Every path has a few puddles.

UPDATED 20060331

COMMENT #104

CHART #215

1. Once again, the most important market it looks like we can focus on at the moment is reviewed in this COMMENT.

2. Let's go back a year ago so that the current perspective can be understood in the framework of the longer term picture.

3. The following CHART marked the end of the decline:

4. The CHART of daily cash prices essentially identifies a red Wave [3] low in February, a red Wave [4] high in September and a final red Wave [5] decline to the low shown in the lower right corner of the CHART (see pages 283-92 of "The $upertrader's Reference Manual").

5. A couple of weeks later, the monthly perspective was presented along with two key retracement levels shown in the lower right corner of the CHART by the red and black horizontal dotted lines.

6. The CHART shows price action over a 15 year period or so.

7. The expectation was that price would retrace up to the black dotted line at a minimum and, likely, at least to the red dotted horizontal line.

8. The entire decline from the blue Wave C high lasted 40 months.

9. This is the 15th month since of the correction from the low shown in the lower right corner of the CHART.

10. So we can see that we've retraced, in time, about 3/8 of the time spent in the decline which, normally, is the minimum expected.

11. The high of the correction actually occurred about 4 months ago, so that high has not reached the 3/8 or so level.

12. The correction to date would seem to require both more price and more time in order to work out the extremely negative perception of this market that still exists today.

13. From the low, the market rallied over the next seven months to the high of last summer shown in the following CHART of daily prices:

14. How the advance unfolded was presented as seen in the CHART.

15. From the 2004 low, the market was believed to have made a corrective blue Wave [A] high early in 2005 and Wave [B] low in March as shown in the lower left corner.

16. From that March low, the market was then believed to have completed the blue Waves 1, 2 & 3 of [C] at the July high.

17. From the 708 high, we can see that, at the end of July, a Wave C decline was expected from the high that had just formed on the 27th.

18. The blue Wave 3 of [C] high was labeled in the upper left corner of the next CHART of daily cash prices.

19. The complexity of the ensuing correction from the 727 blue Wave B high is shown in the CHART.

20. We can see that it was believed that the blue Wave 4 of [C] low had just formed after the blue A-B-C-X-A-B-C extremely complex movement of two months and that a rally from the early September low was expected.

21. In the next CHART, we can see that the rally did ensure and that the end of the first portion of the blue Wave 5 of [C] up was seen to have formed by early October.

22. The rest of the month of October was spent in the sideways correction shown in the following CHART of hourly prices for the December contract.

23. By the end of October, we can see that the market was ready for the next leg up from the blue Wave B low shown in the lower right corner of the hourly CHART.

24. The rally followed over the next couple of weeks to the mid-November high of the year shown in the CHART of daily prices in the upper right corner.

25. To date, this high has not been exceeded.

26. By early January of this year, the market had corrected back to the late October low which was marked in the following hourly CHART:

27. We can see how, since price had held the pink horizontal line drawn off the late October low, the most bullish interpretation possible was presented which was that the advance to the November high had unfolded in the black and red Wave 1 advances.

28. This segment - the advance from the September low to the November high, was to prove to be particularly difficult for two reasons.

29. First, it appeared to have unfolded as only a 3 legged movement to the 1003 high, 1027 low and 1116 high.

30. Second, it appeared to have followed immediately after the very complex A-B-C-X-A-B-C decline from the 708 high to the 902 low.

31. We could see the green MLC (Monthly Linear Time Cycle Index) projected low for January coming into play in the lower right corner of the CHART.

32. Nevertheless, since the 1027 low had held, the benefit of the doubt was afforded and the market interpreted in the most bullish position possible which was the red Wave 1-2 / black Wave 1-2 interpretation shown.

33. A few days later, the CHART was updated.

34. The key feature in this CHART was the comparison of the 1027 to 1116 advance to the 311 to 405 advance.

35. This comparison is shown by the two blue boxes.

36. The reason this comparison was especially important was because it would allow for the 1027 low to 1116 high to be identified as the blue Wave 5 of [C] wave up by moving the blue Wave 4 low from the 902 low to the 1027 low.

37. Although this unfolding was not favored, it was presented as an alternative.

38. If it were to prove correct, the what it would be suggesting was that the advance from the 2004 low shown in the lower left corner of the CHART to the 2005 high in November had unfolded in an 11 month A-B-C counter-trend corrective advance.

39. The November high of 11 months versus the preceding 40 month decline would seem to be too short, as discussed above.

40. We can see how the November high got up to the black horizontal line marking the 2004 high.

41. This is the black horizontal dotted line shown in the monthly CHART.

42. At the time, price had just peaked at the WLC (Weekly Linear Time Cycle Index) projected high marked in the upper right corner of the CHART by the red box and was moving down into the previously mentioned green MCL projected low for January.

43. By the end of the month, the colored boxes in the lower right corner of the following CHART suggested an important low was at hand.

