Since 1972

Vol 2008 Issue 42

III
I ADVISED YOU
THAT THE
Jake Bernstein’s
COMMODITY AND Weekly Commodity Trading Letter
STOCK MARKETS A Comprehensive Guide to Trends, Timing, Cycles and Seasonals in Futures
WERE LIKELY
VERY CLOSE TO
THE START OF For the Week Beginning 3 November 2008
HUGE RECOVERY
RALLIES THAT What they Say about Monkeys

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COULD Hopefully, what I am about to write won’t offend anyone. If it does then I apologize in advance. I
EVENTUALLY am now at the age (over 60) and time in my life that brings with it the privilege of brutal honesty
BECOME as well as the attitude that if anyone doesn’t like what I say they can certainly disagree with me or
INTERMEDIATE OR go elsewhere. I do not intend what I just said to be either disrespectful or flippant. Some sub-
LONG TERM jects are sensitive – they often question the very essence or purpose of life or, as in this case, the
INVESTMENTS substance of our goal as traders. So please consider this topic to be serious in spite of its tragic
humor.
My Intermediate and
Long Term Investing
The Sad State of the Average Trader
Webinar on Saturday
18 October was at-
A few years ago a friend and I were discussing the sad state of the trader. More specifically, we
tended by serious
traders from all over
were talking about the fact that in spite of all the magnificent advances in trading software, low
the world. At that We- commissions, computer hardware and electronic order execution, the average trader was still a

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binar I picked the
EXACT DAY that the
huge recovery rally
started! Now you can
hear every word and
see every slide I
showed and every
net loser in the markets. As an individual who had never traded she wondered why the lot of the
average trader had not improved substantially given all the advances of the last decade. In fact
she felt that most traders should be making money rather than losing money. She asked me to
draw on my many years of experience in order to give her a cogent answer to this apparent
anomaly.

It didn’t take much time or thought to give her an answer. I pointed out that most traders lose
money for reasons not directly related to their trading system or method but rather to a lack of
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method I taught. Order
the 5 hour Media File discipline, emotional responses to market behavior, lack of organization, informational overload
and learn my best and lack of confidence. I also added that although I (and many other market analysts and educa-
methods! tors) had been “preaching” the importance of discipline for many years, the vast majority of trad-
ers either had no interest in learning discipline or they simply did not believe that it was important.
For additional infor- I remarked that it was utterly amazing to me that traders did not want to fix the weakest link in the
mation see the en- chain.
closed announce-
ment or to order call The Unexpected Reaction
800-678-5253 or
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831-430-0600
My friend briefly pondered the response I had given her. She remarked that she was not at all
surprised by the fact that many traders had little or no interest in improving their discipline in spite
of the fact that they knew in their heart of hearts that this was their real problem. Then she said:
“Do you want to know why traders aren’t interested in fixing problems with their self confidence
and self discipline”?
I took the bait: “Yes, please tell me why”
She replied: “You know what they say about monkeys, don’t you”?
“No, please do tell me” I answered
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“It’s really very simple, no monkey likes to look at his own butt” she said with a big smile.
She was absolutely right. The simple fact of the matter is that facing up to our own limitations as
traders or in our personal lives is the most difficult thing to do. Have you ever looked at a monkey
butt? It’s not the prettiest thing in the world. In fact it’s downright hard to look at. And so it is with
traders as well. They are loath to look at their problems. They are loath to look at the stuff that
has been limiting their profits even though they know that they could be doing better.
(Continued on page 7).

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA. 95066 USA
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 Jake Bernstein’s Weekly Commodity Trading Letter Page 2 of 8
COWS (Corn, Oats, Wheat and Soybeans)
The grain and soybean complex markets fell sharply from recent tops. I warned you that the record-breaking rallies would end and that
the bubble would burst. It did. The declines came and they are still with us but we are in the ideal time frame for seasonal lows in the
soybean complex and corn. As of the end of last week there are some initial lows and some buy signals. I believe that the grain and
soybean markets have the potential to snap back quickly to long term and or intermediate term resistance levels. I hasten to add, how-
ever, trading these markets is not a “cake walk”. Even the most seasoned and experienced traders are having difficulty and therein rests
my very conservative approach to recommendations. See charts below.
Soybean Complex: All soybean complex indicators turned bearish well ahead of the current steep declines. I advised you of the
bearish trends and potentially large corrections before they started. The corrections have come and some short-term buy triggers have

