The soybean market has remained in a sideways motion since last August. Every attempt to definitely break above or below its resistance/support levels has been followed by a counter-trend motion.
Our 2015 soybeans roadmap discussed the possibility that the Gann's 20yrs cycle harmonic turning in late September could align with a market top. However, the current market behavior leads us to believe that perhaps it has aligned with a market bottom.
The current post discusses this possibility and a potential scenario for the upcoming months.
2006 and 2015: A similar behavior?
2006:
In 2006, 9 years ago, the soybean market showed a similar behavior to what we are experiencing today. After a downward-trendless year, the market bottomed on the month of September.
Figure 1 is a daily price-time chart for back-adjusted continuous soybean futures from 2006 to 2007. The chart highlights the final bottoms which took place between September and October 2006 from which the major 2007-2008 bull market began. During those months the market crept showing little activity, making several unsuccessful attempts to rally until early October. It was only until the month of October began that the market finally rallied with strength, even tough the final bottoms were made in September.
After a 2 month rally the market reacted into December 2006 and January 2007 higher bottoms, from which the bull market continued.
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| Figure 1 Daily prices for soybean futures from 2006 to 2007. Final bottom and sideways market during Sept 2006. Strong rally and bull market from Oct 2006. Secondary bottoms on Dec 2006 and Jan 2007. |
2015:
Figure 2 is a daily price-time chart for November soybean futures from 2014 to 2015. Just as 2006, this year has been mostly a downward-trendless market. After the November 2014 top the market declined into a June bottom, rallying into the summer July tops. Afterwards, a one-two month decline into the present month of September. |
| Figure 2 Daily prices for soybean November futures from 2014 to 2015. Sideways market during August-September 2015. Gann's 20yrs cycle on late September possibly aligning with a market bottom. Gann's 14yrs and 45yrs cycle harmonics turning in October and November 2015. |
Figure 2 highlights the sideways market since August. Gann's 20yrs cycle turning in late September may have aligned with a market bottom. If the remaining of this year continues to resemble the year 2006 we may see a series of bottoms, or higher bottoms, aligning with the rest of the important cycles presented in our 2015 roadmap.
Figure 3 is a daily price-time chart for cash soybeans at Decatur, Illinois from 2006 to the present time. The chart contains Gann's 20yrs cycle harmonics aligning with the July 2012 and November 2014 tops, as well as the harmonic turning this month.
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| Figure 3 Daily cash prices for soybeans. Gann's 20yrs cycle harmonics. PTVs of the same length defining the 2006-2008 bull market and the possibly the complete 2012-2015 bear market. |
It also shows a couple of PTVs[1]. The first one measuring 1202.58 defined the complete 2006-2008 bull market. The second one measuring 1206.06 (at the moment) defines what could be the complete 2012-2015 bear market.
Summary
At the beginning of the year, our studies indicated that Gann's 20yrs cycle could align with a market top at the end of September. However, recent market activity and geometry leads us to believe that perhaps it has aligned with a bottom. Nevertheless, the market should prove it has in fact bottomed to confirm this believe.Gann's 14yrs and 45yrs cycle harmonics due to turn in October and November, respectively, may also align with seasonal market bottoms. This would resemble the formation seen in the year 2006. If this is the case, we may see a series of bottoms in the coming months.
[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.
Soybeans - October 2015
Ricardo Da Costa
Grain Market Analysis
Hi Ricardo,
ReplyDeleteThanks for the update, 1202 does not equal a square of 12 (144) multiple??
Also, does the current sideways market resemble in any way the 10 month flat bottom that Mr Cowan pointed out in MSI in regards to the first growth spiral (2/1932 - 12/1932)
Page 46 of MSI says, once you understand the internal construct of a growth spiral (the first one he may mean), the current spiral is also understood. Mr Cowan is talking about PTV's i'm referring to time.
Thanks again
Hi Stephen,
ReplyDeleteNo, 1202 is not a Square of Twelve multiple.
I will have to review what Cowan says in MSI in regards of the 1932 period.