Great Spirit, give me the courage today
to see that struggle and conflict are here to teach me lessons
that are a gift from you.

--Indian prayer

UPDATED 20060807

COMMENT #280

CHART #s 556-557

1. The following two CHARTS of daily prices for the DJIA for the period indicated supplement CHART #552 of Friday.

UPDATED 20060807

COMMENT #281

1. Recently, quite a bit of concern arose over the management of sale of several of the ports to foreign interests.

2. Interestingly, this evening, British Petroleum announced that the Alaskan Pipeline would be closed down, a loss of about 400,000 barrels per day and about 8 percent of the nation's oil supply.

3. Most of this oil purportedly goes to Japan.

4. This is (obviously) an important event for this market and is clearly "good" (bullish) news.

5. The health of a market can often be determined in how a market reacts to fundamental news.

6. A news / price divergence occurs when unexpected news hits a market and the initial reaction in favor of the news is not continued (see pages 171-84 of "The $upertrader's Reference Manual").

7. Although the initial reaction will be upwards, the more important event will occur later in the day when the obviously bullish news either is able to produce follow-through, or not.

UPDATED 20060807

COMMENT #282

CHART #558-561

1. Last year, this CHART of monthly prices was posted at the blue Wave 3 high shown in the upper right corner (see pages 283-92 of "The $upertrader's Reference Manual").

2. The market had advanced in two uplegs of 20 & 40 months as shown in the CHART.

3. What was believed to be underway was the blue Wave A-B-C complex movement shown over the years in the CHART.

4. The blue Wave 3 high, of course, suggested that a blue Wave 4 low and blue Wave 5 advance were yet to follow.

5. At the same time, the weekly CHART of the blue Wave C advance as of the date of the CHART was shown.

6. After the blue Wave 4 low was set, price had advanced to the high shown in the following CHART which shows this market in the upper row.

7. Overnight prices for the continuous spot futures market are shown on the left with those for the December overnight price shown on the right.

8. The highs noted in the upper right corner of each of these two charts (top row) marked the all-time highs, to date, and have not been exceeded since.

9. A couple of weekly later, the market was in place to set a retest high at the blue WIC box shown in the upper right corner (Weekly Inversion Cycle Index projected turn).

10. Since price had been moving up into the projected turn, the expectation, of course, was that price was about to set an important high.

11. We can see how price had reacted to the previous WIC projected turn in the upper left corner by moving up to the all-time high previously discussed.

12. Today's CHART #558 of various daily prices shows the current situation for these contracts.

13. We can see how the continuous spot futures contract appears to be making a new high just this last week.

14. But when we look at the September and December contracts, we can see that last week's highs are very short of those made last month, thereby forming intramarket divergences with the continuous spot futures contract (see pages 171-84 of "The $upertrader's Reference Manual").

15. We want to make sure and note that the price action in the bottom row is through Friday's close whereas that in the top row shows overnight session contracts.

16. What we want to focus on are those horizontal pink trendlines drawn to the right of price for the contracts indicated.

17. These trendlines market the price level at which the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual".

18. Instead of using a competed day to form the last bar, what we are doing in this instance is applying the technique to the experience seen in the overnight session contract so far today.

19. It would be very bearish were this market to absorb the news associated with these contracts, fail to break above last week's high in all markets in the complex, turn down later in the day, and then take out the overnight session low.

20. After the day session contract opens, of course, the same situation will apply.

21. It's just that the horizontal pink trendline will be able to be raised, thereby reducing risk and enhancing the reward : risk ratio should the trade not be stopped out.

22. CHART #559 updates the monthly experience.

23. We already know from the earlier monthly CHART that the blue Wave A advance lasted 51 months and the decline 100.

24. The blue box shows that the advance to the high shown has lasted 79 months.

25. Hence, A+B=51+79=130.

26. (A+B)/C=1.300 (SQ RT PHI=1.272).

27. The red lines below price show that the advance to date has unfolded in two equal segments of 34 months each (FIBONACCI #=34).

