Wheat Weekly (CBOT)

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* Wheat (CBOT)- Currently $500.50

* Over the past 7 trading days, we have seen wheat prices plummet $78.5 peak to trough. Remarkably, there is no indication of this being from longs liquidating positions. This drop can be credited to short hedging by processors and producers, along with new short sales by money managers. Short positions for managed money expanded rapidly by 11.09%.

* Long term prospects for wheat continue to look bleak with the possibility of dropping as low as $375 over the next year. Certainly the amount of institutional hedging we have seen over the past several sessions would hint at lower prices going forward as well.

* There are two major support levels that prices will have to break before going below the October, 09 low of $439.25.

* The first area where support for prices could appear occurs between $493-$496.55

* Second support level is $471 - $473.25

* If either of these price regions hold as support, the long term upside target is $632.75 – $635.5

Soybeans (CBOT)

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* Soybeans (CBOT)- Currently $963.5

* The selloff in soybeans which began January 5, 2009 appears as though there is still more downside potential. The selling pressure was initiated by managed futures funds increasing short positions by a stunning 62.87%. Money managers began unwinding profitable long positions and initiating new short positions totalling 73,820,000 bushels for sale. The selling was met with modest buying from producers and processors.

* A short term low will be put in place after price reaches $923 - $927.

* Short-covering is expected to help price travel up to minimum target of $981 - $984.75

Goldman/Sachs Commodity Index (Update 2)

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Previous forecast wave count indicated a move higher up to $539 (Gann) or $540 (Fib Ext). The price support held and the GSCI rallied to a high of 548.88 only to close the week of 1/03/10 out at 543.22

The following week of 1/10/10 price hit a high of 550.37 then sold off to close the week out at 520.37

Wave count indicates wave v of (5) completed. Following this completion price returns to the place were wave 4 ended. The downside targets include $450 and between $419-$423. These lower targets should be met with considerable ease if price can break below the crucial support level of $472.

Saskatchewan Potash Corp Update 2

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In the previous post, I was calling for 4 sequential price moves in advance of them occurring. They are as follows-

1) Rally from 119.46 to 126.67

2) Decline from 126.67 to 108.68

3)A failed rally from 108.68 which would would test the 126.67 highs.

4)A decline from the failed rally high resulting in large price decline ending at $84.81

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Here are the results-

1)Rally from 119.46 occurred with actual mid-week high coming in at 130. However price failed to sustain at this height and closed the week of 11/29/09 at 123.98. The following week of 12/06/09 Potash gapped higher for the Monday open at 126.5. The stock rallied and put in a weekly high again at 130 but closed the week out at 125.49. The weekly opening and closing prices highlighted the importance and relevance of the calculated resistance target of 126.67. This cleared the way for the second move (lower) to occur.

2)Decline from 126.67 occurred with actual low coming in at 112. My target of 108.68 which was a 61.8% retracement value was never met. Price failed to break below the 50% retracement value located at $112.04

3) Rally from the 112 low (inflection target now moved up to 112.04) occurred with price rallying all the way back up to 130.68. It was noted that this move higher would be a failed rally and would be retraced with subsequent selling pressure. Price has steadily declined since the 130.68 high has been put in place and currently resides at 115.30. Only time will tell if the 4th forecast will come true with price traveling all the way down to $84.76 by February 9th 2010. The time forecast may not be accurate anymore as it is calling for a 26.5% move lower in the next 12 trading days.

AAV Oil and Gas (TSX) Update 2

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Since my previous AAV post, price has increased as much as 20.94% but is currently up only 10.2%. Strength in the U.S. Dollar has caused commodity related equities to give back some gains. Some energy related names will temporarily shrug off broad market weakness and it appears that AAV could be one of those name. If price can remain above the previous swing low of $6.80, the first minimum upside target (derived from RSI) is $7.78. The Fibonacci targets in extension of $7.78 remain active targets if resistance is not met at $7.78

A move below $6.80 would result in additional selling pressure carrying the equity down to at least $6.46

EUR/GBP Update 2

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Sentiment Analysis on Current Market Conditions

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Time Magazine is the cover we will review. On the December 2009 cover, the Federal Reserve Chairman, Ben Bernanke is named “Person of the Year”. He is credited with saving the U.S. economy through buying “toxic assets” from the troubled U.S. banks and implementing a massive Wall Street financial bailout. His picture (on the cover) is placed in front of what appears to be a dollar bill, a spot reserved for American Presidents. This clearly marks an extreme in societal sentiment and hints at the possibility of a short term market peak (the cover is not included in this posting due to the possibility of copyright infringement).

The AAII survey for the week of Jan 8th, 2010 shows the bulls decreased from 49% to 41% and the bears increased slightly from 23% to 26%. What is most interesting last week from the AAII survey is not the sentiment data but the shift in asset allocation. Amazingly, the average AAII investor increased their exposure to the stock market by +15% points to 64%. That is the highest level since, October 2007. The rest is equally divided between cash and bonds.

The chart included in this posting shows a weekly chart of the Dow Jones Industrial Average. I have indicated on the chart were the index value was during the previous and current Asset Allocation Extremes. It is truly remarkable to see that the asset allocation extreme in October 2007 occurred right at the market peak. When the buyers are "all in" who is left to push prices higher? Naturally institutions and hedge funds will still continue to push some equities higher but they will be selective in their choosing. This leaves the inexperienced stock picker at a real disadvantage. This asset allocation extreme indicates the possibility of a major market top.