Wednesday 12 March 2008

Hilbert Sine Wave Still To Complete Downtrend

Hilbert sine wave reminder today. You'd have thought with a 400 point Dow rally that we were in an uptrend now. The chart below shows that rally just led to a pullback move in the unfinished downtrend.

Emini Hilbert Sine Wave Image

Hilbert Sine Wave (Emini 81 minute)

Breaks into trend usually finish with a final cyclical turn. This is my usual "completion" pattern (labeled END using the Better Sine Wave indicator). And boy do I have trouble explaining this one - the best thing is to watch the Hilbert Sine Wave video. I hope the annotations on the chart above help.

The current down trend cannot be considered over until we have a cylical low cross. There are exceptions, but in general it is one of my most reliable patterns. I've likened it to a final Elliott 5th Wave push.

Emini Premium 2007 Image

Emini Premium (June - March 2007)

The Emini rolled-over at the close of trade today. Tomorrow we start trading the next front month - June 2008 (ESM08). The chart above shows the usual premium between the front month and the nearby month. Last year at this time it was about 12 points.

Emini Premium 2008 Image

Emini Premium (June - March 2008)

The current premium between the June 2008 contract and the March 2008 contract is only 2 points. This is very worrisome, especially when you combine this with the recent bearish professional position shown in the latest Commitment of Traders report.

I cannot help but think we are likely to test Monday's low of 1272 and then maybe test January's low of 1262. Let's see how this one plays out.

Watch the Hilbert Sine Wave video here. Good luck with your Emini trading.

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