Weekend Update #2

30 YR BONDS
The bond market reversed late in the week on increasing volume.

Price rejected off the 200 sma before finding support at the 50 sma.

It is unclear to me if the move off the 114-26 L should be counted as a 5 or 3. It sure looks like a nice zigzag to me.

If it's a 5, like I show on the chart, there is 4-1 overlap.

My best guess at this point is that price is tracing an intermediate (X) wave. It may or may not have completed at the 123-25 H.

All prices basis combined contract.

CRUDE
The crude market continued higher this past week as expected.

My interpretation of the crude structure remains the same. I have price tracing minuette (c) of minute [d] in a minor B triangle of intermediate (B). My alternate view is that this is a minute [iv] triangle.

Price ran into the upper boundary of the corrective channel and was initially repelled, but finished Friday's trade closing above it. This also closes price above the daily 50 sma.

I show minuette (a) completing at the 71.39 H, however, it is possible that it actually finished at the 71.97 H.

In Thursday's update I mentioned some reservations I had with this [d] leg structure (read that post for specifics). Triangle legs can be difficult to discern, and generally are.

I'm not real concerned with exactly how the internal structure traces out. Just be aware that this wave could end at any time.

Should price trade through the 75.89 H or the 61.38 L, this would invalidate the triangle view

We are scheduled for a nice KoolsTools cycle peak on Friday. The last 3 L-L's have actually given the next low.

Bottom line - I still expect price to make its way higher, finishing off this leg.

All prices basis November contract unless noted.

DOLLAR INDEX
The greenback made fresh lows on the week, maintaining its leading role as the worlds largest supply of toilet paper.

My interpretation has structure completing minute [iii] of minor 5 of intermediate (C) of primary [B] at the 75.68 L. My alternate view is that low finished minute [v], thus primary [B].

Should [iii] be complete, then we should be in the beginning stages of [iv]. Any trade through the 77.795 L, the price extreme of [i], will suggest that perhaps it was wave [v] that finished at the 75.68 L.

The move off that low certainly appears corrective in nature.

Bottom line - I maintain my near-term bearish stance. If my assessment is correct, we are getting closer to a turning point, however, were not quite there yet.

All prices basis continuous contract.

GOLD
The gold market shot higher this past week on heavy volume reaching all-time highs.

My interpretation has structure in minute [v] of minor C of intermediate (B). This is actually a bearish view. The bullish alternate view has structure in minor 3 of intermediate (3) up to god knows how high.

Notice how we went from one side of the channel to the other, finding resistance on the upper boundary and previous high print. There were also plenty of fibo relationships there as well, almost assuring us of at least a pause.

It appears that minuette (iii) completed at the 1062.70 record high. If correct, we should currently be tracing (iv). I have placed wave (iii) retracement levels on the chart.

(ii) was a sharp zigzag, therefore, suggesting that (iv) should be relatively flat and possibly complex.

I mentioned last week that I thought price may not be able to reach its triangle target of 1076.80, which by the way, is right in the area of where [v] = [i] - [iii] Obviously, based on price action thus far, it could easily attain that level - should that be in the cards.

If (iv) has traced its low, which is doubtful, then (v) = 61.8% of (i) - (iii) at 1092.30. The 426.6% projection of (i) sits at 1092.80.

Should this retrace get out of hand, the price extreme of (i) = 1011. The line in the sand level.

There was a H-H cycle that came in on Friday based on the 6/3 and 8/6 dates. This suggests that we should see some downside pressure, fitting right in with structure.

Bottom line - I expect to see an additional push higher once this retrace is complete.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market had strong upside price action this past week.

This week I'm showing the December contract instead of the usual continuous contract.

I'm not quite sure what's going on in this market. As strange as this sounds, I believe the 302 L (both contracts) either completed an important bottom, or we are in the early stages of much lower price.

I can make arguments both for and against each scenario. It does appear that we finished a 5 wave structure down off the 474.60 H (465.50 continuous).

