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UPDATED 20060526

COMMENT #184

CHART #373

1. The CHART shows hourly prices for the June contract.

2. The CHART updates the following two 15 minute bar CHARTS of the June contract:

3. In the first of the two CHARTS, the market was believed to have unfolded in the black 5 wave impulsive sequence shown by the numbers 1 through 5.

4. From the low, the market was believed close to ending an A-B-C Elliott Wave corrective sequence (see pages 283-92 of "The $upertrader's Reference Manual").

5. The expectation was thus to enter short positions in the expectations of declining prices.

6. The second of the two CHARTS shows what happened the next day.

7. This is the ideal for entereing short positions.

8. Here we see the market opening much higher the morning of the 17th and prices then spending the rest of the day declining as early morning long positions spend the rest of the day sweating bullets and "hoping" for the turnaround that never comes.

9. In today's CHART, we see that the blue Wave 2 high in the above #356 15 minute bar CHART is seen in the upper left corner.

10. The black 5 wave impulsive sequence is seen in the #349 CHART of 15 minute bars is seen to have formed the blue Wave 1 low in the #373 CHART of hourly prices.

11. From the blue Wave 2 high, price then unfolded in the blue Wave 3 decline.

12. We can see how this leg of the decline unfolded in the black bold 5 wave sequence and how the black bold Wave 3 portion of the decline also unfolded in a clear black 5 wave sequence.

13. This blue 5 wave impulsive decline is expected to have formed and even larger Wave 1 decline that is labeled at the bottom of the CHART by the red "1".

14. What this means is that it is highly likely that the market is in the process of now correcting the red Wave 1 decline and is in a red Wave 2 corrective (upside) advance.

15. We can see how the entire leg down has covered 92 points (FIBONACCI #=89) in 53 hours (FIBONACCI #=55).

16. The rate of decline is thus in approximate PHI relationships (PHI=1.618).

17. The pattern is pretty classic and is about as clear as any get (see pages 283-92 of "The $upertrader's Reference Manual").

18. But such movements can be tricky.

19. For example, the following CHART #287 of 15 minute bars suggested that the 5 wave sequence shown by the blue Waves was ending a many-month decline and that the 5 red impulsive wave in the spike advance was the first ember of an important trend reversal.

20. However, what happened was that, from the red Wave C low, another spike upwards did occur, but the spike ended a corrective process instead of continuing an impulsive process and a minor new low soon followed.

21. In the next 15 minute bar CHART #315 a few days later, we again saw the inability to complete the initial impulsive sequence when follow-through to the pattern seen did not arrive.

22. Shortly thereafter, a new low again followed.

23. From that low, this advance followed which seems to show the 5 wave impulsive sequence.

24. The market looks to be a few days ahead of today's #373 CHART in the corrective sequence.

UPDATED 20060526

COMMENT #185

CHART #374

1. What we want to do now is to go back to yearly prices as shown in the following CHART #369.

2. We want to note the rather remarkable symmetry seen in the CHART.

3. As can be seen in the upper left corner, the advance to the high seen lasted 13 years.

4. The breakdown of the 13 year advance was presented here:

5. From the 13 year high, the market declined over the next 5 years as shown in the yearly CHART.

6. Then a 3 year advance.

7. From that 3 year advance marked as a blue Wave a high, the market declined 13 years to the 34 year low shown in the CHART prior to rising another 5 years to the 21 year (and 26 year) high shown in the upper right corner.

8. Hence, the last 39 years in this market (3 X FIBONACCI #13=39) has unfolded in a 13-5-3-13-5 year, or 18-3-18 year movement.

9. Another way of looking at this rather remarkable symmetry is by comparing the 13 year advance and subsequent 26 year sideways experience, 39 total (FIBONACCI #=13, 2 X FIBONACCI #13=26 & 3 X FIBONACCI #13=39).

10. Or, said another way, the sideways period over the advancing period = 26 / 13 = 2.000.

11. The rather remarkable symmetry seen in the above CHART was also seen in the monthly CHART as seen by the two green boxes and the numerous PHI-related ratios shown here:

12. What we want to explore now is whether the weekly CHARTS also suggest completion of the advance.

13. What we want to explore is the blue Wave 5 of C of boxed B shown in this CHART of quarterly prices.

14. The blue Wave 4 is labeled in the CHART as having occurred in the third quarter.

15. Today's #374 CHART of weekly prices shows this blue Wave 3 high in the lower left corner and then the blue Wave 4 low at the bottom, middle of the CHART in light blue coloring.

16. From a weekly perspective only, the best-fit Elliott Wave interpretation actually occurs when the blue Wave 4 low is shifted forward to the first quarter of 2005 instead of the 3rd.

17. If the true blue Wave 4 low is as presented in the 1st quarter of 2005, the #371 CHART of quarterly prices would record an advance of 1-5-15-1-5=27 quarters with 21 up and 6 down instead of 1-5-15-3-3=27 as shown.

18. This would mean that W3=3 X W5 and W5=5 X W1.

19. In other words, from the much longer perspective of the yearly, quarterly and monthly CHARTS presented so far, none of the relationships or conclusions are altered.

20. There are some pretty interesting relationships created by this interpretation in addition to those above regarding quarterly time characteristics.

21. The two most important price relationships are with respect to the blue Wave 5 advance to the green Wave 5 advance of 1.643 (PHI=1.618) as shown by the bracket in the upper right corner.

22. The second is with respect to the blue Wave 5 price advance versus the blue Wave 3 price advance of 1.582 (PHI=1.618).

23. Additionally, green W1=37.9 (100 X SQ[1/PHI]=38.2), green W3=162.3 (100 X PHI=161.8) and green W5=193.5 (100 X SQ RT[1.000+SQ PHI]=190.2).

24. A couple of interesting relationships between these uplegs are marked in the CHART by the green arrows.

25. One of the more interesting features of the weekly CHART #374 is the net commercial position during the entirety of the blue Wave 5 advance.

26. As can be seen, the least net negative this group was occurred at the blue Wave 4 low in the 1st quarter of 2005.

27. The next least negative positions were then seen at the green Wave 2 low and the light blue Wave 4 low in the 3rd quarter of 2005.

28. The record net short position is then seen at the red up arrow.

29. In other words, this group of "smart money" traders has ridden this entire advance over the last year or so from a net short position.

30. A good a "fit" as the CHART #374 shows, we still need to go back to the blue Wave 3 high and review the interpretations of the time to make sure that the suggestion of a completed top is able to be seen as the market was analyzed at the time.

31. This review will have to be continued later to complete the discussion.