"A pessimist is one who feels bad when he feels good
for fear he'll feel worse when he feels better."

--Anonymous

UPDATED 20060605

COMMENT #193

CHART #s 385-386

1. We recently noted the following formation shown in the CHART of weekly prices for the continuous spot futures contract:

2. The CHART was also shown from the daily perspective:

3. The following CHART then summarized the movement from the lows of late last year, showing the advance to the high shown in the upper right corner of the following CHART as the blue A-B-C corrective advance shown in the CHART (see pages 283-92 of "The $upertrader's Reference Manual").

4. Today's CHART #385 shows daily cash index prices in the upper left corner.

5. Here we see a break to new high ground Friday.

6. But when we look at the remaining CHARTS of September futures in the upper right corner and the continuous overnight and day session prices in the bottom row, we can see that these contracts are not confirming the new high in the cash index Friday, thereby forming important intramarket price divergences (see pages 171-84 of "The $upertrader's Reference Manual").

7. CHART #386 shows continuous spot futures prices for the daily contract.

8. Here we see the price action since the high of last month.

9. The triangle at the top of the CHART shows the movement to the 524 high as having required 12 calendar days with 12 more to today's trading.

10. From the 519 low, we can see that the advance of 5 calendar days to the 524 high unfolded in the blue 5 wave sequence shown.

11. It would be possible to interpret the down-up-down sequence to the 526 low, 530 high and 601 low of 2-4-2=8 calendar days as an Elliott Wave 1-2 bullish sequence were it not for the break of the 519 low on 526 (see the green horizontal line).

12. We can see that such momentum oscillators as RSI and Slow Stochastics do not seem to be in position to confirm a new high, if made today.

13. On the other hand, we can see how commercial interests are continuing to sell this market and that the level of net selling has taken readings to new lows (see the black horizontal dashed line in the bottom box).

14. The expectation thus remains that even if the movement since the 512 high has during the 13 calendar day period from the 519 low to the 601 low, the market is not expected to have much upside potential, if any at all.

UPDATED 20060605

COMMENT #194

CHART #387

1. A month or so ago, this market appeared to be in bullish position, so long as the short pink horizontal trendline at the black Wave 2 low remained unbroken.

2. But a couple of days later, the market was not following through to the upside.

3. As a consequence, the structure of the market was reassessed and the blue Wave [A] - [B] interpretation presented (see pages 283-92 of "The $upertrader's Reference Manual").

4. In both CHARTS, the head-and-shoulders top formation remained a possibility as marked by the three red hats.

5. Although a low was made at the time, the low was only minor and lasted but a week or so.

6. Shortly thereafter, the head-and-shoulders top formation won out, price declined through the lower ascending red triangle trendline and the structure was again reassessed in the following CHART.

7. The assumption remained that the market was setting the blue Wave [A] - [B] structure shown.

8. How it got there had changed to the blue A-B-C movement shown with the blue Wave B sequence consisting of the a-b-c-d-e pattern shown.

9. Price had moved down into the green and blue WLC and WIC (Weekly Linear Time Cycle Index and Weekly Inversion Cycle Index) projected low and projected turn shown in the lower right corner of the CHART.

10. The low and turn projected by these boxes was consistent with the even larger reverse head-and-shoulders pattern seen in the following CHART of weekly prices:

11. Today's CHART #387 of daily prices for the cash index shows an alternative.

12. Here the current decline is seen as having begun at the March high instead of at the mid-April high.

13. One of the reasons for considering this possibility is that the market has not sharply reversed, to date, the downtrend.

14. Further, from the May low, one possibility allows for the blue A-B-C movement shown in the lower right corner.

15. Even if a new low is to follow, the bottom box showing a new recent high in the new long commercial position suggests that the new low will not go far.

16. Further, although the formation does suggest a new low, this structure is not the favored interpretation.

17. The favored interpretation remains that of last month.

18. It thus should not be overlooked that price has stopped in mid-May as was expected.

19. The expectation remains that an important low has already occurred or is about to occur.

UPDATED 20060605

COMMENT #195

CHART #388

1. In late February, the expectation in this market was that it was in the process of a complex movement typical of Wave B sideways affairs.

2. The market was expected to set an important low in late February as part of this complex movement.

3. A month or so later, we can see that the late February low did occur on time.

4. The market was believed to still be in the complex Wave B affair, but was believed to be about to accelerate upwards to complete the Wave B high.

5. A couple of weeks later, we can see that the blue Wave B high had been set and that the market was now about to set the blue Wave C low shown.

6. The blue Wave C decline was, in turn, expected to set the blue Wave 2 low.

7. The blue Wave 1 high and blue A & C lows were thus in alignment with the blue WIC projected turns shown in the CHART (Weekly Inversion Cycle Index).

8. How the expected low fit with the longer term perspective was shown in the following CHART of weekly prices that was concurrently posted.

9. The progress after the low was set was followed in the July contract via hourly CHARTS, the last of which is shown here:

10. The CHART was posted at the black Wave 1 high shown in the CHART.

11. From the high, the market traded down for 10 trading days to the 601 black Wave 2 low shown in the CHART.

12. Hence, 26 trading days up and 10 down, 36 total (2 X FIBONACCI #13=26, 2 X FIBONACCI #5=10 and 2 X LUCAS #18=36).

13. 26/10=2.600 (SQ PHI=2.618).

14. The rise to the black Wave 1 high of 26 trading and 37 calendar days was similar to the blue Wave 1 advance which lasted 25 trading and 37 calendar days.

15. Both are marked by the black boxes shown.

16. The three green cups below price suggests completion of the reverse head-and-shoulders formation shown.

17. If so, the green horizontal arrows at the bottom of the CHART show that the left shoulder lasted 60 trading days and the right 36.

18. 60/36=1.600 (PHI=1.618).

19. In calendar days, 88 to the left, 52 to the right, 140 total (FIBONACCI #s=55, 89 & 144).

20. The black Wave 2 low on 601 appears to have marked the blue box MIC projected turn (Monthly Inversion Cycle Index) shown in the lower right corner of the CHART.

21. However, the light blue box in the upper right corner of the CHART is presented as a reminder that it is not totally clear that the MIC projected turn will not mark an important high in price.

22. In the bottom box, we can see how the commercials have supported price by increasing their net long position over the last couple of weeks or so.

23. The red dotted horizontal line marks a .618 price retracement of the black Wave 1 advance.

24. The other two red horiztonal lines above price are drawn off recent highs.

25. The expectation remains that an important tradable advance is underway.