28. Then, another 11 to the blue Wave 5 high followed by another 11 to this month's high, 22 total (LUCAS #=11 & FIBONACCI #=21).

29. There are several interesting ratios noted in the CHART.

30. We can see, by the short red line in the middle chart, that such momentum oscillators as RSI and Slow Stochastics failed to confirm the new highs last year, thereby forming important price / momentum oscillator divergences (see pages 171-84 of "The $upertrader's Reference Manual").

31. This all-time high was exactly twice the price level of the blue Wave 1 high.

32. The black "90" in the lower right corner shows that the distance from the blue Wave B low to this month's high is 90 months (FIBONACCI #=89).

33. The green circles in the bottom chart show three times when the net commercial position has moved significantly above the black horizontal dotted line.

34. The blue horizontal dashed line shows that the net commercial position is now at its most negative level in two years and even more negative than at the all-time high.

35. CHART #560 shows daily prices for the continuous spot futures contract.

36. The essence of this CHART is that price has moved up into the cluster of blue and red boxes in the upper right corner with the blue / green boxes amidst this cluster at the June lows.

37. From last year's all-time high seen in the upper left corner, we can see that price decline 114 trading days to the low shown in February and then rallied another 114 to last week's high.

38. This latter 114 trading day segment is broken down into a 58 and 56 trading day segment (FIBONACCI #=55).

39. The movement of the net commercial position is better seen in this CHART.

40. In the upper left corner, we can see what a huge move the market experienced last year from the late September retest high and decline into the late November lows.

41. CHART #561 shows daily prices for the December contract.

42. The lower blue extended ascending pitchfork line supported price in the overnight session at approximately the low (so far) in that session.

43. It is interesting that the December contract has been as weak as it has this time of the year versus the continuous spot futures contract.

44. The sloping red trendlines in the upper and lower CHARTS show that such momentum oscillators as RSI and Slow Stochastics failed to confirm the high shown, thereby forming important price / momentum oscillator divergences (see pages 171-84 of "The $upertrader's Reference Manual").

45. We can see that last month's high is consistent with the blue boxes shown here:

46. From the high, the small red boxes suggest that this market has unfolded in a 5 wave impulsive decline to the 724 low.

47. From this low, the market appears to have rallied in the 3 legged movement marked in the CHART by the blue a-b-c.

48. This suggests that the trend has turned down in this market and that the blue Wave 1-2 sequence of decline / advance has already been set.

49. The black number in the upper right corner show that this movement unfolded in a 6-7=13 trading day movement (FIBONACCI #=13).

50. The a-b-c advance, in turn, required 3-1-3=7 trading days and carried price up to, as can be seen by the dotted red horizontal trendline, the .786 price retracement level (see pages 185-7 of "The $upertrader's Reference Manual").

51. The blue Wave 2 high will obviously be tested today.

52. Nevertheless, price should be monitored as discussed above for short entry sell signals.

UPDATED 20060807

COMMENT #283

CHART #s 562-563

1. The price discussion also applies to this market where weekly prices were recently discussed.

2. The market was believed in this CHART of daily December prices to have formed the black Wave 1 low shown in the CHART (see pages 283-92 of "The $upertrader's Reference Manual").

3. In today's CHART #562 of daily prices for the contracts labeled, we can see how some of the contracts have moved to new highs is month, while others have not, thereby forming intramarket divergences (see pages 171-84 of "The $upertrader's Reference Manual") in manner similar to that in the previous COMMENT.

4. CHART #563 today updates and shows that the market since the black Wave 1 low now appears to have set the black Wave 2 high after the black a-b-c advance shown in the CHART.

5. The CHART is through Friday's close and is similar to that of the discussion in the previous COMMENT.

UPDATED 20060807

COMMENT #284

CHART #s 564-566

1. In these CHARTS of weekly prices, the importance of the time frame at the end of June was highlighted by the black up arrows.

2. Expectations of the end of the decline were then focused on at the end of the June in the following CHART of daily prices for the continuous spot futures contract.

3. Here we can see that price had moved down into the next WIC (Weekly Inversion Cycle Index) set of projected turns noted in the CHART by the blue boxes in the lower right corner.

