Sample Charts For Mikula Forecasting Service. Updated Weekly
The surge this past Friday in crude oil pushed the price to a new high for the current rally and caused a new cycle to become the best fit cycle. Last week the March crude oil price was up +$1.95 per barrel and ended the week at $54.21 per barrel. The red line below is the new best fit cycle for the March crude oil contract. This cycle has a rally that runs up to the price $55.29 per ounce and the date December 5. My current forecast for crude oil is for a rally until December 5, 2017 and the March crude oil contract should reach $55.29 per barrel.
The best fit cycle for the March silver contract is the green line below. This cycle is weaker than the gold cycle above. The silver cycle below fall until November 22, 2017 and then has a short rally that fails making a top on November 27, 2017. The decline then continues until December 29, 2017 and the price $16.13 per ounce. Last week the March silver contract was up +0.035 cents per ounce and ended the week at $16.965 per ounce.
The silver price through December 29, 2017 is shown as declining but it does not fall very much only reaching $16.13 in the forecast below. My current forecast for the March silver contract is for the price to fall until it reaches $16.13 per ounce or the date December 29, 2017 is reached. When one of these is reached the decline should be over.
The EURUSD had a strong rally of 1.223% last week. This was +0.1442 points. This left the price at 1.19313. The red line below is the best fit cycle for the March EURUSD futures contract. Based on the best fit cycle the rally in the EURUSD should continue until January 17, 2018. We may see a temporary decline until December 4, 2017 but that will be small and temporary. My current forecast for the EURUSD is for a rally until January 17, 2018 and at least the price 1.22 points.
The blue line below is the best fit cycle for the March British Pound futures contract. This best fit cycle also shows a rally just like the two charts above. The March British Pound future contract was up last week +0.0111 points which was +0.836%. This saw the March contract end the week at 1.3382 points. My current forecast for the British Pound is for a rally until December 15, 2017 when the price should be close to 1.3764 points.
There was a new all time high for the DJIA last week on Tuesday, August 8, 2017 at the price 22,179.11. The war rhetoric about North Korea does not bother the US stock market, but the war rhetoric about Venezuela did bother the US markets. When the issue of American intervention in Venezuela hit the news cycles, there was a negative reaction in the financial markets. The DJIA last week fell -234.49 points and ended the week at 21,858.32.
The blue line below is the current percent change line for the DJIA. The fuchsia line is the best fit cycle. This cycle is the inverted cycle from 1974. It was selected before the start of 2017. The best fit cycle has a bottom that aligns to August 25, 2017 and then a strong rally up to October 24, 2017.
My current forecast for the DJIA is for a bottom around August 25, 2017 and then a melt-up until October 24, 2017. The price on October 24, 2017 is hard to forecast because the DJIA will be making new all time highs as we approach this date but the price should be between 23,500 to 24,500.
The grain markets saw managed money exit both long and short positions in all the major grains. This means that the investment funds have no confidence there is going to be a bull market in the grains. The soybean and corn markets are both in the middle of their growing cycle and the weather is a major factor which causes the investment funds to create a bull market by buying long, or a bear market by selling short. At the current time, the long-term weather forecasts, which go out to the middle of August, are showing hot weather in the western US and cooler weather in the middle of the country to the east coast. The area where most of the soybeans are grown is in the middle of the country. This means the weather forecast through the middle of August are not indicating weather damage so funds are exiting the market. In last week’s Commitment of Trader’s report, funds exited 23,558 soybean contracts, 8,909 corn contracts and 17,444 wheat contracts.
The chart below is the November soybean contract. The last top in this market was on July 11, 2017 at 1047.0 cents per bushel. This top was caused by the last weather forecast for hot weather that caused a large wave of investment fund buying.
Last week the November soybean contract was down -9.25 cents per bushel and closed the week at 1013.0 cents per bushel. The green line on the chart is the best fit historical cycle. This cycle has a top in the second week of August, on August 7 and then a decline starts that runs down into the soybean harvest in October. My current soybean forecast is for a top in the second week of August 2017. This will be the seasonal summer top that leads to a long decline into the harvest lows.
Last week the December corn contract lost -5.50 cents per bushel and closed the week at 388.0 cents per bushel. Investments funds often have the same buying and selling patterns in corn and soybeans creating very similar patterns. The corn market had a top in July 11, 2017 at 417.25 cents per bushel. This was caused by the last large inflow on investment fund money. Since this time the weather forecasts have been mixed to neutral and the invest funds have slowly exited the corn market. Without more forecasts for bad weather, the funds will not return to this market.
The green line on the chart below is the best fit historical cycle for December corn. This cycle has a top on July 31 which is the final top for the summer. After this top the best fit cycle shows a decline into September.
My current forecast for corn is for a top to occur between July 31, 2017 and the release of the next WASDE report which is on August 10, 2017. After this top the corn market should start a decline into the harvest and make a harvest low price near September 19, 2017 and the price 339.0.
In 2016 the December lean hogs contract fell as low as 40.70 cents per pound. In 2015 the December contract fell as low as 51.80 cents per pound. The current price of lean hogs is 58.95 cents per pound. This shows the December lean hogs contract has lower support levels and can fall farther. Last week the December contract was down -2.375 cents per pound and ended the week at 58.95 cents per pound. The red line on the chart below is the best fit cycle for December lean hogs. The best fit cycle has a counter trend rally until August 31 and the price 61.21 cents per pound. Then there should be a continuation of the decline until September 21 and the price 56.61 cents per pound.
Based on the price levels reached over the past two years, this market has the potential to go much lower than 56.61 cents per pound. My current forecast for the December contract lean hogs is for a decline to September 21, 2017 and the price 56.61. As September 21 approaches, I may extend this forecast price down to 51.80 which was the low price from 2015. There should be one counter trend rally before the decline to September 21, 2017.
Last week the Commitment of Trader’s Report showed a decline of investment fund short positions by -15,696 contracts. This is the largest single week reduction of short contracts for managed money in the history of coffee futures. The investment funds seem to be repositioning now that the coffee harvest in Brazil is complete. According to the Brazilian government, the size of the coffee crop turned out to be 44.77 million bags of coffee. This is slightly lower than had been forecast but it is adequate to meet demand. Almost 45% of the new coffee crop has already been contracted by coffee wholesalers around the world.
The chart below shows the March coffee contract. This contract ended the week at 130.90 cents per pound and was up +3.40 cents per pound. The orange line is the best fit cycle for the March coffee contract. This market should finish a small rally next week and should then return to a decline. The March coffee price should fall into December 8, 2017 when the price should be close to 118.71 cents per pound.