Back to Nature: The Seasonal Waves of Opportunity

THE SEASONAL OPPORTUNITIES IN GRAINS

NOTE: All the chart positions shown are hypothetical and for educational purposes only.

awheat4 When I write of ‘Seasonal’ opportunities, I’m not confining myself to only the seed time and harvest cycles that occur each and every year without fail.

I’m also referring to the shorter cycles that drive prices upwards rapidly and then expire and crash dramatically as well.

As you can see in the Wheat chart to the left, there are plenty of rising and falling periods within a single grain.

Each of them offer opportunity for profit if one can locate the critical price points for turns in price trend momentum at the bottoms and tops of market moves.

The beauty of the Agricultural products like Wheat, Corn, Soybeans and Cotton and others is their Seasonality and their ties to natural cycles rather than to the man-made stock market trends.

Another plus is that there are only a handful or two of products to analyze and watch at any one time. This is unlike the stock market which has over 5,000 different companies to survey on any given day.

We’re presented with the same challenge as with any other market of course; how to interpret the charts we view and how to locate the important points of change and movement. The above Wheat chart is a good example of such a chart. A chart when seen without a method of analysis that’s based on the same natural order that drives the agricultural markets leaves one in the dark as to where the market is and what the best action to take would be (BUY? SELL? Stand aside?)

awheat1For instance, last September an Excalibur Method trigger signal indicated that a minor uptrend had started to reverse the previous down swing in prices.

This minor swing in prices only lasted about a month’s time, however, it presented those in the know with a hypothetical opportunity for up to $1,000 profit per contract by Buying and then Selling Wheat.

This illustrates what I mean by ‘seasonal’ opportunity.

This was not a major move, but, provided an ample profit opportunity to make it a worthwhile investment.

The very price point where we find the SELL price trigger (red circle on the above chart) provided not only an exit for our hypothetical Long position a month earlier but, also, set up a new downtrend point to SELL into as the market declined further.

awheat2The chart to the left shows what happened after this trigger signal to SELL.

Prices declined and one could have hypothetically stayed with this position until a new BUY price trigger signal appeared (as it did in early February).

Exercising patience would have been rewarded by a potential $6,000 profit per contract.

As with the earlier trigger signal, the BUY price trigger (the green circle) besides being a place to exit the short position from the SELL price trigger around 680.00, also functions as a BUY point for a new uptrend that was developing in early February.

Note that this was long before traders even suspected that the downtrend had ended.

The Excalibur Method specializes in detecting the earliest moments of a trend change.

awheat3Let’s see how the BUY price trigger performed in Wheat.

The chart to the left shows Excalibur followed price up to the price area shown by the red circle where a new downtrend was detected quite early.

This red circle indicated that this would be a lower risk place to SELL.

The angular price momentum has followed Wheat downwards up to the time of posting this chart.

The profit potential on this hypothetical trade was an additional $5,500 per contract within a month and a half time period.

Relative to the low volatility in the Forex markets these days, there are many opportunities in the commodities markets. These are markets that are consumer-driven not bank-driven and are too small to absorb the billions that banks have to invest. The large institutions have decided to exit the commodity markets as they’re too subject to regulatory scrutiny these days. They prefer the darker corners to hide their activities in.

In short, these are markets that deserve closer examination. You may find that they can offer what all investors really are after; a fair chance to make a profit from markets that make sense and that are based on natural laws and not derivative schemes.

Contact me by e-mail here if you wish to learn how to analyze markets like these for yourself. – George

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