Weekend Update #2

30 YR BOND
The bond complex finished lower this past week.

That's about the only intelligent thing I can say about this market.

I have no opinion on this market. I need to see additional price action to get a grasp on structure.

CRUDE
The crude market shook off the big reversal day last Friday and headed higher.

As pointed out last week, we had a nice cycle low that came in on Monday, helping to stop the downside pressure.

This is a new interpretation of structure. Things are really messy here and this is just one view.

This shows a minute [b] wave combination. This assumes that (w) completed at the 74.55 H and (x) finished at the 67.05 L. Price would currently be tracing the (y) wave to finish [b].

If this assessment is correct, price should not hang around here very long. Price will need to immediately start impulsing higher, as it would be in its iiird wave.

Critical support comes in at 68.02. Should that level be breached, then something else is obviously going on.

iii = i at 73.87. iii = 161.8% of i at 77.49.

There is also the possibilty that (x) will take on the form of a triangle. There is also the possibilty that we are working on a bigger minute wave [iv] triangle. I could give you several more scenarios, but you get the picture.

KoolsTools shows that we should have a minor cycle peak on Thursday.

All prices basis continuous contract.

DOLLAR INDEX
The dollar continued losing ground again this week - imagine that.

Price took out the 76.325 L Thursday on a intraday basis. I will assume that the ending diagonal pattern, that was talked about last week, is invalidated.

My guess at current structure is that minute [iii] is extending and price put in a minuette degree (i) at the 78.085 L. Notice that price supported at the 161.8% projection of (i).

If (iii) has finished at the 76.23 L, then price should not get any higher than 78.085 on this retracement.

Following this (iv) wave, we should see continued downside price action.

Bottom line - structure suggests that the poor dollar is not done going down. I don't believe you can rule out new multi-year lows under 73.667.

All prices basis continuous contract.

GOLD
The yellow metal put in another positive week, reaching a high of 1025.80 before pairing some of its gains.

As mentioned last week, resistance was expected at 1015 and 1028, both previous pivots from the left side of the chart.

It is unclear, but we may have finished minuette (v), and thus minute [iii], at the 1025.80 H. If this is the case, we should expect some type of slow complex corrective for [iv].

The 23.6% retracement is at 1004.50, while the 38.2% comes in at 991.40

Thursday is scheduled for a cycle peak (KoolsTools). A better peak cycle may come in on 9/28. This is taken from 4/17 and 7/8.

I took 1/2 my long call position off Wednesday at a 261.8% projection at 1020, booking $1.65 in profit.

I'm not completely sure of the degrees, so I thought it made sense to take some off the table. Will leave the rest on, as I do believe that we see higher price.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market had a strange week. Price exploded higher Tuesday, up over 9% on HUGE volume, yet ended the week lower than where it began.

Generally a move like that, with volume to back it up, has follow through.

The question we have to ask is - does the 302 L have any significance? There is the chance that primary [5] ended on 9/8. If you ratchet up the degrees by one from what I show on the chart, you can certainly make that argument.

At this point, my guess is that wheat is still in a downtrend. What I have labeled on the chart is one way of looking at structure.

I also show an alternate count that may be in play. It is entirely possible that this could be a big [4] wave triangle of the running type (where B exceeds the price extreme of trend).

The main issue that I have with the triangle interpretation is that [4] would be so out of proportion to [2].

The critical levels to pay attention to this next week are 373, which is the price extreme of [4], and the 302 L. Price action through either of those levels narrows the possibilities of what structure is up to.

I will maintain my current bearish bias at this point, however, I'm open to the possibility that an important bottom has been found in this market.

All prices basis continuous contract.

SOYBEANS
The bean market found support at the 50% retracement level Monday before shooting higher with the other grains on Tuesday.

It's unclear whether primary [B] has completed or not. My guess is that the double zigzag down finished just intermediate (A) and (B) is in process.

