"Politicians are the same all over.
They promise to build a bridge even when there is no river."

--Nikita Khrushcev

UPDATED 20060602

COMMENT #192

CHART #384

1. CHART #384 shows daily prices for the continuous spot futures price.

2. Two overlapping segments are marked in the CHART by the red lines above and below price.

3. The two segments measure about 161 trading days (100 X PHI=161.8) and 233 calendar days (FIBONACCI #=233).

4. There are four green ascending trendlines shown that identify the initial rate of ascent to the first important ringed high shown in the CHART.

5. There are three downsloping red trendlines that mark the rate of descent/support that was first established by the line drawn from the initial ringed high to the November low (see the lowest of the three red down sloping trendlines).

6. The second line was drawn from the second high.

7. After price had returned to this line in January, the break of the green line became important.

8. We can see how the low late last month occurred at the second line and at the grey dashed ascending pitchfork.

9. A break of the green ascending line should be important to this market.

10. We can see how the recent rally in price has only taken price back up to the lower ascending blue pitchfork line.

11. This is actually a sign of a weakening rally.

12. When we look at the net commitment of trader's position in the bottom box for the small specs and commercial interests, we can see at the far left by the small black dotted circle that this tool was of no value at the beginning of the rally in late 2004.

13. The next red circle, however, shows how the spread widened significantly at the high a year ago.

14. The green circle then shows the opposite widening at the low late last year.

15. The final red circle shows how recent conditions have seen a record widening with small specs very bullish on this market and large commercial interests very negative.

16. This position is similar to that of a year or so ago at the spring, 2005 top.

17. The recent question in this market was posed at this low and was whether the movement down from the high price shown in the CHART was a completed A-B-C correction from which price was about to rally to a new high or, in the alternative, whether price would see a bit of an upward correction that would set a corrective high followed by downside acceleration.

18. Today's #384 CHART of daily prices for the continuous spot futures price continues to suggest the latter outcome.

19. To update the hourly CHART, however, a few days later, the upside correction had taken place, price had moved up into the grey box, and the market appeared to have set the blue Wave 1 - 2 sequence shown (see pages 283-92 of "The $upertrader's Reference Manual").

20. CHART #385 shows a zoom of the daily perspective.

21. The hourly update is shown in today's CHART #386 of hourly prices for the December contract.

22. The blue lines at the bottom of the CHART show two approximately equal segments of 65 and 61 hours, 126 total.

23. The first set the head-and-shoulders top formation marked by the three green hats.

24. The second set the blue Wave 1 - 2 sequence shown.

25. Note that there has been a reassessment in this interpretation with the blue Wave 1 low moved a few hours to the right.

26. This allows for the blue A-B-C corrective sequence to the blue Wave 2 high.

27. 13 hours to the Wave B low (FIBONACCI #=13) and 12 more to the blue Wave C high (approximate equality), 25 total versus the 36 in the blue Wave 1 decline.

28. The movement continued to see LUCAS #s being a factor in that the blue Wave A advance lasted 7 hours versus the blue Wave B + C legs at 6+12=18 (LUCAS #s=7 & 18).

29. C/B=12/6=2.000.

30. Hence, we know that PHI proportions are present.

31. The question, of course, is whether that blue Wave A advance, which, as marked by the 5 blue boxes, is the beginning of a rally that will see new highs.

32. If so, then the end of the correction to that rally would be seen at the red "1" low after the 6-12-8=26 hour down-up-down sequence following the blue Wave A high.

33. But the action since the red "1" low looks to be the red a-b-c movement shown.

34. In other words, as of the time of this writing, what seems to have happened is that the blue A-B-C rally occurred after the blue Wave 1 low, that the blue A-B-C rally was corrective in nature, that the blue A-B-C rally set the blue Wave 2 high shown in the CHART, that the red Wave 1 decline then followed, that the red Wave 1 low was followed by the red a-b-c sequence shown in the CHART, and that the red a-b-c rally set the red Wave 2 high.

35. We can see that the red sloping lines above the blue Wave 2 high and in the box at the bottom of the page show that such momentum oscillators as RSI and Slow Stochastics have failed to confirm the new high at the blue "2", thereby forming an important price/momentum oscillator divergence (see pages 171-84 of "The $upertrader's Reference Manual").

36. The action suggests a second bearish head-and-shoulders chart formation in the process of forming now.

37. This second formation is marked by the three red hats in the CHART.

38. The blue text in the lower right corner shows that, in a few more hours, it will be 144 hours from the green left shoulder high shown in the upper left corner right about the time that the 34th hour of the red head-and-shoulders top formation will have occurred (FIBONACCI #s=34 & 144).

39. We can see how price has traded back up into the grey box shown.

40. What all this suggests is that price should be in position to accelerate lower.

41. The reason, of course, we pay attention to all of the above is because the market has, in fact, so far peaked in accordance with these CHARTS: