Weekend Update #2

DOLLAR INDEX The dollar took a few days to retrace some of its gains, but finished strong on Friday with an bullish engulfment candle.

As stated last week, it appears that this witch has put in an important bottom. The ultimate objective will be to take out the 11/19/08 H of 91.212.

It's not going to happen overnight folks. It will take time and there is a lot of overhead resistance that she will need to overcome.

Notice how price broke the channel and came back and backtested it.

Here is what the intraday looks like. It appears that minute [i] and [ii] have completed. If that is indeed the case, then [iii] should be in full force next week.

The first objective would be the high of [i] at 79.515. [iii] = [i] at 80.30 and the 161.8% projection of [i] is at 81.533. The 78.305 L should not be breached.

The worst case scenario is that this is a zigzag corrective and we only get 5 more waves up. Remember, 5 waves can not be a full corrective.

If my interpretation of structure is correct, short bets against the dollar or long bets via crosses, may prove painful.

GOLD The yellow metal appears to be close, if not already, to completing a minuette (ii) leg.

If this is the case, gold has set itself up in a [i] [ii] , (i) (ii) situation. This is where you make your money - the sweet spot of a (iii) of [iii].

Price action needs to confirm by definitively breaking the channel (notice how it has supported it) and the 942.10 L. The next objective would be to take the 930 L.

(iii) = (i) at 930.90, while [iii] = [i] at 887. (A)(B) = (C)(D) way down there at 641.30. I don't know that price gets that far, but I also don't know that it doesn't.

I will be looking to short this market via puts early next week with a channel break. Where do I know that I'm wrong? If price takes the wave [ii] high at 974.30. My stop will be a breach of that level.

I have mentioned this previously, and I'll mention again - it sure has the look and feel of a triangle. Not to mention, an inverse H/S on a bigger picture. Lets see what price action brings next week.

Please do your own due diligence before placing any wagers.

30 YR BONDS The bond complex had a nice week to the upside.

When drilling down to a smaller time frame, it is clear to me that there is a 5 wave structure down off the 121'11.5 H. It's also clear that we had a 3 up from the 114'30 L. And equally clear we had 3 down from the 119'8.5 H.

What does this mean? An expanded flat for minor 2. Expanded, because [b] went beyond the the price extreme of [a].

Based on the subwaves, it looks like price should move a little higher early next week to complete the minute [c] leg, however, it should not exceed the 121'11.5 H. At that point, price action should resume to the downside.

I talked about the possibility of a triangle tracing last week. This is still on the table.

Weekend Update #1

SOYBEANS The bean market sold off hard on Thursday and Friday. I'm still not convinced that my original count is wrong. Check out the new near month, which is November.

The price action off the 1113.25 H looks very impulsive to me. This implies that minor 5 finished, therefore, arguing that the top is in.

Notice that the mid-line on the channel could not hold as support. This further supports that minor 5 finished (or that this was nothing more than a primary [2]nd and the continuous contract screwed us!).

Let's see what price action brings early next week before we make that decision. The problem I have is that the intra-day squiggles are very unclear on the leg that would complete 5.

If this is still minor 4, then price needs to find support soon. The 50% retracement of 3 is around 1005, while the 61.8% is at 981.50. I really don't want price to break the 50%, however, the line in the sand is 940.50, which is the high of 1.

If I had been long this market, I would have closed that position out Friday. I think the risks are inherently one sided here. As always, I could be dead wrong in my perception of price action.

WHEAT As expected, the wheat market continued selling off this past week.

Per our discussion last week, wheat should see 5 intermediate waves down to complete an important bottom. It appears that (1) of (5) has completed.

If you drill down intra-day, it looks like (2) may be tracing out an expanded flat. If this is correct, then we should see upward pressure early next week to finish this little corrective.

The 38.2% retracement comes in at 507.25, while the 50% retracement is at 517.

At the conclusion of this counter-trend rally, I fully expect price to continue the downtrend. My first minimum downside target remains at 437.50, which is the .618 projection of [1] - [3].

CORN The corn market continued its downtrend this week after taking a couple days to trace out an intermediate (2) wave.

If correct in my assessment, then the corn market should see some acceleration to the downside soon as it enters its (3)rd.

Price needs to take out 317.25, which should lock in (2)'s high for now. The next level of importance would be the 304 L, which is the bottom of primary [3].

[5] = [1] - [3] at 211.25. [5] = .618 of [1] - [3] at about 270, which is the minimum we should expect.

Like wheat, corn is getting closer, day by day, to a very important bottom.

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The New Bull Market Fallacy

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ES

As expected, ES finished higher today. Range was 17.25 points and volume was about average, but less than yesterday.

It looks like we finished b down, in what would be an expanded flat. It appears that we have completed [1] and [2] of c up. I'm thinking that I will need to ratchet up my degree's by one.

c = a at 1023.75. The 161.8% projection of a comes in at 1039.50. The 1.382 extension of (a) sits at 1027.50. This is a common level that an expanded flat, which is what I believe is tracing, gets to. It can certainly exceed that level or fall short.

Should also be noted that a potential Bearish Butterfly could come into play at the 1020 level.

I might add, that the current 2 bar 15 minute deadly is at 1016.25, while the whole swing from the 998 L gives 1030.

These are just levels and numbers to keep in mind as we watch structure unfold.

If I'm incorrect in my assessment, there are several other options:

1.) minor A has not completed
2.) minor B has already completed
3.) we never take out the 1016 H and trace either a regular flat or triangle
4.) 13 others that I wont list

I wasn't overly impressed with the commitment of the bigs today.

Edit: As of this writing, it appears that we may have completed another 5 little waves up. Interesting that price was stopped (AGAIN!) at the median line.

Crude

Crude had a beautiful day going for awhile - before giving most of it up. Range was $2.16 and volume finished slightly less than yesterday.

This is a 4 hour chart. I needed to show a bigger chart to be able to get this whole mess of a (iv) on it.

If we use the 68.71 L as the end of minuette (iv), then we can actually get 5 waves up. This is not without issues folks. As talked about in last nights update, we do have minor overlap.

I have today's high of 72.21 labeled as sub-minuette i. This high could however, finish off minute [c]. I don't think so - but it is possible.

I will assume that ii has completed, this makes iii = i at 73.54. The 61.8% projection of i - iii is at 74.59.

Notice that RSI is sporting a nice positive divergence from the 72.84 H. This is another reason that I feel there is additional upside left in the structure.