Weekend Update - #2

30 YR BONDS
The bond market sold down after a failed test of the 200 sma, with Monday being the big down day.

Bigger picture structure remains unclear. I show a potential intermediate (X) wave in place at the 123-25 H.

Price has reached the lower boundary of the channel. A bounce of some type should not be unexpected.

Key levels to watch for the upcoming week are the 123-25 H and the 117-18 L. Should that 117-18 L give way, I suspect that the 114-26 L will be reached in short order.

The retracement levels from the corrective off the 111-24 L are on the chart.

All prices basis combined contract.

DOLLAR INDEX
The worlds largest supply of toilet paper saw decent downside price action this past week.

I interpret structure to be in minuette (v) of minute [v] of minor 5 of intermediate (C) of primary [B]. A lot of ending 5's are very near folks.

Notice how the 50 sma has held price in check since July.

Noteworthy as well, look at the RSI action since it registered its low in early June. It has consistently been turned back down from the 50% level. In fact, this has happened 6 different times.

There is big positive divergence, forewarning that a change of trend may soon be at hand.

The DSI readings continue to point to a one way trade here. As has been mentioned in these posts numerous times, this can not go on indefinitely.

5 = 61.8% of 1 - 3 at 74.79. This is the minimum downside objective that would be expected to be reached.

Bottom line - This trend is very mature at this point in time. Be aware that it could end at anytime. As always, an impulse off a low with a channel break will give confirming evidence.

Price basis combined contract.

Crude
Hard upside price action in the crude pits this past week.

It is unclear whether crude broke free from a minor B wave triangle or not, as I show on the chart.

Price action certainly resembles a "thrust" that would be expected.

If a triangle, it measures to 84.33.

There is also the possibility that this is part of a combination corrective, and perhaps a combo that is not finished. That has yet to be determined.

Bottom line - price action does not appear finished in this move higher, however, it should be close to needing a retracement.

I am anticipating any retrace to be shallow and short lived.

I am a little bummed out that this didn't setup properly, which would have allowed me to put together a decent long line via calls :( This however, is how the market operates.

Price basis continuous contract.

GOLD
The gold market set another new all-time high this past week, printing 1072.

My interpretation of structure has this market in minuette (iv) of minute [v] of minor C of intermediate (C). The alternate view is a very bullish minor 3 of intermediate (3).

As pointed out in Thursday's post, it is unclear which peak (iii) finished at, 1062.50 or 1072.

Once (iv) completes, we should see another leg higher that would complete [v], and thus C.

If this assessment is correct, then the bulk of gains have already occurred. Of course, there is always the possibility that (v) could extend.

Bottom line - we should see another push higher before a meaningful correction.

Price basis December contract.

Weekend Update #2

30 YR BONDS
The bond market reversed late in the week on increasing volume.

Price rejected off the 200 sma before finding support at the 50 sma.

It is unclear to me if the move off the 114-26 L should be counted as a 5 or 3. It sure looks like a nice zigzag to me.

If it's a 5, like I show on the chart, there is 4-1 overlap.

My best guess at this point is that price is tracing an intermediate (X) wave. It may or may not have completed at the 123-25 H.

All prices basis combined contract.

CRUDE
The crude market continued higher this past week as expected.

My interpretation of the crude structure remains the same. I have price tracing minuette (c) of minute [d] in a minor B triangle of intermediate (B). My alternate view is that this is a minute [iv] triangle.

Price ran into the upper boundary of the corrective channel and was initially repelled, but finished Friday's trade closing above it. This also closes price above the daily 50 sma.

I show minuette (a) completing at the 71.39 H, however, it is possible that it actually finished at the 71.97 H.

In Thursday's update I mentioned some reservations I had with this [d] leg structure (read that post for specifics). Triangle legs can be difficult to discern, and generally are.

I'm not real concerned with exactly how the internal structure traces out. Just be aware that this wave could end at any time.

Should price trade through the 75.89 H or the 61.38 L, this would invalidate the triangle view

We are scheduled for a nice KoolsTools cycle peak on Friday. The last 3 L-L's have actually given the next low.

Bottom line - I still expect price to make its way higher, finishing off this leg.

All prices basis November contract unless noted.

DOLLAR INDEX
The greenback made fresh lows on the week, maintaining its leading role as the worlds largest supply of toilet paper.

My interpretation has structure completing minute [iii] of minor 5 of intermediate (C) of primary [B] at the 75.68 L. My alternate view is that low finished minute [v], thus primary [B].

Should [iii] be complete, then we should be in the beginning stages of [iv]. Any trade through the 77.795 L, the price extreme of [i], will suggest that perhaps it was wave [v] that finished at the 75.68 L.

The move off that low certainly appears corrective in nature.

Bottom line - I maintain my near-term bearish stance. If my assessment is correct, we are getting closer to a turning point, however, were not quite there yet.

All prices basis continuous contract.

GOLD
The gold market shot higher this past week on heavy volume reaching all-time highs.

My interpretation has structure in minute [v] of minor C of intermediate (B). This is actually a bearish view. The bullish alternate view has structure in minor 3 of intermediate (3) up to god knows how high.

Notice how we went from one side of the channel to the other, finding resistance on the upper boundary and previous high print. There were also plenty of fibo relationships there as well, almost assuring us of at least a pause.

It appears that minuette (iii) completed at the 1062.70 record high. If correct, we should currently be tracing (iv). I have placed wave (iii) retracement levels on the chart.

