"The only absolute and unqualified right of a United States citizen
is to residence
within the territorial boundaries of the United States,"

--US vs. Valentine 288 F. Supp. 957

UPDATED 20060330

COMMENT #103

CHART #s 206-210

(Posted afternoon, Thursday, 330)

1. A week ago, we were looking at an hourly CHART of the following cash index:

2. The interpretation shown suggested that from the low on 308 shown in the CHART, that the 5 wave impulsive advance marked in the CHART by the red numbers 1 through 5 was complete (see pages 283-92 of "The $upertrader's Reference Manual"), that the 5 wave impulsive advance marked in the CHART by the blue numbers 1 through 5 was complete, but that only 3 of an expected 5 black waves appeared complete.

3. Today's CHART #206 of hourly prices for the same cash index updates through Tuesday's close.

4. Here we see the market completing the black Wave 4 low of the expected 5 wave advance on Tuesday.

5. The Wave 4 movement is seen as having unfolded in the black A-B-C corrective down-up-down movement labeled in the CHART (the black Wave C of 4 low is incorrectly labeled as a black Wave B of 4 low).

6. Just below the Wave 4 low, we can see that this black A-B-C movement lasted 4-31-3=38 hours total.

7. The black Wave B movement was particularly complex with many overlaps as shown in the CHART.

8. Under the interpretation shown, the black Wave B movement from the black Wave A low to the black Wave B high unfolded in the pink A-B-C move shown.

9. Just to the left of the black Wave B high, we can see that this pink A-B-C movement lasted 6-22-3=31 hours with 9 up and 22 down (FIBONACCI #s=8 & 22).

10. The pink Wave B decline is, in turn, shown as having unfolded in the black a-b-c-d-e movement of 6-3-8-2-5=22 hours.

11. In the very upper right corner, we can see that the movement from the 308 low had occurred over 6-6-51-38 = 101 hours.

12. This distances are the amount of time spent in the advance to the black Wave 1 high in the lower left corner, black Wave 2 low, black Wave 3 high at the top of the CHART and black Wave 4 low in the lower right corner.

13. Here we see W1+W2+W4=50 ~ 51=W3 and W3+W4=89 (FIBONACCI #=89) versus W1+W2=12 (FIBONACCI #=13).

14. We can see by the blue horizontal dashed line, red horizontal dotted line and black dash-dot horizontal line that the Wave 4 low occurred right at these three levels of price retracement support calculated on the three blue, red and black up legs, at the green lower descending channel trendline shown in the CHART and at the center fork of the blue descending pitchfork.

15. The #207 CHART of hourly prices shows the advance that then occurred yesterday (Wednesday) from Tuesday's black Wave 4 low and is through Wednesday's close.

16. The question posed as of the #207 CHART is whether the advance formed a "5th Wave rally failure" or whether the advance was but Wave i of black Wave 5.

17. (A "5th Wave rally failure" occurs when the final 5th wave of a 5 wave impulsive advance fails to take out the preceding 3rd wave high - it is a sign of particular weakness in a market when such occurs).

18. The following CHART #208 shows daily prices for each of the continuous spot futures contracts shown through noon or so today, Thursday, 330.

19. We can see how the markets in the right column have been stronger over the last few days than those on the left with the one in the lower right corner leading the way.

20. The one in the lower right corner was just reviewed here:

21. We can see how the markets in the left column have failed to break through the highs of last week.

22. This failure of the markets in the left column to confirm the new highs this week of the markets in the right column has formed an important intermarket divergence (see pages 171-84 of "The $upertrader's Reference Manual").

23. The following CHART #209 shows daily prices for the action of the cash indexes for the markets shown through noon or so today.

24. Here we see the same picture portrayed as in the futures contracts.

25. The #210 CHART then updates hourly prices for the cash index through this afternoon.

26. From the black Wave 4 low, we can see that the market went a little higher this morning, but still failed to take out the highs that had been identified as the black Wave 3 highs in the #187 CHART.

27. The advance/decline has seen (so far) 8 hours up and 4 down, 12 total.

28. It is possible that the market has set a Wave i of 5 high and Wave ii of 5 low.

29. But the action in the chart in the lower left corner of CHART #209 suggests that such is not the case since price has already made a new low for the week today.

30. This new low will be confirmed by the market in the #210 CHART if price breaks the pink horizontal line and confirms the new low seen today in the chart in the lower left corner of the #209 CHART.

31. A break of the horizontal pink line will negated the possibility that the advance from the black Wave 4 low is a Wave i of 5 high and Wave ii of 5 low.

32. Should the pink line be broken prior to this market trading above the black Wave 3 high in the #187 CHART, the suggestion will be that a "5th Wave rally failure" has occurred in the #210 market.

33. This "5th Wave rally failure" coupled with the inability of the markets in the left column of the daily #208 and #209 CHARTS to confirm those in the right column will suggest a very negative outlook for this complex.

34. The #211 CHART shows hourly prices through yesterday's close for the market in the lower right corner of CHART #209.

35. This CHART is important because, if all the above is true, it should align with the information presented a few days ago in the CHART of daily prices in #192.

