Weekend Update - #2

30 YR BONDS
The bond complex had a nice reversal Thursday, leading to a nice upside week.

The 50% retracement level did give way as expected, however, it was short lived. Notice that the channel gave near perfect support.

There are several layers of resistance directly overhead. This includes the 50 sma, the broken base channel, and the small down channel.

One possibility is that structure may be tracing a small triangle here, with the Thursday low of 117-10 being the [b] leg.

If that's the case, this would suggest a zigzag, which means this would likely be an X wave. Any trade through the 120-15 H or 117-10 L would invalidate this view.

Of course, we have to watch for a flat as well.

Bottom line - If a little triangle scenario is play, we are likely range bound in this market for the next couple of weeks.

Price basis combined contract.

CRUDE
The crude market corrective continues. We have now registered 17 trading day's in a sideways market.

Although this chop has been difficult to discern from a pattern standpoint, it has been very tradable with plenty of range.

I show a simple (a)(b)(c) , though it's possible we are tracing a combination.

We have broken free of the 20 sma and appear headed for a meeting with the 50 sma, which is at 74.57 and rising.

This is one way of looking at the intraday structure.

If part of a combination, or (w)(x)(y), then we should be finishing up a sub-minuette c with the completion of an upcoming [5] wave.

If we are getting ready to finish a iii wave, then [5] will need to make a decent move down, as the price extreme of i is 76.71.

I suspect this is an abc that ends a (y) wave.

Bottom line - near-term it appears that we should see at least one more leg down. We can reassess at that point.

All prices basis continuous contract.

DOLLAR INDEX
New lows for the dollar this past week.

I have changed the labels to better align with the continuous contract. The continuous clearly shows a 4th wave triangle, while the combined would be considered a "cheater."

It appears that we had 5 waves down off of the spike high of 77.50. If it is a minute degree, structure would be complete. Any degree less, argues for a 1st wave.

Confirmation of a change in trend will come from:

1. a clean channel break
2. closing of price above the 50 sma
3. RSI break of the 50% level
4. a 5 wave move higher (impulse)
5. completed downside structure

Until the above 5 take place - I will assume the dollar continues lower.

Price basis combined contract.

GOLD
The gold market continues to subdivide higher, reaching new highs in the process.

It's apparent that we are getting very close to this leg finishing. I am assuming that this will complete a minute degree wave [v] coming out of the triangle. Remember that triangles precede finishing moves.

If this interpretation is correct, we will complete an intermediate degree (B) wave at this moves conclusion.

As posted in previous updates, my alternate view is that there was no triangle, but a series of 1's and 2's. This means we would be in minor 3 of intermediate (3) up.

I am anxious to see what type of price action we get when this leg finishes subdividing. Whatever it completes should be tradable.

Sentiment continues to maintain over 90% bulls according to the DSI readings.

Bottom line - We keep going up until we don't. If I were long, and I'm not, I would use Friday's low as a stop and perhaps trail it up.