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developed. The seasonals were ideally BEARISH until late October which meant that we were getting close to lows. Support levels
have been tested. The momentum charts below show my evaluation of current signals. Soybeans have given a high-risk trigger to go
long. I emphasize the “high risk” aspect of my last statement. ALL MARKETS grain and soy complex markets are high risk!
Corn: Prior to the current declines I pointed out that my COT analysis had turned bearish. Seasonal lows are now due. There is bull-
ish momentum divergence. The hotline will give you specific short-term recommendation to buy at or near weekly support. I believe that
corn prices now have the potential to make a very large recovery, perhaps as high as intermediate term resistance areas. The hotline
WILL recommend longs on the next buy signals. There are no buy signals as yet on my work. See below for short-term charts.
Wheat: I advised you “the short term trend may bottom within days, while weekly trend remains bearish”. We saw signs of that bullish
life last week in the form of a huge recovery. There are short-term buy signals. I add that, as in all the grain and soy complex markets,
the swings will continue to be large and wild. A small stop loss in such an environment will only work against you.
Oats: The market remains short term bearish. The intermediate-term uptrend remains bullish. The decline has taken prices down to
important support. There are no long-term sell signals on my indicators. There are no short-term buy signals.
IMPORTANT REMINDER: ALL RECOMMENDATONS GIVEN VIA THE HOTLINE WILL REQUIRE LARGE STOP LOSSES DUE TO
ONGOING MARKET VOLATILITY. THERE HAS NEVER BEEN A TIME AS VOLATILE AS THIS – YOU WILL LOSE MONEY IF YOU
USE SMALL STOPS. IF YOU CAN’T AFFORD THE POTENTIAL RISK THEN DON’T TRADE! THE HOTLINE WILL RESUME

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WITH RECOMMENDATIONS AS SOON AS VOLATILITY RETURNS TO A MORE REASONABLE LEVEL. PRESERVE CAPITAL!
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A
S

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA. 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
 Page 3 of 8 Jake Bernstein’s Weekly Commodity Trading Letter
Meats
Cattle and Hogs: WAIT FOR BUY TRIGGERS! My
analysis of the COT Commercials positions in both
markets continues to project a LONG TERM bull
move in both of the meats. I believe that the recent
decline in hogs constitutes a good test of my bullish
expectations. The end of the month marks the start of a
higher probability seasonal long trade in lean hogs. As
we go to press hog prices continue to decline but cattle
have formed a short term low. On a spread basis we

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believe that hogs are undervalued relative to cattle.
We are, however, close to a short term buy signal and,
as note above, a seasonal rally that may eventually de-
velop into a bigger move which is consistent with my
longer term expectations. The next few weeks should
be bullish for hog prices if the seasonals are on course.

Metals
Copper: There are no long-term sell signals as of this writing. Thin volume and erratic price moves make this a difficult market to
trade. Therefore, I will not be giving specific hotline recommendations due to intraday volatility and risk. The trend remains bearish.
Seasonal lows are ideally due in December.
Gold and Silver: I advised you to “Consider gold
shares as well such as HMY. Gold seasonals made

P their move and you should have gotten out of longs.

Short-term trends in both gold and silver exploded
to the upside but the ideal seasonal tendency was
clearly lower and prices then fell sharply.
The panic selling in stocks worldwide combined
with the anticipated financial crises should have
taken gold and even silver to new all time highs.
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But because they DID NOT DO SO, I warned you
that this was clearly bearish for the precious metals.
The markets sold off sharply and, in fact dropped to
long-term support levels. The inability of gold and/or
silver to hold gains in spite of bearish trends in eco-
nomic data is a negative. Silver shows bullish di-
vergence but gold does not. See charts at left.
As long as seasonals still point to lower prices I will
remain bearish. Silver is also not behaving well
despite the negative economic background. The
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odds are that long-term support will hold BUT there

are no buy triggers as yet in either market.
Platinum/Palladium: My long-term forecasts for
platinum and palladium have been bullish and I am
still long term bullish in spite of the recent correc-
tions down which were clearly discussed in this
newsletter well in advance.
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The dramatic corrective declines were long overdue

and are, in my view, a positive development in the
long-term picture. Platinum has not participated
meaningfully in the precious metals rally and has
reacted to major long-term support levels that are
critically important holding levels. Given the low
price levels I recommend looking for short term
buys signals which have not, as of this time devel-
oped.

