"Nearly all men can stand adversity;
but if you want to test a man's character,
give him power."

--Abraham Lincoln

UPDATED 20060825

COMMENT #306

CHART #s 608-612

1. We recently reviewed the following CHART:

2. These values have not changed materially this month.

3. CHART #608 shows similar daily values for one of the stronger markets in the complex.

4. The bold numbers and arrows represent the high for the year in red and low for the year in green.

5. Now let's take a look at daily prices for the cash index in CHART #609.

6. What is shown is a 36 trading day periodicity by the red lines at the bottom of the CHART (1/4 FIBONACCI #144 = 36 & 2 X LUCAS #18 = 36).

7. We can see that the advance to the high in the center of the CHART lasted 143 trading days followed by another 72 to the high this month (FIBONACCI #=144 & ½ FIBONACCI #144=72).

8. In other words, a 50 percent time retracement at the August high (see pages 185-7 of "The $upertrader's Reference Manual").

9. The date of this high in August is interesting in that it is one of the dates on the timeline shown in this CHART (though the date was not of the magnitude of importance as was presented in the Wall Street Journal and elsewhere):

10. CHART #610 expands and shows daily prices since the high of the year shown in the upper left corner.

11. The red lines at the top of the CHART are divided into two segments, as can be seen by the black numbers, of 24 & 48 trading days, 72 total.

12. The green numbers show that these segments are in relation of 2.000 and that the total is in relation of 3.000 to the first segment.

13. In calendar days, 35 & 69 (FIBONACCI #=34 & 2 X FIBONACCI #34=68).

14. At the bottom of the CHART, we can see that these two segments of 35 & 69 calendar days are the reverse of those seen at the top of the CHART.

15. At the right, we can see that the short sloping red trendline in the upper and lower charts shows that such momentum oscillators as RSI and Slow Stochastics failed to confirm the new high on the 22nd, thereby forming an important price / momentum oscillator divergence (see pages 171-84 of "The $upertrader's Reference Manual").

16. The up and down small red arrows identify the Astro turning point projections from page 376 of "The 2006 $upertrader's Almanac - 2nd Half Edition".

17. The red sloping trendlines show an ascending diagonal triangle which CHART pattern is bearish if the market does, in fact, turn at the end of the triangle but can be very bullish if the upper red trendline is broken with vim and vigor.

18. The blue ascending pitchfork shows that the high on the 22nd occurred right at the center asending fork.

19. When we compare the two advances to the July and August highs, we can see that the segments are in approximate PHI proportions at 1.227 and 1.637 (PHI = 1.618 & SQ PHI = 1.272) as noted by the green arrows in the CHART.

20. The short horizontal pink line to the right of price shows that this market was set up for short side entry via the trading technique presented on pages 205-9 of "The $upertrader's Reference Manual").

21. This signal was executed Friday as price broke the intraday low of Thursday's inside trading day.

22. CHART #611 shows daily prices for a market that, in the past, has been quite insightful to this complex.

23. The advance shown from the June low is presented as an a-b-c-x-a-b-c movement (see pages 283-92 of "The $upertrader's Reference Manual").

24. The two a-b-c movements are separated by the large blue "X" at the 718 low.

25. This market has been among the strongest in the complex since the June low.

26. The decline into the June low is especially of interest in that the numbers in the red boxes show that the decline is comprised of two approximately equal segments.

27. From the June low, the green boxes show that the two advancing segments of the first a-b-c movement and the last of the second a-b-c movement are approximately equal at about 18 points apiece.

28. The green numbers and arrows show that PHI-related ratios are everywhere present in this advance of 48 trading days / 69 calendar days.

29. In addition to the large ascending blue pitchfork, a small red dashed ascending pitchfork is shown.

30. We can see that this market has little leeway to the upside before it will break the pink horizontal line drawn off the May high.

31. Such break is not expected to occur.

32. Price, instead, is believed to have exhausted its upside energy in the a-b-c-x-a-b-c movement shown.

33. The black box shows that this a-b-c-x-a-b-c movement has lasted 15-8-25 trading days with 40 up and 8 down.

34. Up / down = 5.000 (FIBONACCI #=5).

35. In calendar days, the movement lasted 22-12-35=69 days (FIBONACCI #s=13, 21 & 34 and 2 X FIBONACCI #34 = 68).

36. 57 up and 12 down days (FIBONACCI #s = 13 & 55).

37. CHART #612 shows the put / call ratio for this market presented in manner similar to that of others.

38. The June and July lows are noted by the green down arrows along with the May and August highs.

39. The decline from the early July high was sharp and quick, but as it only formed the blue Wave X low shown, was not the extensive decline expected.

40. It now appears that this market, by having completed the second a-b-c segment, is in position similar to that of the early July high and at the May high.