Technical Analysis Of The Markets

Gold

Short-Term Update

Gold had a rather wide range in the overnight session first reaching a low of 1229.10 and then rebounding to a high of 1247.60, at the time that this Post was being written.

In spite of that larger overnight range our current thinking remains unchanged as we are still working on a developing wave !c! of ^iv^ bullish triangle.

Upon completion of wave !c! we expect a wave !d! rally to be the next big event in this market. There still remains an outside chance that wave !b! is not complete and in this case a run to the 1270ish area is expected before all of wave !b! ends. 

Wave !c! cannot drop below the wave !a! low of 1206.00 for our current triangle formation to remain valid. A reversal and rally above the 1264.70 high now would confirm wave !b! still has one more rally to go before it ends.

The internal wave structure of triangle formations can become very complex, so surprises should be expected from time to time.

Our updated count for wave (3) of 3 is as follows:

*i* = 1088.30

*ii* = 1046.80;

*iii*:

^i^ = 1081.40;

^ii^ = 1056.60;

^iii^:

!i! = 1113.10;

!ii! = 1071.10;

!iii! =1263.40, 1262.90(Daily Continuous Futures);

!iv! triangle =1225.30;

!v!= 1280.70, to complete all of wave ^iii^.

^iv^ triangle:

!a! = 1206.00;

!b! = 1264.70, if complete;

!c! setback is now underway;

^v^ rally is next, after completion of wave ^iv^, to complete all of wave *iii*.

*iv* correction will be next, after wave *iii* ends. 

Longer-Term Update

Based on the current count, gold is still working on its first impulsive sequence out of its wave (2) of 3 low, and we still have a long way to go before this sequence is complete.

Wave ^iv^ has become more complex and once it is complete, if it is not already at the 1210.30 low, then we should expect a wave ^v^ rally, which when complete will complete all of wave *iii*. The wave *iv* correction should retrace between 23.6 and 38.2% of the entire wave *iii* rally.

Projection for the end of wave *iii* is:

*iii* = 6.25*i* = 1314.90.

Active Trading Positions: Long 20 positions, with puts at 1085.00.

Crude

Short-Term Update

Crude continued higher in the overnight session reaching 41.95, at the time that this Post was being written.  

Like gold we have a couple of options that this market could be following and those options still remain valid. We are still holding firm to our preferred option which suggests that we have completed all of wave ^b^ of *ii* at the 42.41 high or that we are still working on wave ^b^, which means return to the 42.41 high at least one more time before all of it ends. The other option is that all of wave *ii* ended at the 35.24 low, and that we have already started wave *iii* higher.

The current count for all of wave *ii* is:

^a^ = 35.24;

^b^:

$a$ = 38.29;

$b$ = 36.70;

$c$ = 42.41, if complete, to complete all of wave ^b^.  

^c^ is now underway, with the drop to reach our expected retracement levels shown below, to complete all of wave *ii*.

Our minimum target for wave ^c^ and all of wave *ii* is the wave ^a^ low of 35.24, but we are expecting wave ^c^ and wave *ii* to at least reach our 50% retracement zone which 34.27, before all of wave *ii* ends. 

Our retracement levels for all of wave *ii* are:

50% = 34.27;

61.8% = 32.33.

We are waiting for confirmation that all of wave -i- is complete at the 29.13 high. If it is then our wave -ii- correction will be the next big event in this market.

The wave -ii- setback is expected to retrace between 50 to 61.8% of the entire wave -i- rally. We will provide those retracements when we are sure that all of wave -i- is complete.

Long-Term Update

We are now working on the assumption that a major low in wave b of B was reached at the 26.05 low. If this assumption is correct, then crude is now heading sharply higher, at least back to the all-time high of 147.27!

Active Trading Positions: We will go long at  33.25, risking to 30.00.

S&P500

Short-Term Update

The S&P Futures are up about 10 points in the overnight session, at the time that this Post was being written.

Based on how the Cash S&P opens we are getting much closer to our ideal projected target for the end of wave -iii- which is 2111.02.

