S&P 500 completing (c) up

It looks like we should have a completed minuette wave (c) up possibly overnight or early morning.  See the bottom chart for the view of micro wave ((c)) (not shown) of subminuette y (not shown) of minuette wave (c), which could end the higher degree minute wave ((iv)) correction, unless it's a triangle.  The key from here will be to watch momentum on the downside and for any breach of the proposed minuette wave (b) low around 1116.82 on the /ES.

I think the triangle is more likely and I have my (d) tentatively out there.  For one thing, subminuette wave (a) is three waves, and (b) terminates well above the start of (a).  That rules out a zigzag correction.  The form of the correction at minute degree does not really favor any kind of flat either.  

Stopped out of USO

I was stopped out of USO this morning, but there should be another entry opportunity in a few days. We should be completing subminuette wave iii up of minuette wave (iv) today.

US indices completing final leg of triangle part II

This is a follow-up to my 8/26 post.

In that post, I was looking at this picture.

Today's market action took us over the high of supposed wave (c), which in a converging triangle, is not allowed.
We still have a series of a-b-c's and a higher highs off the bottom gravitating toward a trendline. 
That means a triangle is still likely, just the count was wrong, and the slope of the upper trendline.
My renewed expectation from here is that (c) was not over, and is becoming complex.  I have relabeled the chart with this assumption in mind.  I also threw a new dashed line tentatively out there at the point where (c) would equal 78.6% of (a).   There is a light gray dashed line above that, which is a parallel line to the bottom end of the assumed triangle.  Essentially if price moves equal to or higher than the light gray dashed line, then this formation simply cannot be a triangle at all and this whole analysis is out the window.   I hope that makes sense.

In summary, last week it appeared we were very close to finishing the whole corrective pattern going back to 8/9, but it looks like this is going to drag on for a while longer.  If this is a triangle like I have depicted, then we still need the rest of (c), (d) and (e).

Short USO

Bearish VERTICAL OCT11 USO 32/30 PUT

Stop loss 34.13

Trying a short position here, based on the contracting triangle formation.  Price has already traded above my prior wave iii label, but we should be confined by the high of wave i for this trade to be valid at all.  I have my stop loss in at the high of wave i at 34.13.  This is a very tight range, so losses should be minimal if I'm wrong. 

US Dollar update

I've redrawn the minute and minuette degree labels since my last post. 
Over the next couple days, we'll know pretty quickly if this count is on target or not.  My assumption is that we are carving out a triangle for subminuette degree iv.  The final leg of the triangle, micro degree wave ((E)) up should begin as soon as the market opens tonight (Sunday night).
Assuming the minuette degree forecast comes to past, we still need to complete the fifth wave down of minute degree.   The whole formation shown on the minute degree chart (upper - daily) could only be an (a) wave of the (a)-(b)-(c) needed to complete minute degree ((v)).

Natural Gas ETF grinding lower

UNG appears to be in a c wave down of subminuette degree.  The termination of c should complete minuette degree (b) of minute degree ((iv)) of minor degree 5 of intermediate degree (A) or (1).  Time will tell if minuette degree (b) is a simple a-b-c structure, or a triangle.  We'll assume the intermediate degree correction beginning in June 2008 is an (A) for now, which is the more bullish scenario.  Either way, we still need a minuette degree rally to complete minute degree ((iv)). That is really the only bullish thing I can say about natural gas right now, despite all the hoopla about the "Pickens Bill".

US indices completing final leg of triangle

Subminuette wave (d) of ((iv)) appears to be complete, and we already appear to have the a wave up of the final a-b-c to complete wave (e) - See the lower chart.  At that point the whole triangle formation, and hence, wave ((iv)) will be complete, and we should be heading down for new multi-week lows early next week.
I assume we will trade higher first, Monday or perhaps Tuesday as (e) completes.  This is a symmetrical converging triangle, so we should not trade much higher than the upper boundary of the triangle, and definitely confined under the high of wave (c) at 1188.54 on the /ES.

The top chart is a 4H chart illustrating minuette degree, and the bottom chart is a 1H chart, better showing subminuette degree waves.
See prior posts for the daily chart.

2 - 3 more weeks of upside for silver

Silver is on track to complete subminette wave (iii) of ((v)) of its ending diagonal minor wave C of intermediate wave (B).

