Interesting Elliott Wave Count in Feeder Cattle

Jan 9, 2009: 12:22 PM CST

I know – who trades Feeder Cattle?  While browsing various commodities, I came across what appeared to be a rather ideal example of the Elliott Wave principle playing out in @FC Feeder Cattle futures contracts and I wanted to show you the pattern – if you want, you can pretend it’s a stock or index that is setting up this pattern.

Feeder Cattle Daily Futures Contract:

You can click for a larger image.  And I also want to note that the circled “1” and “2” may also be interpreted as Corrective Waves “A” and “B” respectively of a larger Zig-Zag pattern that either has completed or has one more leg left to complete, depending on your analysis.

More than try to forecast cattle prices, the point of this post is to show you my interpretation of a textbook Elliott Pattern that has internally valid fractal wave counts.

In other words, notice how the Wave 1 structure has subdivided into 5 waves of its own, and within each of those fractal waves, we see the corresponding 5 or 3 wave pattern described by the Elliott texts that has occurred since last year – it’s an interesting and informative way in my opinion to bring the Elliott Principle to life through current examples.

The Second Wave also subdivided into its expected “ABC” Waves, which also subdivided as expected (though I divided the final C wave of 2 into a triangle).

We’ve launched now into the 3rd wave which is subdividing, but the only concern is that the 4th wave traveled into the price territory of the 1st wave, so we could have a complex correction setting up currently – but again that is not the point of this article.

Stepping outside the Elliott world for a moment – notice the whole structure shown on the chart is a massive “Measured Move” or Bear Flag.

The Elliott Wave Principle states that waves subdivide into the lower degree and those fractal waves also have internally valid (complete) Elliott Wave patterns – I believe the recent action in Cattle Futures – as esoteric as they may be – are showing a clean Elliott Wave Pattern example and I thought that was rather interesting.

Corey Rosenbloom
Afraid to Trade.com

8 Comments

8 Responses to “Interesting Elliott Wave Count in Feeder Cattle”

  1. Gawed Says:

    interesting as you say :).
    i’m always afraid of Elliot, haven’t been able to read seriously about it yet but I find it so subjective it scares me a bit… lol i guess this is the best site to say that!

  2. Corey Rosenbloom Says:

    Gawed,

    No need to fear Elliott! It’s actually fascinating to me. I still have a lot to learn specifically with the corrective waves, but it’s amazing how so many of today’s markets conform almost exactly to the “Wave Principle” presented/discovered by Elliott many decades ago.

    In the end, it’s just a tool and is not the holy grail – it’s like any indicator – it gives you clues but never certainties.

  3. Scott Says:

    I think this post will make your top ten for 2009. The title alone qualifies it if you ask me.

  4. Trader Mom Says:

    I am certainly learning a lot of new stuff here about futures. I only traded E-Mini. It was not very successful. LOL. I went back to trade stocks. But One day I will come back to trade futures again. Very good informative site.

  5. Corey Rosenbloom Says:

    Scott,

    haha How in the world do you make Feeder Cattle interesting? My solution? Elliott Wave!!

    Actually I was astonished at how nicely the 2008 price action conformed to text-book Elliott patterns/fractals.

    As to who actually combines Elliott Wave and Feeder Cattle… I am the uber-nerd.

  6. Corey Rosenbloom Says:

    Trader Mom,

    I sort of took the opposite path – from stocks to ETFs to futures. Mainly I stick with the Dow-Mini and Mini-Gold and have dabbled a bit in Crude Oil but that’s about it. I love futures because of the leveraging, tax treatment, liquidity, and position management (knowing exactly how much money is made or lost per tick).

    Futures are fun but I’d recommend having good experiences in stocks before going into futures – though futures – to me at least – is so much more fun.

  7. standard-and-poor Says:

    Can you post more elliot examples on currencies?

  8. Corey Rosenbloom Says:

    S&P,

    Per your request, I’m posting on the GBPUSD this morning. Thanks for the inspiration!