Technical Analysis Of The Markets

Gold

Short-Term Update

 

Gold moved lower, as we expected, in the overnight session, and we reached 1272.00, at the time that this Post was being written. We still expect that our current correction is going to continue, no matter which option this market is ultimately going to follow.

We do note that on the Intraday Chart we do have a 3 wave corrective pattern that is now visible from the 1318.90 high. As a minimum we should expect this correction to enter our 50 to 61.8% retracement zone that is shown in Option 1 and 2 below.

There is no change to our current analysis as we continue to watch three options. We believe that a short term top was made in gold on Thursday at the 1318.90 high, so we expect this market to correct for the next week or two, following one of our options described below.

Our current options are:  

Option 1: Wave *iv* ended at 1201.80. Rallying in an incomplete wave *v*:

In this case we are now rallying in an incomplete wave *v* that is going to subdivide. That count would be:

^i^ = 1318.90;

^ii^ correction is now underway. Retracement levels are:

50% = 1260.40;

61.8% = 1246.50

^iii^ is next after wave ^ii^ ends.

Option 1A: Wave *v* is not subdividing and is complete at 1318.90:

This Option is the same as Option 1, except that all of wave *v* and wave .iii. are complete at the 1318.90 high and we have started wave .iv. lower. In this case we should expect wave .iv to retrace between 23.6 and 38.2 % of the entire wave .iii. rally. This option is unlikely at the moment.

Option 2: We are working on a wave *iv* triangle:

This count is shown on our Daily Gold Chart, with the pink lines as representing the likely path of this pattern. In the case of the bullish wave *iv* triangle option, our count would be:

^a^ = 1201.80;

^b^:

!a! = 1318.90;

!b! drop is underway and should retrace into the same zone as wave ^ii^ in Option 1;

!c! rally, after wave !b! ends, to complete all of wave ^b^.

This triangle will likely take a month or so to develop.

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 little way to before this sequence is complete.

We are thinking that all of wave .iii. in our current gold count is going to end at the red trend line shown in our previously attached Long Term Gold Chart.

The location of that intersection is looking like it could be in the $1340/$1360 area, depending on long it takes for gold to get there.

Active Trading Positions: Long 20 positions, with puts at 1250.00.

Crude

Short-Term Update

Crude was lower in the overnight session reaching 49.17, at the time that this Post was being written. In general, there is no change to our current analysis but we now need to be on guard for the possibility that all of wave ^iv^ could be complete at the 45.82/46.40 low.  

We are assuming that all of !a! of ^iv^ is complete at the 46.40 low, and that the current rally is all or most of wave !b!, as shown on the Daily Crude Chart.

The other possibility is that all of wave ^iv^ is complete at the current lows. We are skeptical about the latter due the short time that wave ^iv^ has taken to develop when compared to wave ^iii^.

The other option is that wave ^iv^ is becoming a bullish triangle, and it that case only wave !a! is complete the  current lows. We would now be rallying in wave !b!. In any event crude is due to rally for the next couple of days. For the time being we will still assume that the current drop is just wave !a! of ^iv^, and that the next big event should at least be a corrective wave !b! rally.

Upon completion of wave !b! we would expect a final drop in wave !c! to complete all of wave ^iv^.

Our updated current count, from the wave b low of 26.05 is:

^i^ = 43.69;

^ii^ = 39.00;

^iii^:

!i! = 46.78;

!ii! = 43.04;

!iii! = 49.56;

!iv! =49.12;

!v! = 51.67, to complete all of wave ^iii^;

^iv^:

!a! = 46.44;

!b! = 49.99, if complete;

!c! drop to complete all of wave ^iv^. Minimum target is 46.44.

Our first projection for the end of wave *iii* is:

*iii* = 1.618*i* = 61.84.

No change to our current thinking around Suncor. We still expect further downside to at least on minimum target level of 25.31, before all of wave -ii- ends. Retracement levels for all of wave -ii- are:

50% =24.31;

61.8% = 22.98.

We cannot rule the possibility that wave .b. is actually not complete at the 28.57 high and is becoming a small bearish triangle. In this case after this triangle ends, we should drop in our final wave .c., to complete all of wave -ii-.

