Weekend update - #2

30 YR BONDS
The long bond filled its 10/13 gap, then had downside price action to finish this past week.

Price has again found the lower boundary of the channel. Should the channel give way, price looks destined to test the 117-18 L.

Sure has a Head and Shoulders look to it. If this is the case, then it would target out down around the 114-26 L.

If you look at this market on a wider scale, say since late 2007, it certainly has the appearance of a huge H/S topping pattern. Should this pattern be in play, it suggests much lower price.

Near-term, any trade through the 118-20 L, gives the minimum amount for 5 waves off the 123-25 H.

All prices basis combined contract.

DOLLAR INDEX
Fresh new lows for the bucky this past week - not unexpected.

My interpretation remains the same. Minuette wave (v) of minute [v] of minor 5 of intermediate (C). We inch closer and closer to an important bottom.

Price found support at the 78.6% retracement of the primary [A] leg off the 71.05 L. We are very near the minimum downside objective of 74.79, which is where 5 = 61.8% of 1 - 3.

Notice that RSI supported on its rising trend line, again giving positive divergence. Pay attention to the 50% level (upper trend line) to see whether it can finally break through.

I'm not sure this would signal an end to the downtrend, however, I do believe it would be meaningful.

Bottom line - As mentioned last week, this trend is very mature. It could end at anytime. Any upside price action should be viewed with suspicion, until an impulse has taken place with a channel break.

All prices basis combined contract.

CRUDE OIL
The crude market finished the week with another positive gain.

We finished something at the 81.99 H. I believe it was a minuette wave (v), which would complete a minute degree wave.

I'm entertaining the idea that it just may be a [iii] wave. The retracement will give us a better idea.

The 38.2% retracement level is 77.17, while the 50% sits at 75.68.

The triangle target is 83.99. The continuous contract numbers can change when they put on a new front month, which is why this number is slightly different.

Bottom line - the retracement process does not appear complete to me. Should price trade through the 81.99 H, then it will be obvious that (v) has not finished.

All prices basis continuous contract.

GOLD
The gold market continued its consolidation this past week.

My interpretation of structure has this market tracing a minuette wave (iv) of minute [v] of minor C of intermediate (B). An alternate view is that this is minor 3 of intermediate (3).

I believe structure is winding up for a nice thrust higher.

Drilling down intraday, shows that (iv) appears to be tracing a triangle. In fact, it may be complete, as of Friday's price action.

If so, it measures 28.30, which would give a target of 1078.70. This is right in the area of the B wave triangle target of 1076.80.

Notice the form that wave (ii) took, a sharp zigzag. The guideline of alternation (p. 63-64 Elliott Wave Principle) suggests that we should be looking for a sideways, and perhaps complex corrective for (iv) . Exactly what we got.

It is possible that this structure is not a triangle at all, but some type of combination. The ultimate result should be the same - upside price action.

I put on a moderate line of November 103 GLD calls today when price reacted at the lower boundary line. I will use a GC break of the c leg at 1048 as my stop.

Bottom line - It appears to me that we still have some upside pressure left for price. If I'm right in my assessment of structure, once we conclude our next leg higher, we should see an intermediate degree correction.

All prices basis December contract