The key levels we need to watch for to ensure this count is legitimate:

1. We want /SI to trade higher to the 43.303 - 43.689 area to complete (iii).  The former is the 61.8% retracement of prior wave (i), the latter is where it meets the upper diagonal line extending from ((iii)). Price may exceed the boundary by a small margin.
2. We want /SI to reverse and trade back down to the lower boundary of the triangle.  I have a target of 39.977 for wave (iv), which is where (iv) will be 61.8% of wave (ii) from wave (iii)'s projected termination.  It cannot exceed the low of (ii) at 38.826.  If it does, this count is invalidated, and the larger degree downturn will likely be underway, so we'll want to watch momentum and look for a short entry. 
3. We'll want yet another trade back up to the upper boundary to complete wave (v) of ((v)) of  C of  (B).  At this point we should be in the latter half of the 2nd week of September, or into the 3rd week.  This will likely carry us through the September options expiration.

In summary, silver should grind higher in a choppy fashion until the 3rd week of September, before major selling begins.

Major US indices still in a fourth wave

Looking at the lower chart in the first image below, the /ES on a 4H chart, seems to be tracing out a triangle.  This will likely extend out for another week at least before taking out the 8/9 lows to complete the fifth wave.  What is not entirely clear to me is whether that will complete the higher degree wave (1) of intermediate degree, or whether we'll need one more push down. 

If I were only looking at the Dow or the S&P 500, I'd say the next push down could complete (1), but looking at the Russell 2000 small cap index (next image), it looks like the next push down will only complete the third wave.  Therefore, it is better to be cautious and assume that while we should get a rally after new lows, it may not be the end of intermediate wave (1).

Silver still in (B)

While we technically could have had a completed the fifth wave of the upward sloping diagonal formation on 8/22, silver appears to have made yet another a-b-c correction down today.  Notice on the minuette time frame (lower) how ((a)) and ((c)) of (ii) are equal.  That means we're looking at a complex wave ((v)), most likely.  My assumption at this point is that ((v)) could turn into an extension, or diagonal of its own, which would stretch this upward sloping correction on the minute time frame out into September.

My upside target, if we get a rally from here is 43.64 for minuette (iii) of ((v))on the /SI.

US Dollar update

The dollar is completing the likely final leg of a triangle on the 4h chart (lower).  This would be a wave iv of subminuette degree.  The ensuing final fifth wave of subminuette degree would complete a minuette degree (c) of wave ((v)) of minute degree on the daily chart (upper).

All of this is interesting since this could possibly complete an even larger degree intermediate wave (2) or (B) down, retracing an intermediate degree rally that started in March of 2008.  These all time lows have yet to be violated, and that will be the major focus on this next push down.  If the lows stay in tact, and the market begins another push higher, then the bull market in the dollar begins in earnest.

See the Bigger Picture page for the intermediate degree picture (weekly chart of the $DXY).

Possible completed triangle formation

I've been W-R-O-N-G on my silver analysis thus far, at least intra-day.  I'm trying to keep an open mind, however, and looking at the pattern on the daily, I'm seeing a possible completed triangle formation.  I really need to work on recognizing possible triangle formations earlier on.  It would have saved me a lot of grief this year so far.

Anyway, below is the daily chart of SLV, and below that the intra day 4H /SI futures.  We could be at or very near a completed formation.  If this is the case, we'll get a correction very soon, and finally get the short play.  The best confirmation will be a violation of the lows of both ((d)) and ((b)) on the daily chart.  I'll try and get short ahead of that by looking for five waves down on the intra-day charts.

silver making higher highs on momentum

We could be in a fifth wave blow-off on the minuette timeframe, but it's just too risky to stay short. When I see price and momentum in convergence like this, that usually is a sign for continuation of trend.
As for my longer term bearish posture on the metal, nothing has changed yet. I will of course wait for a change in direction and a violation of key support levels before getting short again.

out of silver

SLV count was invalidated (again).  I'm flat.

more downside ahead in the major indices

Below is a daily chart of the SPY.

At this point I'm pretty comfortable saying we have four waves completed of minor degree.  In the context of minor wave 5 down, we are still in a third wave.  I expect minor wave 5 will not end until we take out the 8/9 lows.
I expect a very healthy bounce after 5 completes,  retracing well above this week's highs.  I'll be looking for a 61.8% retracement of the entire five wave move down.
By the end of the coming bounce, investors and analysts will be very bullish, and hopeful of a recovery.   The VIX should take a huge hit, and provide a good opportunity for getting into short positions for the next big leg down.
Conversely, when we take out the recent lows, option premiums will be very expensive.  It will be better to be a seller of premium, than a buyer.  I will consider selling vertical put spreads when I think the turn is happening.

one more small push higher in silver

There is a good chance that minuette wave (iv), as shown on the 1h time frame in the bottom chart, is complete.   That means we have one more a-b-c up, to complete the final fifth wave.  I have 41.135 as a likely target, which is where ((c)) will be 61.8% of ((a)).

