WELLINGTON: Over the last 40 years wheat futures have maintained a fixed recurring pattern of 11 months of rising prices every 4 years. There have been 7 such periods, each of them successful for an average rise of 25%. The next 11 month period begins this week and ends the second week of January 2018.
The discoverer of the pattern, and others like it across commodity, currency and equity markets, is New Zealand company Kenton-Dau LLC.
The company claims that all markets behave as electrical systems and that this gives rise to regular periods of rising and falling prices. In 2014 the company tested its findings in collaborating with investors from Australia and New Zealand, including ACC, New Zealand’s largest institutional investor. It now provides its forecasts to proprietary trading firms.
“All markets share the same electrical structure,” says Branton Kenton-Dau, the company’s Principal, “yet each market expresses that structure uniquely. This gives a market its own individual characteristics which traders of those markets know intuitively.”
The regularity of the periods is a strong indication that price movements in markets like wheat are more than random walks. The discovery, claims the company, provides a new source of market intelligence that can lead to better investment decisions. At the same time Kenton-Dau warns that in a market as volatile as wheat there can be significant price excursion within the trade.
There are two further features of a market’s electrical structure that concern wheat traders says Kenton-Dau. The first is that the rising 11 month period in wheat prices is balanced by a corresponding 11 month fall in prices.
The second is that as an electrical system wheat prices are influenced by changes in the Earth’s own electro-magnetic field. In practical terms this means that wheat prices fall when the Earth’s electro-magnetic field is also falling. Since 1982 there have been 5 such periods, all successful for an average fall of 21%.
