Brent Harris Elliott Wave
Futures Market Advisory Service

Daily Service Sample Article (12/21/05)

ELLIOTT AG PAGE

SOYBEANS: Since I can no longer make a good case for a highly bearish, wave-c decline from the June 2005 top in soybeans (7.57 ½), the most likely wave-count now indicates that a larger, CYCLE-WAVE-B advance is still in progress from the Feb 2005 bottom (4.98 ½). Therefore, once a completed, wave-[b], or wave-[x] decline can be effectively labeled-off the June 2005 peak, traders should have a good chance to catch a FINAL RALLY...back to the $7.00-$7.50 level. At present, however, because I can NOT make a reasonable argument for a completed decline (from the June high), we are looking to SELL the current advance. Once the rally from the Nov bottom terminates, we should see a FINAL DROP to the key 5.32-5.22 long-term support area. Anyhow, the optimum SELL-ZONE is at the 23.6%-38.2%-retracement combination from the 2004 and 2005 continuation chart highs, or 6.25 3/4-6.32 basis Jan beans and about 6.37-6.43 1/4 in the March contract. Near-term resistance, however, is at 6.11-6.17 1/4 Jan and 6.22 1/4-6.28 ½ March. The BEST support for Jan and Mar beans is now at 5.98 1/4-5.93 and 6.09 ½-6.04 1/4, respectively, with the MAXIMUM support at 5.83 3/4-5.78 ½ and 5.95-5.89 3/4 (March).
 

CORN: Since last weeks continuation chart “buy-signal” in corn has now been followed by a similar “buy-signal” in the March contract, it is highly likely that we have confirmed a completed decline from the July top...on BOTH charts. In which case, we should now see AT LEAST a multi-month, sideways-to-higher pattern develop, as a CYCLE-WAVE-IV, “corrective” rally unfolds. To that end, while the nearby contract could drop all the way back to the 1.91 ½-1.88 3/4 level at ANY TIME, prices should eventually rally to AT LEAST the 2.19-2.21 level. The BEST upside objective however, is at the 14.58%-30.9%-56%-retracment combination from the 1996, 2004 and 2005 highs, or 2.29-2.32. Anyhow, IF we happen to get an IMMEDIATE PULLBACK to key support at 2.04 3/4-2.02 1/4, we’ll go LIGHTLY long the Mar contract. If the beans first reach the 6.25 3/4-6.32 level, however, then we’ll probably stand-aside the corn. Near-term resistance for March corn is at 2.14 1/4-2.15 ½.
 

WHEAT: Given that the advance from the Dec 9 low in Mar wheat (3.07) not only exceeded the greatest duration of a rally since the Sept top, but key resistance at 3.22 3/4-3.26 1/4 was violated as well, it certainly looks like we have confirmed a completed, wave-[1] decline. In which case, over the course of the next couple of weeks, we’ll probably look to re-enter the short-side; once an a-b-c rally has been traced-out. Note, if in fact the present advance is just a wave-[2] correction, then the next leg-down, wave-[3] will put this market in an extremely BEARISH position. Traders should be aware however, because the Dec continuation chart low of 2.92 ½ FAILED to exceed the 2004 low of 2.82 ½, it is still theoretically possible that a MAJOR, wave-C rally will unfold. Consequently, we have to be fairly certain that the advance from the Dec 9 low (3.07) does indeed unfold into a BEARISH-THREE, and NOT A BULLISH-FIVE. Key resistance for Mar wheat is now at 3.34 ½-3.36 ½ and 3.44-
3.47, with the support at 3.20 ½-3.19 3/4, 3.16-3.15 and 3.09 ½-3.08 3/4.
 

COTTON: Given that the drop from the Oct peak in cotton not only traced-out a 5-wave/impulse-pattern, but key support at 46.25-45.69 was also clearly MISSED in the nearby contract (50.20-49.82 basis March), I’m inclined to try and sell the current rally. However, because I can now make a case for a completed, CONTRACTING TRIANGLE-B-WAVE decline from the 2003 top, I think we’ll stand-aside for the next week or two, and see what happens. Resistance for March cotton is at 55.20-55.70, with support at 52.20 and 50.20-49.82.
 