If this is the case, (C) = (A) at 829.75. The (C) = 78.6% of (A) at 861.375. This fits in with the confluence mentioned in last weeks update.

If [B] has finished at the 892 L, then [C] = [A] at 1185.75. The minimum objective would be where [C] = 61.8% of [A] at 1073.50.

Wednesday is slated for a cycle peak. This comes from 7/16 and 8/18.

All prices basis continuous contract.

WHEAT
Like its fellow grain markets, wheat had a big day Tuesday with no follow through.

Out of all the grain markets, wheat continues to display the most weakness.

It appears as though wheat is tracing out a minor degree 4th wave currently. If so, it was a pretty muted 3rd, but did have a nice fib relationship.

Perhaps this pause here is another lower degree [i] , [ii] setting up. This would be a very bearish setup for this market, portending much lower price.

If this is a minor 4, I would expect 5 to extend, though it certainly doesn't have to. 5th's are the big extension waves in commodities.

Intermediate (3) = (1) at 417.50. I'm still looking for sub 400 price eventually.

We did have a minor cycle low that was suppose to hit Friday. We are still a couple of weeks out from a good cycle low.

Critical resistance is the wave (2) price extreme at 517.25.

I maintain my bearish bias in this market until proven otherwise.

All prices basis continuous contract.

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Crude

Crude followed the equity markets, putting in a small bodied spinning top type candle. Range was a light $1.50 on below average volume.

I have no clue if this count is correct, but it works. There is a 5 there. Marry this to the 5 off the 67.05 L and you have a completed structure.

What did it complete? You would ask that. It's still unclear at this point is the best answer. There are a few possibilities, but I believe it's tracing a triangle, which makes a lot of sense.

There is a chance that if this is indeed a triangle, we completed minute [d] today. If correct, then [e] down should be under way. Once complete, that would finish minor B. C up would follow.

I guess that is my preferred count currently. I'm not confident enough in it to place a wager at this point though.

What we need to see is downside price action tomorrow to confirm that structure has in fact finished. Breaking the 71.68 L would help. There is a small possibility that [5] will turn into something bigger.

If price should happen to take out the 67.05 L, then it is not a triangle, as that would be the [c] leg.

Something big is just around the corner in this market I believe. Minor B is nearing completion.

Edit: I failed to mention that we have a new moon tomorrow FWIW.

ES

The ES put in a negative day with a spinning top candle. Volume was well above average and the range was 15.25 handles.

It appears that the 1071.50 H completed a micro degree [3] wave and [4] is in progress. I really thought they would have finished up [4] today and started tracing [5] in earnest.

[4] has taken on the form of a double zigzag, which is not surprising.

The 15 minute pit session chart shows that we have still maintained channel integrity. My guess is that the channel will keep until [5] completes.

A 24 hr chart has in fact broken through the channel. I believe that by the time the pit opens it will be back inside, as it appears that this [4] wave corrective is nearly finished.

This is a look at a 610T chart, which is my trading chart. It's a good view of how this corrective is tracing.

Notice the relationship between the contracting and expanding ratios. The initial (B) retraced 70.7% and (W) completed at the 141.4% projection. Should (Y) be complete, and it appears that it is, it had the same relationship.

70.7% and 141.4% are reciprocals. I have discussed this harmonic relationship in numerous past posts. I will remind you again - this relationship is very powerful and needs to be part of your ratio analysis.

I was well positioned to take advantage of this corrective, having put on a fair short-line via both September and October puts.

Well, I managed to screw it up. After we finished the initial (B) leg, I convinced myself that this pig may try turning a triangle, which certainly could have happened.

Long story short, after we started the little bounce from the 1063 level, I bailed on my September puts for chicken feed profit. The worse part is, I put on some September calls.

No biggy really, as tomorrow should be up (I hope). I will more than likely make something on the calls probably, just not a whole lot. But you never know, we may explode.

