Interesting Chart Patterns To Monitor In Coming Days...

[MR]

Corrections are very hard to master. Most Elliott traders make money during an impulse pattern and then lose it during the corrective phase. An impulse pattern consists of five waves. A corrective pattern (with the exception of the triangle pattern) consists of 3 waves. An Impulse pattern is always followed by a Corrective pattern. Corrective patterns can be grouped into two categories:

* Simple Corrections
* Complex Corrections

[MR]

"There is only one pattern in a simple correction. This pattern is called a Zig-Zag correction. A Zig-Zag correction is a three-wave pattern in which the Wave B does not retrace more than 75 percent of Wave A. Wave C will make new lows below the end of Wave A. The Wave A of a Zig-Zag correction always has a five-wave pattern.In two of the three types of complex corrections (Flat and Irregular), the Wave A has a three-wave pattern. Thus, if you can identify a five-wave pattern inside Wave A of any correction, you can then expect the correction to be a Zig-Zag formation." (AGET Manual)

[MR]

Apply Normal Ellipse from GCQ4 daily top to Wave 3 Bottom. It has arrived. Now watch to see how long it can pause this recent advance, or is it identifying the next pivot point?

[MR]

Just an observation.... do the same with SIN4 and HGN4. Apply Normal Ellipse application from Wave 3 top to Wave 4 bottoms.... is this identifying key resistance now in both contracts?

[MR]

Take a look at the instruments mentioned below in a
previous post. If these turn out to be intermediate w4's
within a bigger Wave 3, today's action could be a precursor
of the recent trends quickly returning? Also, noticing how
close the -3-'s are located to current price action. This can
be an indication the projection is still possible, still obtainable.

Originally posted by MR, - Posted: 05-18-2004 10:39 AM
You might want to research and monitor
more closely the following for a possible
Type 1 buy setups building the few weeks:

$FVX (FV M4 or U4),

$TNX (TY M4 or U4),

$TYX (US M4 or U4).

[MR]

So far this observation is playing out exactly as anticipated. Wave 5 continues to move
higher with the uptrend continuing, which confirms my belief this trend up is not over.

Originally posted by MR,
- Posted: 05-14-2004 12:57 PM
Anyone here trade or monitor Goldman Sachs Commodity Index? (Reference to GN X0, Weekly, Daily charts)
Don't think it is a major Wave 5 as label, could be a lower level wave 5. If it dips in next few weeks, you can still identify supports. "Suspect" we still have some form of a bigger Wave 3 still in progress.

This index weights energy costs more, so if you fear inflation, you watch it as well as the CRB Index, or whatever they call it now.

The recent price action is deceptive. It masks a slow and steady uptrend in progress where
potential momentum has not been identified yet.

Respect wave counts, yet learn to anticipate changes before they happen. It is not totally
unrealistic we could witness GN X0 become later a Wave 3 and not finish out as the Wave 5
top building it currently appears to be doing.

I only mention it publically, so IF you see this happen, you will not be taken by surprise.

[MR]

At the risk of becoming labeled like the little boy who cried wolf, I hesitate to keep pushing this notion that energy prices are going to continue to go higher into this summer. So this is the last time I will say it.

I will only mention this one more time because I still am not seeing convincing evidence stock markets around the world are factoring ramifications if there starts to become an acceleration in higher energy prices?

Originally posted by MR, - Posted: 05-13-2004 11:22 PM
Natural Gas contracts (New York market symbol = NG) is also an attractive energy product, under the right conditions, for those who like to do position trades. Downside right now, it is hard to figure out a safe buy area in short-term picture.

One idea to watch for in coming weeks-- bring up NG #F, start a AGET Regression Trend Channel (RTC ) from Feb '04 low to current high. It is overshooting currently but, per chance, it were to pull back toward the other half later, it might help set up a good trade for later. If this happens, just switch to the front month, or a reasonable nearby month contract and see if there is any clear Type 1 Buy setup you can identify.

One more thing, try to localize the wave count where the RTC starts... it is a little tricky to do this, in this case, but I could see it helping some people visualize better a possiblity.

Also, remember, Natural Gas typically has some seasonal lulls during the summer, then interest improves towards late summer, into fall months in preparation for winter demand. If something like this happens, and conforms to chart expectations, try to anticipate ways a position trader could safely get Long.

Originally posted by MR, - Posted: 05-13-2004 09:52 PM
Looked again at Unleaded Gas contracts (New York Futures = HU). Looked at HU M4, HU N4, HU Q4, HU U4, etc. Then looked at monthly, weekly, daily HU #F charts.

I tell you, nice major Wave 3's up!

Thought back in January unleaded gas was going higher this year, still thinking gas prices are going higher this summer.

If I were trading futures right now, sure would watch it harder the next few weeks for a good wave 4 pullback, Type 1 Buy setup. The trend up still looks like it has some life left to it.

Originally posted by MR, - Posted: 05-12-2004 12:56 PM
Back in January I posted this chart here in this thread on how I felt energy prices were going higher this year. (Read the comments at the bottom of the chart posted at that time, shown below.) So far it seems to have worked out exactly that way.

You know what is scary now... when looking at CL, HO, HU, and NG today, even after the Saudi's announced increasing oil production, the charts still have a little bullishness to them.

It makes you wonder, at some point, shouldn't higher energy costs hurt the world economy? It kind of reminds me of how the energy crisis back in the 70's developed, but in a more sneaky way.

And guess who is planning a several thousand mile, long driving family vacation out to see western US states later this summer! Might need a small loan to pay for the gasoline cost!

Originally posted by MR, - Posted: 01-20-2004 01:46 PM
Take a look at energy complex futures contracts, maybe some energy stocks if you get a chance. Email me your favorite symbols....

