Weekend Update - ES

ES
After a nice upside day on Monday, it was all downhill the rest of the week, with Thursday being particularly nasty.

The ES has now given up over 50 handles from its 9/23 high of 1075.75.

It is obvious to me that the equity market(s) topped at the ES 1075.75 H. At minimum we should see an intermediate degree correction. At worst - turn out the lights 'cause this party is over.

My interpretation of structure has the 1075.75 H completing minute [v] of minor C of intermediate (Y). I will assume that primary [2] of [5] of cycle c was finished as well, until proven otherwise.

If correct, this suggests that the March lows should be taken out in this primary wave [3] down. Actually, it is required for 3rd waves to travel beyond 1st waves, as a rule of formation.

There is a possibility that we trace an intermediate degree (X) wave before going even higher, as shown on the monthly chart.

This is a 15 minute pit session chart.

This is my current view of structure of the decline so far. If correct, we are tracing a sub-minuette degree iv wave of minuette (iii). Once complete, we should see v down that will finish (iii).

I have seen some counts out there that show minuette (i) ending at the 1041 L. It is certainly possible, but I don't share that view.

The problem rests with what to do with that clear 5 waves up to the 1065.75 H. My interpretation has structure forming a zigzag with a failure c leg.

The highlighted area represents the 9/7 gap, which should fill in short order and actually has on the 24 hour chart.

This is a Bullish Bat pattern that setup late Friday. It reached its 1st target at market close.

It's possible we see higher price when globex opens if we are still under the influence of this pattern.

I don't like the fact that price ticked through the 88.6%, but 2nd target is up at 1025.50

The daily 3 bar projection sits at 972.25. Notice that the 161.8% was at 1012. Should we break that level, and I'm fairly certain we will, this would suggest that price wants to find its way down to the projection.

SPX
A look at daily cash shows a couple of things of interest.

First, notice the uptrend channel from the March lows. We are very close to that very important lower boundary line. I suspect that should be good for at least some kind of bounce.

Once broken, the play would be to sell a back test failure.

Also notice the RSI. We have broken the uptrend line from the March lows. We also had a very nice and pronounced negative divergence at the highs.

Can't help but notice what a crappy minor C wave, at least wave [v]. A very unsatisfying structure at such an important juncture imo.

We have a full moon Sunday night. Statistically, you are supposed to buy sell-offs into a moon. I don't personally trade moons, but I do pay close attention to them.

Tuesday is a KoolsTools cycle peak day.

Bottom line - there is absolutely nothing suggesting a bullish case here. As stated above, we should see an intermediate degree sized correction at MINIMUM.

Weekend Update #2

30 YR BONDS
The long bond had nice impulsive upside price action this past week.

Price ran into a bevy of resistance including the 200 sma, the 4th of lessor, a 1:1 price projection, as well as the price extreme of intermediate (A) (red dotted line).

I am still unsure of what exactly is playing out with structure. I suspect this is tracing out a primary [B] wave, though far from certain about that. Perhaps this is an intermediate (X) wave of a double zigzag. Again, I'm not sure.

I do show some potential counts at the bottom of the chart. Notice the super bullish count. This would suggest that a major bottom has been put in. I think that is a very remote (at best) possibility.

It does appear that near-term price has not finished going up. Not sure it gets as high as that gap, but it's a big target.

The more structure we see, the better idea we get of what's happening in this market.

All prices basis combined contract.

CRUDE
The crude market rebounded strongly this week, which was not unexpected.

My interpretation has structure in minute [d] leg of a minor B wave triangle of intermediate (B). My alternate view is that this is a minute [iv] wave triangle.

The triangle form continues to take a recognizable shape. I'm showing the continuous contact. You will notice that it counts a little different than the front month November contract, but both are currently in the same place.

It appears that we have finished minuette (a) of minute [d]. It is not clear if we have completed (b) yet. It may need additional work, but looks close to being done.

If this is correct, we should see (c) up unfold this coming week. The projected upper boundary line looks to come in around 74.50ish. (c) = (a) at 74.66, with the 78.6% of (a) at 73.30.

Key levels are the 75.41 H, which is the price extreme of [b], and the 65.05 L, which is the price extreme of [c]. We don't want to see price get much above/below these levels.

