Although he never took an economics course, Princeton psychologist [bold]Daniel Kahneman[/bold] received the Nobel Prize in economic sciences in 2002. Kahneman’s life-long work integrated psychological research and economic science. His work showed economists how people don’t always make reasoned choices. Kahneman calls it “The Quirkiness of Human Judgment”.
[bold]“Sell high and buy low”[/bold] sums this mood partially. No body wants to buy at a market bottom, everybody wants to buy at a top. The quirky human does not reason, is impatient, and herds. We at [bold]Or-phe-us[/bold] are taking Kahneman’s hypothesis further. We say that not only the majority of us behave like dumb sheep (irrationally), our behavior as a group is a fractal. This means that whether we are talking about intra day traders, weekly traders, monthly or yearly investors, as a group our behavior has a form, a form defined by [/bold]Fibonacci[/bold] sequence. And talk about anything, climate, politics, gay marriages or coffee the decisions to vote or not, buy or sell are polarized by a pattern and the Fibonacci sequence.
For example, Coffee is undergoing an accumulation pattern for the last 8 years (a Fibonacci number). And has retraced nearly 61.8% (Fibonacci Golden Ratio) of the previous fall. In the coming months it should find support at the 8 year resistance and push up to a new high above 180 in a five wave impulse form.
We remain SOFT (Coffee, Sugar, Cocoa) BULLS. We initiated our coverage on Coffee on 3 Oct 2006. The SOFT just like SUGAR ended its multi decade SUPECYCLE bear IV wave in Jul 02. The commodity is in a multi year bull market. Currently, the soft seems to be moving in a IV primary circle. And is now churning up the final (E) intermediate wave of the triangle back to sub 100 levels. After this move down the thrust up to 180 should begin. And after it breaks out, the news will arrive, maybe 13 months late (like it did in case of Euro-RON) that Coffee was one of the best performing commodity of 2007. And you know, what will happen then? Everybody will “Buy”. Quirky, isn’t it?