Weekend update - #2

30 YR BONDS
The long bond filled its 10/13 gap, then had downside price action to finish this past week.

Price has again found the lower boundary of the channel. Should the channel give way, price looks destined to test the 117-18 L.

Sure has a Head and Shoulders look to it. If this is the case, then it would target out down around the 114-26 L.

If you look at this market on a wider scale, say since late 2007, it certainly has the appearance of a huge H/S topping pattern. Should this pattern be in play, it suggests much lower price.

Near-term, any trade through the 118-20 L, gives the minimum amount for 5 waves off the 123-25 H.

All prices basis combined contract.

DOLLAR INDEX
Fresh new lows for the bucky this past week - not unexpected.

My interpretation remains the same. Minuette wave (v) of minute [v] of minor 5 of intermediate (C). We inch closer and closer to an important bottom.

Price found support at the 78.6% retracement of the primary [A] leg off the 71.05 L. We are very near the minimum downside objective of 74.79, which is where 5 = 61.8% of 1 - 3.

Notice that RSI supported on its rising trend line, again giving positive divergence. Pay attention to the 50% level (upper trend line) to see whether it can finally break through.

I'm not sure this would signal an end to the downtrend, however, I do believe it would be meaningful.

Bottom line - As mentioned last week, this trend is very mature. It could end at anytime. Any upside price action should be viewed with suspicion, until an impulse has taken place with a channel break.

All prices basis combined contract.

CRUDE OIL
The crude market finished the week with another positive gain.

We finished something at the 81.99 H. I believe it was a minuette wave (v), which would complete a minute degree wave.

I'm entertaining the idea that it just may be a [iii] wave. The retracement will give us a better idea.

The 38.2% retracement level is 77.17, while the 50% sits at 75.68.

The triangle target is 83.99. The continuous contract numbers can change when they put on a new front month, which is why this number is slightly different.

Bottom line - the retracement process does not appear complete to me. Should price trade through the 81.99 H, then it will be obvious that (v) has not finished.

All prices basis continuous contract.

GOLD
The gold market continued its consolidation this past week.

My interpretation of structure has this market tracing a minuette wave (iv) of minute [v] of minor C of intermediate (B). An alternate view is that this is minor 3 of intermediate (3).

I believe structure is winding up for a nice thrust higher.

Drilling down intraday, shows that (iv) appears to be tracing a triangle. In fact, it may be complete, as of Friday's price action.

If so, it measures 28.30, which would give a target of 1078.70. This is right in the area of the B wave triangle target of 1076.80.

Notice the form that wave (ii) took, a sharp zigzag. The guideline of alternation (p. 63-64 Elliott Wave Principle) suggests that we should be looking for a sideways, and perhaps complex corrective for (iv) . Exactly what we got.

It is possible that this structure is not a triangle at all, but some type of combination. The ultimate result should be the same - upside price action.

I put on a moderate line of November 103 GLD calls today when price reacted at the lower boundary line. I will use a GC break of the c leg at 1048 as my stop.

Bottom line - It appears to me that we still have some upside pressure left for price. If I'm right in my assessment of structure, once we conclude our next leg higher, we should see an intermediate degree correction.

All prices basis December contract

Weekend Update - Grains

CORN
As expected, the corn market enjoyed nice upside price action this past week.

Based on structure, my interpretation is that this market indeed made an important tradable bottom at the 302 L.

I believe structure is in the process of completing minor 5 of intermediate (3) of primary [A]. It is unclear if 5 has finished or not. It may need an additional leg higher, but appears complete to me.

Once 5 finishes, if not already, we should see an intermediate degree corrective.

The 38.2% retracement of (1) sits at 374. This is right in the middle of the 4th of lessor degree.

Notice that we have broken out from the channel, suggesting that the move off the 707 H has indeed completed. Also notice that price blew right through the 200 sma.

The critical level to watch is the price extreme of (1), which is 347.60. Should this retracement trade through that level, then something is obviously wrong.