Critical support is the 61.56 L. This is the price extreme of [a]. If my assessment of the internal structure of the triangle is incorrect and [c] is still tracing, then it will need to maintain above this level.

We can come up with general upside targets, as [c] appears complete. The continuous contract measures 15.45, while the November contract only measures 14.51.

This gives targets of 80.50 and 79.56 respectively. Calculations were based on the 65.05 L of [c]. Whenever [e] finishes, we will want use that price for measurement purposes. This will more than likely give higher targets.

The cycle didn't disappoint. Perhaps the next cycle low will determine the end of [e]? This is scheduled to come in 10 trading days from Friday, or October 16.

Bottom line - we are inching closer to entering the next phase of this market. Nobody will be more happy to see that than me. Correctives can drive a person mad - myself included.

Everything appears to be setup. Lets hope for follow through.

All prices basis continuous contract unless noted.

DOLLAR INDEX
The bucky finished relatively flat on the week.

I interpret structure to be in minuette (iv) of minute [iii] of intermediate (C) of primary [B]. My alternate count has primary [B] completing at the 76.045 L.

It appears that (iv) may have completed at the 77.735 H. It is unclear with all the chop and slop of the corrective waves.

Should this be incorrect, price can not trade through the 78.085 level. This would enter wave (i) territory, thus negating the current count.

This sure has channeled like crap the last couple of months. Price acts like it has yet to go through its minor degree wave 4.

I would love to be bullish this market, but I just can't get a clean impulse off the lows. There is 4-1 overlap right out of the gate. Perhaps it's a "cheater" as these do occasional happen.

Friday is setup for a decent KoolsTools cycle peak.

As pointed out last week, there is huge RSI divergence.

Bottom line - I'm still cautiously bearish this market.

All prices basis continuous contract.

GOLD
The gold market rebounded this past week, perhaps being the beneficiary of a flight from equities.

Nothing has changed with my current view of gold. Minute [v] of minor C of intermediate (B) is where I have structure.

Although not shown on the chart, my alternate would be that we finished minute [v] at the 1025.80 H. There is also the remote chance that we finished [i] at the 1025.80 H.

I believe that minute [iv] completed at the 985.50 L. It's a very nice ABC corrective. If this is correct, it appears that we may have put in minuette waves (i) and (ii) of [v].

Based on structure thus far, I'm not expecting price to make it to the triangle target at 1076.80. It's certainly possible that it does, however, its going to take a mighty [v] to get there.

We narrowly maintained channel support on a close basis. This should not be an issue, assuming the count is right.

This is a potential concern of mine. Sure looks like a double headed monster to me.

Should this fairly nice looking H/S play out, it measures down to the 940's. This is suggestive of a short-term top being in place. Not exactly what I'm looking for at this stage - hence the concern.

The cycle this past week played out as I thought it might. Whether it was an inversion or just a plain failure, it worked out. No cycles that I can see for this coming week.

Bottom line - I remain cautiously near-term bullish. Should we take out the 985.50 L, I will assume that two headed monster is in play.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market closed down on the week after looking like it might breakout in the early part of the week.

My current interpretation has the corn market in the beginning stages of intermediate wave (3) of primary [5] of cycle c . My alternate view is that we are tracing a primary [4] wave triangle.

There is the possibility that primary [5] completed at the 302 L, however, I don't believe this to be the case.

The 347.50 H held, which was a key level of resistance. Structure still has not given any definitive confirmation as to what it wants near-term.

Drilling down intraday, the leg up off the 310 L appears to be corrective. This suggests that we may have a smaller degree minor 1 and 2 in place. We can't rule out that (2) has not yet finished.

If I have assessed structure correctly, we should begin to see hard downside impulsive price action. Friday was certainly a good start.

Though not shown on chart, 3 = 161.8% of 1 at 286. Intermediate (3) = (1) at 276.75. This fits in with the minimum objective of [5] at 278.25.

Key levels this week remain the 347.75 H and the 310 L.

I have included a fib set should (2) need additional work, or primary [5] being complete.

All prices continuous contract.

SOYBEANS
The bean market sold off hard this past week, particularly on Friday.