4. The three red numbers identified below price showed that, if the first leg of the decline to the March low was labeled as having a length of 1.000, then the decline to the May low was .786 of that length and the final leg of the decline .618.

5. The market was thus in position to bottom and the low was marked at this time.

6. Today's CHART #564 continues weekly prices.

7. From the low a couple of years ago in the lower left corner, we can see that price, as noted by the numbers below the pink horizontal line drawn from said low, rallied for 55 weeks to the high in the center of the CHART.

8. The next important high from the low in the lower left corner is then marked by the red vertical line below price and occurred 13 weeks later at the 68th week (2 X FIBONACCI #34=68).

9. The next important high occurred early this year at the next red vertical line at the 88th week (FIBONACCI #=89).

10. The low shown in the CHART to the far right corresponds with the 630 low seen above in the daily CHART.

11. This low occurred at the 111th week (2 X FIBONACCI #55=110).

12. However, the low in the #564 market did not occur at the 111th week, but did see a successful retest of the May low.

13. From the high, we can see how this market made important turns at the 13th, 22nd, 33rd and 56th week (FIBONACCI #s=13, 21, 34 & 55).

14. At the bottom of the CHART, we can see how bullish commercial interests became as the red line formed that small "mountain".

15. An important aspect at the 111 week retest is that few net long positions were required to support price than at the May low.

16. CHART 565 also shows weekly prices and shows the decline from the 603 high of last year.

17. We can see how this movement unfolded in a 10-3-9-11-23=56 week movement.

18. An important element of this decline is how the 3rd and 5th waves were about equal in price as noted by the green boxed numbers (see pages 283-92 of "The $upertrader's Reference Manual").

19. These two downlegs measured, as can be seen in the CHART, just a little over 6 points.

20. Another important aspect is that the 56 week movement unfolded in 14 up and 42 down weeks so that up / dn = 3.000 and total / up = 4.000.

21. We can see how, at the low, such momentum oscillators as RSI and Slow Stochastics have failed to confirm the new price low, thereby forming important price / momentum oscillator divergences (see pages 171-84 of "The $upertrader's Reference Manual").

22. Now we get to the bottom box which is the fly in the ointment.

23. Here we see that the net commercial position as noted by the red line and net large speculator position as noted by the blue line have widened considerable in this market to the most negative levels seen over the last several years.

24. Let's move to CHART #566.

25. Here we see the same movement from the perspective of closing prices only.

26. When viewed from this basis, last year's high is shifted forward 24 calendar days from 603 to 627.

27. The 603 high for intraday prices is marked in the CHART by the green up carat.

28. This changes the 55-56=111 movement on the #565 CHART to the 59-52=111 week movement shown.

29. It does allow, however, a nice Elliott Wave sequence with a 5th wave extension as seen in the CHART by the various blue numbers.

30. The problem with that 24 calendar day down / up movement at the time was discussed in June of last year.

31. We can see that, although it is obvious now that the blue box in the following CHART aligned with the 627 high, it was not so clear at the time.

32. The advance to the early June high had seemed complete at the 603 high as shown here:

33. How the movement was interpreted at the time from a weekly perspective is presented in the following two CHARTS of weekly prices.

34. Today's #565 CHART thus shows, at the bottom pink horizontal trendline that the support shown in the above CHART was all taken out by the decline from the blue Wave 2 high shown to the right.

35. The decline from that high to June's low of 56 weeks appears to have unfolded in a 5 wave sequence which is consistent which what should have happened from the blue Wave 2 high of a year or so ago.

36. But if the decline is consistent with what is shown above, then the market, so far, has seen but the blue Wave 3 low at the late June low.

37. This would be consistent with the very negative net commercial short position.

38. It would mean that no much price correction should be seen.

39. We can see that the blue Wave 2 correction lasted 55 weeks which is a little over a year.

40. On the other hand, the early 2004 high was broken in sister market so that the picture is not as negative.

41. This would also be consistent with a less-negative outlook given the very large net commercial position at the May low.