We must not confuse dissent with disloyalty.
When the loyal opposition dies,
I think the soul of America dies with it.

--Edward R. Murrow

UPDATED 20060801

COMMENT #269

CHART #532

1. A couple of months ago, this market was believed to have made an important top on the monthly CHART.

2. By the end of the month of the top, the market was seen as forming the right shoulder of a head-and-shoulders top in the following CHART of daily prices for the continuous spot futures contract as seen here:

3. The hourly CHART of the July futures contract shortened the timing of the right shoulder to here:

4. From the low at the green and blue boxes, price then rallied into a mid-July high at the red box.

5. The decline from the red box was seen in the following CHART of hourly prices for the December contract to have unfolded in a 5 wave impulsive sequence (see pages 283-92 of "The $upertrader's Reference Manual") and to have entered a counter-trend, corrective advance.

6. Today's CHART #532 of daily prices for the December futures contract shows how price has apparently formed the blue A & B waves of an A-B-C corrective sequence.

7. In a very weak market, yesterday's high that was not higher than the high of two days prior formed a "failed 5th wave rally failure".

8. In such instances, the 5th wave fails to exceed the high of the 3rd.

9. Such instances are rare and signal extreme weakness in a market when they occur.

10. The alternative is that yesterday's low formed (or is about to form) a 4th wave low and then trade a little higher to complete a blue Wave C rally and the blue Wave 2 correction.

11. It would be ideal for this movement, should it occur, to peak below the high of the move shown in the upper left corner of the CHART and at, or about at, the upper red ascending channel trendline.

12. However, we can see that this market is set up for short side entry today via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

13. It would be of much greater significance were such short entry trigger signal to occur late in the day today and with price having not been able to take out the black Wave 3 high shown in the CHART at the .786 price retracement level seen at the red horizontal dotted line.

14. Should such action occur, the expectation will be that the blue Wave 1 decline and blue Wave 2 counter-trend correction high are in place and that the market is ready to begin a stout decline.

UPDATED 20060801

COMMENT #270

CHART #s 533 & 534

1. CHART #533 updates daily prices for the continuous spot futures contract.

2. The CHART updated is shown here:

3. As can be seen, after an 8 calendar day decline, the market appeared to have held the green up trendline shown in the CHART and .786 price retracement level, thereby forming the blue Wave c of 2 and blue Wave 2 low.

4. However, the low did not hold and the thin pink horizontal trendline shown at the blue Wave 2 low was taken out.

5. Today's CHART #533 shows the reassessment.

6. Here the blue Wave 2 low has been moved forward to yesterday's low and the 8 calendar day decline has been increased to a 12 calendar day decline.

7. This new number is still quite significant to this market as the blue Wave 1 advance and Wave 2 decline are now of equal length at 12 calendar days each.

8. The 24 calendar day total of the two equals the extent of the black Wave 2 decline which was 3.000 times the advance of the black Wave 1.

9. The total time in the black and blue Wave 1-2-1-2 sequence is thus 56 calendar days (FIBONACCI #=55).

10. The thick pink horizontal trendline drawn off the black Wave 2 low remains as important support the break of which would negate the setup and, likely, bring the Alternative and bearish scenario seen in the pink box above price into play.

11. On the other hand, there are three pink horizontal trendlines drawn above yesterday's price range.

12. The first and lowest is the most important and is thus the thickest.

13. A break of this line is a break above the blue Wave a low and suggests that the blue Wave a low is not the blue Wave 1 low shown in the pink Alternative box above price.

14. In other words, it will (presumably) negate the very bearish Alternative scenario and, further, will suggest that the important expected price advance is underway.

15. The second pink horizontal pink trendline drawn off the blue Wave b high is thus more of a confirming indicator.

16. The last drawn off the blue Wave 1 high, without the black Wave 2 low being taken out, should suggest that the expected advance is confirmed and that price should move above the 2004 high which is the black horizontal dotted trendline shown at the top of the CHART.

17. An extension of the blue ascending pitchfork has also been added.

18. Although it is easy to overlook the importance of this segmentation, its importance to the current price structure of this market should not be disregarded.

19. An example is seen from the bond market a couple of years ago.

20. Here we see price holding a similar pitchfork extension.

21. As can be seen in the next CHART, price then rallied upwards into the WIC (Weekly Inversion Cycle Index projected turn) in early September shown in the upper right corner of the CHART, thereby completing the blue 5 wave impulsive advance and black A-B-C corrective advance up from the May low.