Updated silver count

Silver continues to frustrate to the upside.   My prior counts were invalidated by today's price action. 
Having said that, I will be keeping my short position.  The reason why is as follows.
Looking at the new preferred count on the minuette chart, we had an ((a))-((b))-((c)) down, followed by three waves up, which I have labeled ((a)).  That high was just exceeded today intraday.  Next we had three waves down which takes silver to a new low on 8/10, which I have labeled (a). 
So basically what happed is an ((a))-((b))-((c)) down followed by an ((a))-((b))-((c)) up, where ((b)) is both a barrier triangle, and a running triangle (makes a new price low). 
The ((c)) wave should now unfold into five waves. 
Looking at the lower chart, we see several more three wave moves heading higher, so we have a likely ending diagonal.  My preferred count has us in the third wave of the ending diagonal, which appears to be extending.
In summary, prices will be grinding higher in a choppy up and down fashion over the next few days, but should not exceed my prior stop loss at 40.15 on the SLV, or 42.30 on the /SI futures.

today's silver rally no big deal

It looks like minuette wave ((iv)) down of minute wave ((c)) up, of minor wave 2 up ended up being a complex combination, and completed Friday morning around 6am.  If that is the case, this today's rally may have completed the final leg in the triangle.   While the upper boundary of the triangle was exceeded today, it was only by a small margin.  If silver turns down from here as I have been expecting, it will in hindsight be simply a "throw over" event.

triangle in silver could be complete

I've shown on the lower chart, a completed (A)-(B)-(C) that could complete the fifth and likely final wave of the triangle.
We should see a sharp decline from here if wave (ii) up of 1 down of intermediate wave (C) down is complete.

Silver in a triangle formation intra-day

When silver continued to go sideways, I decided to take another look at a subminuette chart.  I now realize it's likely in a triangle formation, and my prior subminuette wave counts are no longer valid.   My posture remains bearish, but I had to adjust my stop loss up to the start of minuette wave (i), unfortunately.  My assumption here is that subminuette wave d is complex, and we still need the e wave.

Stop loss raised to 41.38.

Intermediate term energy update

Here are updated intermediate degree counts for oil and natural gas.

I realized that these two issues are much easier to interpret on log scale.

USO appears to be in the early stages of (C) down.  
UNG on the other hand is still in its initial downtrend.  While I can see a five wave count in there with a fifth wave extension, we managed to take out that wave 5 low already.  That means the price action on the hard right edge is not a second wave.  That could mean an expanded flat, we'll have to wait and see.

Silver in a tight range intraday

Nothing has changed with my posture.
We need to break out of this range, however, one way or the other.
If we violate the top end of the range, I'll cover.

S&P range-bound

We appear to be in fourth wave up.  It remains to be seen what degree this is.  It could be a subminuette degree wave iv of 3, or a minor wave 4.  What that means is we should get another low before we get a better rally to play.   Specifically, I'll be watching for a new low on lower relative momentum, and a move above the wave iv high or five waves up on the lower time frame.

The other thing I found interesting, is how the market reversed on a closing basis right on the red line that I had on the chart.
I couldn't even remember why I drew that line, and had to expand the chart to look back.  That was the top of intermediate wave (1) up.  A very important level, a level that was violated intra-day.  This was the nail in the coffin of the prior uptrend.

Update: Friday 1:11PM

After looking at the Russell small cap index, which has more clearly defined waves on the daily chart, my leaning is toward a subminuette degree wave ((iv)) of minor wave 3.  We are right around the 38% retracement level, so I would expect this rally to exhaust itself soon.

Silver charts

It's been a while since I've shown a chart.  My best evaluation of Minute and Minuette degree wave structures are shown below.
In short, we are in (C) down on the daily timeframe, and starting a wave iii on the hourly.

As an aside, I noticed that gold is starting to roll over.  I think there could be some good shorting opportunity in gold as well, but right now silver seems the better higher beta play.  I'll re-evaluate after we get the first five waves down in gold of at least minuette degree.

Aggressively short silver

I added to my prior short position at the open.

P.S. I forgot to update my positions page last night. I'll update it later today.

