There is some analog history for a bull trend in Soybean Oil to follow a bull market in Soybean Meal by six to 12 months. I would define the Apr-Jun 2016 advance in Meal to be a bull market. The H&S forming on the weekly Soybean Oil graph is my current favorite developing pattern.
Factor is long Soybean Oil with a decided interest to extend leverage. This market has the potential to be a 1000 basis point trade.
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The dominant chart construction in Cable is the completed 30- year rectangle on the quarterly graph with a target of 1.0345 — and .7790 as an outside possibility. As pointed out in the discussion of Commitment of Traders data herein, specs have an all-time record short position and commercials an all-time record long position in Pound futures. This is not typically a profile consistent with a further downward trend. I would not be surprised if GBP retests major resistance in the 1.39 to 1.41 zone. Factor is flat. If the Cable does rally toward 1.40 I will be watching closely for a selling opportunity in the way of a small topping pattern on the daily chart. There is also a chance – supported by Friday’s reversal day – that the daily chart is forming a symmetrical triangle congestion.
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The dream of novice market speculators is that they will continually bask in the warmth of profitable times. This myth is falsely promised by the promoters of trading systems and trading training programs. In fact, just the opposite is true. Most long-term profitable traders spend the vast majority of their trading careers either in a trading drawdown or recovering from a drawdown. Any slick promoter who tells you different is not dealing from a full deck.
There is a statistical concept known as the “underwater curve.” The underwater curve plots the time periods when new all-time high NAV levels are being registered (represented by “0” on an underwater curve) and the time periods in which drawdowns are either underway or in recovery back toward new all-time NAV levels.
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