Let me cut to the chase: If financial markets truly performed according to the laws of physics, then fundamental "x" would always result in reaction "y" from prices. No variables. No exceptions; just cold, hard cause-and-effect science.
That is far from the case.
Take, for example, the recent gains in the leading Grain markets. To wit: Over the last few days, both corn and wheat prices have made a complete turnaround from multi-year lows to multi-month highs.
And, according to the mainstream powers-that-see, the number one reason behind the concerted rise is a falling dollar. Here, this recent news story explains:
"Wheat, Corn Firm As Dollar Falters. The dollar is the trump card." (Reuters)
"Trump" card? I don't think so. More like a capricious Joker. Case in point: the U.S. dollar has been on a one-way street south since March 2009. All the while, the sustained downtrend in grains got started in June 2009. From there, BOTH markets fell in sync. So, while the strength or weakness in the U.S. currency has long-term ramifications for ALL commodity markets, it has no consistent bearing on short-term trend changes.
Now for a story that makes sense. In the October 6 Daily Futures Junctures, EWI's chief commodity expert and long-time editor Jeffrey Kennedy foresaw a major turning point in the grains' future. In Jeffrey's own words:
'Considering that we have completed wave patterns in corn and wheat, these markets are at interesting junctures. As you can see in tonight's price charts, we can call the end of the 2008's sell off in corn complete at the September low. Similarly, from the 2008 peak wheat, we can also label this move down as finished this week."
From there, corn price soared to a three-and-a-half month high, while wheat rocketed to a two-and-a-half month peak.
So, the next question is: Is there more room to RISE in grain prices?
Well, nobody can answer that with more objectivity and originality than Jeffrey Kennedy. He's the same analyst who alerted subscribers to the summer peak in grains via these insights from the June 2009 Monthly Futures Junctures:
- Wheat: "What has finished a three-wave corrective advance at the recent June peak. We can now look for wheat to more than completely retrace the December 2008 corrective advance."
- Corn: "The corrective advance in corn that began in December 2008 is complete. This means that the stage is set for renewed selling that should push corn prices to below the 2008 low of 325 ¼. Wave patterns argue strongly that this is an intermediate tradable top."
From there, both corn and wheat plunged more than 60% to completely fulfill Jeffrey's outlook.