22. CHART #534 shows hourly prices through last night's close.

23. We can see that the market advanced to the blue Wave 1 high in 160 hours (100 X PHI=161.8).

24. From this high, the blue Wave a-b-c decline is then presumed to have occurred as shown in the CHART.

25. This decline lasted 40-44-75=159 hours with 44 up and 115 down.

26. Down / up hours = 2.614 (SQ PHI=2.618).

27. The red boxes show that the blue Wave a decline of 150 ticks is about equal to the blue Wave c decline of 160 ticks.

28. The market thus advanced 160 hours and declined 159, or were nearly equal.

29. The green dotted horizontal trendline marks the .786 price retracement level (1/SQ RT PHI=.786).

30. The small red sloping trendline in the bottom box shows that such momentum oscillators as RSI and Slow Stochastics have failed to confirm the new price lows, thereby forming an important price / momentum oscillator divergence (see pages 171-84 of "The $upertrader's Reference Manual").

31. We can see how price declined to the lower green channel trendline.

32. A break of the blue upper descending pitchfork line would suggest that the market has completed the blue Wave 2 low and has begun its advance in earnest.

33. The expectation that an important move is at hand, and that resolution of that move will be to the upside, thus remains.

UPDATED 20060801

COMMENT #271

CHART #s 535 & 536

1. CHART #535 shows daily prices for the cash index.

2. We can see how price made a new high at the end of the month.

3. This high was not confirmed by the continuous spot futures contract or the individual futures contracts, however, thereby forming important intramarket price divergences (see pages 171-84 of "The $upertrader's Reference Manual").

4. The two small red sloping trendlines further show that the new price high is not being confirmed by such momentum oscillators as RSI and Slow Stochastics (see pages 171-84 of "The $upertrader's Reference Manual").

5. The red lines at the top of the CHART show two interesting segments relating to the 56 calendar days shown (FIBONACCI #=55).

6. The small short blue sloping trendlines show that the recent rally is occurring on less and less volume support, thereby forming an important price / volume divergence and enhancing the above divergences noted (see pages 171-84 of "The $upertrader's Reference Manual").

7. We can see how price bottomed at the green and blue boxes in the center of the CHART and that the first high since occurred at the red WLC (Weekly Linear Time Cycle Index projected high).

8. We can see that we're now at the next projected turn which is the blue WIC box in the upper right corner of the CHART (Weekly Inversion Cycle Index).

9. Since price has been moving up into the projected turn, the expectation is that the turn will produce a high in price.

10. The box is thus placed above price in the CHART.

11. CHART #536 is also a daily CHART of the cash index.

12. This market is in extremely weak position.

13. We had earlier seen in these hourly CHARTS how there were a series of downthrusting 5 wave impulsive Elliott Wave sequences suggesting the weakness (see pages 283-92 of "The $upertrader's Reference Manual").

14. The weakness is further seen in that the mid-July low broke the June low in this market and then in the very weak rebound that has seen price unable to break above the 720 high.

15. This in comparison to the price action over the last few days in the #535 CHART.

16. Also, note how price has not even been able to break above the red down trendline shown in the CHART.

17. When we inspect closely the price action through yesterday's close, we can see that this market is set up today for short side entry via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

18. We can compare the ratio of these two indexes as has been done for daily prices in CHART #537.

19. Here we see how weak the latter market has been versus the former over the last few months.

20. The reason this weakness is important is shown in the following CHART #538 of the same ratio via the monthly perspective.

21. What this CHART shows is how the ratio has been consistently rising over the years shown.

22. We can see how the decline of the last few months has taken the ratio back to that black up trendline.

23. This trendline is expected to shortly give way.

24. The #536 market is expected to lead to the downside.

UPDATED 20060801

COMMENT #272

CHART #539

LTC0601 - #8

1. The CHART shows the monthly and weekly Inversion Cycle Index projected turns in the blue boxes.

2. The Linear Time Cycle Index projected highs and lows are shown in the red and green boxes.

3. We can see how price has moved up into the blue and red boxes at the end of July.

4. Since the actual action of the market itself is consistent with the projected high of the red boxes and projected turn of the blue boxes, the expectation is that an important high is occurring in this market.

5. The June low in the complex was more consistent with the following CHART of the NASDAQ while the S&P 500 best anticipated the early July high.

6. Make sure and don't miss the May 12th 55 page special stock market report.