Based on my interpretation, structure is in intermediate (C) of primary [B] of cycle b. My alternate view is that primary [C] completed at the 1040 H and we have started cycle c down.

I have added a second alternate at the bottom of the chart. This is a speculative primary degree [B] wave triangle.

It appears that intermediate (B) was in fact complete at the 977.75 H. This means that we are currently in (C), if this is correct.

We are very near the lower boundary of the channel line, which may act as support. It is unclear if 5 waves down are finished, as there is always the chance of an extension, but it does look close.

This would be a convenient place for structure to turn. If not, (C) = (A) at 829.75.

I don't see anything of importance in the cycle area scheduled for this coming week.

All prices basis continuous contract.

WHEAT
Nothing new in the wheat market this past week as it continued to sell off.

My interpretation of structure has wheat in minor 5 of intermediate (3) of primary [5] of cycle v. My alternate view is that primary wave [3] is still in process.

It appears that minor 4 has completed at the 477.25 H. If correct, the minimum objective for 5 = 61.8% of 1 - 3, which sits at 439. Equality with 1 comes in at 414.25.

Intermediate (3) = (1) at 417.50.

The first clue that wheat is bottoming, will be a decisive break of the channel. RSI continues to sport a positive divergence on the daily time frame. Something to watch.

We are scheduled for a KoolsTools cycle low on Thursday.

At this point, structure suggests the downside is unfinished.

All prices continuous contract.

Edit: failed to mention that there will be a full moon on Sunday, October 4.

ES

The equity markets experienced hard downside price action today. Range was an impressive (for the ES) 31.50 handles on another big volume day.

Has the "Great Bear" returned? Price action took out the last remaining level of support (1034.25) that would allow any bullish interpretation.

The preponderance of evidence suggests that we have topped. Is it THE top? That's yet to be determined, but I believe the odds are greater than 50% that we may have entered the next phase of this market.

I have replaced my count with the alternate scenario. This implies structure completed minor C of intermediate (Y) of primary [B] at the 1075.75 H.

Yes, it's far from that perfect idealized Elliott Wave structure, but it is what it is.

I am showing a 120 minute pit session chart because after the 1065.75 H it is a mess trying to get a clean count. Sub-minuette i finishing at the 1053.25 L is just a guess. It's more likely that it actually ended at the 1041.50 L. It's not all that important at this stage.

We should be close to finishing up a sub-micro degree wave structure (not shown).

The daily 1 bar projection sits at 1022. At a minimum, there should be some type of reaction once fulfilled.

The daily 50sma is currently at 1016.25, another level worthy of our attention.

Minuette degree targets include (iii) = 161.8% of (i) at 1002.25, and the 261.8% projection of (i) at 962.50.

Watch the base channel boundary line. This could be a support level.

As discussed in last nights post, I was forced to bail on my calls. I ended up netting out a profit, but chicken feed really. Not to bad when you can be 1000% wrong and still make some beer money :)

Bottom line - I have no choice but to be near-term bearish. There is just no bullish alternative. If your a bulltard, the best you can hope is that this is an intermediate degree (X) wave unfolding.

I suppose it's possible that we somehow finished minor A at the highs. There are better odds of me giving up VO. In other words - don't bet the ranch on it folks :)

It's time to sell this pig!

Crude

The crude pits were a little tamer today, which was not unexpected. Range was $2.26 on above average volume.

I show two separate ways of basically getting to the same place, same time, that is minuette (a) completing at the 71.39 H. Doesn't really matter which is correct, they imply the same thing.

It is possible that the 71.39 H finished the wave iii (or [3]), suggesting that there should be one more leg higher.

Notice the RSI divergence. This is suggestive that the move off the 65.05 L has finished, although, not a certainty.

If this assessment is correct, we should find ourselves in a (b) wave corrective. Once complete, we should see minuette (c) higher.

We did have what appears to be a nice flat off the highs that retraced to the 38.2% to the tick. I suppose it's possible for this to be (b), however, I don't believe that's the case. I would expect something bigger in both price and time.

Anybody notice how the crude market bucked what the dollar did today? Every market has their own structure. Sometimes they fit with other markets - other times they don't.

Crude

HUGE day in the crude pits. Price closed up almost 6% on big volume. Range was $4.50.