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
 Jake Bernstein’s Weekly Commodity Trading Letter Page 4 of 8
Currencies
Aussie $: I advised you well ahead of the fact
that a MAJOR decline was coming. The decline has
been nothing short of amazing and it has left the
bull’s heads spinning! The market has literally
crashed against the US dollar. The last short term
bear market rally did not change my expectations. It
is not unreasonable to expect a short term low but
there are no buy triggers as of this writing. A
brief seasonal rally developed as expected but

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the major trend remains bearish.
Eurocurrency/Swiss Franc: There were per-
sistent and significant warnings (and persistent
ones at that) on my work of a major low in the US
dollar vs. the Swiss and the Euro. I warned you
about them repeatedly and without equivocating.
The forecast was correct. My cyclical patterns sug-
gested that long tops were developing and this is
still the case. There is no change in my long-term
bearish expectation. The dollar has surged as ex-
pected. I remain bullish on the dollar, however, a
short-term top in the dollar was expected and it
has developed.
Japanese Yen: I have been bullish for many

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months and I REMAIN BULLISH. The long-term
bull market continues as predicted. The Yen has
exploded against many currencies as predicted.
Buy on declines to weekly support. I will likely give
you a buy recommendation via the hotline as soon
as there is another buy trigger. I have been and I
remain bullish on Yen vs. US Dollar. The market
has confirmed my forecasts dramatically.
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US Dollar: The dollar gave me clear technical
evidence that was expected to mark the begin-
ning of the end to this bear market. A short-term
top is being made but there are no clear cut sell
triggers as of this writing. The secular (i.e. long
term) bear market as well as the persistent and
extreme level of bearish sentiment gave me strong
technical and behavioral reasons to persist in my
bullish (and contrarian) point of view. The dollar is
now at long-term resistance which is why there has
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been some hesitation.

Canadian$: I have good technical and cyclical
reasons to conclude that an important top has been
made in the Canadian dollar vs. the US dollar. Di-
vergence gave clear warnings of a top or, at the
minimum, a considerable downside correction. The
trend remains bearish.
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BrPound: The market has likely made an ap-

proximate 8.1-year cycle top as predicted. I am still
bearish consistent with the long-term cycle projec-
tion. The market validated by bearish stance but the
bear market is not over yet in spite of the fact that a
short-term rally developed. The market is likely to
establish a short term low but this low should only
be a small recovery in the longer term bear market
that could bottom as early as the end of 2008 or as
late as mid 2009.

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA. 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
Page 5 of 8 Jake Bernstein’s Weekly Commodity Trading Letter
Tropicals
.
Orange Juice:. There are NO buy triggers as of
this writing. Prices continued to fall sharply in sympa-
thy with ongoing and persistent declines in many
other markets. I continue to wait for buy triggers that
could come at any time. My cyclical work suggests
that lows are well overdue. The severe decline in
stocks has brought OJ levels down to bargain base-
ment levels and we can now begin to look for diver-
gence buy triggers. WAIT FOR TRIGGERS!

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Sugar: My analysis of the long-term sugar data sug-
gested that the major cycle, which has averaged ap-
proximately 7 years, low to low turned bullish. Short
term buy signals developed and the price surge has
been excellent. I recommended waiting to buy on a
decline to short term (daily) support. The market is likely
to bottom near or at long-term support in sympathy with
the overall crash in commodities. A short-term buy sig-
nal has been triggered.
Coffee: My long-term cycles continue to tell me that
coffee prices are overdue for a major rally that could
take prices much higher over the next few months.
Coffee is in a major bull market still in its early stages
and it has recently tested short-term support. Coffee

P is a very volatile market that requires consider-

able risk. Large stops that must be used or you will
be stopped out quickly and often. A short-term sea-
sonal bull trend is likely to begin very soon.
Cocoa: My forecast has been bullish and it remains
so. My forecast has been correct. The major bull mar-
ket that I predicted many months ago remains intact.
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Prices surged sharply higher as predicted many
weeks ago, however, a test of support is now
developing, ALSO AS EXPECTED. The long-term
trend remains bullish but the short term and seasonal
trends are bearish (see chart at left).

