Weekend Update - #2

30 YR BOND
The bond market had nice upside price action this past week.

It is still unclear to me if structure off the 114'14/32 L is somehow attached to the wave structure from the 138'1/32 H. I'm just unsure.

It has a nice channel and acts like it wants higher.

If you trade this market, I can't be much help. I need to see additional structure to form an opinion.

All prices basis continuous contract.

CRUDE
The crude market had hard downside price action, giving away almost 9% on the week.

Structure has been very confusing for the last couple of months, as price has chopped back in forth in 3's. This is not unusual for a corrective.

My assessment of the structure has us in a minuette (c) of minute [c] of minor B. I believe that structure will turn a big triangle here, or combination.

It's not my view that we are ready to see significant downside price action. Structure suggests to me that it needs more work on the upside on an intermediate degree before all hell can break loose, which I do believe will happen eventually.

I have placed triangle boundary lines on the chart, not because I think that is where they belong, but to give you an idea of the form I'm looking at.

Minute [c] has turned complex, which is typical in a triangle (p. 52, Elliott Wave Principle). It should finish higher than wave [a]. Should price exceed [a] at 61.37, we are not dealing with a triangle (unless an expanding type).

Drilling down intraday, it's unclear if sub-minuette iii has completed. You could argue that it finished at the 65.60 L, as the leg down to the 65.05 L counts better as a 3, suggesting an expanded flat for iv. We did have a nice 161.8% projection at 65.06.

(c) = 127.2% of (a) at 63.54. The 78.6% retracement of [b] sits at 64.49.

There is another L-L cycle due on Monday. The last two have come in like a charm. On the posted daily chart, [a] and (b) gave w L, (b) and w gave (a) L. w and (a) comes in Monday.

Bottom line - I'm looking for the downside to finish up this coming week, perhaps as early as Monday. [d] should unfold in a ABC up, followed by [e] down.

All prices basis November contract.

DOLLAR INDEX
The dollar made new lows on Wednesday before stabilizing and catching a bid.

My interpretation has structure finishing a minuette degree wave (iii) of minute [iii] of minor 5 at either the 76.23 L or 76.045 L. It's unclear where the orthodox bottom should be.

The 76.23 L had a direct hit with the 161.8% projection of (i), as well as, setting up a nice expanded flat.

Regardless of where the bottom of (iii) is, price should not trade in the territory of (i) at 78.085. Should this happen, I would need to reassess structure.

I have included a bullish alternate at the bottom of the chart.

I think you have to be cautious here. We have huge positive RSI divergence, which I have overlayed on the chart. We also have a unsustainable DSI reading of 3% dollar bulls. This can't, and won't, last.

Bottom line - I remain cautiously near-term bearish on the greenback. Once minute [iii] completes, we should see a [iv] wave that takes some time to fully trace, as [ii] was relatively short lived.

All prices basis continuous contract.

GOLD
The gold market corrected this past week, with Thursday being the big down day.

My current assessment of the yellow metal remains the same. We are in a minor C leg of intermediate (B). At completion, (C) should follow, taking price significantly lower than current levels.

No question we finished a wave at the 1025.80 H. I have it as a minute [iii], which means we are tracing [iv]. It's unclear whether [iv] is finished, but it looks close.

We supported at the broken trend line drawn from the 1060 H and 1028 H. Also notice that this corrective has traced back to the (iv)th of lessor degree, which is expected.

Price closed right at the 38.2% retracement. This supports my view that this is a fourth wave, of at least some degree. Additional retracement ratios on are the chart - should they be needed.

I have placed a new channel on the chart forming a 2-4 line. Should [iv] need additional work, I will make changes to the channel as needed.

The minimum upside objective is 1043.80, where [v] = 61.8% of [i] - [iii]. Interesting enough, equality comes in at 1080.10, very close to the triangle target.

One thing that does give me caution here is the huge volume registered on the downside this past week. I also noticed that weekly volume has been decreasing since the triangle breakout.

It is entirely possible that I am behind in the count, but more than likely, I'm actually ahead of the count. Time will tell.

