Once you can accept the universe as matter expanding into nothing that is something,
wearing stripes with plaid comes easy.

--Albert Einstein

UPDATED 20060914

COMMENT #337

CHART #s 662-663

(Posted morning of Thursday, 914)

1. CHART #662 shows hourly prices for the December futures contract through yesterday's close and updates the following:

2. The a-b-c corrective formation did result in a top as expected, but in today's update, we can see that this movement was only Wave A of and expected A-B-C more extended correction (see pages 283-92 of "The $upertrader's Reference Manual").

3. The blue box shows the number of hours in the black Wave C upleg (12), from the black Wave 1 low (34 [in other words, the # of hours in black Wave 2]) and from the high shown in the upper left corner (53).

4. Hence, today's first hour is the 13th hour of the black Wave C of 2 advance, 35th of the black Wave 2 advance and 54th of the black Wave 1 decline / black Wave 2 advance (FIBONACCI #s=13, 34 & 55).

5. We can see that price is at the upper red ascending channel trendline and at the center blue ascending pitchfork line as price retests the pink horizontal trendline.

6. CHART #663 shows the initial opening and price action this morning.

7. Here we see price again testing the pink horizontal trendline at the top of the CHART as price trades a bit above yesterday's high.

8. The difference is the short green line in the #662 CHART versus the short red line in the #663 CHART.

9. This morning's short red line shows that such momentum oscillators as RSI and Slow Stochastics are failing to confirm this morning's high on the hourly CHART, thereby forming a price / momentum oscillator divergence (see pages 171-84 of "The $upertrader's Reference Manual").

10. The suggestion is that the market is in place to begin a Wave 3 decline.

UPDATED 20060914

COMMENT #338

CHART #664

(Posted morning of Thursday, 914)

1. CHART #664 shows daily cash index prices.

2. As can be seen, at first glance, all markets shown appear to be breaking out to new highs.

3. These breakouts appear questionable, however, as will be seen throughout the morning and in last night's transmission.

UPDATED 20060914

COMMENT #339

CHART #s 665 & 666

(Posted morning of Thursday, 914)

1. Let's update the following CHART of daily prices for the cash index of just a few days ago.

2. As can be seen in today's CHART #665, price made a teensy peak above the July high yesterday.

3. The most important question of this new intraday high (price, surprisingly, did not make a new closing high) is whether it has dissolved the blue Wave 1-2 black Wave 1-2 sequence shown a few days ago and reproduced in today's #665 CHART (see pages 283-92 of "The $upertrader's Reference Manual").

4. When we examine closely the advance of the last couple of days, we can see that the upmove is consistent with the ability of the market to hold the lower thick upper red channel trendline and movement up from the green WLC (Weekly Linear Time Cycle Index) projected low shown in the lower right corner and red WLC projected high shown in the upper right corner.

5. The advance has required a minor reassessment of the structure of the market since the 810 low.

6. The black 5 wave impulsive advance reflects this reassessment.

7. The black Wave 3 advance is seen, in this interpretation, as consisting of the 5 small blue boxes shown.

8. This reassessment has the effect of leaving the black Wave A high and Wave B low in place as they were and moving the black Wave 5 of C of 2 high forward 6 trading and 8 calendar days to the position shown.

9. Hence, the distance from the 810 black Wave B low is thus 34 calendar days (FIBONACCI #=34 [not shown]) whereas the distance from the black Wave 1 low is 54 calendar days (FIBONACCI #=55).

10. From the blue Wave 2 high to yesterday's high (in other words, the black Wave 1-2 sequence) is 72 calendar days (1/2 FIBONACCI #144=72).

11. From the blue Wave 1 low is 91 (FIBONACCI #=89).

12. From the high in the upper left corner is 90 trading days (FIBONACCI #=89).

13. It is instructive that the blue Wave 2 high and black Wave 2 high have formed (assuming completion yesterday), along with the high in the upper left corner of the CHART, have formed amidst the colored boxes shown above price.

14. The two light blue shaded boxes show that the black Wave 1-2 time measurement of 72 calendar days versus the 59 spent in the blue Wave 1-2 segment is 1.220 (SQ PHI=1.272) while the total 131 calendar day segment from the high in the upper left corner to yesterday's high versus the blue Wave 1-2 movement is 2.220 (SQ RT 5=2.236).

15. When we look at yesterday's price action, we can see how price has returned to the thin upper ascending channel trendline.

16. Now let's look at the ascending blue pitchfork.

17. The center prong of this pitchfork marked the end of the 3rd of a 3rd advance in mid-August at the blue box and red down arrow high (see the beginning of the thick red upper red channel trendline).

18. Price then approximately held the bottom prong of this ascending pitchfork at the next blue box low.

19. The next blue box advance to the black Wave 3 high, however, was unable to attain the middle fork, thereby exhibiting lessened energy.

