ES

ES grinded higher today on below average volume. Range was 13.75 handles. Very sleepy price action.

It appears that we traced out the majority of minuette (iv) today. I would not be surprised if they took care of the remainder during globex.

I am assuming that we completed (iii) at the 976 L. It is possible that was in fact (v). If (v) completed down there, we may have finished minor B. That is my alternate count. As always, there are other options.

The line in the sand for my current count is the wave (i) L at 992.25. If price trades through that, then we know something else is in play. Perhaps, a (i)-(ii), i-ii scenario, but I doubt it.

AB = CD at 989.75. The 50% retracement level of (iii) sits at 991.25. There is also a nice trend line directly above. Not a lot of room for error here folks.

Both started accumulating early and continued all day.

For all the buying that took place, price sure didn't seem to reflect it.

Watch your channel folks. It will let you know when (iv) has completed.

Edit: failed to mention that I bought a handful of SPY puts at the close. Trying for a quickie here with the August 102's. Hope my count is right!

Crude

Crude Is another another market that did most of its damage in globex. Matter of fact, it had a positive pit session. Range was $2.46, while volume continued to decline for the 4th staight session.

It appears that we finished 5 waves down of micro degree, thus completing sub-minuette iii. It also appears that we have finished [A] up, of what will be a corrective zigzag. How do we know it will be a zigzag? We have 5 waves up for [A].

Notice the channel line action. We busted through, went and backtested and failed the first time (which we would expect), before being able to work our way back above.

Notice also the monster RSI divergence to finish off iii. Impressive indeed.

We either completed a minuette (a) or (i) leg down there. If they are turning a triangle here (check the daily), then it was an (a).

Regardless, after a brief pause here, we should see additional strength to finish off the corrective with a [C] leg. After that, the resumption of the downside should continue.

Edit: I forgot to talk about the daily channel (see weekend daily chart). Notice where price supported almost to the tick. I think that is important. Perhaps the next leg down finds support again and completes there.

For those of you that don't use channels, I would encourage you to start.

ES

The equity markets sold hard today (well actually last night). ES had a range of 28.75, which is very misleading. Most of that occurred in globex. Pit session range was 9.50. Volume spiked higher.

Yepper, she's a flat. As discussed in the weekend update, the structure was not there for a triangle. The triangle was invalidated when we broke the 985.75 L.

It is sorta difficult to get an accurate count on the subwaves from the 1007 H because every candle was basically straight down.

Therefore, I'm not sure if we have completed minuette (iii) or not. If not, I suspect we are close. Based on wave (ii), we should see some type of complex structure for (iv).

Targets include the 161.8% of (i) at 969 and the 161.8% of [a] at 966.75. (ii) retraced 61.8% of (i), so I will assume that they get us to the 161.8% at minimum.

Also, we are in the zone of the 4th of lesser. I'm not sure if we get a big push for this minor B wave or not. If we do, I have a bevy of numbers that come in around 955ish, which is close to the 38.2% at 958.50.

Short-term, RSI is giving a nice positive divergence.

As mentioned above, the majority of the decline came in globex. Even so, I still would have expected the 100 lotter's to have been less than the -19.5k they finished at.

Notice the smallies covering like bandits in the last 15 minutes of trade.

Bottom line - I don't think we have finished tracing minor B. With that said, I'm also not real confident, based on structure so far, that this retrace will even make it to the 38.2%. Perhaps I'm wrong.

Weekend Update ES

ES The equity markets ended the week exactly where they began. We did, however, gain a little bit of clarity with structure.

It appears that we are tracing either a barrier triangle (p. 50, figure 1-42, Elliott Wave Principle) or a flat. We had a 3 down that finished at the 985.75 L. We then had a 3 up that finished at the 1015.75 H. From that high, Friday's action was a 5 down with what appears to be a 3 up.

Everybody is calling for a triangle here. I'm not so sure. In order for the triangle to still be in effect, the minute [c] leg must be a 3 and not a 5. That means it will need another 5 down to complete a zigzag.

So, [c] is either not complete, or we have a flat and not a triangle. The flat is my preferred count. The triangle is my alternate.

I have seen where some people are calling for a "running" triangle (p. 50, figure 1-43, Elliott Wave Principle). This assumes that Friday's 992.25 L finished [e]. Again, [e] would need to be a 3.

There are other issues I have with this interpretation. I will quote from the good book, "Despite their sideways appearance, all triangles, including running triangles, effect a net retracement of the preceding wave at wave E's end" (p. 49, Elliott Wave Principle). The net retracement is by the slimmest of slim margins.

Off of the 992.25 L, which by the way was a 78.6% retrace of [b] to the tick, price has retraced to the 61.8% of (i) and conveniently stopped at the down trend line. 1006.50 was also the 261.8% projection of a.

Based on structure, it appears that we should have one sub-minuette leg up. This should complete (ii), or (b) of [c] if a triangle. Any breach of 985.75 invalidates the triangle scenario all together.

Likewise, if price prints 1016 we can say adios to the flat.

Here is my big picture look at cash. Notice I have ditched the triple zigzag. As I sated previously, it really doesn't matter, you end up in the same place, same time.

It should be noted, the 60 minute SPX chart has two potential setups that may come into play (outside of the triangle).

You can make a case for a H/S top formation. There is also a fantastic looking Bear Butterfly that would complete at 1025.

Both these patterns should be clearly recognizable on the 60 minute chart.

Weekend Update Crude

CRUDE I wanted to start with the big picture first. I have adopted this view, as it is EWI's.

Based on this interpretation, the July 08 high completed a wave (V) of Supercycle degree. The ensuing decline down to the 32.40 L, that ended in December 08, completed an intermediate (A) wave.

We have been in the process of tracing out a (B) wave for all of 09. When (B) finishes, we should see 5 waves down of intermediate degree, which would complete (C), thus completing primary [2] (shown as circled on chart).

So, the big picture suggests that crude should go higher first, then significantly lower. I believe the downside target is around 10 (basis combined monthly)

This process should take a few years to play out. Long-term, if the interpretation is correct, should see crude at levels that are hard to imagine at this point.

Here is a look at the daily. I have ratcheted down my labels by one degree.

It appears that minute [b] has completed. Notice the break of the mid-line of the channel that had supported for a couple of days.

Price came within a whisker of the 23.6% retracement level of minor A. [c] = [a] at 57.39. The first little daily swing projects to 62.03, which is very close to the 38.2% retracement. All basis continuous contract.

Don't be surprised if they turn a triangle here. It has all the makings so far. My alternate is at the bottom.

Drilling down further we look at the 60m. I show v completing at the 71.80 H. That is the best I can come up with, however, it's possible that it ended up in that mess.

This would be a classic truncation if correct (p.35 Elliott Wave Principle). Regardless, it was a very unsatisfactory top IMO.

We took out the wave i H of 67.79 on a close, which is denoted by the dotted red line. We also appear to be impulsing down.

Although you can't tell from this 60m chart, I believe we are tracing a [4]th wave, maybe even a triangle, of most likely micro degree. This should be evident on any smaller trading chart.

The first objective will be to break the channel line. This should come into play around the mid 66's. The 261.8% of i sits at just under 66.

Short-term, RSI is oversold. I suspect we will finish up this first impulse fairly soon with a retracement coming sometime Monday.

Edit: failed to mention that Monday should be a cycle peak day (KoolsTools). This comes from the 7/13 and 7/29 lows. Friday also gave us a small cycle low day. There are several confluences pointing to an up day for crude Monday.

As always, follow the price action and structure firstly.