A follow up on the soybean market analyses is presented. The month of January was mentioned as important in the 2014 soybean market roadmap. The market bottomed in the early part of the month, again on January 24th and finally on January 30th.
The 9 years cycle presented in a previous update had a window of tolerance between January and February 2014. Based on the triangular wave pattern this cycle was due to come up as a market top, but considering recent market behavior it was expected to invert and show up as a market bottom. Considering its most recent turning points, we were expecting it to turn up in February, however it finally aligned with the January 30th 2014 bottom.
The market has rallied with strength for over a month now. It is important to be prepared in case a correction takes place, tightening stop loss orders and locking in some profits.
May soybeans vectorial analysis
Since January the market has rallied with strength, not even making a 2-day swing. Today, March 07th 2014 the soybean market finished up strongly closing at the high of the day and week. This agrees with our expectation that the market will probably rally until mid-year and possibly reach new highs.
According to soybean market seasonal behavior, the month of March is the month of the year when it is less likely to expect a change in trend. Figure 1 shows a daily price-time chart for May Soybeans. It shows several PTVs[1] whose lengths are related to the third Square of Twelve since 2012. The theoretical lengths of these vectors are presented below:
- 3x144 = 432
- 3x144/√2 = 305.47
- 3x144/2 = 216
- 3x144/4 = 108
 |
| Figure 1. Daily prices for May soybeans futures from 2012 to 2014. PTVs following the third Square of Twelve and the square root of two ratio. |
From Figure 1 it can be seen that the PTV extending from the Jan 24th bottom to today's high measures 214.47, which is half the third Square of Twelve. This is half the length of the PTV that defined the uptrend from May to September 2012. It is the same length as the PTV which defined the market action from January to May 2013 and it is twice the lengths of the price-time vectors defining the rallies from May-June 2013 and November-December 2013.
Even though we are not expecting a change in trend, it is possible that a reaction may ensue. For this reason traders and analysts could tighten their stop loss orders to lock in some profits in case the market reacts.
Conclusion
While the 9 years cycle turned up within the window of tolerance we projected, it did so in January 30th and not in February as we expected it would be more probable. The market has rallied with strength since then.
Market geometry shows that the PTV defining the current rally has reached a length related to the third Square of Twelve, which is the vibration the market has been following since 2012. For this reason traders and analysts could consider tightening their stop loss orders to lock in some profits in case the market reacts.
[1] PTV stands for
Price-Time Vector. This concept was introduced by Bradley Cowan in his
writings. Both PTV and Price-Time Vector are trademarks of Bradley
Cowan.
Update 2: Soybean and Wheat Markets March 2014
Update 2: Soybean and Wheat Markets March 2014
Ricardo Da Costa
Grain Market Analysis
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