44. But the decline had, just like the July to September movement and the September to November movement, unfolded in a very complex decline with several overlaps.

45. We can see that the October low was taken out, thereby negating the red Wave 1-2 / black Wave 1-2 bullish interpretation of the early January CHART .

46. Further, even though price had declined below the October low, and even though such negative price action was consistent with the blue [A]-[B]-[C] interpretation of 11 months as being a completed move, the interpretation just didn't seem to be "natural".

47. A better interpretation was presented at the time which saw the market unfolding in the black a-b-c-x-a-b-c movement shown in the CHART.

48. This interpretation allowed for the complex decline to and from the September low and complex decline to the late January low.

49. It also helped explain how price could bottom in late January in accordance with the green and blue boxes in the lower right corner.

50. A month or so later, we can see how this interpretation was carried forth and how price had, in fact, advanced from the late January projected lows.

51. The decline followed from the break of the pink lines shown here:

52. By early March, it appeared that the decline was ready to end, set the black Wave 2 low shown, and begin the expected blue Wave C (of the blue A-B-C-X-A-B-C correction from the 2004 low) in earnest.

53. Price did move higher and above the February high, but the breakout proved to be false and, a few days later, the market looked ready to attempt to bottom again after having set an irregular A-B-C corrective Wave 2 low.

54. This low was set on the 17th and from this low, another advance did ensue.

55. However, again, the market peaked a bit later as can be seen in today's CHART #215 of daily prices for the continuous spot futures contract.

56. We can see that the reverse green head-and-shoulders chart formation that appeared to be forming in early March has been removed from the CHART due to the break of the 306 low in mid-March.

57. However, the January lows still remain.

58. From the 324 low, we can see that the market has had another down-up-down movement of 2-1-1=4 trading days.

59. This movement appears as a simple A-B-C correction leading to the assumption that the market has formed the blue Wave 1 high and blue Wave 2 low yesterday as shown in the CHART.

60. The black and blue Wave 2 corrections shown in the CHART have thus alternated with the black movement being of a complex / irregular nature (in that the black Wave B high on 310 exceeded the black Wave 1 high on 216) whereas the blue Wave 2 correction is simple in nature.

61. These two alternating corrections are shown in the CHART just below the black and blue lines identifying each of the two Wave 2 corrections.

62. There is another even that is forming that is consistent with the problem formed by the complex corrections into and from the September low and into and from the January low to the 310 high.

63. The green lines in the #215 CHART show a contracting triangle.

64. Assuming this triangle began at the July high of last year, the green numbers at the September low, November high, January low, March high and action since is consistent with the formation of this triangle.

65. The points of the triangle are labeled below the green line below price.

66. We can see where the a, b, c & d points are on this triangle.

67. Missing is, of course, the green e low.

68. This e wave decline began at the 310 high green Wave d high under this interpretation.

69. The interpretation is not the favored one.

70. The favored one remains, from the January low, that the market is in the process of seeing a blue Wave C advance unfold that should carry above the March and November highs shown in the CHART.

71. Next, let's address the red head-and-shoulders chart formation which previously considered the right shoulder to have been set at the February high.

72. The 310 high, of course, negated the possibility that the right shoulder was set at the 216 high.

73. However, it does not totally negate the possibility that the shoulder formed at the 310 high.

74. The ideal would have been for the shoulder to occur on the solar eclipse date of 329 for at that time both shoulders would have been 92 trading days from the hear (FIBONACCI #=89).

75. But as can be seen in the CHART, the right shoulder certainly did not form on or near that date.

76. The pattern thus has but low probability of forming.

77. There's no doubt that many chartists will still consider the formation as in the process of forming, however, and will consider the green ascending triangle trendline shown in the CHART to be the neckline of the formation.

78. There are thus likely to be many public sell stop orders just below the pink horizontal line drawn off the 317 and blue Wave 2 low.

79. In fact, given the sharp manner in which the 5 trading day decline occurred from the 310 high to 317 low, the price action since the 310 high will be seen as consistent with the right shoulder high as shown in the CHART by the red cap to the right of price.

80. When we look at the commitment of trader's information at the bottom of the CHART, we can see periods when the spread between large speculators (black line) and commercial interests (red line) marked important lows over the last year or so.

81. These periods are marked by the green circles in the bottom box.

82. To the far right, we can see that the spread between the two is, again, narrow.

83. Such narrow spread is more consistent with the bullish interpretation presented by the black Wave 1-2 / blue Wave 1-2 information seen in the CHART than the bearish head-and-shoulders topping formation and green neckline which is also seen in the CHART.

84. In early January, three CHARTS of the 1988, 1991 and 1992 campaigns were presented.

85. The one that seems most appropriate now is the 1988 experience which is shown here:

86. That year, a brief advance was seen early in the year.

87. Price then bottomed in late March after a mid-February high.

88. When we look at the high and low price levels for the first quarter of 1988 and 2006, we can see that they are about the same in both years.

