The wheat market cycle analysis and a previous update showed several cycles due to turn in February 2014. The major cycle projected for early 2014 in the wheat market goes back 119 years into the January 1895 final bottom. Cycles this long sometimes deviate for several weeks from their expected turn dates.
The wheat market bottomed on January 30th and rallied with strength. However, our PTV[1] and price projections for March wheat futures were not reached and our initial cycle turn dates were late by a week.
Cycle update
Figure 1 is a daily price-time chart for cash wheat at St. Louis, Missouri from 2008 to 2014. It is an updated price-time chart from our early 2014 wheat market cycle analysis showing the cycle turn dates and the market price action since our forecast was published.
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| Figure 1 Daily cash prices for wheat at St. Louis, Missouri from 2008 to 2014. Harmonics of Gann's 20yrs and 14yrs cycles. |
It is important to be aware that these cycle turn dates for Gann's 20 years cycle are based on recent market turning points, such as the major top of Feb 2008 and the major bottom of Oct 2009. However a much more larger harmonic of Gann's 20 years cycle anchored at the January 1895 major bottom projects a turning point date for March 2014. It could align with a higher bottom in case the market reacts.
Even thought it is not showed in Figure 1, the cash wheat market was in a contraction process since 2008. This process could have finished on Aug-Sep 2013 bottoms. It is perhaps too early to be sure, but a new expanding sequence could be developing, meaning progressively larger swings.
Figure 2 is a daily price-time chart for May wheat futures from 2011 to 2014. It is included here with the only purpose of showing the actual bottom of the market and the cycle turn date projected in our forecast.
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| Figure 2 Daily March wheat futures prices from 2011 to 2014. |
It is worth noticing that the price gap at the beginning of March is exactly at the 50% point of the rally from January. As mentioned above, in case the market reacts it could make a higher bottom on March 2014. This could be an indication for traders and analysts to tighten stop stop orders. It is not uncommon to see the wheat market reacting 87.50% or 7/8 of the previous rally.
Conclusion
The cycle projections from our early 2014 wheat forecast were fairly accurate. However, our PTV and March futures price projections were not reached, but the market has rallied as expected.A larger harmonic of Gann's 20 year cycle from January 1895 bottom is projected for March 2014. According to seasonal behavior, March is not the month to expect a change in trend. We do not anticipate a lower bottom right now, but if the market reacts, a higher swing bottom could align with this harmonic.
[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
Nadiel Outis
Grain Market Analysis
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