Bottom line - I am expecting a retracement process for the upcoming week, assuming 5 has finished. Be on the alert for a triangle or some type of complex pattern due to the form that (2) took.

All prices basis December contract.

SOYBEANS
It was upside price action for the soybean market this past week.

My interpretation remains the same. Primary [C] of cycle b of supercycle (a).

It is possible that structure has completed a 5 wave move higher off the 878.75 L. I have this labeled as intermediate (1).

It is also worth mentioning that I have a triangle alternate view. Price needs to take out the 1040 H to invalidate this count.

Should (1) be complete, I have put the retracement levels on the chart. I would like to see price maintain channel integrity on the retrace.

The key levels to watch for the upcoming week are the 1040 H and the 878.75 L.

The minimum upside objective is 1060.25, where [C] = 61.8% of [A]. [C] = [A] 1172.50.

There is a cycle peak due Tuesday.

We do have a slight RSI divergence as well. RSI last peaked at the early August highs. Price has made two successive highs while RSI made lower highs each time. This is something to watch.

Bottom Line - I will assume that all systems are still a go for the preferred count until proven otherwise.

Look for some wave (2) retracement for the upcoming week.

All prices basis continuous contract.

WHEAT
The wheat market, like the other grain markets, saw nice upside price action this past week.

I interpret structure to be in minor 5 of intermediate (1) of primary [A]. It is very possible that we are much further along in this count than I am giving it credit for.

It is unclear, but we may have completed minor 5 on Friday. If so, that would also finish (1).

We tested both the channel and 200 sma this past week, and failed them for the time being.

Friday's action finished very ugly. They put in a nice shooting star candle on heavy volume. Basically, price got to resistance, where it was sold hard. Not a very bullish development.

Bottom line - As stated last week, I need to see a channel break and an impulse higher to get 100% behind a cycle degree bottom. I believe both are forthcoming, however, we have not seen them yet for confirmation.

All prices basis December contract.

Crude

Consolidation day in the crude pits. Range was a smallish $1.64 on about average volume.

It is unclear to me whether or not wave (v) has completed. Price action off the 81.99 H is certainly corrective, however, it acts like it's some kind of 4th wave.

My guess at this point, we finished (v) and the move down to the 79.90 L was (a). Wave (b) is an expanded flat, which means that (c) down will follow, to finish minute [ii], in what will be a flat.

The problem I have with this view is the RSI action. That is certainly not a wave (v) divergence. In fact, notice that it takes out the high of what I have labeled as wave (iii).

This calls to question whether (v) is done or in progress. Perhaps (iii) finished at the 81.99 H? This would sorta make sense.

Regardless, I feel price is on the verge of a decent retracement process.

Last night I mentioned that the Bradley turn date was today. It is tomorrow. Sorry for the confusion.

Crude

The crude pits had hard impulsive upside price action for the majority of the day. Range was a robust $4.35 on impressive volume.

If my interpretation of structure is correct, we finished a minuette degree wave (iv) at the 77.64 L. This puts us in (v) of minute [i].

Price has reached the top of the channel, which would suggest that (v) is nearing completion. There is always the chance for "throw-over", as Elliott called it, where price breaks above the upper boundary.

Momentum is certainly slowing down, as evidenced by RSI. It appears that we should have our customary negative divergence on completion of this wave (v).

Once [i] completes, we should witness a more meaningful retracement.

I believe we have a Bradley Model turn date tomorrow.

The poor pitiful dollar made new yearly lows today. It is fast approaching the 73.792 L made last summer.

Crude

After one hell of a thrust out of a likely triangle, crude took a rest today. Range was $2.08 on slightly better than average volume.

The huge confluence of resistance that was discussed in last nights update was to great, as price was turned back - temporarily in my view.

I am concerned about my degrees, as I noticed that EWI had this counted as sub-minuette degree legs for the triangle. This is two full notches below mine.