Fibers
Cotton: My previous comments were as follows “In
spite of the recent strength in sympathy with the grain
and soybean complex the technical picture is still
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NOT convincingly positive. I remain neutral to short

term bearish. A short term low is developing but there
are no buy triggers as yet.
Lumber: Based on my analysis of the cycles, trend,
timing and COT data, I advised you that lumber is
positioned what could very well be the first stages of a
record-breaking price rally.
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I believe that a long-term bull market is imminent.

No matter what I say it is utterly imperative to
WAIT FOR A TRIGGER! That trigger may have been
made on a daily basis. See chart at left. The market
has made new lows for the move but the cycles and
my COT studies continue to give advance indications
of a major low in the offing. There are indications that
a short term low is developing. Prices have made new
lows and small trader sentiment remains chronically
low.

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
Jake Bernstein’s Weekly Commodity Trading Letter Page 6 of 8
Interest Rates
I believe that the next major move in US interest rates
will be to the upside. My forecast is based on the 50-
60 year long term cycle which now points higher. The
current Federal Reserve policy is to keep rates low as
part of the economic bailout. Ultimately this policy will
cause a backlash in which rates will rise throughout
the world. My analysis and forecasts have been and
remain bearish for US interest rate futures. I also

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advised you that the dollar would decline to test sup-
port. The financial rescue plan will likely result in huge
interest rate increases. SEE CHART AT RIGHT.

Stocks
Based on my cycles work, I told you that the odds
favored a significant low in the US stock market by
the end of 2008. I was clear and specific in my advice
to go long on the close of trading 27 October. I
showed you the history of this seasonal back to 1901!
S&P futures have rallied over $30,000 in value since
that date. Stock market lows are likely in late October
based on seasonals that have been correct over a

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large percentage of the time. The panic selling and
massive volatility that infected stock markets all over
the world were expected into what I believe will be the
best investment opportunities in the last 20 years.
While opportunities will be fantastic, you must wait for
timing triggers or you must be willing to dollar cost
average into quality stocks over the next few months.
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So far the rallies have been encouraging but we must
wait for weekly buy triggers in order to be more cer-
tain. A daily buy trigger has developed.

Energies
The energy futures markets collapsed following a
period of excessive bullish sentiment and runaway
bull move. Efforts by OPEC to prop up prices by low-
ering production will likely have only a minimal and
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limited effect, as has been the case in the past. The

simple fact is that by continuing their stranglehold on
the markets for so many years OEC has short itself in
the foot.

As we go to press the markets are still attempting to

bottom. I believe that lows are likely very soon. The
natural gas market has more upside potential on an
intermediate and long-term basis. Given the length
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and severity of the decline in all energies the odds of

a major recovery rally are significant. I do not believe
that these bull markets are over as yet and I suspect
that a rally back to the $90 level is very likely.
I recommend watching daily momentum divergence
for triggers that could come within the next few days.
WAIT FOR TIMING triggers to go long. The develop-
ing short term lows are also likely to lift energy stocks
for what could be recovery rallies.

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA. 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
 Page 7 of 8 Jake Bernstein’s Weekly Commodity Trading Letter
Monkey….(Cont’d from page 1)

The Problem

There have been many attempts to help traders overcome the basic limitations that stand in their way. Some believe that
a good trading system will somehow automatically resolve trading issues. The fact is that even the best of trading sys-
tems or methods in the hands of a trader with poor discipline is a waste of time and money. The fact is that a marginally
effective trading system can perform well under the guidance and implementation of a disciplined trader. But there is a far
greater issue than that. The simple fact of the matter, as my friend so eloquently stated is that traders are not willing to

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examine and resolve their weak side because it’s not pretty. In fact, most of the time it’s terribly ugly. To examine your
weaknesses can cause remorse, anger and frustration. And although this is the first part of the trip and although things
get much better after we have confessed our shortcomings the fact remains that the first step is the most difficult.

