"When stocks are falling, commodities come calling."
So goes the mainstream theory that hails hard assets as safe havens during equity declines. But -- since April 2011 -- the supposed inverse correlation between stocks and commodities unraveled when the bellwether Continuous Commodity Index (CCI) declined 20%-plus, right alongside falling equity markets.
Now, while the usual suspects continue to investigate the reasons behind the hard asset sector's surprising sell-off, EWI's
Futures Junctures Service editor Jeffrey Kennedy has long since had this case signed, sealed, and solved.
In the March 2011 Monthly Futures Junctures, Jeffrey Kennedy presented the following chart of the CCI that showed an unfinished motive pattern and wrote: "The CCI shows the need for additional advance for the pattern to complete itself." (Note: The long-term wave count has been removed for this publication)
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 (CCI) 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 and the following chart of the CCI illustrates how far the index has fallen from its April peak: (Note: Again, the long-term wave count has been removed for this publication)
So, the question now is: Has the Commodity bubble burst? OR, will the market re-flate once again?
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DAILY FUTURES JUNCTURES:
Every weekday, you’ll get the single best Elliott wave opportunity in softs, grains and meats. This detailed daily forecast includes clearly labeled price charts and plain-spoken analysis of the commodity market that shows the highest probability for a big move. Every Friday, the Weekly Wrap-up will deliver Elliott wave forecasts of up to 18 different markets, including Jeffrey's thorough video analysis of the two or three most promising opportunities. You'll also get weekly updates on three powerful sentiment indicators: COT, DSI and the FJ-exclusive ICP.
MONTHLY FUTURES JUNCTURES:
Every month, you'll receive an in-depth analysis of the most promising long-term opportunity, plus intermediate- and long-term forecasts of a dozen other commodity markets. Along with valuable long-term coverage, each issue also includes a Trader's Classroom lesson, which offers practical tips and techniques to help sharpen your wave-trading skills. (New issue posts Friday, Jan. 27)
ELLIOTT WAVE THEORIST:
At least once per month, you’ll also get Bob Prechter’s cutting edge view into when, where, and why the waves are unfolding in the broader market. Each Theorist provides unparalleled insight into the sociological and psychological signals in the marketplace.