Bottom line - it appears that [4] is complete, or very close. We should see upside price action to finish off [5], thus completing (iii).

The structure off the 1071.50 H is clearly corrective. The waves have numerous overlap. The only way this could be considered impulsive is by having four 1,2's so far.

Upside targets are 1073.75, where [5] = [1], and 1082.50 where [5] = 61.8% of [1] - [3].

I don't really expect [5] to get out of hand, however, the "greater fool theory" is in full force.

Tomorrow is expiry.

Crude

Crude chopped its way higher for a nice gain today. Range was $2.42 on slightly better than average volume.

It appears that crude finished an ending diagonal to a double zigzag to complete a sub-minuette degree b leg. This is one way to interpret the structure off the 68.02 L.

I'm not real thrilled with this as C legs generally don't sport ED's (p. 37 Elliott Wave Principle). I am satisfied that there indeed was a diagonal.

That's why I have a bullish alternate count at the bottom. The problem is that only Houdini and EWI can get a 5 out of that mess off the lows. I actually prefer the bullish count because it helps my daily view.

Unfortunately, I don't believe that is what structure is telling us.

I am basically convinced that the bigger picture is turning a triangle. The waves have that choppy, hard to discern form to them. The triangle interpretation has its own issues. I will cover that this weekend.

So, if my preferred count of b ending at the 72.56 H is correct, we should see impulsive action to the downside. If we don't immediately get that, something is wrong with my assessment.

ES

ES posted another winning day, stretching the rubber band even tighter. Range was a respectable 19.50 handles on better than average volume.

I was fairly confident that the micro degree [1] wave was a 5 and not a 3, suggesting an impulse instead of a diagonal.

Here is one way of interpreting the count. This is the 15m pit session chart again. I don't really care for the sub-micro (3) wave, but structure isn't always pretty.

It's not completely clear if [3] has finished yet or not. It may have some additional work left, but it's close.

Structure has certainly put in a nice channel for us. When this channel breaks - we will know that (iii) has completed. At that point, we will draw a new channel from the wave (iv) price extreme. This assumes that my assessment of structure is correct.

Here is an update on the potential wolfe wave. We have hit the upper boundary line with today's price action.

If this pattern is in play, and I have my doubts, then we should see decisive downside price action.

Target will be the the lower boundary line connecting 1 and 4.

Unfortunately, I don't believe structure is suggesting such a move yet - at least to the target line.

Just in case, I put on a short-line via SPY puts. I have some cheap September 108's and got some October 108's near the close.

Whether this pattern plays out or not, I expect both positions to be profitable. Why would I put them on if I didn't - right?

Did you folks notice the VIX action today? Up nicely over 1%. Perhaps it's expiry related.

The TRIN basically moved up all day as well, while the put/call ratio moved lower.

Bottom line - We should finish up [3] and then [4] in short order. Once [5] completes we should see a more meaningful correction (I hope).

The ivth of lessor starts around 1044 and goes to about 1030. Since (ii) was a deep and sharp correction, my guess is that (iv) will be shallow and flat (guideline of alternation).

VO would be real happy with 1044 and elated if it happened by Friday :)

Crude

Crude continued retracing Friday's beat down. Range was $2.71 on volume that was right at average.

Here is one way of looking at today's price action. It is unclear to me if the leg off the 70.71 L was a [5]th wave failure, or a [B] leg. My guess is that it was indeed the [5]th.

This whole mess off the 68.02 L can be counted several different ways. I'm not going to spend the rest of my life trying to figure it out.

The important part is how this structure fits into the overall picture. Unfortunately, that doesn't get any easier. If we had 5 up from the 67.05 L then we have to have another 5, it's that simple.

Just like determining if we had 5 down from the 72.90 H. If we did, we got 5 more coming, which is probably the case.

Whenever we finish this sub-minuette b wave (if we haven't already), we should see a c down. If this last leg higher is married to anything to the left of it, it can be counted complete.

