Weekend Update - Bonds, Crude, Dollar Index, Gold

Weekend Update - ES, DOW, RUT, Nasdaq

ES
The overall pattern for the ES, and all the equity markets for that matter, remain difficult to discern.

It's just one of those situations where we won't truly know what structure has traced until after the fact, which is not uncommon.

It makes it hard for position traders, and to some extent, swing traders. If your a scalper like me, you should be doing just fine because all we really care about is where the next 3-6 handles is headed.

The 15 minute pit session chart shows an island reversal. This is basically an exhaustion gap that is followed by a breakaway gap in the opposite direction.

I am counting the move off the 1112.25 H as a 5 wave structure. You could argue for a 3, but I think it counts best as a 5.

This implies that after a retrace process we should see an additional 5 waves down, at minimum.


It appears that we have 5 small waves up from the 1085.25 L, which I have labeled as a sub-minuette degree a or i.

Drilling down further, we can see that it appears that micro [A] is complete. We should get a small [B] retracement (levels on chart) when globex opens, followed by a [C] leg lower.

At that point, I would expect to see a 5 wave structure higher of sub-minuette degree. If your a scalper, it should make for a nice little trade, as a measures 7.5 handles.


Any trade through the 1085.25 L would invalidate this view.

The weekly view suggests that we should see additional downside pressure on price.

This past week saw price action fill the long standing gap from October 08.

More noteworthy, in my opinion, is that we had a KoolsTools cycle peak come due. This suggests that we may see lower price, though never a certainty.

This basically jives with what short-term structure is suggesting as well.

Weekend Update - Grains

CORN
The corn market was the laggard of the grains this week.

In the Tuesday update, I postulated that I thought this market had finished wave (4) and (5) was underway. I will stick with that assessment, however, my confidence is on the low side.

Although it sniffed the 10/23 H, price never made a serious challenge to overtake it. It was was weak attempt, in my opinion.

Being a 4th wave, it's possible that it needs additional work. If this is the case, it may be in the process of tracing something complex. A flat, triangle, or combination may very well be in cards.

I don't believe we had a 5th wave failure, though I guess it is possible.

Should price trade through the 365.25 L, then that will seal the deal on a wave (5) being in force.

The broken 200 sma is directly underneath for support, as well as the channel boundary.

We also have an established RSI uptrend that may very well act as support.

More than likely, I will need to up the degrees by one notch. I am going to hold off on this another week.

Bottom line - I will maintain my near-term bullish bias for the time being.

Prices basis December contract.

SOYBEANS
A breakout week for beans. Price traded through the 1029.50 H, and more importantly, the 1041.50 H.

This more than likely signals that primary [C] of a double zigzag of cycle c has commenced.

There is still an outside chance that we are still tracing primary [B], though I believe those odds are low.

Upside targets are where (3) = (1) at 1100.50, and (3) = 161.8% of (1) at 1192.75. [C] = [A] at 1174.

Drilling down intraday, you see that price is having a struggle getting past the 1050 level. This happens to be the 127.2% expansion of (2), which does get my attention, but my guess is it will be short lived as resistance.

Bottom line - It was sort of a messy start to this leg, but things appear to be progressing in impulsive fashion. I am near-term bullish this market until proven otherwise.

Price basis continuous contract.

WHEAT
Big breakout week in the wheat market.

Price confidently traded through the primary [1] high, suggesting that primary wave [3] was underway, and more specific, a "third of third."

The alternative is that [2] is still tracing and this is nothing more than a (C) leg on a coke binge.

I believe this little pullback is nothing more than a smaller degree 4 wave, possible of minor degree, though it may very well be intermediate.

Since we have decisively broken out of the down channel, we should expect it to become support if price were to trade that low.

Notice how price has supported on the 200 sma after breaking through.

Upside targets include [3] = [1] at 623.25, and [3] = 161.8% of [1] at 706.75.

Bottom line - I am near-term very bullish this market. Any trade through the intermediate (1) H of 528.25 would quickly change this view.

Prices basis December contract.

Crude

Price action played out exactly as expected today.

