Weekend Update - #2

30 YR BONDS
The bond complex had a nice reversal Thursday, leading to a nice upside week.

The 50% retracement level did give way as expected, however, it was short lived. Notice that the channel gave near perfect support.

There are several layers of resistance directly overhead. This includes the 50 sma, the broken base channel, and the small down channel.

One possibility is that structure may be tracing a small triangle here, with the Thursday low of 117-10 being the [b] leg.

If that's the case, this would suggest a zigzag, which means this would likely be an X wave. Any trade through the 120-15 H or 117-10 L would invalidate this view.

Of course, we have to watch for a flat as well.

Bottom line - If a little triangle scenario is play, we are likely range bound in this market for the next couple of weeks.

Price basis combined contract.

CRUDE
The crude market corrective continues. We have now registered 17 trading day's in a sideways market.

Although this chop has been difficult to discern from a pattern standpoint, it has been very tradable with plenty of range.

I show a simple (a)(b)(c) , though it's possible we are tracing a combination.

We have broken free of the 20 sma and appear headed for a meeting with the 50 sma, which is at 74.57 and rising.

This is one way of looking at the intraday structure.

If part of a combination, or (w)(x)(y), then we should be finishing up a sub-minuette c with the completion of an upcoming [5] wave.

If we are getting ready to finish a iii wave, then [5] will need to make a decent move down, as the price extreme of i is 76.71.

I suspect this is an abc that ends a (y) wave.

Bottom line - near-term it appears that we should see at least one more leg down. We can reassess at that point.

All prices basis continuous contract.

DOLLAR INDEX
New lows for the dollar this past week.

I have changed the labels to better align with the continuous contract. The continuous clearly shows a 4th wave triangle, while the combined would be considered a "cheater."

It appears that we had 5 waves down off of the spike high of 77.50. If it is a minute degree, structure would be complete. Any degree less, argues for a 1st wave.

Confirmation of a change in trend will come from:

1. a clean channel break
2. closing of price above the 50 sma
3. RSI break of the 50% level
4. a 5 wave move higher (impulse)
5. completed downside structure

Until the above 5 take place - I will assume the dollar continues lower.

Price basis combined contract.

GOLD
The gold market continues to subdivide higher, reaching new highs in the process.

It's apparent that we are getting very close to this leg finishing. I am assuming that this will complete a minute degree wave [v] coming out of the triangle. Remember that triangles precede finishing moves.

If this interpretation is correct, we will complete an intermediate degree (B) wave at this moves conclusion.

As posted in previous updates, my alternate view is that there was no triangle, but a series of 1's and 2's. This means we would be in minor 3 of intermediate (3) up.

I am anxious to see what type of price action we get when this leg finishes subdividing. Whatever it completes should be tradable.

Sentiment continues to maintain over 90% bulls according to the DSI readings.

Bottom line - We keep going up until we don't. If I were long, and I'm not, I would use Friday's low as a stop and perhaps trail it up.

Weekend Update - Grains

CORN
The corn market traded higher this past week after retesting the broken channel.

I interpret structure to still be tracing intermediate (4) of primary [A].

It's possible that wave (4) has completed and (5) has started. I don't believe this is the case though.

Being a 4 wave, there is always the chance of a triangle or some type of complex pattern.

Should (4)'s price low be in, we can start to get upside projections. (5) = 61.8% of (1) - (3) at 428.25.

RSI has done a good job of maintaining its uptrend line. We should expect to see our customary divergence when (5) completes.

A critical level remains the price extreme of (1) at 347.60. Should price trade through that level, then we would have to take another look at structure.

Bottom line - I'm expecting some more grinding away in this wave (4) this upcoming week.

Price basis December contract.

SOYBEANS
The bean market traded higher this past week after bouncing off the daily 50 sma.

Interpretation remains intermediate wave (2) of primary [C] of a double zigzag cycle b wave.

Price action off the 951.25 L does not appear impulsive. This suggests that (2) needs additional work. Should this be the case, the channel will be in jeopardy.

The 880.25 L is a critical level. Any trade through this price invalidates this leg being a (2).

A triangle may still be in play, whether an [X] or [B].

The retracement levels of (1) are on the chart.

Bottom line - It appears that wave (3) will need to wait a little longer. I'm expecting downside pressure for the upcoming week.

Price basis continuous contract.

WHEAT
The wheat market enjoyed nice upside price action this past week.

I interpret structure to be in intermediate (2) of primary [A].

It is unclear if we are still tracing minor B of (2), or if wave (2) has actually completed. My guess is that we are in the finishing stages of minor B , with C down to follow.

The alternative is that (2) completed at the 487.75 L and we have put in some smaller degree 1's and 2's.

Notice that we are back at the channel. This would be a good spot to complete B.

Any trade through the 574.75 H would signal that (3) has commenced.

The dotted vertical lines in the RSI pane represent Gann dates. The last 2 have been spot on for very tradable lows. The next date takes place on December 2nd.

Bottom line - I'm expecting price to start retracing very soon. The retracement levels are on the chart.

Prices basis December contract.

The grains have had big reactions off of the moons as of late. We have a moon on Monday the 16th.

DOW

Was today an important date?

Today was scheduled for a KoolsTools cycle peak in the DOW. This comes from the 3/6 and 7/10 dates.

Also noteworthy, today marked the 50% Fibonacci level in terms of time from the 10/11/07 H and 3/6/09 L.

Crude

Well, obviously the triangle didn't work as price traded through the 76.71 L.

I will go with the alternate tonight, while tomorrow I'll come up with a new alternate and another wag to this corrective mess :)

Not much to say except it appears that we should have additional downside price action, as structure does not look complete.

Although I took this snapshot prior to putting my channel work on the chart, it is channeling very nicely so far.

RSI is already starting to show divergence, which seems early. Generally, you witness your RSI extreme with the completion of a third wave, though there is still time for that to happen.

Barring an extension of (5), we should see the completion of micro [3] very near the 161.8% projection of [1] at 75.87.

Notice the 261.8% projection of sub-micro (1) sits at 75.68.

It should also be noted that the daily 50 sma sits at 74.57 and currently rising. We broke through the 20 sma and failed the retest, which usually suggests that we head for the next major moving average.

Crude

What the hell pattern is crude in? I'm not real sure folks, but here is a wag.

This market appears to be tracing a combination of some type. I show a zigzag/flat/triangle on the chart.

A double zigzag down to (w), then an expanded flat up to (x), followed by a triangle for (y).

Notice how range has really started to contract the last several days. This is a big chart and if we are tracing a triangle it would appear that we have several more days of choppy consolidation.

This pattern would suggest that resolution of this mess will be to the upside.

Any trade through the 81.06 H or 76.71 L will invalidate this view.

It's also possible that this is just a simple (a)(b)(c) structure and we have put in i and ii of (c) down.

As I said above, it is entirely guess work on my part.

Weekend Update - ES

ES
I don't have time for writeup.

I have taken this near-term view, which is spelled out on the Renko chart.

Sure looks like a clear triangle to me, which suggests a (c) leg higher to finish [ii], or a B wave.

November 16 is a date that has my interest.