Brent Harris Elliott Wave
Futures Market Advisory Service

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Cotton (Jan. 31, 2009)

Although the short-to-intermediate-term pattern in cotton has turned somewhat "positive", the longer-term formation is likely to remain QUITE BEARISH until at least LATE 2010. Because the decline from the Mar 2008 top (91.38) should be a SUPER-CYCLE-WAVE-(C), of the SAME-DEGREE/MAGNITUDE as the HUGE, 1995-2001/SUPER-CYCLE-WAVE-(A) drop (117.20-to-28.20), it stands to reason that the current BEAR will probably remain in force for AT LEAST HALF that duration ,i.e., about 3-years. Furthermore, since SCWAVE-(C)down should also unfold into FIVE-WAVES of CYCLE-DEGREE, and so far we are only about HALFWAY through the CYCLE-WAVE-TWO section up, we’re effectively NOT EVEN TWO-FIFTHS, or 40%-finished. So, while traders may want to attempt a fairly short-term play on the long-side, IF we happen to see a decent pullback between now and about mid-February, our primary goal is to get short...once a CYCLE-WAVE-TWO rally appears to be ending. To that end, while our MINIMUM, UPSIDE TARGET for CYCLE-WAVE-TWO is at the 55.05-55.70 level, THE BEST SELL-ZONE is probably at 57.21-57.59. This area yields the 27.25%-38.2%-retracement combination from the 1995 and 2008 highs, as well as appreciations of 100% and 55.9% from the 2001 and 2008 lows. Finally, while our expected, CYCLE-WAVE-THREE decline probably WON’T take-out the 2008/CYCLE-WAVE-ONE low of 36.70 by more than 5.00-6.00-points, especially IF a DIAGONAL TRIANGLE/(C)-WAVE is actually unfolding here, the eventual MINIMUM, DOWNSIDE TARGET (for late 2010-early 2011) IS AT THE 28.24-26.63 LEVEL. This area yields the 72.75%-times SCWAVE-(A) projection, AND depreciations of 76.4% and 69.1% from the 1995 and 2008 highs.

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