Even though I show the bullish case on the chart, I favor the alternate. It's hard to imagine c being that small compared to a - not even getting to the 61.8% of a.

Then again, the technicals are telling me that price appears to want higher. Notice the monster positive RSI divergence that has developed over the last few months.

Also noteworthy, is the massive upside volume registered in this market since mid September.

I have discussed a [4] wave potential triangle in previous updates. The proportion with [1] is just to extreme in my opinion. It should be noted, however, that price has not exceeded the wave [4] H, as of yet.

They were nice enough to leave us hanging, as Friday's trade fell a few ticks shy on December, while the continuous had a perfect double top at 373.

Critical levels for the upcoming week are the wave [4] price extreme at the 376 H (373 continuous) and the 302 L.

Bottom Line - I'm unsure at this point what precisely structure is telling us. I can tell you that I need to see an impulse that takes out the channel before I can get behind a cycle degree bottom.

All prices basis December contract unless noted.

SOYBEANS
The bean market enjoyed nice upside price action this past week.

My interpretation of structure has beans completing primary [B] of a double zigzag of cycle wave c. My alternate view is that primary [C] finished at the 1040 H and we have started cycle c down.

This structure reminds me of where the crude market was a few weeks ago. A [B] wave triangle is certainly possible and is a 2nd alternate.

If [B] is indeed finished, we should see 5 intermediate degree waves up that would finish [C], thus completing the double zigzag and cycle b.

Targets include [C] = [A] at 1172.50, while [C] = 61.8% of [A] at 1060.25, which is the minimum upside objective. The 78.6% retracement of a is at 1146.25.

Notice how the channel provided support and turned price higher.

I see no cycles of importance for the upcoming week ahead.

All prices basis continuous contract.

WHEAT
Like the rest of the grains, the wheat market had a big upside week. It actually had 4 consecutive winning days in a row. This hasn't taken place since May.

My interpretation of structure has wheat completing minor 5 of intermediate (3) of primary [5] of cycle v at the 439.25 L. My alternate view is that primary wave [3] is still in process.

It is very possible that I'm behind in the count and this market in fact finished primary [5] at the 439.25 L.

One of my concerns is the fact that RSI has been big time divergent over the last several weeks (not shown on chart), which I have discussed in previous updates.

RSI actually registered its low on July 7. September 9th saw RSI make a higher low and has been trending higher since, while price continued to set multi-year lows.

Price tried to break out of the channel on Thursday, but was quickly rejected.

Also troubling, is the size of the retrace thus far. It came close to the 61.8% level, which would be considered "deep" for a 4th wave. Minor 5 was small in size, though it appears to have a clean structure.

486 is the line in the sand, as this is the price extreme of (1). Should price trade through that level, the structure will need to be reassessed.

Thursday's H-H cycle produced another H instead of the expected L.

The Sunday moon did wonders for the grain markets as a whole.

Bottom line - If my current count is correct, we should have 1 more leg lower that would put in an important bottom in this market. If by chance we have seen that low, price action will begin impulsing higher.

All prices basis continuous contract.

ES

ES closed its 4th consecutive upside day. Range was 14 handles on below average volume.

Anybody else notice how volume has been considerably less on this leg up than last weeks big sell days?

It appears that we have completed a 5 wave structure up (nice RSI divergence). What this actually finishes is up for debate. I show a minute degree [i] wave, however, there are several other alternatives that make just as much sense.

It looks like we have a 5 wave move off the 1067.25 H. At minimum, we should see another 5 waves.

The same can be said of this move off the 1015 L (pit session), unless of course, somehow it is married to something from the left side of the chart.

Perhaps the leg off the 1075.75 H ended at the 1041 L for wave (i) down, and we then have been in a big expanding flat with (c) ending at today's 1067.25 H to finish (ii) up? This would entail starting (iii) of [i] down.

Folks, there is very little chance of this being correct structure. A pipe dream if you will.

