Weekend Update ES

ES We may have finished minor A up Thursday. I say may because it's not very clean after the 994 H.

We had 5 waves off the 994 H, however, there is huge 4-1 overlap. The only structure that is allowed with overlap are diagonals, both leading and ending. Do we have a leading diagonal?

Technically, we very well could. This would be a leading expanding diagonal, as opposed to contracting, which is more common. According to Prechter, "A leading diagonal in the wave one position is typically followed by a deep retracement", p. 41 Elliott Wave Principle. We had a retracement that ticked the 78.6%.

I'm not sure folks. Even if it turns out that it is indeed a LD, it is a very unsatisfying beginning to B. I will begrudgingly use it as my preferred count until proven otherwise.

There is still the possibility that this is wave (iv) and A has not yet completed. That would mean we have another little leg higher in (v). The majority of the evidence points to A being finished, and based on structure that's my belief.

It does appear that we have 5 waves coming off the 990.50 H. Perhaps this ugly minuette (i) has completed and we are ready to start impulsing. It should be noted that we broke the 2-4 channel.

(iii) = (i) at 974.75. The reciprocal to our 78.6% is the 127.2% at 970.50. A Pi ratio is also there. Lets see how price interacts at that number.

The next few days will give us a clue as to what type of structure this minor B will trace. A zigzag would be a pleasant surprise. Please Lord don't let it be some congested drawn out triangle...I'm begging!

I really don't have anything major on the timing front. Wednesday should be a daily cycle low day. There is a moon that comes in Wednesday as well. August should be a cycle peak on the monthly. Kool if your tuned in - please chime in if you have anything good.

SPX Here is my big picture view. Nothing has changed (yet). I'm questioning the 3x's zigzag. Prechter and gang changed their count to a 2x's zz. It really doesn't matter...you get to the same spot at the same time.

Weekend Chart Update #2

Crude It was a wild week for crude. It lost 6% on Wednesday, then took it all back Thursday. Friday continued the power move.

I believe that we completed a minute [b] wave Wednesday/Thursday globex. If I have my degree's right, we should have completed minuette (i) and (ii) (a beautiful zigzag) at the 64.96 L. This would mean we are currently tracing (iii).

(iii) = (i) at 70.04. Based on structure thus far, I expect that price to get left behind fairly quickly. The 161.8% sits at 73.18, while the 2:1 comes in at 75.14. These fib projections are basis September. The continuous contract are slightly different.

The daily picture shows that we are near a confluence of resistance. The previous channel line, the current channel line, the 78.6% AB=CD projection, the 70.7% retrace from the high - all sit directly ahead.

The 1 bar daily projection is at 74.62. I'll speculate that we eventually reach that target - maybe sooner than you think.

I managed to get a slug of USO calls Friday morning :) I dumped the majority of them towards the high of the day for +.85. I still have a smallish line and will see how this (iii) wave plays out...if I'm correct in my wave structure assessment.

Dollar Index The dollar was one of the few assets that didn't have a good week. Thursday's bearish harami was followed by a big bearish reversal candle Friday. This was after a fake breakout of the 2-4 line on Wednesday.

5 of intermediate (C) looks to still be tracing. If you drill down to a 15 minute chart, it appears that it is very close to completing a small triangle ((iv) of [v] of 5 ?).

The 10-day Daily Sentiment Index closed at 9.7 on Friday. The March 2008 bottom registered a low of 10.8. Structure says this pig is imminently close to an important bottom, while the sentiment indicators agree.

Dollar strength should have ramifications on other markets.

Gold GC had a nice bullish reversal candle on Friday, which was preceded by Thursday's bullish harami.

Should 964.80 be taken, then we will have to adjust our minute [ii]. AB=CD is at 985.20.

It sure has the look and feel of a triangle - doesn't it? Unfortunately, a triangle can only be in 4th's, B's or X's (p. 41, Elliott Wave Principle).

My preferred count is bearish and my alternate bullish. Hopefully, there is resolution soon as to what structure it is in.

