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Commodity Spotlight: Coffee & “The Most Powerful Wave Pattern Of All”
On September 11, coffee prices were about as perky as a daisy in the desert. Case in point: the market plunged to its lowest level in three-and-a-half weeks.
As for why -- Well, that depends on whom you ask. According to the mainstream experts, one main “culprit” was behind the drop in java: gains in the U.S. dollar, as the following news clip makes clear:
“Coffee futures were pounded by the fund liquidation… sparked by a resurgent dollar… They’re all [soft commodities] getting hammered. I’m sure it’s a dollar play more than anything else. Other market fundamentals are getting scant attention from investors.” (Such as: Hurricane Ike headed for Houston, one of the top four coffee ports in the United States) -- Reuters
One problem: There is NO consistent correlation between gains in the greenback and losses in coffee. To wit: After hitting a lifetime low on March 17, the dollar enjoyed a rising sideways crawl until breaking out decisively to the upside in the first week of August. During that time, coffee prices enjoyed a powerful rally from early June to July 1.
Then again, from August 15 to August 27, as the dollar’s winning streak propelled prices to an 11-month high, coffee surged to its own 7-week peak.
Quickly regarding the part in bold about "other market fundamentals," I have one question: If investors can choose willy-nilly which outside events to react to, then how do you know whether the marketplace will “sit heavily” on a certain piece of data -- or, whether it will “shrug it off”?
Answer: You don’t.
As for truly objective and consistent insight into the near-term trend changes in store for coffee -- check this out. One week BEFORE coffee prices embarked on their recent losing streak, the September 5 Daily Futures Junctures Weekly Wrap-up set the bearish stage via the following close-up. (Note: Some Elliott wave labels have been removed for this publication)
The best part is, in the latest, September 11 Daily Futures Junctures, Jeffrey revisits the coffee market to reveal this breaking development: The most powerful wave pattern of all, a third-of-a-third, may be underway.
In Jeffrey’s own words: “In coffee, prices have been falling as expected… I’ll continue to give the benefit of the doubt” to one side. Get the details via instant access to the full Futures Junctures Service now.