If it's a loner, then it is the first leg of a zigzag. If so, I would need to ratchet down the degrees by one.

Targets would be [C] = [A] at 72.76, [C] = 61.8% of [A] at 71.76.

Anybody notice the price action in the grains today? Holy cow. The corn market was up over 9% on humongous volume. Did the Chinese Govt come out and say that everybody had to eat corn 3 times a day or what?

Beans and wheat had strong days as well. Not sure what's up with the grains. Maybe someone would be kind enough to fill me in.

ES

ES had its 7th positive gain day out of the last 8 sessions. Volume was well above average and range was 13.75 handles.

Here is the 15m pit session chart again. I have made a couple of minor changes.

I stated last night that this leg may complete a minuette degree wave. That is certainly possible, but I believe the odds are low of that scenario. It would just be to big of a wave for that degree imo.

The count I have labeled on the chart, may in fact, be to small as well. I have a couple of alternates at the bottom.

The problem that I'm having is that if the 1038.75 H completed a minute [i] wave, then we basically have no room for a [iv]th corrective. Wave 4's can not enter the price territory of wave 1's.

It is clear to me that we are very close to ending this leg from the 986.50 L. So, you can see the dilemma. Perhaps the bottom count is correct and this pig is almost done with the bear rally? It's possible, however, that's not my preferred count.

We need to pay attention to this move off the 1029.50 L, which I have labeled as a sub-minuette iv. This could actually be playing out as an ending diagonal. You can make a case that my micro [1] is a 3 instead of a 5, which is how I'm currently counting it.

I have placed the boundary lines on the chart - should this play out.

The key will be that [4] needs to close in the price territory of [1], and [5] will need to be shorter than [3].

I had to leave early from the market today or I would have been selling this pig at the upper pink boundary line. This looks very wolfe wavy to me. Target will be the bottom pink boundary line.

My guess is that this does not play out as I have shown. Structure suggests that we have a little more upside price action needed.

I see that the bigs unloaded in the last 30 minutes.

I also see that the 2 bar daily price projection (KoolsTools) was basically met today at 1052.50. I had several fib ratios that fell on that number as well.

I'm not sure the Bradley turn date did much - at least yet.

Crude

Crude corrected all day with choppy and slow action. Range was a very smallish $1.49 on below average volume.

Look at this mess. I'm not even going to bother trying to figure out the waves.

I think it's safe to say that whatever went on today was corrective.

I kept trying to find a triangle out of today's action, but you can only have one complex wave. I count 74, or is it 126.

We may very well end up with a triangle, but it will be part of a combination if there is one.

I believe that the 68.02 L finished either an a or i of sub-minuette degree. We are likely tracing b or ii now. And yes, 2 waves can contain a triangle if part of a combination.

There is also the chance this could be a [4]th wave. Regardless, they all three call for lower price.

Keep in mind, yesterday was suppose to be a KoolsTools cycle low. Not sure how that can happen, but I guess anythings possible.

Again, the 67.05 L is critical support. If that gives, I think 65 is a shoe-in, and possibly 63ish.

ES

The equity markets turned a potential bad day into a decent positive day. Volume was a touch below average, while range was 19.75.

Taking out the 1043.75 H basically blew up the double zigzag, at least how I was counting it.

This is another way of looking at this move off of the 986.75 L. This is a 15 minute pit session chart. Based on this interpretation, we are currently tracing v of sub-minuette degree.

What will it complete? Who knows. I guess a minuette (i) of (v) of [iii]. You could also ratchet up the degrees by one and be finishing minute [iii]. Or possibly something entirely different.

It's just not clear exactly where we are in the structure. Sure looks like a big ABC to me off the 971 L - no?

The Bull Bat worked like a charm. I took profit at the 1st and 2nd targets.

Don't forget that we have a Bradley date tomorrow.