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 Suncor at 23.75.

S&P500

Short-Term Update

The S&P Futures are up about 9 points at the time that this Post was being written. Our current analysis remains unchanged as we are waiting to confirm whether wave .ii. is still developing or is complete at the 2050.70 low.  

For the moment we have labelled the 2050.70 low as wave *a*, and the current rally as wave *b*, which maybe complete at yesterday’s high of 2100.66. If that is the case then we should now be falling in wave *c* to complete all of wave .ii..

We should know in a couple of days if wave .ii. is complete at the 2050.70 low and that we are now rallying sharply in wave .iii., or if the S&P will follow our projected path.

Long Term Update

Wave -i- of (v) is complete at the 1946.70 high; wave -ii- at 1891.00, and wave -iii- at 2111.05. Wave -iv- is now complete at the 2025.91 low and we have started our wave -v- rally to all time new highs. Our minimum target for the end of wave (v) is the all-time high of 2134.72.  From there, we expect sideways action, and then a 1929 type of meltdown!

Active Trading Positions: Flat.

USDX

Short-Term Update

The USDX saw a marginal new low in the overnight session reaching 93.41, at the time that this Post was being written. We still expect that if our current analysis is correct that the USDX is heading a lot lower, before all of wave $iii$ ends.

A break below the double bottom at 92.52/91.54, would be a very positive development for the USDX bears.  We expect lower prices in the days ahead.

On the Intraday Chart the drop from 95.54 to the current low of 93.41, looks like a complete or almost complete 5 wave impulsive sequence.

If that observation is correct then we should expect a small corrective rally in the USDX to begin soon.

This rally is expected to retrace between 50 to 61.8% of the drop from 95.54 to 93.41.

Long-Term Trading Update

Our expected sharp drop in wave !iii! has begun, which should see this market move below the 91.00 level. 

Active Trading Positions: We are short at 95.85, and have added to shorts at 94.80, risking all to 95.55.

GDX 

As you can see on the Daily GDX Chart, we are working on the assumption that all of wave (i) is complete the 27.03 high and that we are now correcting in wave (ii).

If that analysis is correct then wave (ii) should retrace between 50 to 61.8% of the entire wave (i) rally. Those retracement levels are shown on the daily GDX Charts. Our current count for all of wave iii is:

(i) = 27.03;

(ii) correction is now underway.

Upon completion of wave (ii) we expect a very sharp rally in wave (iii), as the next big event in this market.

SSO

As you can see on the Daily SSO Chart, we are assuming that all of wave *v* and wave (i) are complete at the 15.71 high. If that is the case then we should now expect a wave (ii) correction that retraces between 50 to 61.8% of the entire wave (i) rally. Those retracement levels are shown on the Daily SSO Chart. This correction, when it happens, will be much deeper than the corrections of on the GDX, ABX and KGC stocks.

The other option is that wave *v* still going to extend further to the upside.

ABX

As you can see on the Daily ABX Chart, we are assuming that all of wave .i. is complete at the 21.40 high, and that we are now correcting in wave .ii. If that assumption is correct then wave .ii. is expected to retrace between 50 to 61.8% of the entire wave .i. rally. Those retracement levels are shown on the Daily ABX Chart. Our current count for wave (iii) is;

.i. = 21.40;

.ii. correction is now underway.

Upon completion of wave .ii. we expect a sharp rally in wave .iii.

KGC

As you can see on the 60 Min KGC Chart, we completed wave (i) of iii at the 5.48, and it could now be possible that all of wave (ii) is complete at the 4.71 low. This low is within our 50 to 61.8% retracement zone, which is shown on the attached 60 Min KGC Chart. Upon completion of wave (ii) we expect a very sharp rally in wave (iii), as the next big event in this market!

Long-Term Update

Our first impulsive sequence out of wave B lows of the GDX and our selected gold stocks, is likely now complete at the current highs and we are correcting in wave ii, except in ABX, which will be correcting in wave (ii) of iii.

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

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Free Trades Offer For Gold-Eagle Readers:  Send me an email to [email protected] and I’ll send you my next couple short term ewave trades for free!

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