Weekend Update - #2

30 YR BONDS
The bond market sold down after a failed test of the 200 sma, with Monday being the big down day.

Bigger picture structure remains unclear. I show a potential intermediate (X) wave in place at the 123-25 H.

Price has reached the lower boundary of the channel. A bounce of some type should not be unexpected.

Key levels to watch for the upcoming week are the 123-25 H and the 117-18 L. Should that 117-18 L give way, I suspect that the 114-26 L will be reached in short order.

The retracement levels from the corrective off the 111-24 L are on the chart.

All prices basis combined contract.

DOLLAR INDEX
The worlds largest supply of toilet paper saw decent downside price action this past week.

I interpret structure to be in minuette (v) of minute [v] of minor 5 of intermediate (C) of primary [B]. A lot of ending 5's are very near folks.

Notice how the 50 sma has held price in check since July.

Noteworthy as well, look at the RSI action since it registered its low in early June. It has consistently been turned back down from the 50% level. In fact, this has happened 6 different times.

There is big positive divergence, forewarning that a change of trend may soon be at hand.

The DSI readings continue to point to a one way trade here. As has been mentioned in these posts numerous times, this can not go on indefinitely.

5 = 61.8% of 1 - 3 at 74.79. This is the minimum downside objective that would be expected to be reached.

Bottom line - This trend is very mature at this point in time. Be aware that it could end at anytime. As always, an impulse off a low with a channel break will give confirming evidence.

Price basis combined contract.

Crude
Hard upside price action in the crude pits this past week.

It is unclear whether crude broke free from a minor B wave triangle or not, as I show on the chart.

Price action certainly resembles a "thrust" that would be expected.

If a triangle, it measures to 84.33.

There is also the possibility that this is part of a combination corrective, and perhaps a combo that is not finished. That has yet to be determined.

Bottom line - price action does not appear finished in this move higher, however, it should be close to needing a retracement.

I am anticipating any retrace to be shallow and short lived.

I am a little bummed out that this didn't setup properly, which would have allowed me to put together a decent long line via calls :( This however, is how the market operates.

Price basis continuous contract.

GOLD
The gold market set another new all-time high this past week, printing 1072.

My interpretation of structure has this market in minuette (iv) of minute [v] of minor C of intermediate (C). The alternate view is a very bullish minor 3 of intermediate (3).

As pointed out in Thursday's post, it is unclear which peak (iii) finished at, 1062.50 or 1072.

Once (iv) completes, we should see another leg higher that would complete [v], and thus C.

If this assessment is correct, then the bulk of gains have already occurred. Of course, there is always the possibility that (v) could extend.

Bottom line - we should see another push higher before a meaningful correction.

Price basis December contract.

Weekend Update - Grains

CORN
The corn market broke through prior 4th wave resistance with impulsive price action.

As per my update earlier in the week, it appears that a primary degree structure completed at the 302 L. This suggests that cycle wave c has finished, and thus supercycle (a) .

My interpretation has structure in minor wave 4 of intermediate (3) of primary [A] of cycle a of supercycle (b). A mouthful for sure. If correct, this suggests that a tradable bottom is in place for this market.

My alternate view is that the 302 L only finished primary [1] of c down. This would be a very bearish count for the corn market, should it be correct.

Since (a) down took the form of an abc , or a 3 wave structure, this leaves open the possibility of (b) being a flat, triangle, or zigzag.

Price ran into some important levels this week that acted as resistance. Notice that it also ran into the channel. It is no surprise that price was unsuccessful in its bid to move higher.

The channel will be one of the signals I need to fully back my current assessment, as well as a completed impulse.

Bottom line - The evidence is strongly suggesting that an important development has taken place at the 302 L. I will assume this to be the case, until proven otherwise.

Near-term should see upside price action after completion of this minor 4 wave. The 200 sma is directly overhead, chances are good that it will act as resistance.

All prices basis December contract.


SOYBEANS
The bean market spent the majority of the week consolidating/retracing.

Nothing has changed in my assessment of this market. Primary [C] of cycle b of supercycle (a) is where I show current structure. I still think that a triangle could actually be playing out.

Perhaps this is a big b wave combination. The 974.25 H, where I have [C], could be [W]. The 746.25 L could be the (A) leg of an [X] wave triangle, with the 1040 H as (B).

I have just never been satisfied with the 5 wave structure that completes [A] . Then trying to marry the front month and combined contracts with the continuous makes me think something other than a double zigzag is tracing.

Of course they could make it easy on me and just blow out the 1040 H, thereby, confirming my preferred count.

Targets remain the same, [C] = [A] at 1172.50. [C] = 61.8% of [A] at 1060.25, our minimum upside objective.

I don't see any decent cycle days for the upcoming week

Bottom line - I still anticipate higher price. It appears that we finished a minor degree 3 wave on Tuesday and look to be tracing 4. After completion, price should begin working higher.

All prices basis continuous contract.

WHEAT
The wheat market broke above 4th wave of lessor degree resistance in impulsive fashion.

