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Trade of The Week for VO!!!

ES, Crude

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Weekend Update - Bonds, Crude, Dollar Index, Gold

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.

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.