Weekend Update #2

30 YR BONDS
The bond complex had hard downside price action on Friday, erasing all of the gains from early in the week.

Price broke and closed over critical resistance on Wednesday. This eliminates the possibility of any triangle, at least based on the continuous contract.

Notice that price was repelled at the 78.6% projection of minor A, as well as the 38.2% retracement of the entire move off the 138'1/32 H.

One of the problems I have with this witch, is I do not know what the long-term count is. Based on the data I have (only 10 years), I suspect that the intermediate degree correction (EWI has this degree labeling) we completed at the 110'14/32 L was a primary [A] wave. This of course is a guess.

Anybody out there that has a LT count - please chime in.

Here is the combined contract. Notice that the triangle is still in play.

Also, price has not taken out the (A) L at 123'10. This leaves the possibility that the alternate count may be in play.

Bottom line - I'm not sure what's going on in this market. Near-term it appears that price put in a reversal late last week and should see some downside pressure.

CRUDE
The crude market sold hard the first part of the week before stabilizing.

Price took out the minuette (x) wave low on the near month (October) calling into question my preferred double zigzag count for minute [b].

The problem is that both the combined and continuous contract failed to follow - so far.

As mentioned previously, I DO NOT believe structure finished in an ending diagonal. An ending expanding diagonal? Nope.

I have to admit though, price certainly "looks" like it wants lower on the daily. The 1 bar projection (KoolsTools) says it wants 64.88 (basis continuous contract).

From a cycle standpoint, the low at minute [a] and minuette (b) gave the low at minuette (x). The (b) and (x) wave lows ended Friday. Will this be another low?

If your bullish this market, you better hope so. We have completed two sets of 5's down. We get another one and that equals an impulse. Telling us that, at minimum, we see another 5 waves of minuette degree.

Drilling down on our chart, I can make a case for price reversing here. We do have some channel support and RSI is certainly diverging. If that is the case, it needs to start higher right now.

First objective would be to break the channel mid-line and take out the 68.78 H in impulsive fashion. The 69.40 H would be next (basis October contract).

DOLLAR INDEX
The dollar chopped around for the week, ending basically where it started.

It continues to support on the lower boundary line. I still have a bullish interpretation on the chart of completing intermediate (C) at the 77.52 L.

For how long is the question? Probably not much longer, as I suspect price breaks lower.

Bottom line - I will be pleasantly surprised if the dollar gathers itself here and pushes higher. My guess is that (C) has not finished. Lets see what next week brings.

All prices basis continuous contract.

GOLD
As posted Thursday, it appears that the gold market has a completed triangle and in the process of thrusting higher.

It broke free of several channels and closed above some pivots. It appears to be in the early stages of this advance, which I believe to be a minor C wave of intermediate (B).

If this is correct, then we should see new all-time highs.

The triangle target is 1076.80. C = A at 1248.40, while C = 61.8% of A at 1127.60. The first objective will be to take out the 1015 level.

I would have liked an opportunity to get long at a channel backtest, but it does not appear that will happen. I will look for an entry this coming week.

With so many of the markets showing uncertainty to structure and direction, its nice to have one that appears to have a defined tradable structure.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market continued its downtrend this week.

Price took out the 312 L on Thursday and had a decisive close below it on Friday. This signals that primary [4] is indeed complete at the 373 H.

It appears that minor 1 and 2 are finished and 3 is underway. We should see price continue to accelerate as 3 of (3) hits its stride.

Notice that price moved back inside the channel after hanging around the upper boundary last week.

I am still looking for price to find its way down to the 270's. The minimum primary objective is 278.125, which is where [5] = the 61.8% of [1] - [3].

Other targets include 279, which is where (3) = (1). 3 = 1 at 273. So, there is nice confluence in that area.

Notice that volume has been declining since [3] completed. This is generally what happens in 5ths. RSI also looks like it will give us a positive divergence on this leg. Another 5th wave signature.

This coming week should continue to see price weakness. I would like to see price action make its way to the mid-channel line, where conveniently, structure may finish its multi-year correction.

All prices basis continuous contract.

SOYBEANS
The bean market reversed course and sold off the entire week.

It appears that we finished primary [A] at the 1040 H. If this is correct, we should be tracing [B], which would be followed by the final [C] of a double zigzag.

Price should maintain above the [X] wave low of 746.25. The 61.8% retracement sits at 858.50, which is conveniently near the (4)th of lessor degree.

Once [B] completes, targets will be 1263.75, where [Y] = [W] and 1066.125, where [Y] = 61.8% of [W]. We will also be able to get a projection off of [A].