I stated last week that I may be behind in the count. It appears that is indeed the case. The necessary structure is in place to say that 5 waves off the 725.25 H have completed at the 439.25 L.

My current interpretation has structure completing primary [5] of cycle V of supercycle (a) . Should this view be correct, a tradable bottom is in place.

With a 5 wave move from the early 2008 H, we can expect (b) to take the form of a zigzag. B wave zigzags generally retrace between 38.2% and 78.6% of the prior move. This is shown with the cyan tinted box.

RSI has really been warning that something was up. The positive divergence, which also shows up well on the weekly, was too great to ignore. Although I have discussed it for several weeks, I really dropped the ball on this one.

Drilling down intraday shows how I'm looking at this leg higher.

It is possible that the 529 H finished an impulse, however, I believe it counts best with a minor wave 3 completion up there.

483 becomes important with this view. This is the price extreme of 1, which should not be traded through.

It appears that the minute [c] leg (not shown) of this wave 4 corrective needs one more leg down to complete.

Bottom line - I do believe that something important has taken place in this market. Before I can get 100% behind it, I need to see an initial impulse wave. That is 3 sets of 5 waves.

Based on my count (which could be wrong) I see just 2 sets so far. I also need to see a 2-4 channel break, thereby, confirming a new primary trend.

It's always nice to see markets move into their next phase.

All prices basis December contract.

Edit: We have a new moon on Sunday the 18th. The last moon on the 4th, set the grains off. Lets see what happens.

Crude

There was an upside explosion in the crude pits today. Range was a nice $3.18 on above average volume.

I'm not entirely sure whether we came out of a triangle or not. It really doesn't matter, and we wont really know until down the road.

What does matter is price action has been impulsive off the 68.88 L. We either ended [e] or likely [2] there.

I'm still expecting price to reach the 79.42 target area. I would like to think that we could accomplish that in short order, but nothing goes straight up. We are due a retrace.

If minor B is indeed complete, the minimum upside objective is 83.54. This is where C = 61.8% of A. C = A around 100.

We also have the 38.2% retracement of the all-time high in the same area.

Prices basis November contract.

I read a headline from our idiot financial media that said "the stock market was helped by the strength in oil." Since when is $78 crude oil a good thing? Did anybody notice RBOB? I saw where it was up over 5% at one point.

So this is a good thing that should be cheered I guess. The tranny's don't seem to mind either. Crude is up about 70% since February. Seems pretty good unless your comparing it to the tranny's - up almost 90% since March. Whatever.

If I'm right on structure, then the tranny's have much higher to go, because structure suggests crude isn't finished.

How about that trade I put on last night :)

Gold

Checking in on the gold 60 minute continuous contract.

This market made news highs on Monday and Tuesday, reaching 1072, before starting to correct. This is very close to the 1076.80 triangle target.

It's unclear exactly where this minuette degree (iii) wave finished. I have the 1072 H shown on the chart, however, it may very well have ended at the 1062.50 H. This is the alternate count at the bottom.

This would entail an expanded flat for (iv). The leg I have labeled as sub-minuette v is a mess. It counts much better as a corrective.

I wouldn't be surprised if (iv) turns into something more complex, as it has that look like it needs additional time and/or price.

We have had huge negative RSI readings with each successive peak since the 1045 area.

The 200 sma supported this corrective thus far. If price gets through the 20 sma, I would expect the 50 sma to repel price back to the 20 sma, before it can make another attack on the 50 sma. Basic major moving average stuff.

If this interpretation is correct, then we should have an additional leg higher to complete minute [v], and thus minor C.

As I have stated in previous posts, I may be ahead in the count. It's possible that we would only complete minute [iii]. That is one of my alternate views, with another being that this witch is going lots higher.

1011 is the price extreme of (i). Should this level be traded through, then obviously something is wrong.

Crude

Fairly lackluster day in the crude pits. Range was a very small $1.13, while volume was slightly below average.

Guess they were waiting for globex to ramp it up.

Well folks, we have slightly taken out the 75.89 price extreme of [b]. This is very disappointing indeed.

As I stated in previous posts, price should not have traded through wave [b] in order for this to be a triangle.

You do have to give some leeway with futures, but the continuous contract has really busted through. More than what I would consider acceptable.

Is it somehow possible that we completed both the [d] and [e] legs? The continuous contract suggests that is indeed possible.

The front month counts a little different, however, you could move [b] over just like the continuous contract.

This produces a perfect hit on the trend line. Perhaps this is the correct way of looking at it, then again, maybe I'm trying to force structure to fit my interpretation. I'm not sure folks.

Three months of scratching out 3's, pulling my hair out trying to figure out what the hell structure was doing, and this is what it gives us. Unbelievable.

Edit: FWIW I sold 75.93. I'm using a 76.03 stop with a target of 75.43. Prolly silly trade, but I can live with the results. Risking $200 for $1,000. Wish me luck.

Corn

The corn market, like the rest of the grains, has been ripping higher lately.