30 YR Bond Bonds enjoyed a good week. As bond prices move higher - yields drop and vice versa. That is exactly what happened this past week.

It appears that minor B completed on Monday. Minor C should see five minute waves up.

AB=CD at 124'20. I suspect that we will see price exceed that projection. If so, the 127.2% comes in at about 127 (nice coincidence) with the 161.8% at 130'19.5.

I'm satisfied that (C) completed at 111'21.5, thus completing primary [A] . The proportionality is not there compared to 2 for this to still be minor 4. However, that is my alternate.

I will be looking for price to trace higher this coming week.

Weekend Chart Update #1

Beans The bean complex had a great week. They took out some resistance early Wednesday and followed with a big wide range candle Thursday.

The [1] [2], (1) (2) count is in jeopardy. The critical resistance level is 1071.75(red line), the high of [2]. If this level is taken, then we have to assume that b needs more work, or something else is at play.

We closed right at some resistance Friday. The 2:1 is at 1045.50 with the 88.6% directly above it. Also, notice the dark green trend line. This originates from the 7/7/08 H.

When you scale down to a smaller time frame it appears that we may have finished, or very close to finishing, a 3 wave. We don't have a whole lot of margin for error here.

Wheat The wheat market appears to be tracing out an expanded flat for its wave [4].

AB=CD at 547, while the 127.2% sits around 558. You will notice a dark red trend line that starts from the 12/5/08 L. This did a good job of stopping the intermediate (A) leg and I suspect it will do the same for the (C) leg, should price reach that level.

At the conclusion of this flat, I'm expecting price to continue its downtrend to complete an important bottom. We will also be able to put a new channel in when [4] is finally complete.

There is a possibility that the intermediate (B) wave is actually [5]. If you drill down you could possibly wrestle a ending diagonal out of it. I don't believe that is the case.

I'm looking for this counter-trend rally to resume next week and possibly continue into the following, but ultimately finding its way lower to complete [5].

Corn The corn market followed the rest of the grains and put in a counter-trend rally.

If my interpretation of structure is correct, corn completed its primary [3] wave. It has currently reached the 23.6% retracement area. There is also a gap from 7/2 that looks ripe for filling (highlighted box).

The 4th of lesser degree is also in the area. The rest of the retracement ratio's are on the chart should it need a deeper retrace.

Corn, like wheat, is setting up for an important bottom.

Standardized nomenclature and color schemes

Grand Supercycle: [I] / [a] - cyan
Supercycle: (I) / (a) - yellow
Cycle: I / a - red

Primary: [1] / [A] - green
Intermediate: (1) / (A) - orange
Minor: 1 / A - violet

Minute: [i] / [a] - red
Minuette: (i) / (a) - cyan
Subminuette: i / a - magenta

Micro: [1] / [A] - silver
Submicro: (1) / (A) - green
Miniscule: 1 / A - orange

I will be using this labeling starting this weekend.

Crude

Crude took back yesterdays pounding and put in a bull engulfment candle to kick start its C leg. Another monster range day at $4.53, or ES equivalent of 90+ handles. Volume was just as impressive, the strongest since 5/7/09.

They finished off B in globex and left no doubts we were in C. It appears that we should be fairly close to completing 1 of 5, if my assessment is correct. You could argue that we are currently tracing (3).

AB=CD at 72.29. Retracements from the high include the 61.8% at 68.95, which is basically the high of A. There is also confluence around the 70.30 price with both the 70.7% and the 78.6% projection of A.

The one bar daily projection is all the way up at 74.62, which currently seems like a stretch, but you never know.

This market is very buyable after it traces out its 2 wave IMO. I will be looking to put on a long line via calls. As always, please due your own due diligence before placing wagers.

KoolsTools Time Cycles say we could have a daily peak tomorrow. This might coincide with the completion of 1. The next major peak we should be watching for doesn't come in for another 11 trading days.

Again folks, this doesn't mean price is going up for the next 11 days. It means that in 11 trading days, wherever price is at, should be a peak day. Price could very well be lower for the peak.