The structure off the 1040 H appears to be taking the form of a zigzag, which would make sense, however, it's to early to make that determination.

All prices basis continuous contract.

WHEAT
The wheat market, like the rest of the grains, had hard downside price action this past week.

Price broke and closed under the 486 L. This suggests that intermediate (2) has completed.

It also appears that minor 1 and 2 are complete and 3 has started in earnest. If this assessment is correct, price action to the downside should accelerate as 3 of (3) kicks in.

We should attain our minimum primary objective of 465.75 in short order. This is 61.8% of [1] - [3]. [5] = [1] - [3] at 391.50. V = 38.2% of I - III at 385.125. There are several sets of fib numbers in this area.

Our nearest intermediate degree target is (3) = (1) at 417.50.

Like corn, volume has started to diminish on this leg. Again, this is suggestive of a 5th wave.

All prices continuous contract.

Gold

I wanted to give you an update on gold.

It appears that indeed gold did trace a triangle and has decisively broken free over the last two days.

The "thrust" took a couple of days to get in gear, but looks to be in full swing now. Price took out and closed the 993.60 pivot. Next up is the 1015 H, or minor A.

The triangle measures to 1076.80. C = A at 1248.40, while C = 61.8% of A at 1127.60.

It is early in this leg. There should be new all-time highs attained if price reaches its target. I will look for a backtest of the upper boundary line for a potential long setup.

All prices basis December.

Crude

Crude put in another small bodied candle today. Range was $1.74 on below average volume.

If your bullish this market, today was almost a victory. We maintained above yesterdays price low of 67.05, yet structure does not appear to be suggesting that the decline is finished.

It looks like we finished off a [C] leg of a corrective this morning. We have not witnessed impulsive price action thus far. My guess is that 67.05 breaks.

Perhaps price wants the daily projection at 64.88 (basis continuous contract). Perhaps it wants a lot lower. It's unclear to me at the moment.

If this was an ending diagonal, then that would suggest that we should see the 61.11 L in short order. The ED scenario is my backup to my 4th alternate count. In other words, I ain't buying it folks.

Let's see how price action treats us tomorrow. If this witch can hold the channel, maybe we could see some upside potential. As stated earlier, I have serious doubts as to whether 67.05 can hold.

ES

Another pretty slow action day in the equity markets. Range was 13 handles on extremely light volume.

It appears that minuette wave (iv) is still in process. We clearly had a 5-3-5 structure off the 991 L. I have labeled this as a sub-minuette w wave.

Price action off the 1004.25 H (nailed by Koolio) was choppy and just didn't feel or look like a 5. I believe it is an x wave. This means that (iv) will be a combination ( two separate correctives).

It's unclear if the second sub-minuette degree abc is complete. My guess is that it has more to go, but it's close. Notice that we do not have that classic RSI divergence as of yet.

y = w at 1004.50. y = 161.8% of w at 1012.75. I have the retracement levels (black) on the chart.

There is the chance that the leg down to the 991.25 L was indeed a 5. If so, this could complete (v), thus finishing minute [i]. I don't think this is the case, but be aware of that possibility.

Once we finish this y leg, it will gives us two sets of small 5's. If we go on and trace a third 5, that will increase the odds that [i] completed. This might fit in with the KoolsTools timing cycles, which called for a low based on the 8/25 and 8/28 daily's.

Regardless of the retrace, I believe structure suggests that lower prices are ahead of us. It doesn't necessarily mean that the bear rally is exhausted, though it certainly could be.

As previously stated, I need to see the channel from the March lows taken out before I can join that camp.

I will patiently await a setup that allows me to put on a short line via puts. I'm hoping this pig has enough in it to get up to the 1012-1014ish area at minimum. I would like to see the base channel hold the retrace if possible.

Line in the sand for a beashish case would be the 1027.75 H imo.

Crude

Crude lost ground again today. Range was $1.75 on average volume.

Well she broke beneath the 67.42 L (basis October). Interesting enough, the continuous contract did not. Where does that leave us?

I can't be entirely positive, but I am going to maintain my original assessment that we still need a minuette (c) leg higher to complete minute [b].

By switching some things around, I have come up with a decent count, and not only decent - but one I actually like.

We have two sets of 5 waves, or a 5-3-5 structure currently. One more downside set gives us an impulse. Without that extra set, it's just a corrective.

I'm not trying to be hard-headed here folks. I don't care which way structure takes this market. My goal is to be on the right side of the market. That sometimes is easier said than done.

Perhaps EWI is right, this was an ending diagonal. The continuous contract suggests otherwise.

So, if my interpretation is correct, price will start heading higher NOW. No room for error here.

