Weekend Update #2

30 YR BOND
The bond complex finished lower this past week.

That's about the only intelligent thing I can say about this market.

I have no opinion on this market. I need to see additional price action to get a grasp on structure.

CRUDE
The crude market shook off the big reversal day last Friday and headed higher.

As pointed out last week, we had a nice cycle low that came in on Monday, helping to stop the downside pressure.

This is a new interpretation of structure. Things are really messy here and this is just one view.

This shows a minute [b] wave combination. This assumes that (w) completed at the 74.55 H and (x) finished at the 67.05 L. Price would currently be tracing the (y) wave to finish [b].

If this assessment is correct, price should not hang around here very long. Price will need to immediately start impulsing higher, as it would be in its iiird wave.

Critical support comes in at 68.02. Should that level be breached, then something else is obviously going on.

iii = i at 73.87. iii = 161.8% of i at 77.49.

There is also the possibilty that (x) will take on the form of a triangle. There is also the possibilty that we are working on a bigger minute wave [iv] triangle. I could give you several more scenarios, but you get the picture.

KoolsTools shows that we should have a minor cycle peak on Thursday.

All prices basis continuous contract.

DOLLAR INDEX
The dollar continued losing ground again this week - imagine that.

Price took out the 76.325 L Thursday on a intraday basis. I will assume that the ending diagonal pattern, that was talked about last week, is invalidated.

My guess at current structure is that minute [iii] is extending and price put in a minuette degree (i) at the 78.085 L. Notice that price supported at the 161.8% projection of (i).

If (iii) has finished at the 76.23 L, then price should not get any higher than 78.085 on this retracement.

Following this (iv) wave, we should see continued downside price action.

Bottom line - structure suggests that the poor dollar is not done going down. I don't believe you can rule out new multi-year lows under 73.667.

All prices basis continuous contract.

GOLD
The yellow metal put in another positive week, reaching a high of 1025.80 before pairing some of its gains.

As mentioned last week, resistance was expected at 1015 and 1028, both previous pivots from the left side of the chart.

It is unclear, but we may have finished minuette (v), and thus minute [iii], at the 1025.80 H. If this is the case, we should expect some type of slow complex corrective for [iv].

The 23.6% retracement is at 1004.50, while the 38.2% comes in at 991.40

Thursday is scheduled for a cycle peak (KoolsTools). A better peak cycle may come in on 9/28. This is taken from 4/17 and 7/8.

I took 1/2 my long call position off Wednesday at a 261.8% projection at 1020, booking $1.65 in profit.

I'm not completely sure of the degrees, so I thought it made sense to take some off the table. Will leave the rest on, as I do believe that we see higher price.

All prices basis December contract.

Weekend Update - Grains

CORN
The corn market had a strange week. Price exploded higher Tuesday, up over 9% on HUGE volume, yet ended the week lower than where it began.

Generally a move like that, with volume to back it up, has follow through.

The question we have to ask is - does the 302 L have any significance? There is the chance that primary [5] ended on 9/8. If you ratchet up the degrees by one from what I show on the chart, you can certainly make that argument.

At this point, my guess is that wheat is still in a downtrend. What I have labeled on the chart is one way of looking at structure.

I also show an alternate count that may be in play. It is entirely possible that this could be a big [4] wave triangle of the running type (where B exceeds the price extreme of trend).

The main issue that I have with the triangle interpretation is that [4] would be so out of proportion to [2].

The critical levels to pay attention to this next week are 373, which is the price extreme of [4], and the 302 L. Price action through either of those levels narrows the possibilities of what structure is up to.

I will maintain my current bearish bias at this point, however, I'm open to the possibility that an important bottom has been found in this market.

All prices basis continuous contract.

SOYBEANS
The bean market found support at the 50% retracement level Monday before shooting higher with the other grains on Tuesday.

It's unclear whether primary [B] has completed or not. My guess is that the double zigzag down finished just intermediate (A) and (B) is in process.

If this is the case, (C) = (A) at 829.75. The (C) = 78.6% of (A) at 861.375. This fits in with the confluence mentioned in last weeks update.