We are suppose to have a KoolsTools cycle peak on Monday (black dotted line). This was arrived at from the 4/17 and 7/8 dates. I suspect there will be an inversion and it will signal a low.

Bottom line - I remain near-term bullish gold. Structure continues to suggest that we should see higher price, meaning this retracement was counter-trend. Keep an eye on the dollar.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market put in a good week to the upside.

We didn't get any confirmation as to what structure is up to. As stated last week, there is a possibility that primary [5] ended at the 302 L. I also stated that I don't believe this to be the case, however, it can't be ruled out.

Should price turn here and start aggressive impulsive action to the downside, I would be inclined to believe that corn had put in a smaller minor degree 1 and 2 waves. A very bearish development for this market.

Drilling down intraday, price was turned away at the 78.6% retracement of the previous move off the 347.75 H. From my experience, the deeper the retracement, generally the more powerful the 3rd wave tends to be.

Should price take the 347.75 H, which is a beautiful double top, this would obviously negate this view.

It is also possible that primary [4] is still tracing. A triangle can not be ruled out. This view would be negated should price exceed 373 to the upside, or 302 on the downside.

Key levels to watch this coming week are the 347.75 H and 310 L.

A KoolsTools cycle peak is due to come in on Wednesday.

All prices basis continuous contract.

SOYBEANS
After a nice day down Monday, the bean market was relatively quite the remainder of the week.

Support was once again found at the upper boundary of the corrective base channel.

I have gone ahead and labeled intermediate (A) at the 892 L. It's unclear, but (B) does not look complete to me. I believe it needs additional work.

Once complete, (C) down should follow in a 5 wave move. Assuming that (B) has seen its price high, then (C) = (A) at 829.75. As discussed the last couple of weeks, there is a lot of confluence in the 860 area.

Although not shown on the chart, minor C of (B) = A at 987.75.

Wednesday is scheduled to be a KoolsTools cycle peak day.

All prices basis continuous contract.

WHEAT
The wheat market's whole week was blown up on Friday, losing almost 5%.

Friday's price action broke through the 450 L, though it closed a smidge above it. This suggests that minor 4 has completed.

If this is the case, the minimum objective for 5 is 439, where 5 = 61.8% of 1 - 3. Equality comes in at 414.25.

Intermediate (3) = (1) 417.50.

Key resistance now becomes the 4th wave price extreme at 481.50.

I see no meaningful cycles for the upcoming week ahead.

It doesn't appear as though there is any relief from the beating wheat is taking just yet. This market is down close to 40% from the June highs, and 70% from the 08 highs.

All prices basis continuous contract.

Crude

Another big down day for the crude market. Range came in at $3.17 on heavy volume.

Let's start with the daily and look at the bigger picture first. We failed to hold the 67.66 L, thereby, negating the triangle as I had it labeled.

This is what structure appears to be tracing in my view. It is clear that we have put in nothing but 3's since the 75.83 H.

This suggests a combination or triangle. I believe that structure continues to form one of the two, with my choice being a triangle for this minor B leg. I am guilty of trying to finish it off to soon, which is very common.

It appears that minuette (a) of minute [c] traced a double three, as I have discussed, is typical for the C leg to be complex. (c) should contain 5 sub-minuette degree waves.

Once complete, this should finish [c]. At that point, we should see upside pressure while [d] unfolds.

With this interpretation, price can not break 61.37. Should that happen, then there is no way to account for a triangle of any degree lower than intermediate.

This intraday chart is the one I showed a couple of days ago with the wolfe wave. Who knew it was that important of a pattern. Price continues to support on the 1-4 line.

Price has stair-stepped down (literally) in this iii wave. It looks to me like iii may have completed at the 65.60 L. If so, we should currently be working on iv.

ii appears to be a zigzag, therefore, we can expect iv to be shallow and complex.

The big wildcard in all this is the dollar. It has the looks of impulsive action the last few days. Although, it should be counter-trend based on my current assessment, there are ways of looking at structure that could conclude its 5th wave.