20. The lower ascending prong has thus been emphasized in today's CHART #665.

21. The reason is that price, in spite of what appears to be a vigorous advance to yesterday's high and close, has still only been able to regain but the bottom prong of the ascending blue pitchfork.

22. Now let's look at the bottom chart showing such momentum oscillators as RSI and Slow Stochastics.

23. Here we see the same green coloration to the 905 high as was shown a few days ago.

24. But to yesterday's high, we see how this green line has turned red, thereby signaling the momentum loss at yesterday's high.

25. This loss has formed a price / momentum oscillator divergence (see pages 171-84 of "The $upertrader's Reference Manual").

26. This red divergence is thus now in place whereas it was not in place at the 905 high.

27. Such divergences are not, in and of themselves, important in the markets.

28. However, when combined with other information, such as the blue and red boxes in the upper right corner, they do become important.

29. CHART #666 shows the continuous spot futures contract for this market.

30. Here we see a totally different picture.

31. As can be seen in this CHART, yesterday's high did not take out the July high, either on an intraday or a closing basis, thereby forming an important cash (see CHART #665) / futures (see CHART #666) price divergence (see pages 171-84 of "The $upertrader's Reference Manual").

32. This is an important divergence in the complex.

33. As was seen in the COMMENT and CHARTs of 20060512, the ability to focus on the key market / contract in a complex that is providing the best insight at market turns allows for proper interpretation of future direction in the rest of the complex.

34. At this point in time, the divergences discussed in this COMMENT appear to be those of greatest importance.

35. We can boil the entire topping scenario down to minuscule risk as identified by the pink horizontal trendline in the #666 CHART.

36. A break thereof negates and causes reassessment.

UPDATED 20060914

COMMENT #340

CHART #667

(Posted noon Thursday 914)

1. The long term perspective of the following market was presented in this CHART of weekly prices (the text below the red line at the bottom of the favored scenario should read "(most bearish)":

2. The market bounced from the horizontal pink price support line shown at the time.

3. The decline to that July low is seen as the blue Wave I decline in the following CHART of daily prices:

4. The 420 high in the upper left corner, as previously discussed, was just a fraction of a point higher than the earlier high shown.

5. Today's CHART #667 of daily prices updates:

6. The CHART shows a minor reassessment as a result of the price action of the last couple of days.

7. The reassessment is similar to that of the prior COMMENTS of today.

8. The essence of the CHART is the blue Wave I-II sequence (see pages 283-92 of "The $upertrader's Reference Manual").

9. The advance from the July low remains as the red A-B-C corrective advance shown in the previous CHART.

10. The red Wave C advance has been adjusted a tad as discussed in the earlier COMMENTS of today.

11. The black box shows that the blue Wave I decline / Wave II advance have lasted 89 & 57 calendar days, 146 total (FIBONACCI #s=55, 89 & 146).

12. We thus know that this movement is in approximate PHI relationships with respect to time.

13. The actual ratios are: 89/57=1.561, 146/89=1.640 and 2.561 (PHI=1.618 & SQ PHI=2.618).

14. The red horizontal dotted lines show that the black Wave 3 high peaked at about the .500 price retracement level and that the black Wave 5 high peaked at about the .618 price retracement level (see pages 185-7 of "The $upertrader's Reference Manual").

15. The bottom box shows that volume over the last month or so has not been able to attain the levels of mid-August, thus signaling that price has been unsupported as it has advanced over the last few weeks.

16. We can also see how yesterday's advance occurred on lower volume.

17. The distance from the early April high is identified as 69 trading days with 40 thereafter, 109 total (2 X FIBONACCI #55=110).

18. The upper red line of the ascending diagonal triangle has been redrawn.

19. We can see how such momentum oscillators as RSI and Slow Stochastics are now diverging as signaled by the short red line whereas, at the black Wave 3 high, such divergence was not yet seen as shown by the short green lines (see pages 171-84 of "The $upertrader's Reference Manual").

20. It is important that the blue Wave II high (assuming that such is, in fact, what yesterday's high is) was set below the pink horizontal line shown at the top of the CHART.

21. We can see how important the blue box Inversion Cycle Index projected turns have been for this market.

22. This market thus, after the minor reassessment noted, ratifies others in the complex which seem to be in similar position.

UPDATED 20060914

COMMENT #341

CHART #668

(Posted late afternoon Thursday 914)

1. CHART #668 of daily prices for the continuous spot futures price updates the following CHART of a couple of months ago:

UPDATED 20060914

COMMENT #342

CHART #s 669 - 671

(Post-close Thursday 914)

1. Earlier this year, the following CHART of weekly prices was posted at the high of the year:

2. The daily CHART of the advance from the blue Wave X low was shown at the same time.

3. But as can be seen in the following CHART, the advance from the blue Wave b low of last October shown in the above CHARTS had several defects:

4. The following CHART was posted at the high of the year in the complex at the same time:

5. The reason for the CHART was because the ascending diagonal triangle shown was believed to be providing a much clearer signal of the true structure of the complex at the time.

