The pioneers of a warless world
are the youth
who refuse military service.

--Albert Einstein

UPDATED 20060918

COMMENT #345

CHART #677

1. CHART #677 updates hourly prices for the December contract from Friday.

2. The interpretation presented suggests that the movement is complete.

3. If this is correct, the market should not be able to trade above Friday's intraday high.

4. Hence, the ability to do so will negate such bearish setup.

5. The market is becoming more bullish since the 911 events did not result in "catastrophe" of one kind or another.

6. The low in the CHART, for example, is on that date.

7. The two segments identified by the red lines at the top of the CHART total 54 hours (FIBONACCI #=55) and are in relation of 1.363 : 1.000 (1.000+SQ[1/PHI] = 1.382).

UPDATED 20060918

COMMENT #346

CHART #678

1. It has been 6 months, as shown by the pink thick horizontal line in CHART #678 of daily prices, since the values in the red line have attained the low numbers they did last Thursday.

2. As can be seen, values are now lower than they were at the May high which is identified by the red up arrow in the red box near the bottom of the CHART.

UPDATED 20060918

COMMENT #347

CHART #679

1. CHART #679 updates daily prices.

2. What we want to investigate here is that green up channel marked in the CHART by the two green ascending channel trendlines.

3. We can see how price came down to the lower ascending green channel trendline Friday and found support.

4. A recent similar example is seen in this CHART of daily prices for the cash index which found support at the green WLC (Weekly Linear Time Cycle Index projected low) and lower red channel trendline …..

5. ….. and then spent the next several days rallying from the green to the red and blue boxes and red down arrow shown in the upper right corner (or, at least, that's the assumption of what has happened).

6. A bottom now would bring into play a possible head-and-shoulders reverse bottom formation marked in the CHART by the three green cups below price.

7. This head-and-shoulders formation is, of course, opposite the larger red one shown above price which is a bearish formation.

8. The green lines at the bottom of the CHART show that this pattern is divided into 65 & 66 trading day segments from left shoulder to head to right shoulder.

9. This outcome is not favored, but is a possibility and must be monitored.

10. A 50 percent retracement of the decline from the 906 high is marked in the CHART by the red horizontal line drawn in the middle of the midway gap (see the light grey shading).

11. We thus want to see if there's an Elliott Wave explanation that might fit with such an outcome.

12. That reassessment is shown in the CHART as the red Wave A advance and a-b-c decline to the red Wave B low on Friday.

13. In such movement we see a down-up-down pattern of 8-31-7=46 trading days with up = 31 and down = 15 so that up / down = 2.067 (SQ PHI X PHI = 2.058).

14. We can see how the Astro turning points marked in the CHART by the red down and up arrows both began and ended the current downleg (if it did end Friday).

15. Even if the red Wave B low and right shoulder low do form now, the expectation is only for a red impulsive Wave C advance that still would not be expected to exceed the high of the year but could exceed the September high.

16. Obviously, the ability to exit positions entirely, or at least lighten up, at an important low and then reposition short at either a retracement of the red Wave c of B downleg or at the end of a formal red Wave C impulsive advance can be very profitable.

17. CHART #680 is also of daily prices for the same market and shows that price has moved down into the next blue WIC projected turn (Weekly Inversion Cycle Index).

18. Since price has declined into the turn, the turn is expected to result in a low.

19. Now let's take a look at CHART #681.

20. Here we see the series of lower highs marked in the CHART by the four red caps.

21. But note that the reverse head-and-shoulders bottoming formation is nowhere to be seen.

22. At the bottom of the CHART, the blue box shows the alternative (not favored) scenario just discussed above.

23. Here the advance to the July high is seen as a Wave [A] advance and the decline to the September low is seen as the red Wave [B] shown.

24. The market is attempting to hold the pink horizontal price support line shown.

25. At the same time, we can see that price is at the bottom of the red and green descending channel marked by the two descending trendlines.

26. We had previously discussed how the series of red caps and lower highs was very bearish for this market.

27. If the 818 low is correctly labeled as the red Wave 1 low shown, we would not expected price to trade above this low even if it does find support here (in the favored bearish scenario, that is).

28. The continuous spot futures contract is a little stronger than the December contract shown in today's CHART #681.

29. For the favored scenario to play out, price should take out the June red Wave I shown not only in the December, but also in the continuous spot futures contract.

30. Recent lows should also be taken out by other markets in similar position elsewhere in the complex if the favored bearish outlook is to continue to play out.

UPDATED 20060918

COMMENT #s 348 & 349

CHART #s 682 & 683

1. CHART #682 shows daily prices for the cash index.

2. A minor adjustment has been made that places the assumed blue Wave II high at Friday.

3. As previously discussed, the actual high of the last few years occurred on 420 amidst the blue Inversion Cycle Index projected turns shown in the upper left corner of the CHART.