Though it's too early to call a major bottom in this market, it has certainly put in a tradable bottom.

I show a primary degree [5] wave ending at the 302 L. This would also complete a cycle degree c wave. The alternate remains a very bearish view.

It's unclear if minor 3 has finished, but the structure does suggest that it is close.

Notice that we have hit some important levels. The 50% retracement of the move off the 473.20 H, as well as some key fibonacci relationships.

The 38.2% retracement of 3 sits at 365.20. Watch the base channel boundary line, as this often provides support for wave 4's.

If I have structure pegged correctly, we should see additional upside price action after a retracement process.

ES

ES ended its winning streak today. Range was 11.25 handles on expanding volume.

Here is one way to view structure. It's likely incorrect, but wtf.

We printed 1081.50 in globex on a big gap up. So, it appears that (v) did not end at the 1076.25 H (pit session).

Notice the box, which is showing perhaps the best 5 wave structure on the whole chart. Beautiful alternation with the 2 and 4 waves. But these days 5's are 3's and 3's are 5's.

Who knows, maybe by pit open they have price back under the wave 1 price extreme. Not counting on it though.

I have really lost interest in this market over the last few months. I will likely stop updating it on an everyday basis.

Crude

Another upside day in the crude pits. Range was $1.72 on above average volume.

This is one way of looking at the minute [d] leg structure. It's not without issues, but certainly works without breaking rules.

My big concern, which I'm sure is obvious, is the sub-minuette iv wave. It really has no proportionality with ii. It looks like it should be a smaller degree.

There are different ways of counting this that would take care of that issue, however, they lead to additional problems.

I'm starting to get nervous here. The 75.89 H (75.41 continuous) is the price extreme of minute [b]. We have printed 74.96 in globex. Should price trade through that level by any meaningful amount, then this structure is NOT a triangle.

In fact, it really shouldn't trade through that level at all, but the futures markets don't always play by the rules.

If not a triangle, then price is tracing some devious type of combination for minor B that I have yet to identify.

Hopefully the mid-line of the channel will keep price in check.

We do have nice RSI divergence that suggests that a 5th wave of some degree is nearing an end.

Once we get a completion of [d], we will be able to put retracement levels on to give us an indication of where [e] may end.

Edit: I notice where EWI finally called a contracting triangle in this market :)

ES

The equity markets had a sleepy day of trade. ES finished higher for its 6th straight session. Range was a pathetic 9.75 handles on what I show to be the lowest volume day of the year.

Structure still has not shown its hand for the bigger picture view. It continues to be a guessing game at this point.

Obviously, one of the legs off the 1015 L (pit session) has extended. I believe it is the 5th, as shown on the chart, however, you could make a case it was the 3rd.

I originally had a triangle in the (iv) wave, and it's still possible that it did. If so, then the sub-minuette degree waves would need to be moved up right. This would argue for one more leg higher.

Regardless, I have not placed a minute degree label at 1076.75 H, if structure is even complete up there. We will need to see what kind of price action takes place off that high.

We finally closed a gap - HOORAY!

I suspect that regardless of what specific structure we find ourselves in, the other's will be taken care of shortly.

Notice where price was rejected. This is the big corrective base channel drawn off the 971.25 L.

I also show a bearish count as an alternate. 7 waves up certainly suggest a double zigzag. This would mean that structure is tracing either a expanded flat or a triangle.

Who knows, I'm content to sit back and watch things unfold, as this is not my main trading market. I am still short via a handful of SPY puts, but nothing I will lose sleep over if I have to eat them.

I will keep looking for select spots to sell this pig, as I wouldn't dare consider being long - unless intraday. In my opinion, the math doesn't work on the long side here. You bulltards are welcome to all the upside this pig wants to give you.

Sorry for the lack of a weekend update. It was unavoidable.

Crude

A slow day in the crude pits, as we spent the majority of the day correcting. Range was a smallish $1.79 on contracting volume.

Big picture first. The triangle form continues to take shape.

If this is a correct interpretation, we are working on the minute [d] leg. After completion, we should see an [e] leg down that would finish the triangle.

The upper boundary line is simply a guess based on the two peaks. It may end higher or lower than what is shown, though it would be a convenient turning spot.

The 79.39 target is the minimum level this will measure, which is based on wave [c] low of 65.05. There is a high probability that [e] will finish higher than that low. We will need to take the measurement from wave [e] low when that occurs.

Looky where price topped today - right at the mid-channel line.

Drilling down intraday shows how I'm looking at the subdivisions.

It's unclear if we have finished minuette (c), and thus [d], or not. During trade today, I originally thought we needed another leg higher.

After more study, I'm not so sure. Regardless, it does appear close to being a complete structure, if not already.

Notice how the reciprocals .786 and 1.272 worked together. That's not an accident - I can assure you.

RSI suggests that we ended some degree of 5th at the 73.84 H. I'm hoping for a tad higher myself. (c) = (a) at 74.39, a nice target indeed.

Prices are basis November contract.