Weekend Update - ES

ES
The equity markets enjoyed nice upside gains this week with no major surprises.

My count remains that minor A finished at the 1038.75 H. We are in the process of tracing out an expanded flat for B. C down will follow.

As I stated previously, this is likely NOT what the waves are forming. However, you can't rule it out.

I am bothered by the internals here. I'm not sure we can continue higher before trying to relieve some of the overboughtness and bullishness. Perhaps I'm wrong.

Anyway, it appears that we may have completed, what I have labeled as, a double zigzag up for minute [b]. Whatever the structure off the 986.50 L - it seems complete.

We either are tracing a corrective here, or setup some 1's and 2's. Unfortunately, it appears that it is just a corrective. If this is indeed a minute [c], then we should be impulsing down.

We have the potential here for a nice Bullish Bat, near perfect actually.

I'm not sure that it works out, but it is setup. First target is 1033.50, which is about 6 handles higher. Second target = 1040.75. I thought it was worth a shot, so I'm long at 1027.25. My stop is 1022.75.

Hope to wake up in the morning with a nice profit to start the day.


Here is another potential pattern that I have been watching lately. Is this a wolfe wave in the making?

Who knows - but I can assure you that if/when we reach the upper boundary line and the pattern is still intact - VO will put on a short-line.

See the crude update for a very nice wolfe wave that played out intraday Friday.

The next good KoolsTools cycle I see is a peak that is scheduled to come in on September 20. We also have a Bradley date on the 15th. There is some astro dates this month as well.

I noticed that the 1 bar daily terminal projection of 1042.75 was hit on Friday.

Figure 1-34 is what I'm proposing that structure may be tracing.

Weekend Update - Crude

CRUDE
The crude market had a vicious reversal on Friday - losing almost 4%.

So, where does that leave us in terms of structure? It's starting to get tricky in this mess. Means that more than likely this minor B wave (or [iv]) is turning a triangle or complex combination.

I'm not certain how to count the move up from the 67.05 L. I can get a 5 out of it, however, it looks like it is best counted as a 3. We should know within the next few days what exactly it is.

If price takes out the low then we know it is a 3. If it's a 5, that low will hold and we should, at minimum, see another 5 waves up of sub-minuette degree.

I have a question mark next to the minuette (c) because it just wouldn't make sense for structure to complete there. A failure (c) of the second half of a double zigzag? It just doesn't look right.

It's either not complete or my assessment of the total structure forming is wrong - or both.

Here is what price action on Friday looked like on the squiggle level.

I show this as an ABC corrective because I don't believe you can get a 5 down to the 71.62 L. It would appear that if my assessment is correct, we are tracing an expanded flat for b.

It could also be forming a running triangle. If this is the case, it should be tracing the [C] leg currently.

Whether this is a corrective or impulse, the eventual resolution should be to the downside.

Notice the monster RSI divergence.

This is a trade setup from Friday's price action.

This is a wolfe wave for you folks that are familiar with it. This is not an EWT pattern.

Entry for this pattern is a touch of the boundary line at point 5. Notice that C (or Y) just happened to tick equality for you counters. The first touch would been at 69.76.

Target is the lower boundary line, which is made by connecting the top of 1 with the bottom of 4. Expect price to get there in a hurry, as happened Friday.

Price eventually supported at the 261.80% projection of A at 68.85.

My entry was WAY late at 69.45. I covered at 68.94. Dandy of a setup and trade.

Notice the big divergence up at point 5. Also, notice that price supported at the 261.80% projection of [A], which was also the weekly Demark PP on the way down to start the pattern.

Bottom line - crude is getting messy and that probably means a likely triangle. I expect downside resolution near-term, however, I don't expect price to take out the 61.11 L. It targets 65, which sounds reasonable.

Edit: I failed to mention that Monday is supposed to be a cycle low (KoolsTools). This comes from the 8/7 and 8/25 highs.