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 July 9,
2006 Commentary (weekend edition)-
Wow, what a
week. There are so many things 'on the table' that can move the markets, I
don't suspect the action will cool down any time soon. First, I'll update a few
business things, and then we'll look at some charts. I will be going on my
yearly 'vacation' shortly, and I am using that time for my latest 'project',
which I will explain down the road when the time is right. For now, I will be
'gone' around July 16th until the end of the month. If you want to make an
order, please do it before then if you want to have me ship before I go on my
respite. Otherwise, I won't be checking any e-mail until the end of the month,
when I'll start shipping again. I will add a note to the books page shortly
before I get ready to stop shipping.
Speaking of the books page, I have finally decided on
making a long-anticipated change there, and I will now only sell full sets.
This is long overdue, and really shouldn't come as a surprise. The body of work
is really more like a course, and since it is all 'integrated' and part of what
I feel is a synergistic whole, the work should be viewed in its entirety in my
opinion anyway. During the transition I will still sell one book individually,
for those that must read one first before they can make a commitment. I won't
detail this any more here, because I have explained it all on the newly updated
books page, including a link that goes into greater detail for those that 'want
to know'. Since almost all of my sales are for full sets the change isn't
really going to have a great effect on anything around here.
Finally,
unless I get some kind of energy spurt and window of time, with all I have
going right now, this will be the last commentary until after I return near the
end of the month. You can check back in case I decide to do another one next
weekend, but the odds are slim at this point. I will likely miss two or maybe
three commentaries before I get back to the grind, but keep checking back. I'll
update my return on the What's
New page first. You might take this time to pore over the
archive.
I'll start with last week's Jim's Chart of the Week. Here's what I
posted last weekend.
I was watching this ABCD with an ABCD in the
BC leg, 'testing' this key median line lower parallel from below, right at a
.382. When we look at the NDX.X in a moment you will be able to put together
some more of the things I was looking at here. It goes without saying that this
is an area I want to be watching closely. It was also setting up as just about
every index and sector had something interesting to say.
Let's see
what the COMPX did this week.
After acting like it was going to break right
through the area handily, the COMPX rolled over and dropped nicely right off
the area. We are now approaching another critical spot where the COMPX, and all
the indices, will have to make some critical decisions. But for now I'll be
happy with the well over sixty point drop and close on the low right off the
area I pointed out in advance for the readers. I just love when things react
right off spots I show in advance.
Let's look at something very interesting in
the NDX.X.
The NDX.X had rolled off an area of interest
at the first arrow, with some nice time symmetry. Full set readers should know
exactly why I was watching there. Just look at how that set was used.
The second arrow shows the setup as the COMPX hit its area. The NDX.X was
relatively weaker than the COMPX, dropping over sixty points on an index with a
value quite a bit less. Look on a 15-minute chart and notice the Friday-Monday
divergence between the two. The point is, though, just look at how much there
is to work with, and how both approaches pointed to the same area. How, and
why, I try to do this is explained in detail in Kane Trading on: Median Line and
Fibonacci Synergy.
Let's follow up on the dollar index.
The dollar index kept on rolling down, right
off my area. I added some things on to show where I was watching next. This is
a key spot where the dollar may give me clues as to how serious it is in
resuming that downtrend. It bounced right off that median line lower parallel
and .618 retracement area, then rolled right back down and closed poorly. And
what did it roll off of? Within less than .01 of a key .382 (now, that
surprises me). It sure does look weak. I can't begin to tell you how important
I think the dollar is.
Let's follow up on the XOI.X.
As I suspected, the bigger pattern held sway
and contributed all the influence to the move. Given that the bullish percents
had hit an extreme low, this was anticipated, not to mention the strong,
persistent uptrend obviously in place. Even the .886 retracement (not shown) at
the upper division line had little effect on the momentum. That was a new
all-time high for the XOI.X there on Friday. All-time high. That goes
along with the ramp in crude and unleaded. But I doubt crude at $80, $100, or
higher will have any effect whatsoever on this powerhouse economy, on people's
pocketbooks, or on inflation. Nope, no effect at all. Just ask the talking
heads on television. See my note on the commercials in the conclusion.
Let's finish
with a nice example of the methodology recently in the LC.
I showed this on the June contract because I
had already set up the chart for other work. I perhaps should have done this on
the August contract, and a similar setup can be generated there. I'll leave
that to the reader to explore. Point is, the LC pulls back to a .382, right at
the median line lower parallel. You can especially see a nice pattern on the
August contract, and a nice trigger. Although I am only showing the framework
here, this is the type of thing I am constantly on the lookout for, and I sure
see a lot of similar setups. Any issue, any timeframe, from stocks to futures
to FOREX, as long as there is liquidity. One great aspect for me of my
methodology is how universally it seems to apply.
As I close, let me mention that the
commercials added significantly, and are, simply put, wildly short (make sure
you do the mini equivalents in your calculations). This is something I want to
watch, as that is not the type of behavior I'd expect to see in a roaring bull
market in a great economy, like they keep telling me this is. Watch those
rates, which are my chart of the week because I won't be posting for several
weeks, and that chart will remain salient for quite awhile. Watch the dollar
and the currencies, and gold. And watch energy. I may not like what I am seeing
as a consumer and a citizen, but as a trader, I couldn't ask for more.
I will be
back in a few weeks or so, and we'll get this commentary back up to full speed,
so stay tuned. The next commentary will probably be July 30, 2006, but maybe
not until August 6, 2006. And maybe my vacation gets 'delayed' and I don't miss
any commentary. Or maybe I do one on July 16, you never know. So, keep an eye
on this section to see what is happening.
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