Gann Global Financial

Currently, our research indicates the Soybean market is presenting, maybe, THE best opportunity across the board…. Better than the stock market, precious metals, and the energy markets.

We have been able to get a jump on this market in terms of participating in the current opportunity via futures and options. This video will fill you in with regard to the historic context in which this market is trading, based on our research.

* Please comment on the video at the bottom of the page *

Current Research and Forecast for Soybeans and Soybean Oil Futures

The recent move down in soybeans was one of the greatest legs down in the history in the soybeans since 1936. There are five other markets over that course of time, approximately 70 years, which had similar price implosions to the one we’ve seen recently in our market.

The current action in Soybeans very much rhymes with history and what took place during those five implosions.   I want to go through some of the observations that I have with respect to what is taking place now.

First of all, I believe the prospects are very high that the December 2008 low did complete a bear market. We experienced a first leg up into the January 12th high and a secondary decline. We also experienced a bull market correction into the March 2nd low. From there we have seen the market push up to as high as approximately 1011, as of Wednesday, April 8th.

Soybean Market 1019 February High

So, we’re not far from the 1019 February high. The high for the move in the pit session on Wednesday April 8 was 1046 ½, so we’re knocking on the door to the possibility of confirming the overall bull market.

Of the five “closest fit” precedents, only the 1975 market continued lower in a continued bear market. In other words, after we experienced these implosions, historically, four out of the five started bull markets after that, and only one of the five continued lower and that was the 1975 market. In other words, in four precedents we were on the bull side of the market cycle at this point in time.

I really like our prospects on the long side of the soybean complex. We are all ready positioned in these markets so I’m not suggesting you just jump in there at this point, but you are going to be able to follow along with respect to what is taking place.

The closest fit, I believe, is the 1977-1978 market.

In three of the four bull market precedents (1977-1978.1949, 1978, and 2005 ), the three I have displayed in the chart (see video), followed almost the exact angle of ascents. So there are actually three angles that are advancing side-by-side. That’s very interesting.

In other words, the DNA in our market closely represents three of the five historic precedents. Once the comparable low to March 2nd was established, the legs up were almost exact in terms of velocity of advance – overall percentage advance per day which we say is the angle of ascent.

This is very interesting and would suggest that the soybeans could very well follow this angle of ascent. If that’s true then we’re a little bit overbought here. That also occurred when we first hit 981 ¼. We retraced back to this leg.

Can we see some backing and filling? Certainly we can, but all of these three were bull market legs.

In looking at the soybean cash, the 1977-78 market (see chart in the video) is the closest fit.

Let’s look at how this played out in ’77. There was a huge implosion in price, almost exactly the same percentage decline as our market. This was followed by an initial flurry to the upside lasting one month and eight days. The recent advance in Soybeans was one month and four days.

The backing and filling demonstrated by the 1977-’78 bull market correction was rather modest. We’ve experienced a backing and filling in our market, and then we started the next leg up and it’s very possible that we could parrot this 1977-78 market which continued into a bull market.

Live Trade in Soybean Oil for Current Subscribers

Soybean oil is the market that Gann Global Market Forecasting Service Subscribers are positioned in. We’re long the July call options in the soybean oil long the 34, 36, and 38 for subscribers, long the 38s for an average of 60 points.

Those options have gone from an average entry price of 60 to the close today (April at 120. So we’ve almost doubled those options in price. Obviously this market moving up very aggressively as the soybeans are.

Historic Market Forecasting Benchmarks

Let’s go through a couple of the historic benchmarks for what to expect during a leg up in the soybean oil.

Our assumption is this implosion completed the bear market first leg up secondary correction, and that we are in the midst of what will be a second leg up in a bull market. This would be confirmed by a rally over the January 7th high, so we have a ways to go there.

We closed at 3499 today, Wednesday, April 8th so we’re still about 250 points away from that high.