I will certainly be paying close attention to that market, as it has repercussions for basically all other assets classes.

ES

As expected, ES had a follow through day to the downside, kicking the bulltards right where it hurts. Range was a nice 23 handles, as volume expanded and finished above average.

Based on my count, it appears that minuette (y) is nearing completion, if not already complete. This should finish minute [iv], after which, we should expect minute [v] up to unfold.

In order for this interpretation to remain valid, price needs to not enter the territory of [i] at 1034.25.

The last leg down to the 1041 L was choppy with overlap. This suggests that it may have been an ending diagonal. If not a diagonal, it could be the [B] wave of an expanded flat or even a triangle.

This would mean that we were still in a ivth wave, which is very possible. I like the flat myself, as it certainly appears that we had a 5 wave structure off the 1041 L.

Who knows, perhaps it was a 3 (somehow), which calls for a triangle. This would be of the running type, as [A] would start at the 1043.50 L.

My guess is that (y) finished, calling for an ending diagonal. It won't take us long to find out.

We have a potential Bullish Bat pattern in play.

Should this pattern come to fruition, it suggests that we ended "something" at the 1041 L.

I am long 1043 with a stop just under the low at 1040.75. That's one of the nice things about this pattern - small stops.

Nice looking channel on the volume chart. Notice that price was rejected the first time, then made what appeared to be a successful break, before falling back inside.

As I finish this up, brother Kane's 88.6% has held price, at least for the time being. 1042 should have been entry, but I jumped the gun.

I originally thought I would peel one off at the first target, however, I'm going to hold for second target. Greed can be good - sometimes :)

Edit: I failed to mention that I unloaded my Oct. SPY puts today. I did not end up making as much as I thought I would, but a nice profit nevertheless. I seriously considered putting on some calls towards the close, but chose not to.

Crude

Crude saw hard downside price action today. Range was $3.77 on expanding volume.

How's that for a thrust? Geez. Appears that I called the completion of the triangle 18,000 points to soon. Obviously, e or [e] was not complete, if there is even an e down here.

The chart clearly shows a 3 wave structure thus far. In my defense, you can see why it looked possible for the triangle to have finished. You can get 3 down to the 69.27 L, at channel support with a nice fib relationship.

I don't like my degree's. Feels like they should be a notch (or two) higher. This would suggest the minute scenario. In which case, I would be right in my assessment of an ABC down to the 69.27 L.

Critical support is the 67.66 L. Should that be violated then the triangle, as I have labeled, would be off the table.

There is also the possibility that [c] is a complex leg and will be a double zigzag. C leg's are typically complex anyway (p. 52 Elliott Wave Principle). It would actually make for nicer symmetry in my opinion.

I'm not hell bent on this having to be a triangle. It very well could be some combination, as discussed in previous posts.

This we do know, structure is putting in a bunch of 3's since the 75.83 H. Only 4's, B's or X's sport triangle's. We are in a B or 4th wave. Triangle legs come in 3's.

Bottom line - I will assume we are tracing a triangle until proven otherwise. It does not appear that we are finished with this current leg. Watch the 67.66 area should we trade down there.

All prices basis November contract.

ES

The equity markets made new bear rally highs before giving back 5 days worth of price action in the last hour of trade.

Volume shot higher, while total range was 20.25 handles. Daily candles were ugly. SPX put in a "key reversal" day.

Well folks, we finished something at the 1075.75 H. The question is what? Once again we look at a 15m pit session chart of the December contract. I show several different scenarios, and each of them have their own specific issues.

I show minute [iii] finishing at today's 1075.75 H. There is a chance that we are still tracing minuette (iv), however, I give that a low probability. It would be so out of proportion to (ii) that it wouldn't make sense.

I'm also not sure how to account for the structure from the 1051.50 L. Price action off the highs definitely suggest an ending diagonal, however, 3 would be the shortest wave - invalidating the pattern. It doesn't count well as a 5 either.

This leads me to believe that perhaps minute [iii] completed at the 1071.50 H and we are still tracing minute [iv], as shown at the bottom of chart. Replace the (iv) label with a (w) and the (v) with a (x), this puts us in (y) down currently of a double three. [iv] would make much more sense compared to [ii].