6. A few days ago, the market was again believed to be providing a pretty clear signal of topping action as seen in the following CHART:

7. One of the important aspects of the above CHART was the observation, noted in the two red boxes, that the sharp decline from the May high, appeared to have unfolded in but a 3 legged sequence to the blue MIC box and projected turn in June (Monthly Inversion Cycle Index).

8. The pink horizontal line at the top of the CHART was not expected to be broken.

9. Today's CHART #669 updates.

10. Here we see that the market has made a new high above the pink horizontal line.

11. This breakout is not seen in all the markets in this complex, as was observed in earlier discussion and CHARTS today.

12. We can see by the two short red sloping lines that such momentum oscillators as RSI and Slow Stochastics are not confirming the new high of yesterday, thereby forming important price / momentum oscillator divergences (see pages 171-84 of "The $upertrader's Reference Manual").

13. These divergences are occurring as price has moved up into the next blue WIC (Weekly Inversion Cycle Index) projected turn.

14. Since price has moved up into the turn, the turn is expected to form an important high in price.

15. At the bottom of the CHART, we can see that the decline to the June low lasted 36 calendar days followed by a 91 calendar day rally (FIBONACCI #s=34 & 89).

16. To the blue Wave X low, the distance is 70 calendar days followed by 57 (1/2 FIBONACCI #144=72 & FIBONACCI #=55).

17. 70/57=1.228 (SQ RT PHI=1.272).

18. 127/57=2.228 (SQ RT 5=2.236).

19. 127/36=3.528 (1.000 + SQ PHI = 3.618).

20. 127/91=1.396 (1.000 + SQ[1/PHI]=1.382).

21. What is shown in the CHART is the trading day relationship to the blue Wave X low and thereafter to yesterday's high.

22. This distance measures 48 & 40 = 88 trading days (FIBONACCI #=89).

23. 48/40=1.200 (SQ RT PHI=1.272).

24. The new high has caused concern regarding the assumption of a solid top earlier in the year.

25. Let's see if CHART #670 of monthly prices can help explain the new high.

26. From the high in the upper left corner, the 5 black numbers suggest an impulsive decline to the low shown.

27. As can be seen, this decline lasted 28 months.

28. From the low, the black A-B-C labeling suggests a 3 legged movement to the blue Wave A high shown (see pages 283-92 of "The $upertrader's Reference Manual").

29. From this blue Wave A high, the market then seems to have experienced a prolonged sideways affair marked by the black A-B-C movement.

30. This black A-B-C movement unfolded over 7-21-1=29 months (LUCAS #=29) ending in the blue Wave B low shown.

31. The black Wave B advance occurred in a smaller Degree of Trading a-b-c advance of 7-7-7=21 months total (FIBONACCI #=21).

32. The prior high of the year shown here …..

33. ….. thus occurred at the black Wave B high shown in today's CHART #670 of monthly prices:

34. This was the ideal time for this market to peak and form a Wave II high, for at such point, the market had unfolded in the 28-18-28=74 month pattern shown by the red lines at the bottom of the CHART.

35. There are several interesting PHI-related ratios that arise from various combinations of these three segments.

36. Noting that 28+18=46 and 28+28=56, we see the following;

37. 28/18=1.556.

38. 46/18=2.556.

39. 46/28=1.643.

40. 74/46=1.609.

41. 74/28=2.643.

42. 74/56=1.321.

43. 74/18=4.111.

44. 56/28=2.000.

45. 56/46=1.217.

46. But the blue Wave A advance and blue Wave B decline measure 1 month longer at 18 & 29 months.

47. Since these two are successive LUCAS #s, we know that the two legs are in PHI proportions, the ratio being the 1.611 number marked in the CHART by the two green arrows (PHI=1.618).

48. From the low, the market has risen three months to the blue Wave C high shown.

49. Hence, as shown in the upper right corner, from the 2002 low, the market has seen the blue A-B-C corrective advance over 18-29-3=50 months total with 21 up and 29 down.

50. 29/21=1.381 (1.000+SQ[1/PHI]=1.382).

51. As the red dashed horizontal line shows, after all this time, price has only been able to retrace 50 percent of the initial decline.

52. This market is not believed to be the key providing insight as to future direction in the complex.

53. If the others are, as is believed to be the case, then the Wave C advance of but 3 months would make sense timewise as 18/3=6.000.

54. From a price perspective, however, the blue Wave C advance is extremely short with respect to the blue Wave A advance.

55. A very short advance would make sense if the market were in as weak position as is believed.

56. In fact, it would be expected that the new high breakout would actually be seen as more of a divergence against those that have (so far, at least) been unable to follow to new highs.

57. CHART #671 shows the put/call ratio for this market.

58. Here we see a break yesterday to new lows for the last several months in the red line as more calls and fewer puts are purchased.

59. Hence, with all the above, even in this market that has made a new high, the new high breakout is still viewed as false.