First order of business is to take out the 68.70 H. Next would be to breakout of the channel. I will assume this takes place over the next couple of days.

If price loses the 66.94 L on the continuous contract, I will have to assume that I'm just dead wrong.

ES

A slow grindy 4th wave kinda day. Range was 10 handles and volume was average.

It appears that we finished minuette (iii) at the 991 L. The waves were not easy to discern from the 1003 level down, but I believe this count works.

The micro degree running triangle is a little speculative, but it allows two succeeding 5's that count.

It sure looked like we had a b wave triangle after the 999.75 H. I can't tell. If it was a triangle, the c leg is very unsatisfactory. It measured 4.50 handles and the thrust went 4.

My guess is that it was a combination flat-x-expanded flat. We should know soon enough.

One thing of note, RSI made a lower low while price has not. Perhaps this is telling us to expect a break lower.

We did retrace 23.6% of (ii). It's possible that (iv) has completed, but I don't believe so.

Bottom line - I think we are still tracing (iv). My alternate would be that sub-minuette iii finished at the 991 L.

Whatever retracement of (ii) we get will setup a intraday selling opportunity.

One more minuette wave down should complete minute [i]. We should see a more substantial retrace at that point.

Crude

Crude took one on the chin again today. Range was $3.37 with above average volume.

I have a red line marked on the chart at 67.42. This is the line in the sand. Price can not trade through this level, or my double zigzag gets blown apart.

Crude appears close to finishing up this leg down. If correct, we should see upward price action tomorrow. Lets hope it happens before we get to the (x) wave low.

If we do break the 67.42 L, then I have to assume that somehow minute [b], or whatever the hell it is, has finished.

I saw where EWI had this as a ending diagonal. I looked at this angle for hours this past weekend. I just can't agree with that assessment. In other words, they are clueless as well and are trying to make something fit.

We have very nice positive RSI divergence on this 60 minute chart.

Bottom line - I'm still looking for a completion on a minuette (c) leg to finish [b]. This means higher prices near-term. We know where were wrong at.

Lets see what happens tomorrow.

ES

TIMBER! Welcome to September. ES led the equity markets to the downside today. Range was a manly 32.50 handles. Volume was huge, registering its biggest total since March.

The question is not "have we topped," but rather "is this THE top."

This is a 4 hour chart. We have decisively broken the channel from the 865.25 L. The structure from that low, which I believe is a minor degree ABC corrective of an intermediate degree (Y) leg, has finished imo.

I'm not willing to say the bear rally off the March lows is done, at this point. I would need confirmation of a channel break that is drawn off the same March low. This would tell me that the structure from March 6 has completed.

This channel looks like it will come into play around the mid August lows, or where minor B finished.

Isn't it just like them to throw in a bunch of non-counting BS waves at such an important juncture.

I have to tell you folks, I have some minuette degree waves on the chart that I simply had to just put on there. In all honesty, I can't get to the 1013.25 L or the 1010.75 L without breaking and bending impulse rules.

This is a concern for me. Perhaps it's part some leading diagonal or something where further price action is needed to see the complete picture. If this were a corrective, it would actually count really well. Pit session has much cleaner wave structure.

Price action off the 1027.75 H definitely looks impulsive. Not positive about the degree, I may need to adjust that up a notch. It does appear that we are nearly finished with this little leg.

Notice we have a nice positive RSI divergence in place. We also met the daily 1 bar projection off the 1038.75 H at 995. In fact, we closed below the 2 bar daily 161.8%, which suggests that we should find our way down to the projection at 972.

This pig was sold hard today. Both sides puked 'em up. I also believe we had a 90% down day.

Did you notice the VIX explosion? Closed up over +12% while breaking out to the upside of its channel.

First level price needs to break on the downside is 990. This is the wave [i] of C H. This will eliminate some alternatives.

Next will be the 975.50 L, which is where B completed. I suspect this level will be defended.

If your bearish, you don't want price taking out the 1027.75 H, until minute [i] of 1 has finished.

There is just nothing positive that happened in the market today if your a bull. I'm sure Cramer was on screaming that you got to "back the truck up"..."they gave you a gift today"..."it's a new bull market" ect. ect. Stop watching that clown - start watching structure.

Bottom line - I'm bearish. We should see some type of bounce soon. This will setup an opportunity to add to your short-line.

I'm not sure the "Great Bear" is back. We should know fairly soon though.

Crude

Crude was clobbered today for almost 4%. Range was huge at $4.23 with about 1/2 that coming in globex.

I have to say that I was surprised by price action today. It appeared to me that we had a nice 5 up and was setup for upside follow through. Not.