The concern I have with this interpretation, price action was undeniably strong and impulsive to the downside. Not real characteristic of 4 wave action. This may suggest that something of more importance took place at our highs.

There is the chance that minor C completed today. I don't believe this to be the case, but it can not be ruled out.

At this point, I have to assume that we are still tracing minute [iv]. This means that we can not violate the 1034.25 H for [i] (I have that marked wrong on the chart - sorry).

I have the retracement levels on the chart. Also the yellow box is the 4th of lessor.

It appears that our KoolsTools cycle peak came in a day late.

Bottom line - Regardless of the count, we should see additional follow-through to the downside.

Crude

As expected the crude market ran higher today. Range was $2.29 on below average volume.

It's a little unclear how to best account for the subdivisions in the structure today, however, it does appear impulsive.

If this is a correct count, then we should retrace here before impulsing higher.

I have the retracement levels on the chart.

If my bigger picture has merit, that we completed a triangle, then we shouldn't waste much time in here before we "thrust" up. As mentioned last night, the target would be 77.29, or 83.72 if we assume minor B completed.

It appears that we have traced another wolfe wave. The pattern is shown on the chart.

Entry should have been at point 5 around 71.98. You would taken minimal heat of just a few ticks.

I didn't spot this until doing my daily analyzing of the price action for today's trading, so I'm short at 71.65 with a stop at 71.82.

Target is the lower boundary line that connects 1 and 4. Conveniently, we have a 161.8% projection in the same general area. I have a resting order at 71.21.

Edit: wanted to update the wolfe wave as price is currently around 71.30. I have moved my stop to 71.47, which is 1 tick above the 100% projection.

Edit: BINGO!

ES

ES managed a decent gain today in slow choppy price action. Range was a measley 9.75 handles and volume continued to decline.

It is unclear whether wave (iv) has completed or not. Price action off the 1051.50 L has been choppy with overlap, suggesting that structure is still grinding out a corrective.

An alternative to still tracing (iv) is that this (v) wave is an ending diagonal. That is certainly a possibility, in fact, it could count complete if this is the case.

Or perhaps you can squeeze a 5 off the low, just don't look at a chart under 15 minutes and you can get a 1 wave :)


My best guess is that we are still grinding out a (iv) wave, however, I noticed the Russell and Naz made new bear rally highs today.

We did have a KoolsTools peak day today. This suggests that we should see downside pressure - should the cycle work.

Crude

Crude took one on the chin today losing 3.5%. Volume was above average, while range was $3.38.

In the weekend update I talked about a couple of scenarios that may be in play. Based on the continuous contract, I discussed a minute [b] wave combination where (w) and (x) were complete.

It appears that (x) is taking the form of a triangle, also discussed. If this assessment is correct, then there is a good chance that we finished the triangle today.

It would measure $8.02 and target 77.29 based on e ending at the 69.27 L.

It would be the running type, as b exceeds the price extreme of a (p. 50, figure 1-43 Elliott Wave Principle).

This is the November contract. Notice that the late August highs do not exceed the early August highs.

This gives the opportunity for the minute degree triangle that the continuous contract doesn't afford (see weekend update chart).

In each case, they both suggest that near-term price should break higher. This assumes that [e] or e have completed. This is not a certainty.

The minute degree scenario argues that minor B has completed as well as giving a much bigger target. It measures a healthy $14.45 and gives 83.72 as the target.

Correctives can be very tricky. They can fool you into labeling a triangle complete way to early, or simply interpreting the structure incorrectly. So, keep that in mind before sending your buddy VO a mail bomb in case this breaks lower in a totally different pattern :)

I believe the conservative play would be to buy/sell a break of the [d] or [c] leg.

ES

ES had a positive day, though finishing lower than Friday's close due to the globex gap down. Range was 11.25 handles on declining volume.

No question this is a 4 wave. The issue is determining what degree. I still maintain that it is a minuette degree, however, it very well could be minute.