You may or may not remember, but I had already ratcheted down my degrees about 5 months ago. I am having a hard time believing that the crash move off the highs in 2008 only registers as a minute degree. Leaving my degrees alone for the time being.

I have attempted to count this leg off the 68.32 L. It's not easy when the waves just keep subdividing.

In all honesty, it really doesn't matter. As long as you can discern where the larger degrees are you should be in good shape.

I am showing that we ended a minuette degree (iii) wave at the 80.40 H. It is possible that it may very well be a minute degree.

I have placed the retracement levels on the chart.

We had a beautiful Bullish Bat pattern that came in nicely at today's lows.

I show this on my 144T chart, which is the chart I use for entry's in this market.

I was lucky enough to get long 78.38. I took the 1st contract off at 78.55 and then foolishly moved my stop to 78.46.

I was assuming that the candle with the 78.48 H was a wave 1, so I moved my stop 2 ticks below it. I guess not, as they printed 78.45, stopping me.

There was another monster trade I would have had and the same thing happened to me. Crude traded very badly today in my opinion. Sigh.

Bottom line - if my interpretation of structure is correct, we should see a wave (iv) corrective, then more push. Although this may turn out to be a normal 4 wave (slow grinding back and forth), I suspect it will be short lived and brief.

Crude

More upside price action in the crude pits. Range was $1.60 on below average volume.

I show the daily chart again, as it gives a better view of the overhead resistance that price is starting to encounter.

There are several fib relationships, which not all are shown, right in this area. Also, we have the upper boundary of the channel, as well as, the median line of a fork.

The waves continue to subdivide, which shows very well on any intraday chart. It appears that we spent the majority of the day in a 4th wave triangle, before "thrusting" out of it.

My guess is that was a minuette degree (iv) of minute [iii], though I can't be certain. It is also possible that the degrees should be moved down.

Regardless, it suggests price has more room to run.

The new front month for crude is now December.

Edit: Anybody notice how the grains lit up again today with the moon. Coincidence? Not sure, however, structure was suggesting higher price. I have no personal statistical data to either refute or claim correlation.

Weekend Update - ES

ES
Another push higher in the equity markets this past week, however, Friday put in a bearish engulfment candle.

It's still unclear to me as to what the bigger picture structure is tracing. There are multiple options that may be going on here.

I show a count that I'm reasonably satisfied with off the 1015 L (pit session) on the intraday 15 minute chart. This interpretation has a minute degree [iii] wave completing at the 1093.25 H.

If correct, we would be tracing [iv] currently with [v] up to follow. What this minute structure would finish of a larger degree is up for debate.

I don't think you can dismiss the alternate view of a double zigzag, or abc-x-abc. This would suggest an expanded flat scenario, or possibly a running triangle.

Regardless of what this leg turns out to be, RSI has been registering negative divergence. It warned all week that price was setting up for, at minimum, a temporary retrace.

I wanted to show the monthly chart again. Notice that price ran into the channel from the 2007 H.

We actually penetrated it slightly, before being turned away and closing below it. It should be noted, on a log scale, the channel won't come into play until somewhere around the 1125-1130 area it appears.

One thing that should stand out, is where the 200 sma is currently located - right on top of the 50% retracement level.

The short-term stochastics is pegged out and RSI has run into the 50% level. Several confluences here suggesting a break from the upside price action may be near at hand.

I periodically show this OEX weekly line close chart that I pay attention to.

I have had the fibonacci time extensions on for several months now, however, I had never put the retracement levels on.

Perhaps we get to the 50% retracement level about the same time as the 50% time extension, which is November 13. Then again, maybe we never make it to either one.

Bottom line - near-term appears to need another leg higher, assuming the alternate count is not at play.

I feel a very tradable man-sized correction coming very soon. Would not be surprised to see a 100 handles (or more) given back. Not sure it would be the end of the bear rally - though it certainly could be.

Stay on your toes.