4. As seen in the sister market at the time, however, the early April high actually seems to have been the more important date of the two.

5. CHART #682 thus shows that Friday was the 111th trading day from the 407 high (2 X FIBONACCI #55=110) and that this decline / advance can be broken down in the blue Wave I / blue Wave II shown of 69 and 42 trading days (2 X FIBONACCI #34=68 & 2 X FIBONACCI #21=42).

6. The green arrows show that these movements are in approximate PHI relationship at a time when price has retraced about .618 of the decline (see pages 185-7 of "The $upertrader's Reference Manual") as marked in the CHART by the red horizontal dotted line.

7. The short red sloping lines show that such momentum oscillators as RSI and Slow Stochastics continue to diverge with price at Friday's high (see pages 171-84 of "The $upertrader's Reference Manual").

8. The high in the sister market is shown at the beginning of the year in the upper left corner of today's CHART #683 of daily prices.

9. This high was marked in the sister market as it occurred here …..

10. ….. and was better seen at the time here:

11. Short positions were suggested here …..

12. From the early April high, the market spent the next month preparing for the decline in May.

13. The initial formation during that setup was seen as very bearish here:

14. Remember that most indexes in the complex were making their highs for the year as the CHART above was setting its black Wave 2 high in mid-May.

15. By July, we can see that the decline appeared about "counted out" and due for some counter-trend, corrective action:

16. Today's CHART #683 shows that this market has formed the possible black Wave a-b movement shown.

17. The expectation is that Friday formed the black Wave c high.

18. If so, the movement will have occurred over 22-13-4=39 trading days with 22+4=26 up and 13 down so that up / down = 2.000.

19. Total = 39 trading days = 3 X FIBONACCI #13 = 3 X Wave b.

20. Since we were considering a reverse head-and-shoulders, it should be pointed out that it is possible, though strained, that this market is also experiencing a post-911 of 2006 reverse head-and-shoulders setup as identified by the three green cups.

21. If correct, the left shoulder measures 24 trading days and the right 39 so that the total is 63 (3 X FIBONACCI #8=24, 3 X FIBONACCI #13=39 and 3 X FIBONACCI #21=63).

22. The formation is thus in PHI proportions.

23. We had previously discussed the ability of the black Wave 4 high in early July to occur below the black Wave 1 low of last March.

24. Price has now traded above the black Wave 1 low.

25. Hence, the black Wave 1 through 5 decline shown in the CHART from the high in the upper left corner is believed to be correct.

26. Hence, price trading above the black Wave 1 low is of no consequence since the market is believed to be correcting the entirety of the 6 month decline.

27. The green numbers show that the Wave a / Wave c (assuming completion at Friday's high) are in relationship of 1.592 (PHI = 1.618).

28. Hence, although price has retraced a little above the red dotted line, the market is likely to have completed the correction of the January to July decline Friday.

29. This information fits well with the #682 CHART and others of the last few days in the complex.

UPDATED 20060918

COMMENT #350

CHART #684

1. The following market is likely the source of consternation for the others above today:

2. The scenario outlined in the following CHART remains.

3. The classic PHI-related relationships shown in the red box, the blue Wave 1-2 sequence after the red Wave [B] low, the blue A-B-C decline into the red Wave [B] low, the ability of price to continue to hold the green ascending trendline, and the blue Wave 1-2 sequence thereafter continue to favor higher prices.

4. In the following CHART of daily prices for the continuous spot futures contract, we had seen that, from the Wave to low of 804, the market, in the bullish scenario, was believed to have formed the black Wave 1-2 sequence that ended late last month.

5. If correct, the expectation was that the market should see another 5 wave advance up from the black Wave 2 low.

6. The 4 blue boxes suggested that Thursday's low should hold and that a new recent high should be attained as the 5th blue box formed.

7. Today's CHART #684 shows that the new has was attained Friday in accordance with expectations.

8. The outlook shown in today's CHART #684 of daily prices for the continuous spot futures contract is not the favored bullish outlook, but the bearish alternative interpretation recently discussed.

9. The reason it is shown is because, even though price is acting as it should, we still need to be cognizant of the possibility that the true condition of the market is shown by the black Wave 1 low / black Wave 2 high followed by the red Wave 1 low and red Wave 2 high of Friday.

10. If correct, such would be a very bearish structure.

11. At the bottom of the CHART, we can see that commercial interests have been quick to reduce their net long position established over the summer.

12. This reduction is not unexpected.

13. Nevertheless, it has occurred with very little upside price movement.

14. It would be best, of course, were price to simply continue higher and take out that thick horizontal pink line on convincing volume.