Futures

Monthly Edited by Senior Analyst

Mark A. Schimmel

Elliott Wave International

P.O. Box 1618, Gainesville, GA 30503
770-536-0309; 800-336-1618; fax 770-536-2514
www.elliottwave.com
Junctures
© February 2001 issue
(data through February 15)

Monthly Futures Junctures (MFJ) is designed to identify a selection of markets with the clearest wave patterns and most
immediate profit potential. Mark A. Schimmel, EWI’s Commodities Analyst, combs through all the futures charts and presents
you with the top opportunities that he expects to develop over the coming 4-6 weeks.

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PERSPECTIVE
CBOT SOYBEANS
The big news here is that
Soybeans took out
600
important support at SOYBEANS (C)
453½. This break goes a long way (Weekly Continuation) 5
in providing bearish evidence for an 3
eventual test of the 401½ support 550

(July 6, 1999). Now that 453½ is 1

(A) C?
out of the way, look for prices to 4 A
make their way to the next support 500
coming in at 433½. This low led to 2
the recent three-wave (corrective)
453½
rise topping at 514. 450
(B) B
433½
The obvious question is could there
be a bullish resolution here? The 400
answer is yes. Until prices take out
Data Courtesy CQG
433½, there is a possibility that a © February 2001 Elliott Wave International
substantial upside reversal could
350
turn the situation bullish again. As 4/5/99 11/15/99 6/26/00 2/5/01
always, we will continue to monitor
the market on a daily basis for
sudden changes in the price action.
 Futures Junctures —February 16, 2001

Featured Opportunity in
SOFTS
75

NYCE COTTON COTTON

When Cotton traced out a (Weekly Continuation)
five-wave decline to 57.10 70

(weekly continuation) we 67.50

6
knew that prices were very close to a
trend change. We were counting an 65
1 b
expanded flat from 65.45. So the five-
wave decline was exactly what we were
looking for to end the pattern and favor a 60
new leg higher. The decline from 67.50
to 57.10 counts best as wave (c) of a 57.10
large expanded flat from the October 7?
55
2000 high. This leg could end wave %.
So, our seat belts are fastened for the a
beginning of a third wave rally. Look for
50
a bullish reversal in this general vicinity c
as prices rise and close the 62.28 gap. 2
5
45 (5)
Alt: A B C?
C
Data Courtesy CQG
© February 2000 Elliott Wave International
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1250
5?
1150 SUGAR 3
(Weekly Continuation)
1050 CSCE SUGAR
Expect to see new highs for Sugar.
950 Sugar’s pullback (weekly continuation
chart) from 1115 bottomed at 867 within
the span of a previous fourth wave. The pattern that
850 4
took shape appears to be an expanded flat. Prices
are now forming a fifth-wave rise to a new high for
750 1
the move. The next objective is 1160, which
represents the point where wave 5 would equal the
650
distance traveled in wave 1, a common relationship
found in normal five-wave moves.
550

450
2

350
Data Courtesy CQG
© February 2001 Elliott Wave International
250
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2
 Futures Junctures —February 16, 2001

UNFOLDING WAVES
90 Data Courtesy CQG CME LEAN HOGS
© February 2001 Elliott Wave International
Lean Hogs could be headed toward 20.70. Its
i s bull market topped at the 78.10 peak (weekly
80 o ve (C) continuation) in April 2000 and then gave way
eM
av ctive to an impulsive decline that completed three waves down
W re 7
ree Cor at 50.50. Recently, prices bounced in wave ', which is
70 Th (ii)
still taking shape and should be headed toward 60.95. At
6 9? this point, prices would complete two equal legs higher
(C) (i) from 50.50. This is a common relationship under the Wave
60 (iv)
Principle. Once wave  puts in a new low beneath 50.50,
(A)
a five-wave decline would be in place from 78.10. Then,
50 (iii) (v)
prices would be poised for a corrective advance. In the
(A) (B) larger picture, the entire bull market from 20.70 to 78.10
8
(X) 42.65 was a three-wave move. Three-wave moves are usually
40 .618 retracement completely retraced. Lastly, there is a shelf of important
(B) 40.20
support in the 42.65-40.20 area. Within this range lies the
.618 retracement and some major structural lows. This is
30
LEAN HOGS the last real area of support that stands in the way of a
complete retracement back to 20.70.
(Weekly Continuation)
20 20.70

10
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1900

(2)
COCOA
1700 (Weekly Continuation)
2

CSCE COCOA 1500

Cocoa’s entire bear market from 1766 1
(1)
bottomed at 674 (weekly continuation).
This low completed a highly reliable
1300
Elliott Wave pattern, an “ending diagonal triangle”
from 1058 (basis March). Then this pattern gave
4 1168
way to a swift and sharp rise that took out the origin
of the pattern, a typical objective under the Wave 1100 1088

