Brent Harris Elliott Wave
Futures Market Advisory Service

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Cocoa (Jan. 31, 2009)

Since the July-October 2008 decline in cocoa (3385-to-1867) failed to produce a highly bearish, "five-wave/impulse-pattern down", there’s still a slight chance that the Bull Cycle from the 2000 low is still in force. In which case, BEFORE a super bearish position is actually at hand, prices could stage a FINAL ADVANCE TO NEW HIGHS (+3385). However, because the 2000-2008 advance did trace-out a "perfect", A-B-C pattern, complete with a B-wave/CONTRACTING TRIANGLE formation, I think the MORE LIKELY SCENARIO is that 7 ½-year, SUPER-CYCLE-(X) WAVE HAS ALREADY PEAKED. In which case, the only logical interpretation currently.... is that the advance from the October 2008 low (1867) is just a "corrective", CYCLE-WAVE-B. Thus, once an [a]-[b]-[c]advance (from the October 2008 low) is traced-out, the stage will be set for ONE HECK OF A DROP. Note, that the upcoming, CYCLE-WAVE-C decline should produce a move to AT LEAST the next support cluster that is BENEATH the 2008 bottom, or a drop to 1710-1662 MINIMUM. Given that we are currently trading around the 2800 level, that’s a "downside potential" of MORE THAN $10,000 per contract. Anyhow, in looking at the more immediate pattern, the FINAL, [c]-wave section up appears to already be underway from the January 20 low (2340). In fact, since we now also appear to be in the "fifth-wave" section up, of a "nine-wave" count, it’s conceivable that the FINAL, CYCLE-WAVE-B PEAK will be hit during the first, OR second-week in February. So, while I do have good resistance a BOTH the 2745-2805 and 2888-2916 levels, the BEST SELL-ZONE is probably at 3021-to-3063. This area yields the 50%-76.4%-retracement combination from the 1977 and 2008 highs, AND appreciations of 350%, 61.8% and 30.9% from the 2000, 2008 and 2009 low. Finally, in the event a strong close ABOVE 3063 occurs, then we may have to figure that one more move-up to new highs is going to happen. In which case, the eventual top will likely be hit around the 3564-3582 level.

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