"The nationalist not only does not
disapprove of atrocities
committed by his own side,
but he has a remarkable capacity
for not even hearing about them."

-- George Orwell

UPDATED 20060503

COMMENT #150

CHART #303

1. CHART #303 shows hourly prices for the June contract.

2. However, before we get to the CHART, let's build a foundation underlying the reason the CHART's being presented and the reason it is so important at the moment.

3. Last year, the market was approaching an important low as shown here:

4. The reason this CHART is presented is because, from the high, a sharp decline ensued, but then, towards the end of the decline, the market started experiencing choppy action with overlaps where the low, for example, at the beginning of the month was exceeded by the high in the middle of the month.

5. The essence of the CHART, of course, was how the market was moving down into the WIC blue box (Weekly Inversion Cycle Index) projected turn.

6. Since price was moving down into the blue box, a low was expected.

7. In the next CHART, we can see how the low occurred the day of the post and that price then began moving higher up into the next set of red and blue MIC and MLC (Monthly Inversion Cycle Index and Linear Time Cycle Index) projected turn and high.

8. The market seems to be in similar position now.

9. We can see how the red sloping trendlines then were showing that such momentum oscillators as RSI and Slow Stochastics were diverging with new price lows thereby alerting us that price was about to reverse (see pages 171-84 of "The $upertrader's Reference Manual").

10. We know, of course, not to blindly try to apply such divergences to all situations.

11. However, when they occur at the blue, red and green boxes, they become of great importance.

12. The next CHART shows how price rallied from the low.

13. The CHART was released as price was making its first bottom from the high shown.

14. The low of that day is shown in the following CHART.

15. As of the time of the post, price had rallied up to a retest of the high shown in the upper left corner.

16. Again, we see the importance of the red box in the upper left corner at the high representing the WLC (Weekly Linear Time Cycle Index) projected high.

17. A month later, it appeared that the market was in position to make an important low.

18. But the low did not hold, and the market moved down to the bottom of the red down channel shown.

19. CHARTS of late have shown how price has done the same now.

20. We can see how the green WLC (Weekly Linear Time Cycle Index) projected low and red and blue boxes in the upper right corner were coming into play suggesting that an important low was at hand from which price should rally to the boxes in the upper right corner.

21. We can also see how price had failed to hold the pink horizontal trendline and support shown in the second prior CHART.

22. Now we get to the situation back then that seems most applicable now.

23. Five calendar days later after the low on the 21st (see above CHART), we can see that the low had held and that the market had experienced a bit of an upward movement and was attempting to reassert the downtrend.

24. When we look at the blue numbers in the following CHART, we can see that the Elliott Wave pattern presented was suggesting an important upside move.

25. But though the pattern was presented as it was at the time, it was given little potential of becoming reality.

26. Nevertheless, the pattern did have to be respected.

27. From an hourly perspective, it was believed, on the date of the CHART shown, that the decline shown in the CHART was complete at the blue Wave C low.

28. Note the black Wave 4 high in this CHART, however, as that's what's going to become of importance to today's CHART (to be later presented).

29. In the bottom of the CHART, we can see two important momentum oscillator divergences occurring (see pages 171-84 of "The $upertrader's Reference Manual").

30. From the low, we can see an 11 hour advance and 4 hour decline (both LUCAS #s).

31. But let's continue and see what happened.

32. The 4 hour decline turned into a 4-8-1 hour A-B-C movement the next day.

33. The black 1-2 shown suggested vigorous upside movement in accordance with the blue number Elliott Wave pattern shown here.

34. These situations, when they present themselves, should be respected and allowed all chance to unfold in the suggested manner until such time as the pattern is negated.

35. The next CHART shows how a "false flag" low occurred the next hour from which price thereafter rallied.

36. But the information presented in the CHART of hourly prices suggested that all was not well in financial land (see the green numbers representing number of ticks and red lines).

37. The next CHART shows continuation of the same movement.

38. Here we see, from the high in the prior CHART, another spike down over the next 12 hours and then a counter-trend, corrective pattern.

39. The black Wave 4 high remains as previously presented 13 days prior.

40. The red lines were important as they were suggesting that the market was again in the process of setting an important low as a result of the descending diagonal triangle that had formed/was forming.

41. We can see in the CHART that the price/momentum oscillator divergence had not yet occurred/was not occurring at the moment of the post.

42. Look how sloppy price became over the next few hours in the next CHART.

43. But we can see, at the bottom of the CHART by the red sloping trendlines, that the price, momentum oscillator divergence now was occurring and could be seen in the CHART, even though the lower down trendline had been violated by sloppy, non-impulsive price action.

44. The final bottom occurred 6 hours later.

45. The next CHART shows the bottom, the initial surge upwards, and the break of the upper down trendline and corresponding breakout of the descending diagonal triangle.

46. From this low and initial surge upwards, the initial thrust carried up to this high.

47. The high is marked as the black Wave A high in the following CHART.

48. As can be seen, the upward movement seemed to be corrective in nature and either at an end or about to end.

49. The actual end occurred two days later at the blue projected WIC (Weekly Inversion Cycle Index) projected turn as shown in the following CHART of daily prices.

50. The market was in a "dueling pitchforks" battle between the black ascending and blue descending pitchforks shown.

51. The blue, obviously, eventually won out.

52. This brings us to the current position as recently expressed by the CHART of daily prices.

53. Today's CHART #303 of hourly June prices is shown.

54. In this interpretation, the market is seen as having experienced the first 4 waves of an Elliott Wave decline as marked by the blue numbers.

