Crude

Crude finished a little higher today on above average volume. Range was $1.86.

Per our discussion last night, crude looks to have finished its [5]th wave, thus completing iii. It appears that it took the form of an ending diagonal.

Notice the swift reversal off the 72.52 H, a signature of a ED.

If that assessment is correct, we should be tracing iv currently. ii was a zigzag, so based on alternation, we would expect something complex.

I have the retacement ratios on the chart. I would not expect to see a very deep retracement.

After v up completes, we should see a more meaningful retrace.

In all honesty, that [5]th leg counts much better as a 3 than a 5. I would not be surprised if we are still tracing some complex [4]th.

My guess is that tomorrow will be slow action (relatively speaking) for this market. Good thing about crude, on its slow days it is still very tradable - unlike that pos ES.

ES

The equity markets continued higher today on above average volume. Range was 17.50 handles.

As expected, we did finish off a higher leg today, though it may not have been the one I first assumed.

I'm showing two different scenario's tonight in separate charts. The first chart is one possibility of what structure may be forming.

This is based on minor A completing at the 1038.75 H. This means that a minute [a] leg finished at the 991 L. We are currently tracing [b], and when complete we will have [c] down to finish minor B. C up would follow.

If this interpretation is correct, then it appears that we have completed both minuette (a) and (b) and are in the process of working on (c).

It appears that sub-minuette i of v has finished. ii looks to be in process.

This second chart assumes that the 991 L completed minute [ii] of minor C.

If this view is correct, we will trace 5 minuette degree waves up to finish [iii]. There will be a retracement for [iv], at which point [v] up will complete minor C.

Looking at structure from this perspective, it appears that we have completed (i) of (v) at the 1036.25 H today. (ii) is in process.

Both cases should bring higher price. If we get a decent retrace here, I will have to assume that it is a (ii) wave and the first scenario is not in play (at least how I have it labeled).

There are other alternatives as well. If we can get price above the 1038.75 H, which I believe we will, this will eliminate the scenario that minor C has already completed. That will allow us to scratch that off the list, thus narrowing down the remaining possibilities.

If your one of the fortunate few who realize that equity prices have no business at these levels, understand how this great ponzi scheme will end up, and are beside yourself with angst and frustration over it all - just chill out for a bit.

Let the "greater fool" theory run its course. Stand aside and wait your turn because its coming. When it's here, we wont be scratching our heads trying to figure out if we have topped - you will damn well know it.

Crude

Monster day in the crude pit. Price finished 4.5% higher on heavy volume. Range was $4.25, or 85 handle ES equivalent.

As stated in the weekend update, price needed to "start higher right now." It certainly did. It also appears that we had a L-L-L cycle that played out, as mentioned this past weekend.

Price action broke the mid-line , took out the 68.38 H and the 69.40 H in impulsive fashion. Notice also that it broke free of the channel itself in a nice apparent iii wave.

If assessing structure correctly, we are tracing a micro degree [4]th of a sub-minuette iii wave. This suggests higher near-term price. We should have another micro leg higher that would complete iii of v.

Targets include: 72.40, where [5] = 2.618 of [1]; 73.64, where [5] = 61.8% of [1] - [3]; and 73.25 is where iii = 2.618 of i. Basis October contract.

Bottom line - [5] should finish fairly quickly, thus completing iii. I maintain my bullish bias near-term.

Price is just like your golf ball - sometimes you just have to talk to it :)

ES

The equity markets gapped up on the open and went nowhere. Range was 14.75 handles, which is misleading, as the pit session accounted for only 6.75 - yes, it really was that boring. Volume was well below average.

It appears the reason for the slow action today was price tracing a [4]th wave triangle. It can count complete, or (E) may have a little work left.

The triangle measures 8 handles. If (E), and thus [4] have finished, this would give a target of 1030.75. c = 1.618 of a at 1030.75, giving a nice confluence.

[5] = 61.8% of [1] - [3] at 1035, an additional level to watch.

Both the bigs and smalls finished about level. Practically all the work was done in the globex session on Monday and last night.

There was a big divergence after the pit closed. 100 lotters sold it, while the smalls bought/covered.

After the next little leg higher completes, we should see a retrace, or possibly impulsive action. This will give us additional clarity as to what structure is really up to.

I maintain my near-term bearish bias until structure says otherwise.

Weekend Update - ES

ES
I spent an inordinate amount of time this holiday weekend trying to get a handle on where the heck we are in the equity markets (in between a lot of football and beer of course :)

In my opinion, there are three different scenarios at play here:

1.) minor C has completed at the 1038.75 H. This finished intermediate (Y) of a double zigzag, which completes primary [2]. This would conclude the bear counter trend rally from the March lows. The "Great Bear" has returned.

2.) minor C has yet to complete.

a.) the 1038.75 H finished minute [i] of [v] of C.
b.) the 1038.75 H only finished minor A and we are tracing B currently.

The "Great Bear" has to wait a little longer before he returns.

You can make good arguments for each one of these scenarios. Each of the scenarios also have issues - some major.

My preferred at this point in time is that we finished minor A at the 1038.75 H. It is also likely the most bullish scenario.

This means that the 991 L completed minute [a] of B. We are currently tracing a double zigzag for [b], in what will either be a triangle or flat.

It is also possible that the 1038.75 H completed minute [i] and the 991 L finished [ii].

This means that we would be entering the meat of [iii] very soon, as it appears that we will finish minuette (i) in short order.

After a brief (ii) retrace, we hit (iii) of [iii]. This is the second most bullish scenario, though the least likely to be correct imo.

This is the bearish scenario. The 1038.75 H completed the bear rally.

The problem that I have with this view is that only Houdini and EWI can get a 5 down to the 991 L. Is it possible? Sure. It's very possible.

Structure, as many of you are aware, can be extremely difficult to discern at times. As mentioned in a post this past week, perhaps structure is trying to fool the masses.

I believe it counts best (actually very well) as a 3, therefore, this is my second alternate.

Here is my assessment of the intraday structure. Notice that we are very close to the upper boundary of the base channel.

This leg appears to be nearly complete, at which point, we should see downside pressure - regardless of the bigger count.

Bottom line - there is clearly uncertainty in the bigger picture with regard to structure and form. What is not uncertain is the deteriorating internals and technicals.

Two of the three above scenarios call for lower near-term price. That is my view as well. I'm anxious to see how price interacts at the March low channel line.

If we breach the 1038.75 H, then we will know that C is incomplete. If price takes the 975.50 L, scenario 2a is off the table.