HOGS: Since the recent drop in the Feb hogs so far bottomed right at our MAXIMUM, near-term support; at 64.22-63.72, it looks like the next “leg-up” to new highs has started. Traders should keep in mind, however, once a 5-or-9-wave rally is in place, AND our MINIMUM OBJECTIVE at 68.05-68.70 is reached, it will be possible to label a completed advance from the Aug continuation chart low (59.00). At which point, a HIGHLY BEARISH long-term/wave-position could be at hand. Finally, in the event a daily close BELOW 63.72 occurs BEFORE the 68.05 level is achieved, then ALL BETS ARE OFF. In this case, another test of long-term support at 59.20-59.00 could occur, now.
 

ELLIOTT WAVE FUTURES MONITOR
 

SILVER: Given that our expected penetration of the key 8.425 support level has now occurred in the Mar silver, it obviously looks like lower projections have been confirmed. However, because the wave-progression from the Aug 2005 low still calls for a FINAL, primary wave-[5] advance to new highs (+9.17), it is likely that the current drop is wave-(c)-of-[4]. In which case, prices ought to bottom in the next day or two; at the 19.1%-retracement projections from the 1993 and 2001 lows, and a 11.795%-depreciation from the Dec 12 peak, or about 8.27-to-8.17 basis the March contract. Key support for the Feb gold remains at 496.80 and 486.40-483.90. Near-term resistance for Mar silver is at 8.53, 8.61, 8.685-8.75 and 8.81-8.875.
 

STOCKS: [See Chart]
 

COFFEE: While the near-term pattern in coffee is open to several possible interpretations presently, BOTH the intermediate-and-long-term formations remain BULLISH. Consequently, since I can now also make a case for a 5-wave/ impulse-pattern-up from last weeks 93.50 low in the Mar contract, I’m inclined to go ahead and attempt to re-enter the long-side. To that end, the best support cluster is now at the 38.2%-retracement projection from the 2001 low, AND a 27.25%-depreciation from the 2005 top, or 100.50-to-99.30. A close MUCH BELOW this area could be pretty negative near-term, however, as the next lower areas of key support are at 95.30-94.65 and 90.00-89.25. Resistance for Mar coffee is at 103.85-104.65, 106.75-107.60, 109.05 and 110.55-111.35.
 

COCOA: Although a close BELOW key support at 1444-1421 could produce a MAJOR sell-signal in the Mar cocoa, the recent penetration of the 1452-1474 resistance area (nearby contract) still suggests AT LEAST one more “leg-up”. If so, given that I show VERY POWERFUL resistance clusters at BOTH the 1502-1519 and 1551-1582 levels, we may be looking to re-enter short...sometime in the next couple of weeks. By the way, IF the 1421 support area is exceeded first, then the next closest support level will be at 1353-1341.
 

OJ: While the action over the past several weeks may have indicated a tremendous, upside acceleration in the OJ, the intraday pattern suggest that the last “wave-up” subdivided into a THREE, not a FIVE. Thus, since a “timing” sell-signal may have also been confirmed a couple days ago, I’m inclined to stay the heck out of this market. If a DIAGONAL TRIANGLE/WAVE-[c] has actually peaked instead, then we could see a VERY HARD DROP...instead. Support for Jan OJ is at 124.15-123.50, 120.00-119.00, 116.70-116.20 and 113.35-111.75, with the resistance at 127.30-130.35.
 

NEW TRADES AND OPEN POSITIONS 12/21/05
 

SOYBEANS: Traders/Hedgers (33%) can sell the March soybeans at 6.39, using a stop at 6.55 1/4.
 

CORN: Traders/Hedgers (50%) were stopped-out of short March corn at 2.11 1/4 for an after rollover profit of $6,137. Traders can lightly buy March corn at 2.05 1/4, using a stop at 2.00 1/4.
 

WHEAT: Traders/Hedgers (75%) were stopped-out of short March wheat at 3.28 1/4 for an after rollover profit of $1,300.
 

SILVER: Traders/HRT can buy March silver at 8.23/8.285, using a stop at 8.055.
 

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

COFFEE: Traders can buy Mar coffee at 100.15, using a stop at 97.15.