MAY COMMENTS
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Comment numbers for 20060531 188 189
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
"Avoid popularity if you would have peace." UPDATED 20060531
COMMENT #188
CHART #s 377 & 378
1. Earlier this month, we took a look at the long term perspective in the following two CHARTS of monthly prices:
2. (One can read the nuances of the structure of the market in the COMMENT accompanying the CHART by going to the date of the .pdf file at COMMENT #148).
3. The expectation was that the market was making an important top.
4. The following intraday CHARTS were issued in anticipation of a bearish Elliott Wave pattern having formed (see pages 283-92 of "The $upertrader's Reference Manual"):
5. A couple of days after the 1 minute CHART was posted, however, the market made a new high for the move on the 11th.
6. The new high was quickly reversed, however, amidst price/momentum oscillator non-confirmations (see pages 171-84 of "The $upertrader's Reference Manual").
7. Today's CHART #377 of daily prices shows the July contract.
8. When we look at this market, we can see that it is possible that the head-and-shoulders chart formation shown is in the process of forming.
9. This formation is marked in the CHART by the three green caps (see page 120 of "The $upertrader's Reference Manual").
10. One ideal manner in which this formation could form would be to have the 16 trading days to each shoulder from the head (2 X FIBONACCI #8=16).
11. This outcome is shown by the red lines above price.
12. We can see, by the red sloping line, how the high on the 11th was not confirmed by the momentum oscillator shown in the middle box, as previously discussed.
13. The thick red up arrow shows the volume pick-up after the left shoulder high was set.
14. From that volume high, which is marked in the bottom box by the red vertical line, we can see how volume decreased on the rally up to the "head" high on the 11th.
15. There was not a volume pick-up on the ensuing sell off from the high on the 11th.
16. The rally since the low on the 19th, however, has seen lower volume as price has gone up.
17. This decrease in volume is shown by the blue sloping trendline in the bottom box.
18. On the daily CHART #377 above, the 8 calendar day decline from the high on the 11th to the low on the 19th (FIBONACCI #=8) appears to have unfolded in three legs thereby suggesting an A-B-C movement as marked in the CHART.
19. The reason this possible interpretation is important is because the advance from the 424 low to the 511 high of 16 trading days is an apparent 5 wave impulsive movement as marked in the CHART by the 5 black numbers.
20. Hence, a 16 trading day advance followed by a 6 trading day decline (2 X FIBONACCI #8=16, 2 X FIBONACCI #3=6).
21. 16/6=SQ PHI.
22. It is thus possible that the market is in bullish position and that the advance/decline shown of 22 trading days from the 424 low to the 519 low has formed the 1st and 2nd Waves of a Larger Degree of Trading Wave V advance.
23. This possibility is not favored.
24. Were such the case, the from the 519 low, we should be able to see an initial impulsive up thrust.
25. As can be seen, the market, instead, appears to have unfolded in the a-b-c movement (so far, at least) shown.
26. Price is attempting to fill the gap marked in the CHART by the grey horizontal box.
27. We can see that ideal green cap out there to the right in the upper right corner of the CHART.
28. The date of the ideal right shoulder is shown at the green cap.
29. But the a-b-c formation shown is suggesting completion of a corrective movement now.
30. From a head-and-shoulders perspective, it would be ideal to see the market top at the green cap around the horizontal red dashed line drawn off the left shoulder high.
31. But the black a-b-c suggests that the correction is ending, or has ended.
32. The black 2-2-2=6 trading day text with the black arrows shows that the decline from the high and ensuing correction have both unfolded in the same 2-2-2 trading day sequence.
33. In other words, 6 down and 6 up to yesterday's high.
34. With all that in mind, let's take a look at an hourly CHART of July prices in #378.
35. Here the right shoulder green "cap" is moved forward to yesterday's/today's high.
36. The ideal outcome shows the upward corrective movement from the 519 low as being a 14-6-14=34 hour total (FIBONACCI #=34).
37. To the 530 high of yesterday, the market has unfolded in 14-6-10=30 hours.
38. In other words, 30 hours down to the 519 low and then 30 up to the 530 high.
39. On the hourly CHART, the labeling of the 511 to 519 decline is shown as a 5 wave impulsive sequence and not as the black A-B-C 3 legged affair shown on the daily CHART.
40. This labeling is consistent with the 30 hour a-b-c corrective movement shown.
41. So what does this all mean?
42. What it suggests is that the 5 wave impulsive advance from the 424 low to the 511 high is a trend-ending movement and that the 5 wave impulsive decline from the 511 high to the 519 low is the beginning of a new and emerging downtrend.
43. The expectation is that the 519 low is a Larger Degree of Trading Wave 1 low and that the c Wave high yesterday after the a-b-c correction shown is a Larger Degree of Trading Wave 2 high and that the market either began a Wave 3 decline at yesterday's high or will set the Wave 2 high today.
44. The shallowness of the Wave 2 high, if it is unable to trade into and/or fill the grey box shown, suggests that the market is in very weak hands.
UPDATED 20060531
COMMENT #189
CHART #379
1. CHART #379 shows hourly prices for the June contract.
2. It updates the following CHART from about a week ago.
3. The expectation at the time was that the blue Wave 1 advance was complete and that the market should spend some time forming a blue Wave 2 low around Memorial Day.
4. Tomorrow is first notice day.
5. We can see in today's update that price appears to have declined in the 44 hour sequence shown (1/2 FIBONACCI #89=44.5) and then corrected upward in the a-b-c sequence shown to the black Wave B high.
6. The ideal would see a first notice day liquidation that would take out the black Wave A low.
7. If the decline were to carry an equal amount as the black Wave A decline, then the black Wave C decline would carry to the black horizontal arrow pointing to the right.
8. This seems to be a bit much to expect, however.
9. In excited markets, the black Wave C downlegs is often quite abbreviated.
10. We can see that the market has already corrected 50 percent of the blue Wave 1 advance.
11. This price retracement level is marked in the CHART by the red horizontal dashed line.
12. We can see that the market is about at the 89th hour (FIBONACCI #=89) since the blue Wave 1 high.
13. The expectation is that the market is about to set (or has already set) the blue Wave 2 low.
14. If this is correct, price cannot move higher without first moving through the pink horizontal trendline shown.
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!
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