"The Fed has been in existence for 93 years.
In those 93 years the Federal Reserve Notes that the Fed issues
have lost 98% of their purchasing power.
To cover up this monumental scam,
we hear the Fed blather and bluster about how worried they are
about the current inflation rate.
The current inflation rate is the cover-up;
what kills us is the systematic year-after-year loss of purchasing power
of those billions of Federal Reserve Notes."

--Richard Russell

UPDATED 20060710

COMMENT #231

LTC0601 - #s 6-7

CHART #s 460-461

1. The following CHART was presented as a SPECIAL REPORT as part of the April-September edition of "The 2006 $upertrader's Book of Linear Time Cycles".

2. Three data series were analyzed in the CHART.

3. The longest was the D1 series of monthly prices since the beginning of the previous century which included the post-Federal Reserve Board experience.

4. The DI series included prices from about the late 1940s or so and incorporated the post-IMF/Bretton Woods experience.

5. The second included both monthly and weekly prices whereas the first only addressed monthly prices.

6. Finally, the DJ series was of the continuous spot futures contract of the last decade or so.

7. Since the DJ data was the shortest, the expectation has been that it should be the least reliable and most volatile of the three data series.

8. On the other hand, the slowest-moving is the 1900 D1 series of monthly prices only.

9. The DJ projections are thus presented as closest to price with the D1 furthest away.

10. The wide green and red boxes both above and below price identify the MLC (Monthly Linear Time Cycle Index) projected highs and lows.

11. The wide blue boxes record the MIC (Monthly Inversion Cycle Index) projected turns.

12. The narrow WLC and WIC boxes, on the other hand, record the weekly projected highs, lows and turns.

13. The red color is used throughout to project highs, green for lows and blue for turns.

14. It is important to assess whether or not a market is moving up into a projected high or turn (or both) or down into a projected low or turn (or both) before the projection might have significance.

15. For example, at the time of the post of the above SPECIAL REPORT in early April, we could observe the green and blue boxes in the lower left corner and see how price had moved up from those boxes to the red and blue boxes in March with the green ones shortly to follow in April.

16. The projections were explained at the time in the Instructions as originating from the Cycles sheets.

17. One of these sheets is published for each of the markets followed.

18. For example, the one at the time for MKT NMBR 19, which is the DJ or continuous spot futures contract, was presented as it is.

19. We can thus see the red MLC projected high and green MLC projected low in the MLC column and how these same red projected high for March and green projected low for April are shown in the above SPECIAL REPORT for the same month.

20. A little bit later, the next update of the above SPECIAL REPORT was released to cycles book purchasers as price moved down into the green boxes of April.

21. From the April lows, price moved up into the highs of the last few years, peaking here in mid-May:

22. This peak was made amidst the two WIC blue Inversion Cycle Index projected turns and single red WLC projected highs.

23. The light blue, green and red highlighting in the mid-box containing price action was added so that purchasers might see the importance of the red and blue highlighting at the time of the post in mid-May.

24. A month later, price had experienced quite a decline.

25. A different market was presented at the end of the decline that was more in-keeping with the decline that had occurred and events of the moment.

26. In that CHART, we can see how price had moved down from the red and blue boxes at the top of the CHART to the blue and green boxes in the lower right corner.

27. The focus on this NQ CHART and switch from the D1, DI and DJ contracts was consistent with the 55 page report released 512 which focused on the importance of using the proper contract in order to discern proper buy/sell signals in a complex.

28. That report is available to all purchasers of the April-September edition of "The $upertrader's Book of Linear Time Cycles" and is strongly recommended.

29. From the mid-June low, price has followed the expectations and subsequently rallied.

30. The rally has taken price up into the early July highs shown in the following CHART of daily prices for the cash index which is but an update of the same index.

31. The blue, green and red highlighting has been further emphasized.

32. As can be seen, the question of the moment is in relation to the early July shown and, as can be seen by the red and blue dashed arrows, whether that high satisfies the red MLC projected high and blue MIC projected turn.

33. When we look at this CHART solely, without considering other contracts for this market, an important failure is called into question.

34. That failure is the inability of the early July high shown to exceed the high of June.

35. The next CHART shows how the continuous spot futures contract, in fact, has made a new high in early July, thereby exceeding the high of June as shown by the price action versus the red horizontal line.

36. The blue MIC box in the LTC0601 - #6 CHART projected the turn in the DJ contract.

37. The July high shown in the LTC0601 - #7 CHART is in the DJ contract.

38. The July high shown in the LTC0601 - #7 CHART is thus consistent with the blue box MIC (Monthly Inversion Cycle Index projected turn).

39. Since price has been moving up into the MIC projected turn over the last few weeks, the expectation is that the market is in the process of forming a very important high.

40. How can we further resolve this question?

41. One way is to inspect price action in other markets in the complex.

42. The following CHART is such an example.

43. Here we see the red and blue boxes in the upper right corner.

44. The red boxes, of course, represent the MLC and WLC projected highs.

45. The blue small box represents the WIC (Weekly Inversion Cycle Index) projected turn.

46. Since price has been moving up into the blue box (WIC) projected turn, the expectation that the turn will reverse the uptrend and produce a downtrend.

47. The reason we might want to pay attention to these red and blue projections is because price has, in fact, moved down into the blue and green boxes at the bottom of the CHART from the May highs and, from those boxes and the June price lows, then moved up into the blue and red boxes in the upper right corner.

48. Finally, the following CHART was also presented with the Cycles Book in April.

49. Here we see a high projected in June by the red lines at the top of the CHART and low projected by a different cycle later in the year.

50. The last rep of the 14 month high cycle occurred, as can be seen in the CHART, in March of 2005.

51. 14 months later is, thus, May of this year which is consistent with the highs of the last several years seen in the above CHARTS in this market.