We finished the little [A][B][C] to the upside to complete sub-minuette b and then started tracing c down.

It appears that we have completed the first 3 legs, while currently working on wave [4]. We should finish this up in short order, as well as the remaining wave [5].

At that point, we would expect impulsive price action higher. This of course assumes we have structure pegged correctly.

Wave [4]appears that it will take on the form of either a triangle or a flat. The (A) wave clearly looks like a double zigzag to me, which is considered a 3.

There is a nice inflection point at the meeting of the mid-line and upper boundary line. The 127.2% projection rests in the same area. Would be a nice place to turn price.

Though not shown on the chart, (C) = 61.8% of (A) at 78.57, basically in the same place as the inflection point.

Notice that we have retraced to the 4th of lessor and just shy of the 50% level. I really would prefer that (C) not get much above this level.

In case you hadn't noticed, we are on the January contract now.

Crude

Crude spent the better part of the morning in some sinister chop fest of a complex corrective before breaking down. Not unexpected price action.

I have made some label changes. I'm giving structure the benefit of the doubt here and assuming that we completed an impulse up.

If we have 5 waves up, and it's by no means a certainty, then we can expect a 3 wave structure down before resuming upside price action.

Notice that we reached the top of the consolidation channel we have been in since the recovery highs (20 days to be exact). It's not surprising that price couldn't push through, though I think that's coming soon.

This is an intraday look at the back half of what I believe was an [W][X][Y] expanded flat.

It appears that we should have a little bit more upside before price turns lower.

If price takes out today's high, then this view, as I have labeled on the chart, is invalid.

I would also be concerned if we didn't get a retracement to at least the 50% level.

There are a lot of options right now of what structure may have up its sleeve. The more price action we see, the more of those options we can eliminate.

Crude, Corn, Wheat, Gold

Crude basically played out as expected today.

We finished tracing a (4)th wave and put in a somewhat sloppy (5)th, though the smaller degree 3rd was nice.

I'm still not real sure about this structure. This is looking goofy to me.

I still think there is a good shot this turns out being a corrective. I will let structure dictate that.

As it stands now, I will assume that [3] completed at the 79.85 H. This means a [4] wave tomorrow. Should price retrace down to the 78 level, I think that would signal that the 79.85 H actually finished [5].

Globex has been unusually active tonight - not sure why.

I wanted to update the price action in the grain markets.

Wheat is signaling that it's game on. I believe this market is in a "third of a third" currently - where the money is made.

It appears that there is a lot left in the tank.

I have notched up my degree's by one from the weekend update.


The corn market has had impulsive price action as well.

Although this market counts a little different than wheat, I believe it is telling us that (4) is finished.

I have not changed the degree's as of yet, but it appears that they will need to go up a notch as well.

I will give a more detailed update on both these markets this weekend.


I also wanted to bring your attention to the gold market.

This looks like a parabolic rise to me. If this is the case, It could get crazy in this market.

You can never be certain where the damn things end, as the waves just keep subdividing. It's best to wait for price to break the arc before taking a stab at a short line.

Generally speaking, price usually makes a B-line back down to the 61.8% retracement level, where a meaningful bounce takes place.

I put the fib levels on the chart, however, this assumes that price is finished on the upside. This is probably not the case.

The pattern itself calls for 100% retracement when complete. We'll see.

Crude

The 75.57 L obviously finished something.

At this point, I will assume it was a sub-minuette c wave. What it completed is likely either a minuette (c) or (y) wave, and possibly a minute [ii] with it.

The labels on the chart assume that we are impulsing off the low. This is by no means a certainty. In fact, I much prefer the abc-x-abc view so far.

Regardless, it does appear that we should see higher price once this little corrective plays out.

Notice that price ran up to the daily 20 sma, where it found resistance and closed just under it.

Also notice, we basically came down to the lower channel and supported.

I'm not sure this market is ready to go, but it's building up a lot of energy in this obvious bull flag.

ES, DOW, RUT

Another interesting Martin Armstrong read

GOLD $5000+ 11/11/09