Well, obviously sub-minuette v was complete. I show that happened at the 65.05 L, which would have been on Friday. This should conclude minuette (c) and minute [c].

Structure off the bottom probably counts best as a double zigzag a wave, although I show a i on the chart. Regardless, we had a heck of a 3rd wave today, which is either a iii or [3] .

It appears that we finished whatever degree 3rd wave at the 70.72 H. If so, we are currently tracing a 4th.

If I have assessed structure correctly, we are working on the [d] leg of a minor B triangle. Price should not trade above the [b] wave high of 75.89.

We have to careful here as the waves start to contract, it is easy to over estimate the degrees.

Once [d] completes, we should see an [e] leg lower before we "thrust" up and out of the triangle.

iv should finish up fairly quickly then we should see a more meaningful retrace after v is done.

ES

The equity markets had a strange day. Big swings back and forth. Range came in at 22 handles, while volume was huge.

Based on my interpretation, we finished minuette (ii) down and then traced out a sub-minuette i and ii waves. Should this be correct we are setup for big upside day tomorrow.

I got my deep corrective, as we retraced 78.6% of (i). In the process, we actually busted the channel, but quickly regained it.

Notice that we came close to the same channel on the wave ii retrace. This is an important channel. We need to maintain this support for a continued bullish view.

We now have upside targets based on the initial structure of minute [v]. iii = 161.8% of i at 1075.75, while the 261.8% of i is at 1093.50. (iii) = 161.8% of (i) at 1089, while the 261.8% of (i) sits at 1118.50.

Someone mentioned the possibility of a bigger triangle setting up in eChat today. I looked at this scenario last night and came to the conclusion that it is possible, however, the leg up from the 1035.75 L clearly traced a 5 wave structure.

Remember, triangle legs are always 3's. I suppose this could be a "cheater", which does happen, regardless of what the purists say. It's possible, just low odds imo.

I got myself a slug of October 103 SPY calls this morning near the lows. They shook me out of 1/2 of them for a $.55 profit, but I still have plenty to take advantage of a very bullish (i)(ii) , i-ii scenario - should this play out.

It appears that the KoolsTools cycle low came in as expected.

Any trade below 1041.50 is cause for concern. I will dump my calls should we trade through that level. Although not a deal breaker for the bullish case, it severely wounds it.

Bottom line - I'm near-term bullish. Structure suggests we have higher price ahead. Should my assessment be incorrect, I will change my strategy accordingly.

Crude

Crude finished down in a pretty lackluster session. Range was a smallish $1.51, while volume expanded from yesterday, but still below average.

Not much has change with this market. My view is that we are still in the process of tracing sub-minuette iv of v of minuette (c) of minute [c].

Price action was choppy with overlap, confirming that we are still correcting the move down.

I am hoping that we can have a normal last wave down. There is always the chance that we truncate, which is fine, as long as is it easily recognizable.

Not much to add tonight folks. Just be patient and let structure unfold.

ES

The equity markets ended lower after making their highs in the morning. Range was a smallish 12.50 handles on expanding downside volume.

My view is that we finished a minuette wave (i) of (v) of minute [v] at the 1065.75 H. We are currently tracing wave (ii).

I have ratcheted down my degrees by one, as I think this makes sense, based on the structure.

It appears that (ii) is taking the form of a double zigzag. I would like to see a "deepish" type retracement for (ii), and a double zigzag suggests that we will.

Equality = 1048.50. The 70.7% retracement = 1044.50. Somewhere in that vicinity would be perfect.

Price action off the 1065.75 H appears corrective, as it should. You could make an argument for a leading diagonal, however, I think it counts best as a 3.

If somehow the alternate count were in play, then this would suggest that we were looking at minuette degree (iii) down. I don't believe it would start with a leading diagonal.

Perhaps it is just a a wave of (ii). This suggests that we would have to have at least another 5 wave structure up of sub-minuette degree to finish (ii), but without exceeding the the 1075.75 H.

It's possible, however, it is my alternate count. As stated above, I believe we completed (i).

We are due a KoolsTools cycle low tomorrow, which fits perfectly with structure.

