-(c)-of-[4]. Under this count, the most likely target for the next low will be at the 19.1%-retracement projections from the 1993 and 2001 lows, AND a depreciation of 11.795%-from the Dec 12 peak, or 8.265-8.165 basis the March silver. By the way, pivotal support for Feb gold is at 499.30-496.80 and 486.40-483.90. Resistance for March silver is at 8.68 and 8.75-8.81.
 

NEW TRADES AND OPEN POSITIONS 12/20/05
 

SOYBEANS: If Jan soybeans rally to 6.28, Traders/Hedgers (33%) can sell the March contract at-the-market. Risk 16 1/4-cents.
 

CORN: Traders/Hedgers (50%) keep the stop on short March corn at 2.11 1/4. (+$6,387).
 

WHEAT: Traders/Hedgers (75%) keep the stop on short March wheat at 3.28 1/4 (+$1,800).
 

COTTON: Traders/Hedgers (33%) can sell March cotton at 55.14, using a stop at 56.51.
 

SILVER: Traders/HRT can buy March silver at 8.225/8.285, placing all stops at 8.055.
 

STOCKS: Traders can sell the March e-mini S&P at 1294.75, using a stop at 1311.75.