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Category Archives: Softs

Lumber Crash Update!

 

The lumber price crash is normal, and is an example that “investing” in lumber does not work! Every trend ends and lumber ended its bullish trend in May 2018 ($660). Watching the lumber prices crash is a pretty clear signal that the real estate market is also crashing. I’m looking for a potential zigzag in a Primary degree which could take years to completely play out. Even then lumber prices could be subdued for decades. Don’t think impulse but think diagonal, whenever we get connecting zigzags.

The majority of the world uses fundamental analysis, but I bet not a single person knows what “fundamentals” created the wild spike to the upside and then the impending crash. In the end, fundamentals are thrown to the wind as traders just want to ride the lumber bull in fear of missing out.

I will not post every little turning as I only need to confirm Minor degree or higher moves.  There is no real price bottom I can give, but $220 would not surprise me when we get to the previous bull market correction bottoms.

Every Tuesday I get the Market Vane report which always tells me how many “bulls” are present when surveyed. The MV report has been around since the 1960’s and has been respected ever since.

I ordered the subscription many times in the past, and have hard copy files of many that I keep in a binder. It was the 98% bulls that were present at the peak that instantly prompted a crash warning as 98% bulls present leaves nobody left to still come in. At 98% the lumber prices were doomed. This week my lowest reading was already 36% which is a huge drop. Mind you, it may take well below 16% bulls before a solid base can be established.

 

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Lumber Cycle Degree Crash Update

 

What I see here is a diagonal set of 5 waves in Intermediate degree connected by zigzags. All commodities are connected in the same way, and require a completely different idealized pattern to go by. There is an extremely good chance that gold has already seen a bottom, then if this is true shouldn’t lumber prices soar as well?  Crashing lumber prices also tell us where the housing market is going as demand for new homes is failing.

If the big bearish cycle in lumber is in effect then there should be no new record highs. We might get a wave 2 rally but if it turns choppy then more downside will come. It will be a long-term bearish trend that will change housing forever. 10,000 boomers are retiring every day for the next 19 years, so do you think that this is positive for the prices of SFD to keep going up? Maybe on Mars, but not on earth.

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Cotton Monthly Chart: Triangle Still In Progress?

I have been keeping my eye on cotton for some time but as you can see it is such a wild diagonal market. I believe cotton is in a triangle but the exact location is a best guess at this time. I have records going back to the 1970s and without a doubt choppy wave strutures is the dominate theme.  From the 2001 bottom a wild zigzag occured topping in 2011 right along with gold and gold stocks. I do have a very big Submillennium chart of commodities, and the entire general theme is diagoanl in nature. This did not smooth out until a bit until after the GSC degree crash in the mid 1800s. My Submillennium wave two ended in the Little Ice Age about 1500 CE. (Common Era)

This does not mean the entire Submillennium run is a 5th wave extension as it is just the nature of the beast in commodity land.  You have to be very good at looking for, and identifying diagoal wave structures,  as they will sneak up on us when all we can do is count impulse waves everywhere.

The commercials are short cottom by a wide margin so persuing a bullish wave count at this time is a lose-lose situation.  I can’t pass up following any potential triangle as it is a very rare treat and excelent experience.  This is the first attempt at counting out the cotton triangle so anything can still happen in the short term. The small “A,B” in Minor degree is an expanded pattern which eventually always get retraced.

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Are Lumber Prices About To Crash? 1979-2018 Monthly Chart Elliott Wave Count Review

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.

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Cocoa and The Impending Shortage of Chocolate.

Stories  are wild about another Cocoa shortage looming in the world today. Oh, the horror of it all, if this world runs out sweet chocolate again.

Big Chocolate Makers Drop $1 Billion to Head Off Worldwide Cocoa Shortage – Eater

With cocoa charts still pointing down, it’s hard to imagine a supply problem is actually here. There is the potential for another flat in the ending  stage, which could still produce a massive spike to the upside. Supply has been devastated due to crop diseases, with Ebolaalso  killing off many of the cocoa farmers.  They also blame global warming for the sad state of cocoa production.

I posted cocoa with a best estimated wave count, but I assure you that any wave structures in cocoa are diagonal in nature. If this is to be confirmed in the future, then any impending rally should contain an inverted zigzag.

This is not going to happen overnight, as the probabilities of more short-term downside still exist.  Even Coffee is reported to be in a shortage. Withdrawal from sugar and coffee, could send investors wild without another fix!  😀

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