In the last few weeks we could see how bullish the media were towards lumber prices. All sorts of reasons for the price rise have been used. I have worked on this lumber chart for many years, but due to the choppy wave structure had a hell of a time in making something that fit well. I have worked in the forest industry starting in 1969, so I still remember that crash rather well. Our company behaved differently before the 79 peak, but a year after the crash it was a different ball game.
Before the crash the company never cared about inventory levels that much, as lumber prices were rising as the rough cut lumber sat in the yards. When the crash came and prices started to fall, the whole focus switched to reducing inventory levels, and maintaining strict control. Sawmill production was curtailed many times to keep our inventory levels extremely low.
I never do these difficult wave counts in the computer as I print them out in full 8×10 sized charts. I stare at the chart for an hour or so before I lay down a single “ink” mark. Yes, I mean “ink” because each mark makes you think extra hard before you label anything.
One thing is certain and that is that the bull market in lumber is a diagonal in Cycle degree. Most all commodities are in one huge diagonal in Submillennium degree wave 3 starting before wave one back to 1100 CE. After the GSC crash, commodities started to smooth out a bit, but diagoanls will always be around to make counting commodity wave structures a real challenge.
I have labeled it right down to Minute degree levels, which is the bare minimum that needs to be done to come close to confirming a wave count in Primary degree. The Minor degree would be two degrees below Primary degree.
In the Mid 90’s lumber prices formed a huge quadruple top that eventually got surpassed 13 years later. At this point all things point to the high possibility of a Cycle degree wave 3 peak, and a huge bear market should follow. The wave 3-4 crash in Primary degree was a flat, as I can only count 3-3-5. To me it looks like a classic flat. There is no way of knowing what pattern we are going to get for a lumber Cycle degree bear market, but I’m voting for a zigzag at this time.