Soybeans Reach 2020 Target; New Rally into May – July ’21 Likely… New Rally into 2022 Expected.
Outlook 2021 – Inflation Pros & Cons
01-28-21 – Since late-March ‘20, the outlook has been for Stock Indices (projected to set a 1 – 2 year bottom around March 23 ‘20) and inflationary markets (led by a declining Dollar after cycles peaked in March ‘20 as Silver cycles bottomed on March 16 – 20 ‘20) to surge hand-in-hand from April ‘20 into 2Q ‘21.
While these markets – which also included grains, energy markets and other commodities – are not expected to peak in tandem, the period leading into May/June ‘21 was/is expected to see rallies in close synchronicity to each other as economies recover around the globe.
The period surrounding June/July ’21 could be the most volatile due to how these moves often culminate. For roughly 95% of the trend, stocks view price inflation favorably and rally together. Then, the market wakes up one morning (when that inflationary move reaches an extreme) and the glee suddenly turns to panic… and stocks sell off…
Soybeans, Corn & Wheat are retracing after nearing or attacking critical resistance and upside targets… By extending the current advance into Jan. ’21, Soybeans have again surged for 9 months and have again rallied a little under 7.00/S points. While their overall wave structure argues for another multi-month advance – in 2021/2022 – Soybeans could find resistance at 1450 – 1500/S for a couple months.
Meanwhile, Corn is focused on its own 2-Year Cycle that projects an overall advance into June/July 2021. That would be the next peak in a sequence that already includes 1 – 2 year (or longer) peaks in July ‘13, July ‘15, July ‘17 & June/July ‘19.
That overall advance should take Corn back to (at least) 630.0/C and could spur even higher levels if 630.0 is exceeded before then.
Wheat, in a slight contrast, appears to be in the earlier stages of a major advance that could trigger a surge back toward ~950/W potentially by/in July 2021. Depending on how and when that target is reached, Wheat has the potential to see even higher levels in the next 12 – 24 months.
Wheat is now expected to take the lead in the next advance and to experience a proportionately-greater move to the upside (than Soybeans) throughout the first half of 2021. One of the primary reasons for this is the setup of the 21 MACs on a monthly and weekly basis (see chart of monthly 21 MAC on page 7) – creating a similar setup to other markets in 2020.
This combination of 21 MAC indicators is very similar to what unfolded in Soybeans in July & Aug… Since its major bottom in 2016 and its secondary bottom in 2019, Wheat has traced out a textbook bottoming pattern – moving in close sync with the monthly 21 MAC. It entered 2020 trading above that channel and then dipped into June 2020 – when cycles were projecting the onset of a major move up.
Simultaneously, it tested and held it’s rising monthly 21 Low MAC and quickly reversed higher. In Sept. & Oct. ’20, Wheat confirmed a breakout higher – closing above the monthly 21 High MAC and also above early-2020 highs.
That ushered in a classic 1 – 3 month reactive pullback that had Wheat drop precisely to its rising monthly 21 High MAC and reverse higher in early-Dec. That set the stage for a similar pattern to unfold in the weekly 21 MAC (and even the daily 21 MAC).
Wheat corrected during the second half of Oct., all of Nov. and the beginning of Dec. – retracing a precise 50% of its 2020 advance while dropping toward its rising weekly 21 High MAC and bottoming during the week after it dropped to and held its weekly HLS (an extreme downside target that is usually met 1 – 2 weeks before a multi-month bottom takes hold).
[That is very similar to what Bitcoin did in Sept. ‘20 – pulling back to its rising monthly 21 High MAC while testing and holding its monthly HLS.]
It also bottomed in perfect adherence to the weekly trend pattern, dropping far enough to twice neutralize its weekly uptrend but not far enough to turn the weekly trend down. On a weekly basis, it was the ideal setup for a decisive, intermediate bottom.
After confirming that and the corresponding daily patterns with a surge in January, Wheat has now pulled back to the steeply-ascending weekly 21 High MAC at 617.0/WN. That should spur a reversal higher and the onset of a more accelerated advance in the months ahead.
As described in late-2020, Wheat has set up a few ‘landmarks’ for the first half of 2021. The Dec. 26, ‘20 Weekly Re-Lay updated a couple interim upside targets – one or both of which could be attained before the end of Feb. ’21…
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Grains are poised for new surges into May – July ’21 and ultimately into 2022. They are in the culmination of a 40-Year Cycle of Drought & 80-Year Cycle of Agriculture (leading into 2021) – the time when parabolic moves are most likely, in another example of the 90/10 Rule of Cycles.
~11-Year, ~40-Year & ~80-Year Cycles converge in 2021/2022 and pinpoint what could be a seismic shift in natural, geopolitical and market cycles at the same time many food/commodity inflation cycles culminate. Wheat is in the earlier stages of what could/should be a powerful rally into 2022.
On a 1 – 3 year basis, Corn has a corroborating 3-year low (July 2007) – low (Jun 2010) – high (July 2013) – high (June 2016) – high (May/Jun 2019) – high (May/June 2022) Cycle Progression – projecting the next 1 – 2 year peak. Wheat has a ~6-year low (2004) – low (2010) – low (2016) – high (2022) Cycle Progression that is being reinforced by a ~33-month low (3Q 2016) – low (2Q 2019) – high (1Q 2022) Cycle Progression. Soybeans have an ~8-month Cycle Progression that portends future peaks in ~May ’21 & ~Jan ’22.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.