This is my trading chart. Wanted to show you what the entire days action looked like off the 62.70 L. That vertical blue line shows why I have (1) and (2) labeled the way I do in the above chart.

ES

The market started its thrust out of the three day consolidation (hallelujah!) late yesterday and continued through globex and the early part of the session.

We made the high of the day within the first hour. From there we basically grinded our way down first, then up, before they puked 'em up the last 45 minutes.

Range was 20.50 handles with higher than average volume.

It appears that we have finally finished minor A. If A is indeed done, it measured 128.75 handles. At this point, we have begun impulsing down in B and appear close to finishing (iii) of minute [a]. It should be noted, we have only had a zigzag down at this stage. There is still the possibility that this is wave (iv) with (v) up to complete A.

It's way to early in the structure to determine which of the three forms it will take. As stated previously, it will be either a triangle, flat or zigzag. My preference is a nice power zigzag. A flat, however, would screw the most people. It would give doubt to the shorts of the legitimacy of the downside, while allowing the dippers to add to their longs. A witch those flats can be - especially the expanded ones.

If the up structure completed (coming so close to my 995!), then we will need to start looking at our retracement levels from the 865.25 L. The first up will be the 23.6% at 963.50. The 38.2% comes in at 44.50, while the 50% sits at 29.75.

I suspect the three day grindathon we had for wave [iv] (4th of lesser degree) will not be easily taken. And we still need to break the channel line.

The minimum downside objective for a triangle would be the 38.2%. A zigzag should get to the 50%, while a flat should minimally reach the 70.7% at 903. Don't forget we STILL have intraday gaps that go all the way down to 910.50.

Using KoolsTools Time Cycles, we should see a low based on the daily 4 trading days from today, or next Wednesday. This is not to imply that this B wave should complete by then. Only that Wednesday should contain a daily low - not "the" low.

Notice the red box. That's why I refer to them as "big" money and not "smart" money. We know who was buying the drinks tonight.

One last thing. I'm in the process of standardizing my nomenclature and color schemes for the labeling. The problem I have is that I use three different backgrounds and I have had a hard time with colors that fit for all three.

That should be done by this weekend. I will post something in regards to this.

Crude

Crude was taken behind the woodshed today, losing close to 6%. Range was a hefty $4.31, while volume was the heaviest since 5/7/09.

It appears that C still has more room on the downside. My interpretation of structure is that iii of v should be complete, or fairly close. That would mean that we are tracing out iv with v to follow, thus completing (3).

As always, degree's and labels are subject to change.

There is a possibility that the structure that finished at the 68.99 H was B. I do not believe that is the case.

One area to watch is 62.42. This is the one bar daily projection from the 68.99 H. Another area worth watching is 61.37, this is the 261.8% projection from wave (1). Retracements from the 59.30 L and 68.99 H are shown in red.

ES

ES closed negative for a second straight day (just barely). Range was 12 points and volume was slightly under yesterday's total. Basically, more of the same today - slow grinding consolidation.

Is structure still tracing a triangle? More than likely no, by definition, however, I suspect the end result will be similar. If not a triangle, then probably a combination of some type (double or triple three). The last structure may very well turn out to be a triangle.

It really doesn't matter what the final structure is comprised of. We should resolve this mess to the upside to complete A. It appears that we have not corrected enough in time. When that time element has been satisfied we should start impulsing upward.

This correction has been the biggest, in terms of both price and time, since the 865.25 L. I really believe that this has to be our minor wave 4 (white). This would mean that minor 3 (white) ended at the 976.50 H.

Generally, when wave 3 extends the 5th tends towards equality with wave 1. 1 was 19 handles, so 19 handles from the end of 4 should be an area of "heads up". This is by no means a certainty.

The smallies damn well knew GS would ramp it at the end of day, just like they do everyday.

ES

A rare negative close for the market today. We had a 15.50 handle range, while volume increased from the two previous sessions.

It appears that we are still in process of tracing out a triangle, although, slightly different than what I had labeled yesterday. Wave C looks to have morphed into a more complex structure(WXY).

