Dot Com-modities. Has the Raw Materials Bubble Burst?

Home > Commodities
Dot Com-modities. Has the Raw Materials Bubble Burst?
Our Futures Junctures Service uses objective Elliott analysis to identify the near-, and long-term trend underway in commodities.

By Nico Isaac
Wed, 18 Apr 2012 15:45:00 ET

Get investable insights sent to your inbox at least once a week – for free. Challenge the way you think about investing with The EWI Independent.

Privacy

Since soaring to multi-decade highs in mid-2011, the commodity sector as a whole has had the wind knocked out of its bullish sails. To wit: from its April 2011 peak, the bellwether Continuous Commodity Index (CCI) has plunged 20% to its lowest level in four months.

The question is: will commodity prices keep falling?

Well, according to the mainstream experts -- YES -- and, just as equally, NO.

Depending on which popular media report you choose to believe, that is. On this, the contradictory pair of April 18 news stories below will have you feeling more displaced than a squirrel in a desert.

The future of commodities is bleak: “At the biannual World Economic Outlook, the International Monetary Fund predicted that commodity prices are likely to keep falling from last year’s high as demand and price have lost steam,” all the while NOT discounting the possibility of a redo of the 2007-8 financial crisis. (ABC Online)

The future of commodities looks bright: “Commodity Prices Improve on Economic Optimism.” (BusinessWeek)

If you seek an answer for where commodity prices are headed, ask somebody who has stayed one step ahead of the sector’s many biggest turns: EWI’s chief commodity analyst and Futures Junctures Service editor Jeffrey Kennedy.

In the March 2011 Monthly Futures Junctures, Jeffrey Kennedy presented the following chart of the CCI that showed an unfinished rising Elliott wave pattern and wrote: "The CCI shows the need for additional advance for the pattern to complete itself."

Then, once price action confirmed Jeffrey's bearish wave count, he revisited the CCI in the September 2011 Monthly Futures Junctures. There, Jeffrey presented a special, expanded "Featured Market" segment on the Continuous Commodity Index that argued in favor of a major turn down via these timely insights:

"The Continuous Commodity Index tells a bearish story when we apply the most basic Elliott wave analysis. This month, we will review the CCI's price charts to see why..."

And: "The advance in the CCI from the 2008 low to the high this year is in five waves, meaning that it is an impulse wave. So, with a completed five-wave advance, what can we look for next? ... We can make a high probability forecast that in the months ahead, the CC will fall..."

Flash ahead to today. In the April 17 Daily Futures Junctures, Jeffrey presents the following chart of the CCI that shows the depth of the market’s decline. Above all, Jeffrey’s analysis of the CCI reveals that the most powerful Elliott wave pattern of all known 13 Elliott wave configurations could be just around the market’s corner.

So, the question now is: Has the "commodity bubble" burst? OR, will the market re-flate once again?

Right now, EWI's complete Futures Junctures Service has the answer you've been waiting for -- yours risk-free for 30 days.

Want to see what big moves are in store for commodites? See them now -- RISK-FREE for 30 days

PLUS, get the best short-term commodity opportunities from an Elliott wave expert -- 5 days a week

Futures Junctures editor Jeffrey Kennedy is your personal opportunity scout as he searches the world's leading commodity markets and serves up his best picks 5 days a week.

You get in-depth commodity analysis, daily video forecasts for up to 18 different commodities, plus Elliott wave trading lessons to help put your knowledge into action.

"A concise, daily, audio-visual information barrage. Absolutely the BEST value anywhere." - Tom P.

Start your 30-day RISK-FREE subscription today and find out where commodities are heading next >>

Tags: Daily Futures Junctures, Elliott wave, futures trading, Jeffrey Kennedy

Free 32-page eBook

Commodity Trader's Classroom

While commodity markets are known as some of the toughest trading environments around, these actionable lessons from skilled veteran Jeffrey Kennedy can help you trade commodities, or any market for that matter, with more confidence. Download your free eBook now.

CLOSE [ X ]

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.