MAY COMMENTS
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Comment numbers for 20060515 164
GENERAL COMMENTS
"It would indeed be ironic if,
in the name of national defense,
we would sanction the subversion of one of the liberties . . .
which makes the defense of the Nation worthwhile."
- United States v. Robel, 389 US 258, 264 (1967)
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1. We always want to be aware of those projected turning points on page 368 of "The 2006 $upertrader's Almanac - 1st Half Edition".
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CURRENT COMMENTS
Always keep your words soft and sweet, UPDATED 20060515
COMMENT #164
CHART #340
1. It was suspected late last year that the following market of daily prices for the continuous spot futures contract was unfolding in an emerging diagonal triangle advance.
2. The reason for the interpretation shown was because the blue Wave 1 high had unvolved in a 3 legged affair as had the blue Wave 2 low a couple of months later (see pages 283-92 of "The $upertrader's Reference Manual").
3. Were this assumption to prove correct, it would, of course, had important implications for the complex over the next several months as it would suggest that up thrusts would be very limited in nature.
4. We can see how the advance from the blue Wave 2 low was also perceived to be a 3 legged affair that was in the process of completing the c leg of the advance.
5. In the next chart, a minor reassessment was made by the red numbers shown in the CHART.
6. But the assumption was that the blue Wave 3 advance was at or near the end of the advance and that the blue Wave 3 had unfolded in the 3 legged a-b-c movement shown.
7. From the early December high, the blue Wave 4 low occurred a month later followed by the short spurt to the high of the year to date.
8. This was a very unique and pristine movement.
9. Rather than repeat all that is in the CHART, one can simply go to the COMMENT and review it there if necessary.
10. The January peak was followed a few days later by this entry sell signal via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".
11. A couple of months later, the market had declined in the 5 wave impulsive sequence shown and already corrected half the decline at the solar eclipse.
12. The suggestion was that the market was in position to complete the blue Wave II high shown and begin downside acceleration.
13. But some of the other markets were still in need of a bit more time to complete similar movement as had been seen in our key market that is the subject of this COMMENT.
14. A few days later, the market was again in prime position to set the blue Wave II high as shown by the blue A-B-C labeling in the CHART.
15. This brings us to today's CHART #340 of daily prices for the June futures contract.
16. We can see 4 twenty trading day segments since the high in the upper left corner.
17. Both the blue Wave 1 low and blue Wave 2 high shown in the CHART occurred at this periodicity as shown in the CHART.
18. We can see that the blue Wave 1 decline lasted 41 trading days (2 X FIBONACCI #21=42) and that the blue Wave 2 high occurred 20 trading days later.
19. W1 / W2 = 2.050 (PHI X SQ RT PHI = 2.058).
20. In the labeling of the blue Wave 2 correction, we can see that the blue Wave C measures about 1.272 (SQ RT PHI) times that of the blue Wave A advance.
21. At the same time, the blue Wave C of 2 high retraced about .786 of the blue Wave 1 decline (1/SQ RT PHI=.786).
22. This price retracement level is marked in the CHART by the horizontal red dashed line (see pages 185-7 of "The $upertrader's Reference Manual").
23. From the blue Wave 2 high, the market then seems to have unfolded in a 5 trading day decline and then a 15 trading day correction.
24. This action suggests the black Wave 1 low and Wave 2 high.
25. If such action is the "running correction" it appears to be, the pattern is very bearish.
26. The price action over the days following the black Wave 2 high is consistent with a "running correction".
27. In the black Wave 2 corrective movement, we can see that the movement shows 3 up, 9 down and 3 up trading days, 15 total so that A=3=C and B/A=3.000=B/C.
28. We can see that price has taken out the blue Wave 1 low as shown by the pink horizontal trendline.
29. If the movement is not a "running correction", an alternative that is also very bearish is shown at the black line at the bottom of the CHART.
30. The position of the market is the exact opposite of this one that was shown in COMMENT #162 of 20060512:
31. It was from those nestled Elliott Wave 1-2 sequences that the 3 year advance was launched after a retest of the low shown in the lower left corner.
32. The opposite is believed to be happening now.
33. In other words, price set the low then, high now.
34. Price retested the low 5 months later then and retested the high 3 months later now (FIBONACCI #s=3 & 5).
35. After the retest, a series of higher lows was seen which formed Elliott Wave successive 1-2 sequences then just as the market has formed a series of lower Wave 2 highs now.
36. CHART #341 of daily prices shows the ascending diagonal triangle without all the specifics seen in the prior CHART.
37. Here we see the 5 waves of the triangle identified by the blue numbers.
38. This continues the process begun at the beginning of this COMMENT when the blue Wave 1-2 were first suspected last fall.
39. The apex of the red ascending trendlines of the diagonal triangle point to the retest and blue Wave 2 high in early April.
40. The pink horizontal trendline in this CHART of continuous spot futures prices show that price has held the line by, again, less than 1 point.
41. Now let's take a look at weekly prices for the cash index over the last few years in CHART #342.
42. There are two interpretations presented.
43. The one at the bottom is shown, to the right of the horizontal black line, to be in PHI proportions.
44. The favored interpretation is the blue a-b-c-x-a-b-c movement shown in the CHART.
45. Here we see a 67 week advance in the first a-b-c (2 X FIBONACCI #34=68).
46. Then a 29 week decline to the blue Wave X low.
47. The second blue a-b-c movement then lasted 74 weeks with 37 in the blue a+b movement and followed by a 37 week advance that is the diagonal triangle seen in above CHARTS.
48. In the upper right corner, we see that the text connected to the black arrow shows that the diagonal triangle unfolded in PHI proportions.
49. Elsewhere throughout the rest of the CHART, we can see further rather remarkable PHI proportions everywhere.
50. The price relationships are shown in the blue box in the upper left corner.
51. The measure of the various relevant legs are shown in the first column and the ratios of the legs in the second.
52. The point is that this market ratifies discussion seen in other markets and shows rather remarkable evidence in support of the conclusion that a very important high has been seen in this complex.
2. We always want to be aware of those "Inversion Cycle Indexes" in the weekly pages of the April through September edition of "The 2006 $upertrader's Book of Linear Time Cycles" which is available in an easy-to-use electronic format. A sample of the format for the charting file may be seen in the NOTICE posted here. Ordering information here!
3. The initial issue of the free "Trading on the Edge" E-Zine was released 20001021. Archived copies are available here. Subscription information here.
4. NOTICE of refund and cancellation polices may be accessed here.
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