Gann Global Financial

In the soybeans, we’ve seen the market surge, especially these last couple of days, and so it’s all systems go as far as our bullish projections, but there is no question the market has gotten ahead of itself in terms of its overall velocity of advance.

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I want to point out a number of things here. We had mentioned back on February 24th that the soybean complex held its own in spite of continued weakness in the stock market, that would be an indication that the market was in a strong position and that has been borne out.

Also, sometime back we had pointed out the 60-year cycle, which is the most important inflationary cycle that we’re looking at right now and has the potential for turning commodity prices higher, that was the shortest lived historic deflationary move in history.

Based upon that 60-year cycle, that was one of the cycles that put us short back in July of last year. The final bottom basis that 60-year cycle was as of February 9th, suggests we would have bottomed as of February 9th, but the time period based upon the 60-year cycle in the soybeans would have bottomed as of March 2nd which was exactly our low in the soybeans. That is very interesting that that time period came in right on target.

In looking at that 60-year cycle, the ascent which took place once the final low was in place; the leg up which took place in the soybeans during 1949 into July of 1949 suggests we basically are running really hot to the upside. But based upon an average overall ascent during the 60-year cycle, this would be the progress that we would expect in our market.

Now, dropping down in the soybean oil, we have felt that this market was in a stronger position than the soybeans. It topped out in March of 2008 whereas the soybeans didn’t top out until June, so we actually established a lower top in soybeans so the overall bear market is more mature.

You can see this 1976 precedent bottomed within one day of our low. The ’76 precedent bottomed as of March 17th. Our low at 2966 this past week established its low on March 16th, within one day.

In both these, the soybeans and the soybean oil, we have some bullish cycles which have now come into play.

In looking at our call options positions, obviously, a very favorable session today in the soybean oil. The July options expire on June 26th so these are the options that we’re holding.

If we were to replicate the 1978 advance, again, we would see the market push up the $46 level. Following the 1976 precedent would mean prices would go up towards the $46 level. We have plenty of time on these options to see this borne out. These were very significant moves, 57% and 48%.

If we have the same DNA and we’ve demonstrated it up until right into this buy signal, then we would expect to see this market experience, that kind of percentage of gain, and the possibility would be to see these options increase 10 to 12 fold.

We will likely look to take profits before, on partial positions, anyway, we would like to take profits on the way up but the prospect is for a real home run situation there.

I like how everything is playing out as far as the soybean complex is concerned.