This is not at all surprising, as we generally see one of the subwaves more complex than the other's. Triangles are a fight between bull and bears and reflect a balance of forces. That's why they go sideways.

If this assessment of structure is correct, we should see a thrust upward on E's completion. It has a 21.50 handle measurement from high to low. This would target out around 995 (there's that number again!) using the apex. We will have to see where E ends to get an exact target.

There is also the possibility that this is not a triangle at all. One thing is certain, we have traced out a bunch 3's. If price trades below C at 966, then the triangle would be invalidated.

Notice the channel line. This comes from a 1-3 line starting at the end of wave 2. Pretty random how price supported there - ya think?


Not much to glean from this, outside of the fact, the smalls were almost -40k this morning before finishing around -12.5k.

There was a beautiful buy setup off of the confluence of Value Low and S1 during the retest. Hope some of you got a piece of that.

ES

I'm not sure if I'm just trying to force a triangle in this structure or what.

C leg's can be complex..."most subwaves in a triangle are zigzags, but sometimes one of the subwaves (usually C) is more complex than the others and can take the shape of a multiple zigzag", p. 49 Elliott Wave Principle.

We did have a nice Bull Butterfly that setup. Currently it has met its first target at 71.50.

Triangle/Diagonal Video

Here is a great video from Elliott Wave International that does a very nice job of explaining triangles and diagonals. Go to video #3.

I'm not sure, but you may have to sign up for the free EWI account.

Crude

Crude had its 9th consecutive positive close today. The range really tightened up today at $1.39.

The daily put in a small bodied spinning top/doji candle. We ran into stiff resistance at the 61.8% retrace from the high and the 3 bar daily projection around 69.

Obviously my interpretation of structure was incorrect. I believe that crude is tracing out a double zigzag (WXY) for this B leg. This occurs when the first zigzag has not adequately retraced enough in terms of price.

I'm showing a 120 minute chart to get rid of some of the noise. Notice the beautiful channeling. You may have also noticed the 14 bar cycle i have had on there for a few days.

This is based on the 59.30 L and the 60.02 L (the first two lows). There has been some nice hits with this cycle, by no means perfect, but still impressive nonetheless.

As far as targets go, W = Y at 71.14, while the 78.6% is at 69.59. The 261.8% projection of A comes in at 69.66 and the 4 bar daily projection sits at 69.69 (lucky it). So we have a pretty good confluence of numbers in the mid 69's.

The targets assume, of course, that the structure has not completed. At this point, that's my guess. The action that we had today is indicative of a 4 wave. If that is the case, the probabilities are that the retrace will not be deep. The 23.6% is at 66.70

Here is a nice (and easy) setup that happened today. Several things came together to make this a no-brainer:

1.) we reached the top of the channel and

2.) a 5th wave was completing and

3.) they threw a doji candle at us

Easy money folks.

ES

Es finished higher on the day for its 10th positive close in the last 11 sessions. Range was 16 handles, while volume contracted for the second day in row.

There are several different scenarios that may be in play here. As mentioned in eChat, we may very well be tracing out a triangle.

This would be a running triangle because B exceeds the high of A. I am not sure D has completed at this point, so I may need to adjust the upper boundary line.

There is also the possibility that this is an Ending Diagonal (ED). We have two sets of 3 wave structures off of the 948.25 L, and appear to be working on the third currently. I show that alternate count at the bottom.

This is a 1.50 point range chart that shows the triangle in better detail.

Aso, notice the dark red channel and how that has acted as resistance. This is the 2-4 line. Once broken, this is exactly what we would expect.








The small lotter's started buying the 969 L and basically continued into the close. The bigs did not start in earnest until we made the failed low at 970.75 (VO was long at 72!).

Sure looks like wedging action to me.

There are also a couple of other possibilities that may unfold over the next day or two, but rest assured, this pig is very close to giving us a sizable retrace of this leg off of the 965.25 L.

I stuck my toes in the water on some puts today. Just a 1/4 position though, as I'm likely early.

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