P.P.S. You can follow my trades in real time on mytrade.com. I'll put a link on the positions page.

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USD rally underway

Note on the hourly intraday charts of the dollar index futures a strong rally off recent lows after a three wave a-b-c decline. Note also that the late April/May lows are still in tact.

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Short silver

Bearish via short SLV Sep11 37/38 Vertical call spread

SLV is still in a range, but is leaning more toward the bearish side, so I'm risking a short position here.  Due to highly inflated put premiums, I'm optioning to sell a call spread instead.

Short term picture unclear

Looking at intraday charts of the /ES, the wave strucure remains unclear. Therefore, I must defer to the daily chart, where we are still in a wave 3 of (1) down of possibly intermediate degree.

I'm still watching silver for a short entry. It is currently in a tight corrective range.

New SPY charts posted

I've posted updated longer term charts on the bigger picture page.
Since my view has changed, or rather, the market changed it for me, it's time to put it all together.
Now lets talk about what happened this week.   As I posted previously, all I saw on the daily and hourly charts were a-b-c structures, leading me to believe we were in a corrective phase, rather than starting a large higher degree downward move.   When the floor fell out this week, I realized I was wrong, but still needed to understand the recent activity and how it all fit together.  As it turns out, I think we were in a triangle, but rather than a fourth wave triangle preparing for a final fifth, we were in a diagonal fifth wave, otherwise known as an ending diagonal.  This explains the a-b-c structures perfectly.
Below I've shown how it looks on weekly and daily time frames.
I should note that upon closer examination, we appear to be in an impulse wave down, and are still completing the third wave.  I'll zoom in Monday morning to the intraday futures to see where it looks like we are in this impulse down.
 

Refactoring

I was wrong. There, I said it. The levels we broke to the downside in the major indices have undoubtably invalidated any chance of new yearly highs. That triangle formation I was watching in prior posts is invalidated. In fact, I'm going as far as saying the May levels will remain unviolated likely for years.
I think we have just started a new primary degree wave down.
I need to post some charts which I will do later today. Part of the problem is making sense out of the intermediate term picture. I think it's likely we are in a diagonal first wave down of possibly minute degree. If there is any good news, it's that the fourth wave in a diagonal typically retraces a large portion of the third, often even overlapping the first wave. It would make sense to wait before attempting to play this downside move.

That's all for now.

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SPY still looking like a triangle, silver poised for re-short

The level of downside we have achieved with this push lower lends some weight to the case that this might be the start of a higher degree downtrend.  I have a couple problems with that view.  One, we have yet to reach levels that invalidate a fourth wave, but more importantly, I just can't come to any sort of count that implies impulse.  All I see are 3 wave A-B-C type moves on the minute time frame.  Additionally, the slope of the upper line going back to May highs is downward sloping, which tends to imply that we'll see another push higher.

I'm staying with the triangle thesis, until that count is invalidated.  We should know soon, as the count on the minuette timeframe seems to be coming to a conclusion.

In other news, look at silver.  It just cratered mid-day.  That ((c)) wave, if that's what it was, was extremely short.  My alert went off, and I see we have five waves down on the subminuette chart. I'm praying for a rally retracement into the close so I can get back into my short position.

Updated count for Silver

We are definitely in another impulse wave higher on the minuette time frame (lower).   We appear to be in a wave iv.
I've relabeled my prior chart.  If you look at the minute time frame (upper), assuming this is still all corrective, in order to complete (B) we need a W-X-Y, or alternately (lazily) expressed as ((a))-((b))-((c))-X-((a))-((b))-((c)).  We are now in the final ((c)). I've drawn a line at the old highs, which we should not be able to exceed if this count is accurate.

Silver now unclear

I have to admit defeat here in trying to define how silver made a new high today.

I cannot come up with an alternate working count that makes sense, so I'm going to take the cheap way out and set an alert for a move under yesterday's low.

If and when that occurs, I'll take another look at the chart to see if things clarify.

Stopped out of short SLV

I'll go over the chart in more detail later.
Until then, I'm watching for the next short opportunity.

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Temptation

It sure is tempting to add to my short silver position here, but I'm resisting and waiting for a downside breakout of this recent range. That will be all the confirmation I need, and I can start looking for an entry at that time.

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Silver still looks good for a selloff

Here's an updated picture of what I see since I went short last week.
Notice on the subminuette timeframe (30min - lower)
 the lack of momentum confirmation on the rise higher this morning.