The dissenter is every human being
at those moments of his life
when he resigns momentarily from the herd
and thinks for himself.

--Archibald Macleish:



28

UPDATED 20060814

COMMENT #289

CHART #587

(Posted morning of 20060815)

1. A week ago, the topic of the moment over the weekend was the very bullish fundamental news regarding the closing of the Alaskan pipeline.

2. Every media news report I was able to avail at the time stated that the closure would result in much higher gasoline prices.

3. A few speculated that the closure would result in oil prices rising $10 / barrel.

4. The peace agreement yesterday regarding Lebanon / Israel similarly appears to have been received in similar manner.

5. The early rally faded in the late afternoon.

6. The seemingly good fundamental news was unable to sustain a rally in stock market prices.

7. We can review pages 171-84 of "The $upertrader's Reference Manual" and see how seemingly fundamentally favorable news that is unable to rally a market creates a news / price divergence that leaves the market in the hands of the weak players that have been suckered into positions based on the news.

8. CHART #587 with prices through the close of Monday shows such an example.

9. Here we have a market that is believed to be in bearish position as a result of the manner in which the market declined to the blue Wave I low shown in the left lower corner of the CHART.

10. The key to that decline was the 5 wave impulsive sequence described several times of late, among which were the CHARTS seen here:

11. From the blue Wave I low, today's CHART of daily prices for the cash index shows that there have been 10 accumulation days (days in which volume and price both increase) and 12 distribution days (days in which volume increases and price decreases).

12. The days are marked by the green and red diamonds in the CHART.

13. The action since the blue Wave II high is especially of interest.

14. The blue lines in the top and bottom boxes show that the initial price decline was accompanied on increasing volume while the price increase since has occurred on lower volume.

15. This price / volume alignment is consistent with what we should be seeing if the blue Wave I low / blue Wave II rally shown in the CHART (a bearish interpretation) is correct (see pages 283-92 of "The $upertrader's Reference Manual").

16. With respect to yesterday's good news rally attempt, it is interesting that price has still been unable to close above the upper blue extended descending blue pitchfork line.

17. As a result of yesterday's price action, the 5 trading day decline to last Friday's low has been labeled as a small blue Wave i Elliott Wave decline.

18. It would be more correct to draw this pitchfork from the June low to August high.

19. Eventually, that will be done, assuming a continued price decline in this market and in the complex.

20. CHART #588 shows 15 minute prices through Monday's close.

21. The 804 high corresponds with the same in the CHART of daily prices in CHART #587.

22. The blue and pink lines are the same.

23. A short pink horizontal line has been added at the bottom to identify the momentary intraday break below Thursday's low.

24. From Thursday's low, what is of interest is the 3 legged up-down-up movement identified in the CHART as the A-B-C sequence shown.

25. Here we see, in terms of price, C/A=1.618 (PHI).

26. This rally, as can be seen by the red horizontal dotted line, carried to the black Wave C high yesterday where the price / momentum divergence marked in the CHART by the two sloping red lines occurred (see pages 171-84 of "The $upertrader's Reference Manual").

27. This 61 hour move lasted 16-23-22 hours as marked in the CHART, or just a tad in each leg beyond an ideal 13-21-21=55 hour sequence (FIBONACCI #s=55).

28. We thus know that the movement is in approximate PHI proportions with respect to time in addition to price.

29. The A-B-C movement is believed to be counter-trend (corrective).

30. But such belief has come into question because of the manner in which the market has unfolded from the high in the upper left corner.

31. If that high is as important as believed, and if the high set the blue Wave II high marked in the daily CHART, then the decline since should have unfolded in a pretty clear 5 wave impulsive sequence to indicate that trend was clear down.

32. The alternative at the bottom of the CHART suggests that the decline unfolded in the blue A-B-C sequence shown in the CHART with the blue Wave C portion of the decline lasting 74 hours and unfolding over 5-2-28-16-23 hours with 18 up and 56 down.

33. If correct, then the rally to yesterday's high would be Wave 1 of an upthrust.

34. The alternative is thus labeled as a "Bullish Alternative" as shown in the CHART.

35. This interpretation is not favored at the time, but is presented as a possibility.

36. In the #587 CHART of daily prices, the decline to Friday's low is shown as having formed a blue Wave i low.

37. This third interpretation suggests that yesterday's high is Wave a of a blue Wave ii high.

38. Since such interpretation would suggest a blue Wave b decline and blue Wave c rally to the blue Wave ii high, the blue Wave ii high is not shown as being complete at this time and is thus not part of the CHART.

39. Since yesterday's decline lasted 13 periods, the rally / decline from the low shown in the CHART has lasted 22-13=35 periods (FIBONACCI #s=21, 13 & 34).

40. This places the two in approximate PHI proportions and does not negate the overall bearish implication of the blue Wave II high shown in the daily CHART.