CRB INDEX: Our stated objective on this decline is 235, although a drop to 230 is a reasonable possibility. Whatever the price, December is the seventh month of decline and that means the low for the month should come early. That lower figure represents a major fifty-percent level on the yearly chart, so this combination of time and price will surely generate a sustained advance in the months ahead.

CORN: The big picture can be tough to hold in your mind's eye when wrestling with day-to-day decisions, so it is good to stand back once in a while to refresh the image. Hopefully, that is what we accomplish here every four weeks. As we left it at the end of October, CA was finding understandable problems with resistance at 2.95 and a twenty-cent dip was expected to resolve that obstacle. As we go to press the March contract is 23 cents off of the top and the daily chart is trying to form a bottom. Essentially, we still have the format of a dynamic upward trend that can be expected to churn out another new rally high. A bearish attitude is not warranted until corn does something illegal, such as close below the last reaction low. In this case, that means CH is only doing corrective motions unless and until it falls below 2.64. A highly unlikely occurrence since the important fifty-percent support stands in the way at 2.70. Having satisfied a minimal correction of 20 cents, the advance could renew at any time, but it would be great if it dawdled a bit longer until we have the benefit of seven down weekly timing in the week ending 12/12/97. Somewhere between now and then; between here and 2.70, lies a major buying opportunity in front of a rush toward 3.20

OATS: Oats came down quite a bit more than expected, but downside potential from here is minimal The March contract is within hailing distance of the contract low at 1.48 and as it happens, that also approximates the extreme low posted on the nearby chart last December. The weekly cycle is the same as listed for corn.

SOYBEANS: January soybeans came within seven cents of our projected target at 7.55 and has been in a corrective posture for a little over a week now. In the last issue, I pointed out that the next downward adjustment would likely be in the realm of 75 cents. Subtracting from the current high, that yields a potential target support at 6.73. Half-way back to the September low offers a floor at 6.85, which is very near to the last reaction low of 6.87. If this correction is exactly the same size as SF experienced last August (61 cents), the bottom will come at 6.87. As luck would have it, the rising ten-week moving average splits the difference with a current reading of 6.86. If the last week of November slips a little farther, it will create a bullish three-down weekly cycle right at the beginning of December. If I could write the script, the ideal buying situation will present itself in the opening days of December, somewhere between 6.95 and 6.85. Unusual as it may seem at these higher prices, if the last day of November finds SF closing below 7.00 it will generate a bullish seven-down monthly cycle for December on the nearby chart. A return to the 7.55 level is a minimum expectation and the fate of the larger bull trend gets told at that juncture. It won't get through immediately, but if eventually there is a credible penetration of that major half-way point, the path will be clear to complete the journey up to 9.00.

December soybean meal easily held above projected support at 218 at the end of October and launched the predicted run to 247. The peak actually occurred at 246.20 and has now slipped into a corrective mode. Proportional support, an old low, and the ten-week moving average all converge to give centralized support around 220 in the January contract. Keep watching for a reason to buy.

We had two targets for December bean oil to reach during the first part of November. The first, at 26.00 was surpassed after a brief tussle and BOZ never made it to the second number at 27.50. It simply ran out of time because three-up monthly timing began to weigh in as we drifted into the second half of the month. The correction has come on cue and a simple fifty-percent adjustment will allow BOH to fall back to 27.65. Pushing above 26.00 was a watershed moment because that was the last rally top prior to the final low. That represents an honest indication of positive change on the monthly chart! A month-end settlement above 26.00 will be a very bullish development.

WHEAT: Negative monthly timing did its dastardly deed during November and December wheat is now hovering just above the July bottom at 3.35. It is always wise to expect a bounce from a double-bottom formation, although in this case I'm not sure we want to be overly optimistic. Seasonal pressures are neutral to negative in this period and there are no monthly cycles to enhance rally potential. Using the October rally as a template, WZ could recover up to thirty cents without turning the larger trend bullish. As it happens, that would also approximate a fifty- percent retracement of this last decline. Plan for a bounce, but keep you stop-loss orders running close behind.

LIVE CATTLE: Most of November was spent doing a slow sideways shuffle although that pattern appears to have expired today. February cattle surged ahead with the highest close of this month and for that matter, most of October as well. This is an honest breakout and will sponsor a minimum advance to the fifty-percent line at 70.82. Initial contact with that higher figure should produce a dip of 120 point, or so. After that, we'll have to see what it looks like. If the correction is mild and they come back with a weekly settlement above 71.00, plan for an extended move up to 74.00. Either way, December is a swing month.