As we have been saying for a couple of Post now, the S&P has now satisfied all of the minimum requirements for a completed wave -iii- and we need to be on guard for a reversal, which will mark the start of wave -iv- lower.

Upon completion of wave -iii-, we expect wave -iv- to retrace between 23.6 to 38.2% of the entire wave -iii- rally. Once we are certain that all of wave -iii- is complete we will provide our retracement levels for all of wave -iv. 

Long Term Update:

Wave -i- of (v) is complete at the 1946.70 high, and wave -ii- at 1891.00. We should now be heading to our second projected target for the end of wave -iii- and once that wave is complete, we should expect drop in wave -iv-. Our minimum target for the end of wave (v) is the all-time high of 2134.72.  And then…. A plunge to below the 2008 financial crisis lows!

Active Trading Positions: Flat.

USDX

Short-Term Update

The USDX continues to drift lower as we reached 94.16 in the overnight session, at the time that this Post was being written.  

We have still not be able to provide an update on the current direction of the USDX, and cannot rule the possibility that we could be heading back to the 100.71 high. The Daily USDX Chart (not attached) does have a lot of overlapping waves from its 100.60 high to its 93.64 low.

This could indicate a leg of a still forming bullish triangle.

A rally to a new high above 100.70 does not fit with the current gold analysis.

The other option is that the rally from the 93.62 low to the 95.21 high was just another corrective wave in a series of waves that are impulsive on setbacks and corrective on rallies.

If this is the correct observation then the USDX is heading much lower, which is our general prediction. A break of the 93.62 low would suggest that something like this is happening.  Stay tuned!

Long-Term Trading Update

Uncertain, but this chart shows the general big picture of what we see:

Active Trading Positions: Flat.

HUI/GDX and Selected Gold Stocks

Short-Term Update

With gold being higher, we suspect that the GDX and our selected gold stocks will be higher, but we still think that their respective corrections, that are detailed below are still NOT complete.  

GDX

As you can see on the 60 Min GDX Chart, we are thinking that wave (iv) is becoming a 3 wave pattern as follows;

-a- = 21.41

-b- = 22.48, if complete

-c- is next to complete all of wave (iv), with retracements levels as follows:

23.6% = 20.56;

38.2% = 19.01.

Of course wave (iv) could take a develop into some other corrective pattern, like a bullish triangle also. What we are sure about is that it is unlikely that all of wave (iv) is complete at the current low of 21.51, so we expect more downside even though it looks good here. 

SSO

As you can see on the Daily SSO Chart, not much happened, but we believe that wave .ii. is still NOT complete, so we expect more downside within this corrective pattern. Retracements for the end of wave .ii. are:

50% = 8.30;

61.8% = 7.97.

At the moment it is a bit to early to determine which corrective pattern that wave .ii. is going to follow, but a 3 wave drops appears to forming.

In the longer term, projections for the end of wave *iii* are:

*iii* = 1.618*i* = 14.07;

*iii* = 2.618*i* = 18.49;

*iii* = 4.236*i* = 25.64.

KGC

As you can see on the 60 Min KGC Chart, it looks like wave ^iv^ is becoming a 3 wave corrective pattern as follows:

*a* = 3.98;

*b* = 4.38, if complete;

*c* drop is next to complete all of wave ^iv^. Retracement levels for wave ^iv^ are:

23.6% = 4.21

38.2% = 4.00

Our current wave .v. count looks like:

^i^ = 3.58;

^ii^ = 3.21;

^iii^ = 4.49;

^iv^ correction is now underway, subdividing as indicated above, but it could become a bullish triangle also.

^v^ rally is next after the completion of wave ^iv^. The minimum target for wave ^v^ is 4.49.

Long-Term Update

The GDX and all of our selected stocks/indices have finally completed their respective wave B lows. We are still expecting higher prices, as we complete our first impulsive sequence out of their respective wave B lows.

Active Trading Positions: We are long the GDX, ABX, KGC, NEM, CRJ, and TSX:XGD with no stops.

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Website: www.captainewave.com

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