If this is a second leg up in a bull market, the current advance into the April 6th high is very young. The low from March 16th to the April 6th current high is 26 days. At 26 days it ranks as the 46th shortest out of 47 legs up since futures trading began in 1951.

If this is a bull leg you would not expect it to be complete in just 26 days, so presumably we are early on in this leg up. That is, if we’re correct that the trend is up and this is a leg up in a bull market.

As far as the time period of legs, this is what history tells us with respect to that. The medium leg up is three months and 23 days. When you look at the 46 legs up in history, the mid-point of those 46 legs, or average, is three months and 23 days.

(See chart in the video) The diamond point represents three months and 23 days from the low. The average leg up in a bull market would move from March 16th until approximately the second week of July.

This isn’t a projection in terms of price. Our projections are actually incorporated in two closest fits, and we have blanked that out (see chart in video) for this complimentary video…subscribers would receive the projections.

We know, based on time, a typical leg up in Soybean Oil lasts three months and 23 days so that is a good benchmark for us.

Our July call options expire on May 16th. That’s not too far off of what would be the average leg up. That obviously plays in on options where you need to have enough time in terms of what we purchased to hold those long call options positions.

Additional information: only eight of 46, that’s 17% of the legs up in history in soybeans were one month and 23 days or less. We’re only in the 26th day and only 17% were complete in one month and 23 days.

Twenty-three of 46 lasted between two months and three days to four months and 24 days. We show that up here in this bar. We start here towards the middle of May and go until about the end of the first week of August, and that means that half of all the bull market legs in history in soybean oil would be complete in the time band shown in the video.

We expect Soybean Oil to continue higher into the middle of May. That means we have plenty of time to see up that upside and the probabilities would favor more upside if this is a leg up.

This is a very comforting benchmark.  We are in the early stages of what should be a leg up in a bull market, and we want subscribers to our Forecasting Services to be patient in holding long positions at this point in time.”

In terms of percentage moves during legs up, the median percentage advance was 46%. As we look at all 46 advances, the median advance is 46% percent and 46% off 2966, which is the low here, would project a 4330, so somewhere in this vicinity.

As far as the closest fits, it remains to be seen if we follow the 1976, 1978, or neither precedent. This is the 1976 precedent here, and this is the 1978 precedent here. I don’t have the culmination prices and dates on the chart (see video). That’s reserved for our subscribers, but those are precedents are being studied by our research team very closely.

The ’78 precedent was much more modest and would project a modest 2:1 risk reward on our 38 July call options, whereas the ’76 we could see upwards of an 11:1 risk reward in our call options and that is if we don’t do anything else from this point in time.

Subscribers are situated very nicely, I believe, to profit. The only question is, to what extent that profit will be.

In looking at the soybean oil, this was the 1976-77 precedent (see chart in video). There was a minor spike off the lows into March 9th, backing and filling, and then the market surging higher into what would be a July 14th high in the market.

We’re looking at these patterns; this DNA, in our market, matching them against history; the psychology, the technical analysis, the patterns, and the formations, all play into forecasting this market.

The Soybeans and the Soybean oil are tracking each other very closely in terms of percentage advances, although the soybeans is showing a little bit more strength. It’s good that both of these markets are advancing basically in tandem. They both have advanced about 18%.

Undoubtedly a significant number of buy stops are building above the 1024 high. It will be interesting to see what happens once these stops are hit.

We fully expect that the buy stops are going to hit above 1024. Those people on the short side of the market are obviously very much on the defensive and on the run.

The crop report that came out this last week-and-a-half has caused a surge up in price. The major landmark high is at 1069. It is going to be a interesting if we exceed that high.

Obviously there can be some backing and filling. We don’t expect Soybean Oil to go straight up. It can rally above the 1024 and then experience a correction beneath the 1024 before resuming the uptrend.

In addition, we see the shorts are obviously being pushed to the wall, covering short positions. The follow through in trade action is going to give us our next bit of information and evidence as to just how strong a position the soybean complex is in.