An Example

As many of you know, I have been presenting trading Webinars for a few years. Because my Webinars give real value
and solid information, they are always well attended. I recently announced another Webinar for next week (8 November)
at which I plan to discuss the psychology and behavioral aspect of trading. The purpose is to show traders how they can
overcome the behavioral limitations and improve their results by gaining confidence which, in turn, promotes discipline.
Although this is one of the most important Webinars I have ever given, it currently has the smallest number of sign ups. In
fact, registrations are about 80% less than normal. Why? The answer is the same, No money likes to look at his own
butt!

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The Solution

I have been in the markets in many different aspects for over 40 years. I have seen so many different types of markets
and so many types of traders. I have seen traders make every mistake in the book. I have made almost every mistake in
the book. I even invented a few until I finally learned the right way. I still make some mistakes but they are always fewer
and not as egregious. I have seen people who have great trading methods and fantastic skill as analysts lose money be-
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cause they have a weak behavioral side. The answer is simple: bite the bullet, do it now, don’t be afraid to look at your
butt and make the change.

A Bold And Brave Forecast

The financial world is in turmoil. Markets all over the world are collapsing before our very eyes. Some companies, once
held in high esteem are turning into dust virtually overnight. Dire predictions abound. Some say the worst is yet to come.
Some claim that world economies are heading into a severe depression that will take many years to resolve. I remind you
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of several very important facts that you must keep uppermost in mind at this time.

1) As subscribers you should have been prepared for the commodity price collapse, for the bubble in energies and
for the decline in real estate and the ensuing domino effect throughout all sectors of the financial markets
2) Look at the long term cycles which are now NEGATING the dire forecasts and REMEMBER that these are the
same cycles I talked about when the tops were being made. They were correct at the tops and they will likely be
correct at the bottoms.
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3) REMEMBER that many of those who are now forecasting the “end of the world” are the same people who pre-
dicted the “Goldilocks economy” and continued growth when the markets were topping. They were dead wrong at
the top and they will be dead wrong at the bottom
4) So here is my general, brave and bold forecast. I believe, based on the cycles, the data, the indicators and the
psychology of the markets that a fast and furious recovery is coming sooner, bigger and more amazingly than vir-
tually any so called expert or economist is either able to or willing to say. I believe that we have been fooled into
believing that economies have been seriously damaged. DO NOT UNDERESTIMATE the ability of record world
demand for food and industrial commodities as well as energy to drive a recovery the likes of which we have
never seen before. Hopefully you will have read this here FIRST and you will remember my words!

© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900
Jake Bernstein’s Weekly Commodity Trading Letter Page 8 of 8
Long Term Support being Tested – How to Use it for Trading

Many commodity markets are now testing long-term support. These tests are critically important in determining the direction of the
next major moves. Here is the procedure I recommend for using support effectively. Shown at the bottom of the page are the cur-
rent long-term support level charts for crude oil and gold.
• Long-term support is a setup. It is NOT a call to action. It is, rather, a preliminary indication that the odds favor a rally. But
odds are only odds until they are validated by a TRIGGER. Therefore we do not buy at support (or sell at resistance) in
the absence of a specific timing trigger or triggers.

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• I use the MAC for determining support and resistance. The MAC is a method I developed over 25 years ago. It consists
of 2 simple moving averages; 10 periods of the highs and 8 periods of the lows.
• When a market has been in an uptrend and then reacts to the low of the MAC it tends to find support. But support does
not always hold. If we use a timing trigger once a market has fallen to support then we have better odds of a rally devel-
oping from the support level
• Once support has been hit we begin to watch for daily timing triggers. Those who are familiar with my work know that I
use the following timing triggers, any one of which is acceptable to use after support has been hit: MAC with Williams
AD/MA, MACD and/or Momentum divergence triggers.

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© 2008 Network Press Inc. PO Box 66767 Scotts Valley CA. 95067 USA 800-678-5253 831-430-0600 FAX 831-430-0900