Regardless of degree, I believe that it is not finished. It appears that it has taken the form of a "double three" (w,x,y) and not a triangle, as discussed in the weekend update.

There is the possibility that y, and thus (iv) completed at the 1051.50 L, which was the 23.6% retracement. I don't believe this is the case, as price action doesn't appear to be impulsive off that low.

We also have not fulfilled the 15 minute deadly at 1048.

That leaves us needing to complete this last sub-minuette y to finish off (iv).

It appears that [A] down was a 5. If correct, then this y leg will be a zigzag. If somehow it was a 3, then look for a flat or triangle.

I give low odds to the triangle, as this means that price will not take out the price extreme of [A] at 1051.50. As mentioned above, the deadly rests at 1048, which I believe we will see.

[B] has a direct 70.7% retracement. Perhaps it wants the 141.4% projection at 1040.50? This assumes that [B] is in fact complete.

[C] = [A] at 1047. The 38.2% retracement of (iii) comes in at 1039.25.

Don't forget the KoolsTools cycle peak due tomorrow.

Weekend Update - ES

ES
The equity markets once again powered higher this past week on better than average volume.

This is a 15m pit session chart. It is pretty obvious that we are in a 4th wave of some degree. I have us ending a minuette degree (iii) at the 1071.50 H.

It is entirely possible that we finished a minute degree up there, as shown as the alternate at the bottom.

It appears that we may be tracing a triangle for this (iv)th wave. If that is the case, then it counts to this being an e leg currently. The c leg low of 1059.25 can not be violated or this will not be considered a valid triangle (basis December contract), as I have it labeled.

Once this (iv) finishes, we should have another push higher that would complete wave (v). We should get a more meaningful retracement at that point.

If a triangle, it measures 15.25 handles. Depending where e ends, this will target somewhere in the mid 1070's.

Should this not turn out to be a triangle, I have highlighted an area where price typically finds support, in the area of the previous wave 4 of lessor degree.

The minute wave [i] high = 1033 (basis December contract). Should price enter this territory, we would need to reassess the count. The wave (iii) retracement ratios are on the chart.

This is a snapshot of my trading chart with the breakdown of this current wave (iv) corrective.

There are several possible ways of counting this - this is one view.

It appears that a was a "double three" down to the 1056 L. The triangle form should be fairly easy to see.

There is a possibility that b turned complex as well. This means that it finished at the 1067.25 H, where d is labeled on the chart. If this is the case, then this is likely not a triangle.

We will need to see further price action to nail this in-process pattern down, however, under no circumstances can the 1056 L be violated. This would mean that the triangle pattern is dead.

We would then look for a normal 5 wave c leg to take place.

This is the potential wolfe wave chart I posted last weekend.

As I stated this past week, I don't believe this pattern plays out.

Not that I would mind, as I have some October SPY puts in inventory, but structure doesn't suggest this is in the cards.

In my opinion, the only way this plays out is if minor C has completed. I don't believe that is the case.

This is an OEX weekly chart that has been a couple of months since I last posted it.

I have trend lines of interest, as well as, a Fibonacci fan from the October 08 highs.

There are three things I want to point out.

First, we have broken and closed above the main trend line off the highs. It did not pose any real resistance, at least on a weekly basis. This could be viewed as very bullish.

Secondly, we are fast approaching the 61.8% fan line. Will it get in the way of the bulltards and prove to be a challenge for higher prices? I suspect we get some type of reaction there.

And lastly, we have huge negative divergence based on this simple stochastics. Price would have to go significantly higher to erase this. The bottom indicator is a simple MACD. It too shows divergence based on the histogram.

Bottom line - price action off the 1071.50 H is corrective in nature - not impulsive. After this is done, we once again should see higher price.

This doesn't mean that price will take out the 1071.50 H. We can always have a truncated (v)th wave. Regardless of where it completes, expect a decent correction of price and/or time.

We are setup for a very nice KoolsTools cycle peak for Tuesday. This is based on the days of 8/17 and 9/2. Notice the "bowl" that Kool is so fond of pointing out.