[MR]

Just thinking out loud... wonder what would happen if the major indicies, many who weekly charts are currently labelled 1-2-3, would end up becoming A-B-C's? Do you think if that happened someday, it might possibly catch trader's by surprise?

Originally posted by MR, - Posted: 03-11-2004 11:26 PM
Here is a quick update on the DJ Industrial, Weekly chart. Scroll down several charts to see the previous $INDU Weekly posted over a month ago where I pointed out we were at a key resistance. Looks like price is finally capitulating at the key strong resistance (see comments below). Anticipating more weakness to come....

[jims_id]

Energy vs. stock indices

Hi Marc:

I read your post on energy complex and then saw your subsequent post on the DJIA weekly. Before I saw your DJI post I was going to ask you to reconcile the energy charts and the equities charts, and your overall bearish posture for world equity markets. Here's my take, for what it's worth and it's more or less a duh!. Scenario 1: we see the energies sell off for a nice type 1 setup, and simultaneously we see a rally in equities. Scenario 2: Energy continues its wave 3 move to the upside, and equities sell off in response. The conundrum is formed by the strong weekly wave paterns in both the equities and energy.

For my two bits worth, and as screwy as it sounds, I think the bull scenareo for the equities is the slight odds on favorite. I'm thinking (and, of course, being a tout for my positions) that the bull flag formations in the weekly indices will win out. Nevertheless it's hard to argue with your energy scenario. In the energies favor, it has always seemed like the high weekly PTI's that the equities are sporting have in the past for me come down some before the ultimate correction is over.

Like to here your thoughts on why you are gut-bearish US equities.


Jim McGowan

[pj909]

An interesting notion. The ABC could be w2 of a larger impulse wave. So the premise is $INDU topped 1/14/00, followed by a w1 low on 10/11/02 and the high earlier this year on 2/20 would be just shy of the .781 max retrace for a w2. That means w3 would be starting now. A MOB from w1 places the DOW below 6000 by Q1'05 . A break of 9043 would certainly raise this theory to the forefront. Any bets on when?

[MR]

Hi Jim!

Originally posted by jims_id
Scenario 1: we see the energies sell off for a nice
type 1 setup, and simultaneously we see a rally in
equities. Scenario 2: Energy continues its wave 3
move to the upside, and equities sell off in response.
The conundrum is formed by the strong weekly wave
patterns in both the equities and energy. I think the
bull scenario for the equities is the slight odds on
favorite.. Like to here your thoughts on why you are
gut-bearish US equities.
Jim McGowan

I think you are correct. Odds do seem to favor more of a rally in equities before any real "top" is in place. Your scenarios sound like good ideas.

But what to do in say the next three to six months after this might happen? Will inflation concerns force higher interest rate increases than currently anticipated? Will HO and NG continue to charge strongly higher, very high heating prices this fall and winter? When will the war wear everyone out? Will this constant threat of terrorism eventually run its course? We are entering a national election campaign season where strong negativism will only get worse. Have we factored in the possibility of a new President being elected?

I could go on… basically I think we have underlying social and economic negative conditions building that I think are only going to lead to the markets eventually pulling back hard again. It might be time to begin preparing for this as a real possiblity is all I was hoping to suggest.


Marc

[MR]

Hi PJ,

Originally posted by pj909
An interesting notion. The ABC could be w2 of a larger impulse wave. So the premise is $INDU topped 1/14/00, followed by a w1 low on 10/11/02 and the high earlier this year on 2/20 would be just shy of the .781 max retrace for a w2. That means w3 would be starting now. A MOB from w1 places the DOW below 6000 by Q1'05 . A break of 9043 would certainly raise this theory to the forefront. Any bets on when?

I honestly respect your opinion, but am not personally ready to accept this notion the Dow Jones Industrial Average ($INDU) is at an all-time high, and that it is building for a major sell off similar to what the Nikkei did over a decade ago.

Rather, I contend odds still favor the current longer-term price pattern is in a very complex Wave 4 correction playing itself out. If you can find historical $INDU monthly data going back to before the 1970's, look approximately at the 1972-1981 time frame. Then compare it to what is currently evolving. It is possible we are only half way through this correction?

Either scenario-- your idea or mine-- both provide good potential of big price swing gyrations still to come. If you are lucky enough to time your entries before any of these major price swings occur, good money can be made trading in both directions.

[jims_id]

Hi Marc

I wholeheartedly agree that the longer term scenario looks troubling for equities. Just to add to your listed concerns, I think the markets are sporting unusually unfavorable valuations. Add to that the break of the long term trendline for the S&P (log scale) from 1982, which has not been recovered yet. Add to that the geopolitical risk, etc, etc. Bottom line, as you said, there are plenty of reasons for concerns for equities longer term. Once the tide turns and the market participants become fully attuned to these risks, it could get real ugly.

That said right now I'm not willing to give up the ghost just yet. My plans are to stay flexible and move to the sidelines if possible when equities turn lower in earnest. The problem is that the best laid plans of man often go awry. Just one terrorist attack on US soil could spoil my slightly bullish outlook, and put a real big dent in my equity account.

Best of luck.

Jim McGowan


P.S. Want to take a guestimate where the 30 year treasury will be by the end of the year? (another cause for concern IMHO)

[jims_id]

Hi again Marc

Marc:

One more thing I forgot to add to the last post. I'm not convinced that the recent rally in the markets and yesterday's flag breakout on the hourly S&P chart was the real McCoy. No volume support in those charts which to me makes it suspect.

Regards,

Jim M.

[MR]

Re: Hi Marc

Jim,

Does 5.80 to 6.00 sound ok to you?

Marc

Originally posted by jims_id
P.S. Want to take a guestimate where the 30 year treasury will be by the end of the year? (another cause for concern IMHO)