36. This market is important to the complex because it is believed to have brought the three markets back into alignment to the downside.

37. (The market in the lower left corner of the #209 CHART is one of these three markets - the high shown in that market is the one discussed in the #196 CHART and those accompanying).

38. To be consistent with the red Wave v of blue Wave 5 advance shown in the #192 CHART (in other words, from the 308 low to 322 high), the market (because of the overlap formed by the 308 low being lower than the 131 high) should be seen as a 3 legged affair.

39. When we look at the advance from the 308 low to 322 high in the following CHART #212 of hourly prices, we see that the breakdown shown, where the blue 5 diamond advance forms the red Wave 3 advance, and the 5 red waves shown from the pink Wave B low to the pink Wave C high complete the pink Wave C advance, does seem to best be interpreted in the 3 legged manner shown.

40. Here the entire advance is presented as the pink A-B-C affair.

41. Such is consistent with the #192 CHART of daily prices where the entire movement from the 2004 low of last spring is analyzed and is consistent with the discussion in the #196 CHART of daily prices and elsewhere of late.

42. Finally, the #213 CHART shows hourly prices through this afternoon (Thursday, 330).

43. Here we see, from the 322 high of a week ago, a sharp decline and then a counter-trend correction to the first hour intraday high this morning.

44. As can be seen in this CHART, it is believed that this high as finished the blue A-B-C correction shown and that the blue Wave C advance to this morning's high of the first hour has set the blue Wave 2 high seen in the CHART.

45. The reason this has all been discussed is that it forms a picture of confirmation where each piece of the puzzle is acting as it should and in accordance with the assumption that the three markets are back in alignment to the downside and that others are following.

46. One of the most negative pictures seen in the complex is shown in the following CHART #214 of daily prices for the continuous spot futures contract.

47. Here we see the 41 trading day decline shown in the CHART as having unfolded in the black 5 wave impulsive sequence shown followed by a 14 trading day rally into today's intraday high (see the upper right chart in CHART #208).

48. This 14 trading day advance has carried price to, approximately, the Wave 4 high of previous Degree of Trading (which is the black Wave 4 high of early March shown in the CHART).

49. We can see, by the red horiztonal line shown, that this price level is also around the 50 percent retracement level of the 41 trading day decline.

50. The large up and down red arrow show the effect of this year's eclipses on price (see page 368 of "The 2006 $upertrader's Almanac - 1st Half Edition").

51. This upmove has been contrary to the experience of the last few years and is contrary to what was expected in early March.

52. The red line at the top of the CHART shows that the 41 trading day decline and 14 trading day rally into today's high has unfolded over 55 trading days (FIBONACCI #=55).

53. The March low occurred on the 6 year anniversary as shown in the CHART at the bottom by the black text.

54. What is suggested is the blue Wave I low and blue Wave II high (see pages 283-92 of "The $upertrader's Reference Manual").

55. In calendar days, this movement lasted 78 days.

56. The same event in 2000 lasted 69.

57. The two are PHI-related in that 78 / 69 = 1.130 (4th root of PHI=1.128).

58. On page 93 of The Almanac, we can see that this is the 89th calendar day of the year (FIBONACCI #=89) and that the 2000 and 2006 segments spent 69+78=147 calendar days setting the two tops (FIBONACCI #=144).

59. From an Elliott Wave standpoint, the 41 trading day decline actually appears as better-interpreted if the black Wave 3 low of 21 trading days is the first leg (down), the black Wave 4 high of 15 trading days is the second leg (up) and the 5 trading day decline is the third leg (down) thus resulting in a 21-15-5=41 trading day movement.

60. Here we see, essentially, an A-B-C affair with A=21 ~ 20=B+C.

61. Nevertheless, if all the other information of late is true, we want to err on the side of the most negative outlook possible at this moment until such time as the market shows us otherwise.

62. In other words, we're right back where we always want to be.

63. If the negative outlook discussed is correct, RISK to the upside is teensy and REWARD (assuming we've just begun a blue Wave III decline) enormous.

64. This is what we want to be doing with out trading capital - exposing it to small risk / huge potential reward situations.

65. Quite frankly, we've absolutely no way of knowing what the markets are going to do.

66. Our job is to simply identify the high reward / low risk situations that not only have a high reward / risk ratio, but also have a high probability of working out in accordance with expectations and, once that situation's been identified, to put the orders in and then go do something else.

67. Once the orders are in, we've done about all we can do.

68. The market's then going to do what it's going to do - and we have absolutely no control over what the market's going to do.

69. In this particular situation, we're able to easily identify the risk to this trade as being at today's intraday high.

70. A break above that high thus negates and is the point at which it's time to yell "uncle" for this particular market and trade.

71. The others can be approached in similar manner.

72. Well, it's taken most of the day to put this together, and the market's now closed, so this will be going out later than what was hoped when it was begun.

73. Nevertheless, nothing seems to have disturbed the expectations into the close.