Soybeans - May 2016

 There are two cycles that could impact market action during the month of May 2016. Statistically, after a March bottom the market will most likely rally for three or four months until June or July tops. With that in mind, the month of May will probably have an acceleration bottom leading up to the summer tops.

 Cycle analysis

 Figure 1 is a daily price-time chart for cash soybeans at Central Illinois. It contains two cycle harmonics expected to turn in May 2016. These are a 14yrs cycle harmonic (red) and a harmonic of a 5.5yrs cycle (magenta.)

 

Figure 1
Daily cash prices for soybeans at Central, Illinois. Harmonics of Gann's 14yrs cycle (red) and Cowan's 5.5yrs cycle (magenta) expected to turn during May 2016.

 The 5.5yrs cycle harmonic was first shown by B.Cowan in his website years ago, aligning with several sell signals during a short bear market. While useful at times, this cycle is not always too reliable. The harmonic of Gann's 14yrs cycle is expected to turn around early to mid-May.

 Summary

 A couple of cycles were shown to turn during May 2016. According to our yearly analysis, a top is expected during the summer months of June and/or July. This leads us to think that the May cycle could align with a swing bottom, from which prices would continue to rise.

Next post: Update: Soybeans - May 2016

 Ricardo Da Costa

 Grain Market Analysis