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So, the big question tonight is whether or not Clockwork Orange has a new lease on life or if today’s drop was yet another theta burning blip in our journey toward the resolution of Soylent Blue. Since my crystal ball is still at the shop we’ll have to make due with some inflection points which should guide our trading for the remainder of the week.
[amprotect=nonmember] Charts and commentary below for anyone donning a secret decoder ring. The rest of you guys will have to wait until tomorrow – sorry. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
The early phase of a prospective third wave sub dividing into second waves is always a pain to trade. After all without some supportive momentum indicators you don’t know if it’s part of a third wave down or if an a-b-c pattern completed and the early stage of a ramp up is in the works. Once the second sub division shows up however the risk starts to drop with each top that is being painted – today is a good example.
Today’s spike up and the ensuing drop bestowed us with a new high to hang our hat on. You see, if we breach today’s high at 1088.96 then we are most likely looking at a more complicated wave 2 retracement (i.e. the Soylent Sisters). Reason is that we should be in a third of a third and that one cannot breach the top of the prior second wave. That simple.
So 1088.96 is what you guys should put on your alert tab (if you’re trading with TOS) as it’s our Clockwork Orange RIP line. Which would mean that the immediate bearish scenario will have to be delayed until later this summer – according to the time cycles I follow early to mid August. Not too bad but in the interim the bears could take a lot of damage. Be mentally prepared for that once/if we breach that line.
To add insult to injury there is a second bullish scenario I can cook up. Call it Soylent Blue Lite – it would involve us dropping a bit further, maybe to the 1045 mark, after which we’d push into 1120. It’s a possibility that would somewhat diminish the upside potential as the odds for a reversal at 1120 would be high assuming a prior drop to 1045.
Clockwork Orange is peeling like an onion at this point (with the tears to show for). It’s starting to more look solid after passing the 1030 mark and will of course be confirmed once we breach 1010.91. Until then pretty much anything is possible I’m afraid.
The good news is that ole’ bucky is holding up quite nicely thus far and that we may have seen the extent of its correction. The AUD/JPY is also dropping as I’m typing this, so Clockwork Orange does have a fighting chance.
But price is not everything – implicitly momentum should give us some very important hints in the next two days. If you look at that fractal on the NYSE A/D ratio I follow then it’s clear that we should see a very hard drop starting either tomorrow or Friday at the very latest. If that one doesn’t come and we just hang around with little downside momo then the odds for Orange will start to diminish greatly again. After all – this is supposed to be a third wave down and not some walk in the park for the bulls. I want to see heavy long covering mixed accompanied by decapitations, panic, and seppuku attempts down in the NYSE pits.
So, a no-show will give us probably cause to expect Soylent Blue or worse. Which also should be considered when looking at Soylent Blue Lite. We should not drop down to that level and then hang around for a day or two. The 1045 level needs to be sliced through – no questions asked – otherwise it will again mean that we’ll have to endure more of this summer of pain.
I hope this puts you guys into the zone for the remainder of the week. Keep it frosty and expect the worst – this way you don’t lose any sleep over nothing.