December 30th Update

Last trading day of the year.

I'm now completely flat.  I exited silver Wednesday morning with a nice profit, making it the best trade of the year for me. 
I exited crude this morning at a small, but negligible loss.  I got out of crude due to a change in my view of the wave count, in addition to recent price action which I will go over now.

I previously had the intermediate wave (4) low at 94.77 on 11/25, making the move up to 102.59 on 12/5 an ending diagonal (5) that was truncated.  The move down to 92.52 on 12/16 formed another triangle, which could have been intermediate wave (1) down beginning a large correction.
If you look at the picture below, I have shown in red another interpretation that I now favor which is short term more bullish for crude.   The red lines trace out a three-wave move lower, with a three-wave B and a diagonal wave C.  In this count, the 12/16 low is where intermediate wave (4) actually ends.


Interestingly, we have already had a five-wave move off the 12/16 low on the hourly chart (below).  This has failed to make a new price extreme on the upside(see daily chart above), however, so I think it's likely we could have an extended fifth, despite the fact that (3) was also extended.   Because of the upside potential this presents, I exited all my short positions to see how things play out. 

After hours update

Today's post has been updated.

December 7th Update

Crude

I went short this morning.
I took a position in two different put verticals, one near term, and one longer term.
Bearish VERTICAL JAN12 36/38 PUT
Bearish VERTICAL MAR12 35/37 PUT
Both are two points wide, in order to capture more profits while still limiting loss and offsetting time decay.

Crude futures don't look much different on the daily chart, but the hourly chart is very bearish.  As I write this post a bounce is underway, so we'll see where it leads.
Momentum definitely points lower near term.

After hours update 8:39 PM CST:
Here is a current snapshot of the hourly futures, which appears to have completed a triangle formation for subminuette degree wave ii of minuette wave (iii).
The triangle completed at the exact 61.8% retracement of subminuette wave i.

December 6th Update

Silver

The overnight low in silver makes five waves down of at least minute degree.  See the first chart below for the futures.  Wave i was extended, and wave iii was not the shortest wave.  All the rules are satisfied, except one.  You'll notice that wave iv overlaps wave i slightly.  This sometimes happens in futures markets, so I took at look at the cash markets via the SLV (silver ETF), and the overlap is not there ( see the second image ).  The larger trend is undoubtedly down now, but the completed five waves likely trace out a higher degree ((i)), which means we'll now need wave ((ii)).   The bullish sentiment will now come back.  I also will need to move my stop since wave ((ii)) can and likely will retrace most of the move down thus far. Below I show a hypothetical retracement path to the 61.8% retracement target (green dashed line).  I could sell a put here, rebuilding my vertical.  Before I do anything, I'll wait for the first two waves to trace out on the hourly to see what form the correction begins to take (ie a 5-3-5 zigzag or a 3-3-5 flat for A-B-C).

Update: I didn't notice this earlier, but my proposed wave v of ((i)) has a converging momentum signal (ie a lower low in momentum matching a lower low in price).  This rarely happens in a fifth wave.  This is yet another reason not to jump the gun and sell puts here.  The confirmation of the above count will be when wave iv is exceeded to the upside, or in other words price moving above 32.45 in the futures.

Crude

We potentially have five waves down on the hourly chart.  If this turns out to be accurate, then the fifth wave on the daily time frame was truncated.

And now for a 3 month daily chart showing five waves up completed, possibly.

And finally, a weekly view is a little more complicated.  My best guess is that we are in an ending diagonal C-Wave of possibly primary degree heading down.  In this scenario, intermediate degree wave (2) is now over, and we are ready to begin (3) down which will be composed of another A-B-C zigzag or combination.

December 5th Update

Silver


Selling has begun.  The day opened with a nice upside fake, before rolling over and taking out some near term support levels.  On a 1H chart, all price support levels going back to 11/30 are now taken out.  I bought back the short puts in my vertical this morning, and will let the long puts run. 

I'll update my positions page to show long 31 puts now.  Last night's overnight high of 32.11 should serve as a good stop loss point, if we are indeed in a larger degree impulse wave heading down. 

December 1st Update

Silver

Triangle formation!

I was really late to the party identifying this pattern, but better late than never I guess.  It doesn't change my downside prediction, and in fact only bolters it.