55. This decline unfolded in a 22-20-39-7=88 hour movement (FIBONACCI #=89).

56. From the blue Wave 4 high, the CHART shows the market as having unfolded in successive 3 legged movements as marked by the small black a-b-c labeling.

57. The first two legs - the black Wave 1 low and black Wave 2 high, seem fairly clear.

58. It is not, however, clear that the black Waves 3 & 4 are correctly positioned.

59. Recent discussion suggests that they are, and that the black Wave 5 low is, in fact, a black Wave 5 low and, also, the blue Wave C low and, also, the end of the A-B-C-X-A-B-C decline discussed of late from last summer's high.

60. However, just as the low of last August was strung out over several hours, so do the 1st and 2nd Alternatives presented in the lower right corner of the CHART allow for a few more hours of excruciating torment as the market completes the descending diagonal triangle.

61. What's in support of the idea that the movement is complete as shown is how the impulsive downward movements of 48, 18 and 5 hours and corrective movements of 43 & 14 hours have all contracted by, approximately, 1/3.

62. In other words, 18 is about 1/3 of 48 as 5 is approximately 1/3 of 18.

63. 14 is about 1/3 of 43.

64. The black Wave 1 decline unfolded over 25-16-7=48 hours with 16 up and 32 down so that 32/16=2.000.

65. Black Wave 2 unfolded in 17-5-21=43 hours so that a+b=22 ~ 21=c.

66. Black Wave 3 unfolded in 11-6-1=18 hours with 6 up and 12 down so that 12/6=2.000 which was the same ratio experienced in black Wave 1.

67. Black Wave 4 then unfolded in a 3-8-3 sequence with a=3=c.

68. Then 5 in black Wave 5.

69. This final 5 hour decline does not appear to have unfolded in a 5 wave sequence on a 15 minute or smaller CHART (not shown) which is cause for the alternatives shown.

70. Let's take a look at these three legs down (the black Wave 1 of blue Wave 5, the black Wave 3 of blue Wave 5 and the black Wave 5 of blue Wave 5) from the viewpoint of price and see what's there.

71. In ticks, the declines measured 78, 61 and 30 ticks, 98 total.

72. W1/W3=1.279 (SQ RT PHI=1.272).

73. W3/W5=2.033 (PHI X SQ RT PHI=2.058).

74. W1/W5=2.600 (SQ RT PHI=2.618).

75. Total/W5=3.267 (2 X PHI=1.618).

76. Total/W3=1.607 (PHI=1.618).

77. Total/W1=1.256 (SQ RT PHI=1.272).

78. These are each clearly PHI-related from the perspective of price.

79. The conclusion is that the black Wave 5 low ended the decline in question.

80. So where will we know for sure that the pattern is complete?

81. First, the most important line shown in the CHART is actually the lower descending thick green trendline of the descending diagonal trendline.

82. As was seen in the analysis of the diagonal triangle low of last year, this line can be, and usually is, exceeded by a bit.

83. This "underthrow" is not seen in the current CHART.

84. Second, although a break of the horizontal pink line shown in the CHART would normally suggest confirmation of the black Wave 5 low shown, it is possible in the alternatives presented for this high to be taken out and the upper thin green descending trendline to be "flattened" a little and for the market then to experience another decline below the low of the move and down to the lower green descending thick trendline.

85. The reason this possibility is discussed is because of the length of the black Wave 1 and 2 movement.

86. Even though the relative brevity of the black Wave 3, 4 & 5 movements has been explained by the 1/3 relationship of each, they are still very short relative to the black Wave 1 and 2 movements.

87. These 3 legs totaled 18-14-5=37 hours to the black Wave 5 low.

88. From that low, the market has already traded 8 hours off the low, or 45 total, or more than the length of the black Wave 2 correction but not quite equal to the black Wave 1 decline.

89. The black Wave c of 2 high was above the black Wave a of 2 high.

90. In other words, such movement provides an example of how a black Wave 4 high could still be seen above the black Wave a of 4 high followed by one more new low to a black Wave 5 (among other alternatives).

91. But such is not the favored outcome not only because of the time perspectives, but, especially, because of the above price relationships in support of the time relationships and the divergences discussed over the last few days in other areas of the complex.

92. The reason this all remains so important is because of the increased importance of liquidity as we've often discussed in these COMMENTS over the last few years.

93. In other words, that markets are in a period where turns in one are highly correlated with turns in others.

94. If the black Wave 5 lows is as shown, then recent turns in other markets are likely to also prove valid.

95. If a bit more time is required to complete the pattern, other markets are also likely to continue existing trends for a bit longer.

UPDATED 20060503

COMMENT #151

CHART #304

1. CHART #304 shows daily prices.

2. We can see that yesterday's inside day has set up a short sale entry signal via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

3. This market has gotten itself into position where bullish sentiment of late has flagged somewhat.

4. It would thus not be surprising to have a short surge upwards that restores the bullishness as complacency has set in.

5. But, as was seen in yesterday's late afternoon note, the market is at prime position now.

6. The position appears similar to this one earlier in the year at the high of the year.

7. Execution of the short sale trigger today is consistent with the market's current position.

8. Pyramiding techniques presented around pages 232-6 of "The $upertrader's Reference Manual" should be reviewed.

UPDATED 20060503

COMMENT #152

CHART #305

UPDATED 20060504

COMMENT #153

CHART #306