89. It was from the late March lows that the ensuing price advance shown in the 1988 CHART began in earnest.

90. The black Wave 1-2 / blue Wave 1-2 formation shown is consistent with such an advance occurring this year.

91. Our risk of finding out if the advance does, in fact, occur is negligible from these levels relative to the potential reward.

UPDATED 20060331

COMMENT #105

CHART #216

1. We had marked the high in this market last year in the following CHART of daily prices for the continuous spot futures contract:

2. Earlier this year, the March spot contract was unable to break last year's high (which is shown in the upper left corner of the CHART) …..

3. ….. while the June was as was recorded the day of this posting …..

4. From the decline, another nice, sharp decline followed as may be seen in today's CHART #216 of daily June prices:

5. The green MLC projected low at the bottom of the CHART and red MLC (Monthly Linear Time Cycle Index) projected high both seem to be about a month or so late.

6. The story is thus the blue boxes in the upper right corner.

7. These two boxes show the monthly / weekly Inversion Cycle Index alignment.

8. Since price has been moving up into the turn projected by this alignment, the expectation is that a high is about to form.

9. There are all sorts of interesting relationships shown in the CHART.

10. At the bottom of the CHART, we can see that the action since last year's high has traversed 145 trading days through yesterday (FIBONACCI #=144) with 57 to the November low (FIBONACCI #=55) and 88 since (FIBONACCI #=89).

11. The black lines below price show that the movement from the December low to the February high lasted 36 calendar days with another 57 to yesterday's high, 93 total (FIBONACCI #s=34, 55 & 89).

12. Since these numbers are each just a little bit greater than the actual corresponding FIBONACCI #, we know that the identified segments are going to be pretty close to exact PHI proportions.

13. For example, 93/57=1.632 (PHI=1.618).

14. It should be noted that although the June February high did exceed the June contract high of last year as shown in the CHART, the June contract high in February did not exceed the high recorded in the continuous spot futures contract.

15. The 201 high is thus considered to be extremely important in this market as said high is believed to have formed a retest rally failure versus the 2005 high.

16. If all this is correct, the blue Wave 1 low on 215 shown in the CHART is consistent suggesting that the market is in the process now of setting a blue Wave 2 high (see pages 283-92 of "The $upertrader's Reference Manual").

UPDATED 20060331

COMMENT #106

CHART #217

1. Earlier, we had been expecting a high to form in this market:

2. The expected decline from the high was expected to form a black Wave C low as shown in the following CHART:

3. The ideal outcome was seen by the blue and green boxes in the lower right corner here:

4. Today's CHART #217 of daily July prices updates:

5. Here we see how price did decline into the blue and green boxes.

6. The decline appears to have unfolded in a 5 wave impulsive sequence marked in the CHART by the 5 black numbers (see pages 283-92 of "The $upertrader's Reference Manual").

7. We can see how the black Wave C low just barely broke the December low marked in the chart by the thin green horizontal line.

8. The black Wave C low is believed to have completed the blue Wave B low shown in the lower right corner.

9. This blue Wave B low is comprised of the decline from the blue Wave A high of a year or so ago shown in the upper left corner.

10. We can see that the ratio of the black Wave A leg down to the black Wave C leg down is 1.628 (PHI=1.618) as marked by the green arrows.

11. The red numbers below each leg report that the decline in Wave A measured 967 points (FIBONACCI #=987) with 594 in the black Wave C decline (FIBONACCI #=610).

12. The blue numbers and arrow report that the black Waves A, B & C lasted 120, 164 and 45 calendar days, 329 total (LUCAS #=322).

13. This results in almost perfect balance in the movement with 164 up and 165 down days.

14. We can see that the expected increase in commercial long positions during the black Wave C decline did occur as shown by the red line in the bottom box.

15. The line shows how commercials moved to a net long number of contracts held at the June, 2005 low, August, 2005 low, December, 2005 low and now at the March, 2006 low.

16. The blue Wave A high at last year's April high measures 8 months from the 2004 low.

17. The blue Wave B decline lasted 11 more months.

18. If all the above is correct, what is expected is for a blue Wave C advance to occur from this month's low.

UPDATED 20060331

COMMENT #107

CHART #218

1. Yesterday, we discussed the decline since the beginning of the year as seen in the following CHART:

2. Short positions were kicked off by simple entry at the time as noted in the following CHART which employed the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

3. We can see how a similar situation seems to have just gotten underway in the following market as seen in today's CHART #107 of daily prices for the cash index.

4. Noteworthy is the pickup in volume on yesterday's decline in this market and the break of the lows over the prior week or so.

5. This was an interesting volume pickup since the prior's day's volume had also increased as price close higher, near the upper end of the day's range and well above the open.

6. The last three uplegs from the January, February and March lows shown in the CHART have lasted 8, 10 & 9 trading days.

7. But the selloffs, to date, have not been able to muster steam to the downside and have been contained within the green up channel shown.

8. The lower ascending green channel trendline thus becomes important to this market.