"The government of the United States is a definite government,
confined to specified objects. It is not like state governments,
whose powers are more general.
Charity is no part of the legislative duty of the government."

--James Madison, speech in the House of Representatives, 17940110

UPDATED 20060513

COMMENT #163

CHART #s 336-339

1. For the last year or so, the following CHART of monthly prices for the continuous spot futures contract has served as the road map for this market:

2. Since the CHART is as of last August, we can see that see how today's update #339 has continued to hold the green up trendline shown in the CHART.

3. As can be seen at the bottom, this is the 55th month since the low shown in the left corner of the CHART.

4. The advance required 24 months.

5. Then and 8 month decline and advance, 16 total (FIBONACCI #=8).

6. The market then declined ½ X 8 = 4 months to the low of last August as shown prior to rising 6 months in a 2-2-2 month sequence followed by another 2 month decline to last month's low, 8 total.

7. The end of the initial 8 month decline to the summer low of 2004 was anticipated in this extremely complex movement shown in the following CHART:

8. A nice sharp rally ensued and the end of the year found the market retesting its summer lows as seen in the following CHART of December prices:

9. Price rallied from these lows to the high shown in the CHART the next spring of 2005.

10. But by the next summer, the market was at the next important low.

11. The first monthly CHART above was posted at that time.

12. The December, 2005 CHART showed a little bit different structure but was also believed to be making an important bottom.

13. From the low, a rally ensued over the next couple of months to the high shown in the upper right corner.

14. A month later, a low was anticipated around the black arrow as shown in the following three CHARTS:

15. The final low was made in the continuous spot futures contract at the end of November as shown in the following CHART …

16. … while the July contract bottomed in December.

17. A couple of months later, a high was anticipated here:

18. The March contract had a sharp selloff, but a little later than the ideal date in late February.

19. At this time, the July contract tried to hold the green up trendline shown in the CHART.

20. The two prior CHARTS show how price is often influenced by the last trading day.

21. At the time, the structure of how the market was believed to be unfolding was marked in the following CHART by the black Wave A low and Wave B high.

22. The box in the lower right corner showed how the two moves were in PHI proportions.

23. The expectation was that a black Wave C decline should follow and that, when done, the market would be in position to stage a "get on board for this one" rally.

24. Early last month, the movement was seen to be part of a larger structure as marked in the CHART by the blue Wave A high in the upper right corner and blue Wave B low in the lower right corner.

25. The last review of this market showed the possibility that the market had completed the black Wave C decline and was in position to rally so long as the green up trendline held.

26. The short pink horizontal trendline to the right of the inside day was suggested as a long entry buy signal.

27. We can see how such momentum oscillators as RSI and Slow Stochastics were showing a divergence with the new price low as shown by the sloping red trendlines.

28. At the same time, the commercials had increased their net long position.

29. But that blue box shown in the lower right corner of the CHART had not sung yet, and the long entry buy signal was not triggered as price broke the green up trendline and moved lower into first notice day.

30. Today's CHART #336 of daily prices for the continuous spot futures contract updates.

31. Here we see that price declined into the green WLC (Weekly Linear Time Cycle Index) projected low.

32. The red numbers in the two red boxes show that the two downlegs to the November and April lows are about equal in price at 955 and 940 ticks (FIBONACCI #=987).

33. Price has held the green horizontal line shown in the CHART.

34. The problem with this decline from the red WLC projected highs at the 224 high is that it appears to be a 3-legged affair (see pages 283-92 of "The $upertrader's Reference Manual").

35. It's thus not totally clear that the market has completed that black Wave C of blue Wave B decline.

36. If not, it will likely be because the market rallies from the green WLC projected low to the red WLC projected high and then sees the final low at the green WLC projected low shown in the very right corner.

37. When we look at the very bottom box of the net commercial long position, however, we see that the position is stronger (more bullish) than it was at the lows of last June, August and November.

38. Since some of the price information is a bit disheveled in the continuous spot futures contract, we'll take a look in the July contract in CHART #337.

39. Here we see that this market has taken out the December and August lows.

40. We can see that the decline to the December low and to the April low lasted 34 and 55 trading days (FIBONACCI #s=34 & 55).

41. The number of down days in the movement shown are 127 (100 X SQ RT PHI=127.2) versus the 76 up days (LUCAS #=76) so we know that the swings are well-balanced in time and are in approximate PHI proportions.

42. The actual ratio, as shown in the text at the bottom of the CHART, is 1.671 (PHI=1.618).

43. Further, the total number of 203 trading days (LUCAS #=199) versus the number of down days is 1.598 (PHI=1.618) and versus the number of up days is 2.671 (SQ PHI=2.618).

44. When we look at CHART #338 of daily December prices, we see a similar picture with a little bit different twist over the last few days.

45. Here we see a new low made after the black up arrow day shown in the CHART.

46. This new low seems to have completed the 5 wave Elliott Wave decline from the 410 high.

47. If the 410 high was Wave 4, then the black Wave C decline would appear complete in the December contract.

48. Completion of the black Wave c decline would suggest that the blue Wave B low is in place.

49. The divergence shown between such momentum oscillators as RSI and Slow Stochastics shown by the two short red sloping lines shown in the CHART support the view that the market has completed the decline.

50. A very unique proportional segmentation may be seen in the December contract as shown by the red vertical lines above price.

51. Here we see near-perfect PHI ratios defining the decline to the low of last August, high in October, low in December, and the low now this month.

52. The small pink horizontal trendline shows that a long entry position has already been triggered in the December contract via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

53. What this all suggests is that an impulsive blue Wave C advance should now be underway.

54. This advance is expected to unfold in a 5 wave movement.

55. The advance is expected to eventually take out last year's high and should be long-lasting (many months).