If we did in fact end a 5 wave structure higher today, we should see a decent retrace. There are some gaps that WILL be filled sooner or later. A normal 61.8% retracement would take care of both of the 10/6 and 10/8 gaps.

We are slated for a KoolsTools cycle peak tomorrow. This comes from the 9/28 and 10/2 lows.

Time for kickoff. Predicted final score: Black & Gold 98 cornhuskers 0. Yes, I am wearing my 20 year old t-shirt that says "HUCK THE FUSKERS!" :)

Crude

Huge day in the crude pits today as expected. Range was $3.38 on big volume.

We had a nice easy wave structure to count today. Today was all about getting long and staying long.

It appears that we are tracing a micro wave [4] of [5] of sub-minuette iii. If this is correct, we should see an additional push higher to complete this leg.

It's unclear if [4] has completed, but it is very close. Notice that we have retraced back to the lessor of 4th degree. I would expect this corrective to remain fairly shallow.

Price traced a beautiful little triangle for sub-micro (4). A nice "marker" for where we were in the structure. Notice how the base channel supported price. Should have been an easy trade setup for those of you that trade this market.

I was fortunate enough to get long 71.35 on the e leg. Needless to say, VO got fat today :)

I do have some reservations of where I have structure pegged.

For starters, i seems awful big compared to the rest of the structure. Also, iii is one leg away from completing. Unless [5] really gets it's dancing shoes on, then there isn't going to be a lot of room for iv to trace without moving into i territory.

It is possible that (a) actually finished at the 71.97 H. This poses its own problems. (c) needs to finish below the 75.89 H in order for the triangle to be valid.

I will maintain my current count until structure dictates otherwise.

Bottom line - I expect price to follow up this corrective with another leg higher. Should price trade through the 70.58 level, then something else is going on.

Crude

It was a retracement day in the crude pits. Range was $2.88 and volume expanded.

I sure didn't expect crude to basically spend the whole day retracing the previous wave. I really thought they would make quick work of it.

It appears that structure may have finished this leg down, which I have as a sub-minuette ii wave. During trade today I thought we needed another leg down - I guess not.

Nice hit at the 78.6% retracement level. This is more indicative of a 2nd wave, as discussed last night. We also held the channel after briefly breaking underneath it.

IF this is a ii wave AND it finished at the 68.88 L, then we should see nice impulsive upside price action tomorrow.

iii = i at 72.80. iii = 161.8% of i at 75.23. (c) = (a) at 74.38.

ES

ES finished positive on the day with a late push. Range was a pathetic 9.50 handles, while volume contracted.

Slow and choppy. The results of an apparent triangle that took all day to trace. It appears that we started the "thrust" towards EOD.

Yes, that's right! There is a potential 467.38912 different scenarios that could be in play here. If I stare at the charts long enough, I'm sure I can come up with a few more.

The only bearish count would be the (i) of [iii] scenario. This will be eliminated with trade through the 1065.75 H, which should happen fairly soon (like tomorrow).

The rest of the scenarios will need additional price structure before we can confidently narrow the list down.

It appears that we have a 5 wave structure off the 1015 L (pit session). I have moved up the degrees by one, as I think this makes more sense.

The minimum upside objective = 1068.50 (pit session). This is where (v) = 61.8% of (i) - (iii).

The 250 range chart shows the wave (iv) triangle.

I was fortunate enough to get long e at 1048.75. I was also stoopid enough to get stopped at 1050.25. UGH!

We should have our customary 5th wave RSI divergence, denoted by the black box.

I fully expect yesterdays big gap to get filled during the following retrace.

Bottom line - structure should show its hand soon enough. Be patient.

Time to go root the redbirds on! Predicted final: redbirds 87 dodger blue 0, Carpenter throws no-hitter and Pujols goes yard 13x's.