I plan on putting on a long line tomorrow via calls. More than likely they will be October's. Should I be completely wrong, it shouldn't take long before I know, as we would be entering a 3rd wave down.

Stop will be the 1035.75 L, as this is the line in the sand for my interpretation of structure.

Please do your own due diligence before placing any wagers.

Crude

Crude followed the equity markets higher. Range was $2.13 on declining volume.

Not a whole lot changed with today's action. It appears that wave iv is still in process.

As mentioned in last update, it is unclear exactly where iii completed. I have it labeled at the 65.60 L. It is possible the 65.05 L contained it.

Regardless, It does appear that it is finished. After iv completes we should see v down.

Retracement levels are are on the chart.

This is a very nice Bullish Crab that took place today.

Even though it only managed to get to 1st target, that was still over $.60 of potential profit.

Notice the nice RSI divergence at completion of pattern.

Big nice swings in today's trade. I hope some of you were able to take advantage of them.

ES

As expected, ES had impulsive upside price action today. Range was a nice 25.25 handles, however, volume was meager.

I really have doubts about the minuette degree starting waves I have labeled on chart. I show an alternate count of sub-minuette degree.

Remember, 5 minuette degree waves up will finish minute [v] and thus, minor C. Minute [i] was 63 handles, while minute [iii] came in at 89.25 handles.

It's certainly possible that the minuette degree's are correct, but unless (v) explodes, then minute [v] will be very small in comparison to the rest of the structure.

Equality = 1098.75. The minimum objective of 61.8% of [i] - [iii] = 1100.25.

Thus far, we have beautiful fib relationships working with structure.

Price was temporarily stopped at the 61.8% retracement of the corrective, as well as the 261.8% projection of wave (i) (or i).

This is a good "marker" for us, as 3rd waves have a common relationship with the 261.8% ratio.

We have retraced to the 23.6% of wave (i), which again is a nice "marker", as 4th waves generally retrace 23.6% - 38.2%.

It appears that the daily 20 sma has held so far. The pattern discussed in the weekend update, suggests that price should see new highs.

We should see higher price once this wave (iv) (or iv) completes.

Weekend Update - ES

ES
Not a good week for the equity markets in general. The ES closed down 34.75 handles off its Wednesday high.

My current interpretation has structure finishing minute [iv] of minor C of intermediate (Y) at the 1036.25 L Friday.

In order for this view to remain valid, price can not enter the territory of [i], which sits at the 1034.25 level. Should that occur, odds favor that minor C completed up at the 1075.75 H, as per the alternate at bottom of chart.

The only remaining bullish way at looking at structure would assume that C was tracing an ending diagonal. This would actually require [iv] to work its way into wave [i] territory. Although a possibility, I don't think it is very realistic.

Diagonals form 3's - not 5's (p. 36-37, Elliott Wave Principle). It is clear to me that minute [i] traced a 5 wave structure.

It appears that we have a little 5 waves up off the 1036.25 L. I have labeled this as a minuette (i) and (ii). 5 minuette waves up will finish minor C, thus completing intermediate (Y).

Price does not have to reach new highs to finish its upside structure. It's very possible that [v] could truncate.

Targets for (iii) are equality with (i) at 1047.75, as well as, the 161.8% projection of (i) at 1053.

This is a weekly look at things. Notice that MACD has a confirmed cross-over. Also notice the big negative divergence of the histogram.

I suspect that RSI will have a reaction at the trend line. I'm still looking for RSI to show a negative divergence before this bear rally completes. The breaking of the channel will let us know that the downtrend has resumed.

Although not shown, we have reached the monthly 20 sma (and ema) - and were rejected. This has setup a big sell pattern, as ADX is also over 30. I don't trade this pattern, but I do pay attention to it.

It should be noted, however, that the daily has setup a buy signal based on the same.

The daily projection down = 1022. We did close under the 161.8% projection, suggesting that we should see the 261.8%.

We had a KoolsTools cycle peak that was scheduled for Tuesday. We did go on to make a higher high, but not on a close basis. The next decent cycle I see is a cycle low setup for Wednesday. This comes from the two peaks up top.

Bottom line - I'm looking for structure to trace out one more impulse. It appears that we have a 5 wave move off of Friday's low. At minimum, we should see another 5 waves up.