Principle. Thus far, prices have carried back up to

1088. We are now looking for a pullback before (4)
prices attempt to test a previous fourth wave at the 2
900
1168 peak. 4
3

700 51 3
(3) 5
Data Courtesy CQG (5)?
© February 2001 Elliott Wave International
500
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 Futures Junctures —February 16, 2001

COFFEE
(Monthly Continuation)
CSCE COFFEE 350

As we go to press, Coffee has s Y

vei
Mo (C)
fallen to a new low of 59.40, basis a ve ive 318.00
W ct
the monthly chart. This decline has 300 ree Corre
Th
gone too far, too fast and needs to stage a
corrective rise to work off very “oversold”
W
(C)
conditions. We now expect prices to search
for a bottom before a corrective rally 250
emerges. Then look for prices to work their
way back up to 64.00 (March contract) and
66.70 (May contract). That is not all. We
200
believe that this decline from January 23 is a
fifth wave. If so, prices will completely
retrace this move.
150 (C)
In the much larger picture, Coffee is retracing (A)
(A)
the entire rise from 48.10 (1992) after
completing a three-wave rise to 318.00
(monthly). The Wave Principle suggests that 100 (B)
(A)
three-wave moves are corrective and subject
to a complete retracement.
X (B)
(B)
50
48.10

Data Courtesy CQG

© February 2001 Elliott Wave International
0
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76

7 COFFEE
74
(May Contract)
Hourly
72

6
70

68 9

66
8

64
Data Courtesy CQG 0?
© February 2001 Elliott Wave International

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 Futures Junctures —February 16, 2001

FLASHBACK
120
CME PORK BELLIES
Pork Bellies took out all listed support PORK BELLIES
down to the 57.87 low. This low comes (Weekly Continuation)
in to just above the .618 retracement of
the entire bull market from 32.15 (weekly continua- 100

tion chart). The current bounce from 54.87 counts 2

best as a fourth wave. Once wave 4 takes out
71.40, look for a reversal that sets up a wave 5
decline to a new low beneath 57.87. This new low 80 1
would complete the entire bear market from 101.10.
4?

60

40

Data Courtesy CQG

© February 2001 Elliott Wave International
100
20
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95
FEEDER CATTLE
(Weekly Continuation) (5)
CME FEEDER
90
CATTLE
(3) Feeders completed their bull market from
December 1998 at the 92.20 top. The
85
rise from 82.05 to 92.20 counts best as a fifth wave.
Under the Wave Principle, once a five-wave move
82.05
ends, look for the largest correction since the
80 (4) beginning of wave one. This correction usually seeks
out initial support within the span of a previous
(1) fourth wave and many times the termination point of
75 the fourth wave, which would carry prices back to
82.05.

70
(2)

65
Data Courtesy CQG
© February 2001 Elliott Wave International

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5
 Futures Junctures —February 16, 2001

Ask SCHIMMEL...
This is a section for those of you that have questions. It is for serious wave students and novices alike. We
also welcome your views and comments and would like to encourage you to e-mail us anytime. E-mail:
marks@elliottwave.com or give me a call at (800)336-1618 Ext. 3003.

Q: I have been following you for quite a while and have enjoyed the service. How do you feel about using line
charts based on the close of each bar? I use these to filter out unnecessary noise in the price action.

A: I do use line charts based on the close when examining the long-term picture. However, if bar charts are available, I
always opt to use these. The very reason that you use line charts (filtering out noise in the price action) is the very
reason that I use bar charts.
The Wave Principle is a great method that measures the psychology of the players in the market. It also helps you
minimize risk. I want to see all the price action from the largest time frame right down to the smallest bar. This helps
me in different situations.
For instance: In the case of a contracting triangle, I can limit my risk by seeking out either wave “c” or wave “a”
and placing my order just one tick beyond the termination point of these legs. If I used a line chart, I would not be able
to fine-tune that position, due to the filtering of the data.
Also, in the case of an expanded flat, I can also minimize my risk by seeking out the end of wave “c” of the pattern.
Once I see that prices are backing off this leg, I can also limit my risk by one tick above wave five of “c.” Again, if I
used a line chart, the natural filtering of the data would likely not allow this close position.
Of course, there are many other cases where the Wave Principle allows you this type of protection. If you have any
other questions regarding these situations, give me a call.

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The Elliott Wave Principle is a detailed description of how markets behave. The description reveals that mass investor psychology swings from pessimism to optimism and back in a
natural sequence, creating specific patterns in price movement. Each pattern has implications regarding the position of the market within its overall progression, past, present and future.
The purpose of this publication and its associated service is to outline the progress of markets in terms of the Elliott Wave Principle and to educate interested parties in the successful
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