ES

ES had follow through to the upside today on with a big gap up. Range was 21.25 handles, while volume was just average

In all likelihood, the scenario that would have had minor C completing at the 1075.75 H is dead. It is still possible that we have traced a couple of 1's and 2's, but at this stage it's not very realistic based on structure.

So what's going on then? I have about 5 different scenarios that make or could make sense, but it is all speculation at this point.

We had a 5 wave structure off the 971 L followed by a corrective 3. This was then followed by another 5 waves off the 986.50 L to the 1075.75 H, before our clear 3 wave corrective down to 1012.

Off the 1012 L, it is unclear if we have had 5 or 3 waves. My guess is we have only seen 3 thus far. The apparent wave 1 is a mess. Leading diagonal? Who knows - who cares. It will clear up soon enough.

There is still a better than average chance that we are tracing an intermediate degree corrective. A flat or triangle could play out off the 3 wave move down to 1012.

I show a bullish count of a minuette degree (i). It is possible that this will turn out to be an (a) wave of a triangle or flat.

I'm not going to go through all the details of each possibility, as I have already spent too much time tonight on this pos market.

We need to see further price action to see exactly what structure is up to.

Nice rejection off the broken channel. Made for a nice short setup. I averaged in some SPY puts (had 107's from yesterday and 108's today) up there.

I unloaded the 108's and 1/2 my 107's for a smallish profit. I could have been completely done at break-even. Oh well, I just have a handful left.

In my opinion, todays gap has little chance of NOT being filled within the next couple of days. Who knows, maybe it happens tomorrow as today was suppose to be a KoolsTools cycle peak day.

Crude

Crude finished higher on the session on above average volume. Range came in at "a no big deal" $1.91.

As expected, price moved up out of the corrective. We ran into the down trending channel and were quickly repelled, which is very common.

I have changed the labeling and placed sub-minuette i at today's high of 71.97.

It is also possible that i actually ended at the 71.63 H. It is unclear, as the leg off of the 70.06 is a mess.

I have placed two separate ii waves on the chart. I prefer the second lower ii myself. This means that ii needs additional work. Although 2nd waves can certainly only retrace a 38.2%, it's not very common.

There is a very remote possibility that 71.97 completed minuette (c), and thus minute [d]. As triangles start contracting, the waves get smaller and can fool you. It's possible, just not likely imo.

Bottom line - I continue to see price moving higher. If I have structure correctly assessed, then we should see nice upside price action tomorrow, as we would be in a wave iii.

Any trade below 68.05 would mean something else is going on.

ES

The equity markets had an expected rebound day today. Range was 19 handles on well below average volume.

What was not expected was how deep this retrace has gone. This calls into question whether this is an impulse or nothing more than a corrective.

Structure has been crap so far. This doesn't rule out a impulsive structure down at all. It just makes it questionable. It looks like a beautiful ABC to me.

I have put an alternate count at the bottom of the chart. It will remain my alternate until price action dictates it needs to have preferred status.

Before the bulltards get to excited, the move up from the 1015 L (pit session) is clearly corrective with choppy overlapping waves. It appears to be a double zigzag.

If this is correct, then the 1015 L will be taken out, regardless of what form the waves ultimately take.

We need to see additional price action to determine if this is nothing more than a corrective, or just an awful impulsive structure.

Tomorrow is cycle peak day.

Crude

Explosive upside day in the crude pits. Range was $2.95 on above average volume.

It appears that minuette (b) is now finished. If correct, we should see 5 sub-minuette waves up to complete (c).

The attached chart is a 5 minute look at the up move today. This is one way of interpreting structure.

I show sub-minuette i completing at the 71 H. It almost feels like this is a wave [4] instead of ii. Tomorrow should give us additional clarity.

Regardless, I believe the ultimate destination is higher.

Here is the daily view of the triangle unfolding.

Notice that (c) = (a) at 74.37. This is very close to the trend line, which is a convenient place for this leg to end.

I'm expecting this little corrective to finish up in short order. We should see continued upside price action once complete.