(ii) was a sharp zigzag, therefore, suggesting that (iv) should be relatively flat and possibly complex.

I mentioned last week that I thought price may not be able to reach its triangle target of 1076.80, which by the way, is right in the area of where [v] = [i] - [iii] Obviously, based on price action thus far, it could easily attain that level - should that be in the cards.

If (iv) has traced its low, which is doubtful, then (v) = 61.8% of (i) - (iii) at 1092.30. The 426.6% projection of (i) sits at 1092.80.

Should this retrace get out of hand, the price extreme of (i) = 1011. The line in the sand level.

There was a H-H cycle that came in on Friday based on the 6/3 and 8/6 dates. This suggests that we should see some downside pressure, fitting right in with structure.

Bottom line - I expect to see an additional push higher once this retrace is complete.

All prices basis December contract.

Weekend Update #2

30 YR BONDS
The long bond had nice impulsive upside price action this past week.

Price ran into a bevy of resistance including the 200 sma, the 4th of lessor, a 1:1 price projection, as well as the price extreme of intermediate (A) (red dotted line).

I am still unsure of what exactly is playing out with structure. I suspect this is tracing out a primary [B] wave, though far from certain about that. Perhaps this is an intermediate (X) wave of a double zigzag. Again, I'm not sure.

I do show some potential counts at the bottom of the chart. Notice the super bullish count. This would suggest that a major bottom has been put in. I think that is a very remote (at best) possibility.

It does appear that near-term price has not finished going up. Not sure it gets as high as that gap, but it's a big target.

The more structure we see, the better idea we get of what's happening in this market.

All prices basis combined contract.

CRUDE
The crude market rebounded strongly this week, which was not unexpected.

My interpretation has structure in minute [d] leg of a minor B wave triangle of intermediate (B). My alternate view is that this is a minute [iv] wave triangle.

The triangle form continues to take a recognizable shape. I'm showing the continuous contact. You will notice that it counts a little different than the front month November contract, but both are currently in the same place.

It appears that we have finished minuette (a) of minute [d]. It is not clear if we have completed (b) yet. It may need additional work, but looks close to being done.

If this is correct, we should see (c) up unfold this coming week. The projected upper boundary line looks to come in around 74.50ish. (c) = (a) at 74.66, with the 78.6% of (a) at 73.30.

Key levels are the 75.41 H, which is the price extreme of [b], and the 65.05 L, which is the price extreme of [c]. We don't want to see price get much above/below these levels.

Critical support is the 61.56 L. This is the price extreme of [a]. If my assessment of the internal structure of the triangle is incorrect and [c] is still tracing, then it will need to maintain above this level.

We can come up with general upside targets, as [c] appears complete. The continuous contract measures 15.45, while the November contract only measures 14.51.

This gives targets of 80.50 and 79.56 respectively. Calculations were based on the 65.05 L of [c]. Whenever [e] finishes, we will want use that price for measurement purposes. This will more than likely give higher targets.

The cycle didn't disappoint. Perhaps the next cycle low will determine the end of [e]? This is scheduled to come in 10 trading days from Friday, or October 16.

Bottom line - we are inching closer to entering the next phase of this market. Nobody will be more happy to see that than me. Correctives can drive a person mad - myself included.

Everything appears to be setup. Lets hope for follow through.

All prices basis continuous contract unless noted.

DOLLAR INDEX
The bucky finished relatively flat on the week.

I interpret structure to be in minuette (iv) of minute [iii] of intermediate (C) of primary [B]. My alternate count has primary [B] completing at the 76.045 L.

It appears that (iv) may have completed at the 77.735 H. It is unclear with all the chop and slop of the corrective waves.

Should this be incorrect, price can not trade through the 78.085 level. This would enter wave (i) territory, thus negating the current count.

This sure has channeled like crap the last couple of months. Price acts like it has yet to go through its minor degree wave 4.

I would love to be bullish this market, but I just can't get a clean impulse off the lows. There is 4-1 overlap right out of the gate. Perhaps it's a "cheater" as these do occasional happen.

Friday is setup for a decent KoolsTools cycle peak.

As pointed out last week, there is huge RSI divergence.

Bottom line - I'm still cautiously bearish this market.

All prices basis continuous contract.

GOLD
The gold market rebounded this past week, perhaps being the beneficiary of a flight from equities.

Nothing has changed with my current view of gold. Minute [v] of minor C of intermediate (B) is where I have structure.

Although not shown on the chart, my alternate would be that we finished minute [v] at the 1025.80 H. There is also the remote chance that we finished [i] at the 1025.80 H.

I believe that minute [iv] completed at the 985.50 L. It's a very nice ABC corrective. If this is correct, it appears that we may have put in minuette waves (i) and (ii) of [v].

Based on structure thus far, I'm not expecting price to make it to the triangle target at 1076.80. It's certainly possible that it does, however, its going to take a mighty [v] to get there.

We narrowly maintained channel support on a close basis. This should not be an issue, assuming the count is right.

This is a potential concern of mine. Sure looks like a double headed monster to me.

Should this fairly nice looking H/S play out, it measures down to the 940's. This is suggestive of a short-term top being in place. Not exactly what I'm looking for at this stage - hence the concern.

The cycle this past week played out as I thought it might. Whether it was an inversion or just a plain failure, it worked out. No cycles that I can see for this coming week.

Bottom line - I remain cautiously near-term bullish. Should we take out the 985.50 L, I will assume that two headed monster is in play.

All prices basis December contract.