I do however, think that this makes a much nicer minuette degree leg down. Check out the daily chart. You can now clearly see a 3 down from the highs last week.

If my interpretation is correct that crude is tracing a double zigzag for a minute [b] wave, then price must not breach the (x) wave low of 66.94.

If (b) is complete, then price should start impulsing higher for its final (c) leg. I would like to give the all clear, but there is a chance there is some minor downside work left.

If you have noticed, the 50 day sma has been supporting price the last couple of days. Also, the dollar sure didn't hurt crude today. I found that kinda strange.

Very nice positive RSI divergence at the 69.13 L.

Bottom line - I think crude is nearly done tracing this minuette (b) wave. I know where I'm wrong.

ES

Based on the globex action, it appeared we were in for a nice trading day. Unfortunately, we had less than a 9 handle pit range on mild volume. A yawner.

We gapped down in globex and sold off to the 1013.25 L. From there we grinded, overlapped, and chopped our way a little bit higher.

We broke both supports mentioned in the weekend update, however, we never closed below the 1014.75 L on the bigger charts. Where does that leave us?

Wished I could tell you matter of fact exactly where we are. It's all a WAG at this point.

My belief is that we still have continued work on the upside left to complete. I don't believe structure is telling us that we are ready for a sell-off. Not yet anyway.

I could be dead wrong. And I sure don't have enough confidence in my upside belief that I would even think about holding overnight long positions.

In my opinion, the easy money has been made on the long side. Those of you that hold in "hopes" of getting back to even are playing with fire. Who knows, I'm probably wrong again - or is that still :)

There are a couple of ways of looking at structure here. Some bearish and a few bullish. I said that I would assume that minor C completed if we took out the 1014.75 L. I lied, at least for the time being.

I just don't see price action as impulsive off the 1038.75 H. Perhaps they are messing with us so that it is unrecognizable to the masses. I need to see additional price action in order to make a better guess.

I can tell you with certainty, structure from the 1013.25 L is not impulsive.

Lets see what tomorrow brings. Maybe they can keep me awake after the crude pit closes.

Weekend Update-ES

ES
Has the counter trend bear rally run its course? The necessary requirements are in place.

This is a 60 minute pit session chart. Notice the beautiful looking structure. This shows cleaner, much nicer looking waves from the 975.50 L.

I show two counts on this chart. My best guess is that structure has not finished tracing the last minute [5]th wave. Yet, you could certainly make the case that [5] is finished, which would complete minor C up.

The issue that I have with the C being finished scenario, is that it does NOT appear to be an impulse off of the 1038.75 H. I think it counts much better as a double zigzag (w, x, y).

This suggests that structure has not finished its upside work. I could also be wrong in my interpretation. That is why I will use that as my alternate count.

I show minuette (i) and (ii) complete. If this is correct then we should be entering the meat of (iii) of (v). When globex opens tonight, I would expect price to start moving higher, if not gapping up.

If price action does not start higher and instead moves down, or worse - gaps down, I would be very worried if I were a bull.

Notice that we are right at the channel line. This needs to hold for the bullish case to be made.

Important levels are the 1022 L and more importantly, the 1014.75 L. Should the 1014.75 L give way, I would immediately assume that minor C has completed.

As stated above, all the necessary requirements are currently in place for a significant top to be in. This would include both time and price.

We have extreme bullishness. As a matter of fact, more extreme than we had at the 07 high according to the Daily Sentiment Index.

This leg of the advance has most certainly been weaker, based on the internals, than the preceding minor A. Just about everything is showing a negative divergence, including RSI.

W.D. Gann said that you can look for tops in the 90th - 99th day or week. We will be entering the 99th week of trade from our top in 07.

Prechter came out on Friday with a short and sweet interim report. In it he said "traders should move back into a full short position today." He also said, "given the extent of the rise, there is no longer much reason to allow for a more complex corrective pattern to unfold."

Could there be a little bit further to go on the upside? According to my count - yes. But folks, we are almost there. I believe the next phase of the market is very close.

If your one of those that rode this to the bottom and back, the market gods have been kind enough to allow you to be able get out with at least your shirt, should you choose to do so.

My belief is that you wont get a second chance. Whether this is "THE" top, or just a top, wont be known until after the fact. Be careful out there.

I apologize for not being able to get this update out sooner. It takes a lot of work, and more importantly, a lot of time to put these updates together.

The only way I know if anybody is actually reading this, is the occasional comment, but those are few and far between.

Edit: as I finish this up, globex has opened with a gap down to the 1025 level. This is not good news for the bullish case. Again 1022 is a level that needs to hold. Should that fail, then 1014.75 is the line in the sand.