January feeders have been consistently leading the way to higher prices so they are nearly up to their fifty-percent problem at 81.12. The action here will give us a good preview of what to expect for live cattle when they encounter comparable resistance at 70.82. As long as the ensuing correction stays above the last reaction low at 79.00, the upward trend stays in a dynamic mode and the expectation will be for new rally highs. Here too, December is a swing month.

LEAN HOGS: Except for the dramatic reversal day on 11/12/97, the action has been rather subdued over the past month. Our expectation was for a sizable recovery to launch in November and for hogs to remain buoyant for the balance of the year. From that point of view, this sideways behavior denotes a lack of performance and a warning that the market needs more time to get organized. It is an indecisive moment, but I prefer not to consider bearish alternative unless and until LHG pushes a solid close below long-term support at 60.00. A strong close above 63.00 will entice momentum buyers into action and help to propel the advance to the fifty-percent level at 66.10. I want to be cautiously friendly and ready to pounce on minor buy signals as they are generated on the daily chart.

The October rally effort for February pork bellies was sub-par and now we find the market struggling to hold above the last bottom at 58.55. In the best of circumstances, bellies are only mildly enigmatic and one can never be confident about what comes next. However, I feel the largest risk is to over-play a bearish attitude here. There is yearly-trend line support at 57.00 and a Fibonacci (62%) proportion at 55.00. If it drops to new contract lows, I think we could see a dramatic and positive reversal from one of those places.

STOCK MARKET: Falling below 900 meant that the cash S&P had a new target of 848. The bottom came the very next day (on “turn around Tuesday”) a little shy of that at 855. Three years ago a seven-point miss would have seemed like three football fields away; and now it is only five percent of the total move down and feels like a finger-tip miss. Increased volatility means that if you are accustomed to being a three-day thinker, you must gear up and shorten that thought process to three hours, or less. Watch the intra-day action if you think that is an exaggeration. Of course, one could also take the opposite approach and totally disconnect from this frantic pace and opt for an annual review.

Out of deference to this astounding bullish trend, I have to recognize one amazing feat in this latest skirmish with opposing forces. When the trap door opened at 900, the market dropped 45 points in a matter of hours and then came back with equal vigor. The S&P 500 index had one daily close below 900 and never even came near to placing a weekly settlement below that benchmark. Exaggerated movement aside, the market clearly rejected those lower prices. It is now trading past the half-way point and above the ten-week moving average. Simply stated the door is open for new highs. Seasonal tendencies are friendly in the period just ahead, so unless the market does something it is not supposed to do we have to assume the bull trend will continue. With that in mind, keep an eye on how the market responds to the bearish influence of seven down “but” weekly timing in the final week of November. If it stays above 940, no harm done. Anyway, it has to push a weekly close under 900 to inflict a mortal wound.

The biggest reservation to a bullish attitude is still the DJIA. It is much weaker by comparison and that is true whether it is rising, or falling. December is a swing month, so our next big timing clue will come in January as we watch the Green Bay Packers rumble into the next Super Bowl. As I read it here, the point of no return for a bullish attitude is a close back under 7400. Go there, and just about any nasty thing you can imagine is possible.

On the face of it, the Transportation index suffered a humongous monthly reversal in October and those things are tough to come back from. So far, November represents an inside month and while that is not hard to accomplish after the enormous range of activity in October, it is still a negative omen. In this case, I don't see anything more aggressive that a test of the recent high.

In general terms, the Utility index performed better than expected during November, although it is still wrestling with the multi-year double top at 256. Based on daily action, I see nothing that even hints of a top, so the index is facing a moment of truth with a full head of steam. The other thing to keep in mind is that unless something truly bizarre happens in December, every index here is about to close higher at the end of third and/or seventh year of advance. Qualify this any way you want, but by the number this is more bullish than anyone had a right to expect and it argues for more in the same direction.

TREASURY BONDS: December bonds have been afflicted with a heavy dose of screwy behavior since early October. Every time it surged above 118, BDZ would retreat like it really didn't want to be up there. On the other hand, it never dropped far enough to turn the trend down so the behavior was somewhat schizophrenic. The important point to take from all that is that the trend never turned down. The last reaction low is 117-05 and there is no point in considering bearish potential until there is a hard close below that level. The comparable number for March bonds at 116-28. If the March contract finishes November above 118-06 it will have rebuffed negative monthly cycles and that means another two months of upward bias. As previously expressed, the presumed target is the old top at 122. Keep in mind this will be the third trip to that level and the third time seldom makes it through. This next probe of major resistance is likely to produce a down draft of five to seven points.