If [B] has finished at the 892 L, then [C] = [A] at 1185.75. The minimum objective would be where [C] = 61.8% of [A] at 1073.50.

Wednesday is slated for a cycle peak. This comes from 7/16 and 8/18.

All prices basis continuous contract.

WHEAT
Like its fellow grain markets, wheat had a big day Tuesday with no follow through.

Out of all the grain markets, wheat continues to display the most weakness.

It appears as though wheat is tracing out a minor degree 4th wave currently. If so, it was a pretty muted 3rd, but did have a nice fib relationship.

Perhaps this pause here is another lower degree [i] , [ii] setting up. This would be a very bearish setup for this market, portending much lower price.

If this is a minor 4, I would expect 5 to extend, though it certainly doesn't have to. 5th's are the big extension waves in commodities.

Intermediate (3) = (1) at 417.50. I'm still looking for sub 400 price eventually.

We did have a minor cycle low that was suppose to hit Friday. We are still a couple of weeks out from a good cycle low.

Critical resistance is the wave (2) price extreme at 517.25.

I maintain my bearish bias in this market until proven otherwise.

All prices basis continuous contract.

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Crude

Crude followed the equity markets, putting in a small bodied spinning top type candle. Range was a light $1.50 on below average volume.

I have no clue if this count is correct, but it works. There is a 5 there. Marry this to the 5 off the 67.05 L and you have a completed structure.

What did it complete? You would ask that. It's still unclear at this point is the best answer. There are a few possibilities, but I believe it's tracing a triangle, which makes a lot of sense.

There is a chance that if this is indeed a triangle, we completed minute [d] today. If correct, then [e] down should be under way. Once complete, that would finish minor B. C up would follow.

I guess that is my preferred count currently. I'm not confident enough in it to place a wager at this point though.

What we need to see is downside price action tomorrow to confirm that structure has in fact finished. Breaking the 71.68 L would help. There is a small possibility that [5] will turn into something bigger.

If price should happen to take out the 67.05 L, then it is not a triangle, as that would be the [c] leg.

Something big is just around the corner in this market I believe. Minor B is nearing completion.

Edit: I failed to mention that we have a new moon tomorrow FWIW.

ES

The ES put in a negative day with a spinning top candle. Volume was well above average and the range was 15.25 handles.

It appears that the 1071.50 H completed a micro degree [3] wave and [4] is in progress. I really thought they would have finished up [4] today and started tracing [5] in earnest.

[4] has taken on the form of a double zigzag, which is not surprising.

The 15 minute pit session chart shows that we have still maintained channel integrity. My guess is that the channel will keep until [5] completes.

A 24 hr chart has in fact broken through the channel. I believe that by the time the pit opens it will be back inside, as it appears that this [4] wave corrective is nearly finished.

This is a look at a 610T chart, which is my trading chart. It's a good view of how this corrective is tracing.

Notice the relationship between the contracting and expanding ratios. The initial (B) retraced 70.7% and (W) completed at the 141.4% projection. Should (Y) be complete, and it appears that it is, it had the same relationship.

70.7% and 141.4% are reciprocals. I have discussed this harmonic relationship in numerous past posts. I will remind you again - this relationship is very powerful and needs to be part of your ratio analysis.

I was well positioned to take advantage of this corrective, having put on a fair short-line via both September and October puts.

Well, I managed to screw it up. After we finished the initial (B) leg, I convinced myself that this pig may try turning a triangle, which certainly could have happened.

Long story short, after we started the little bounce from the 1063 level, I bailed on my September puts for chicken feed profit. The worse part is, I put on some September calls.

No biggy really, as tomorrow should be up (I hope). I will more than likely make something on the calls probably, just not a whole lot. But you never know, we may explode.

Bottom line - it appears that [4] is complete, or very close. We should see upside price action to finish off [5], thus completing (iii).

The structure off the 1071.50 H is clearly corrective. The waves have numerous overlap. The only way this could be considered impulsive is by having four 1,2's so far.

Upside targets are 1073.75, where [5] = [1], and 1082.50 where [5] = 61.8% of [1] - [3].

I don't really expect [5] to get out of hand, however, the "greater fool theory" is in full force.

Tomorrow is expiry.