GOLD: Nearby gold is trying to organize a recovery from the psychological support at $300. At best, it will allow a few weeks of recovery to the old support at $320. December is a swing month so if it brings a rally, we will be looking for a short sale in the opening days of the new year. Barring a close above $320, I see no reason for optimism.

SILVER: Three-up monthly timing in October brought the expected correction and although it slipped a little past prime support at 4.78, the ensuing advance has vigorously renewed the upward trend. The last barrier to a long- term bullish statement of future intention lies near at 5.53. A month-end close above that number will shift the emphasis to a positive forecast an immediate goal of 6.00.

COPPER: Nearby copper is now on a double bottom with the extreme low of 1996 and that makes it ripe for a short covering bounce. Unfortunately, December is the sixth month of decline, so if the rally happens now, it will create a bearish seven-down “but” monthly cycle for January. This is definitely a place to avoid short positions, but it is a bit risky to turn that around and endorse ownership. From a trading standpoint, the next daily buy signal could easily generate a 700-point recovery.

ENERGY: Nearby crude oil skimmed along the top of the upward sloping ten-week moving average for about five weeks and then sliced decisively through this past Monday. Remember, this market is already coming down from major, proportional resistance at 22.75, so this action confirms that the primary trend is down. There is generalized support just below 19.00 and then not until 17.00. In any case, December is a swing month.

As we outlined in the last issue, heating oil appears to be headed for a perilous fourth assault on the old support at 50.00. The January contract will find interim support around 55.00, but the rally from there should be limited to 300 points, or less.

Natural gas peaked exactly on schedule in the final week of October and had no problem in reaching the downside target of 294. In fact, it only stopped there for a couple of days before collapsing to new lows at the end of the week of decline. The trend is bearish, the next rally is not likely to last more than two weeks and the January contract will run into a brick wall at 320 if it gets that far.

SWISS FRANC: The explosive rise at the end of October placed the highest month-end close of 1997. Since this was also above the last rally top prior to the final low, it also represents an honest breakout. As I read it, that legitimizes a new objective of 77.50 which represents a fifty- percent recovery to the 1995 extreme high. In general terms, downward correction of 200 to 300 points will offer the safest buying opportunities.

JAPANESE YEN: Numerous attempts to get JYZ installed into a credible rally phase above 84.00 were all thwarted over the past two months. They finally gave up the ghost early in November and dropped below previous support at 82.00. Now that brings us down to a larger double bottom at 79.00 and that should stimulate a knee-jerk bounce of approximately 300 points. I still think a strong close above 84.00 is required to justify a bullish forecast. Meanwhile, the trend is down and there is no practical support below 79.00.

U.S. DOLLAR: The small implosion at the end of October had the hidden benefit of creating a bullish three-down monthly cycle for November. The expected recovery is underway, although it is still being contained by the declining ten-week moving average. We can't be sure the upward trend is fully in charge until there is a solid close above 98.00.

SUGAR: Weekly and monthly charts are constructive and the current set back is resting on top of the ten-week moving average, so it is poised to start back up. If the last day of October finishes below 12.39, it will create a bullish three-up “but” monthly cycle for March sugar during the month of December. Once it starts back up, buying momentum should carry to the 15.00 area. Stay friendly.

COTTON: This market continues to struggle. As each new contract takes its position as the front month, it tends to sink to the bottom of the multi-month congestion around 68.00 and now the March contract will have its turn. For the most part, every rally this year has been 300 points, or less and there is no reason for optimism until we see an effort larger than average. A significant month-end close above 76.00 is required to generate a major buy signal.

COCOA: The trench got a little deeper over the past few weeks and cocoa is about to close lower at the end of the third month of decline. I don't think there is a lot of downside risk, but the correction is probably going to extend in time. Double bottoms are always worth considering when you are on the hunt to buy. March cocoa has such a pattern to peruse at 1528. Be willing to give it a little more room than that because a major fifty- percent support lies at 1470 on the nearby chart. Our next buying opportunity should occur around one of those prices.

November 26, 1997Fourth Time, Inc.

P.O. Box 17468, Milwaukee, Wisconsin

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