Gold Cycles Pushing Higher - US Stock Cycles Down

Last week's trading saw gold once again forming the bullish pattern of an early-week low, here hitting a bottom of 1753.50, made in Monday's session. From there, strength was seen into Wednesday, with the metal running all the way up to a peak of 1796.10 - before backing slightly off the same to end the week.

Gold's Cyclic Upward Phase in Firm Force

The last bottom of significance for the gold market was projected to come from the 72-day cycle, with a minimum correction back to the 72-day moving average being the expectation into the mid-June timeframe - where this wave was projected to trough. Here again is our 72-day wave:

As mentioned last weekend, our June cycle bottom was confirmed with both price and momentum - which has this 72-day cycle pushing higher in the coming weeks. With that, we should continue to expect any short-term correction with the smaller-degree waves to end up as countertrend affairs, giving way to higher highs for the bigger swing, upon completion.

Technical Indications

Supporting the idea of a continued advance for gold for the coming weeks is the action from our Mid-Term Breadth index, which has also turned higher with the recent action:

With the above said and noted, the overall uptrend is projected to remain intact in the coming weeks, before setting up the next larger swing top. From that high, the second largest-percentage decline of this year is expected to unfold into August, with more precise details noted in our Gold Wave Trader market report.

The Bigger Picture for Gold

From the comments made in past months, the larger trend has been expected to remain higher into later this year for gold, due to the configuration of the bigger 310-day and four-year cycles for gold. Here again is the smaller of these two waves, the 310-day component:

With the configuration of the larger 310-day and four-year waves, the assumption was that the most recent decline phase of the smaller 72-day component would end up as a countertrend affair - as it did manage to do.

Going further, the next low that is due around the month of August is also favored to end up as countertrend - though it should be a fairly sharp affair. From that bottom, the most spectacular rally of the year should play out in the months that follow, with the 2000 figure or better acting as the eventual magnet. That target comes from the inverted 'head & shoulder' pattern, which can also be seen on our 310-day cycle chart.

For the bigger picture, the next mid-term peak is expected to come from the 310-day and four-year cycles, ideally made sometime later this year. From that high, a multi- month decline is expected to materialize into the Spring of 2021 or later, which should be the technical setup for the next major low for the metal.

U.S. Stock Market

In looking at the U.S. stock market once again (as measured by the S&P 500 index, or 'SPX'), the downward phasing of the 45 and 90-day cycles continues to remain in force, ideally holding up into the month of July - where we will be on the lookout for the next bottom of significance to form.

Here is the larger of these two waves, the 90-day cycle:

As can be seen on our chart, both the detrend and momentum indicators that track this 90-day wave are currently pointing south, and with that we are looking for additional correction in the days/weeks ahead. In terms of price, the ideal path has the lower 90-day downside band (in red) acting as the magnet - with the patterns favoring this decline to end up as an eventual countertrend affair, which simply means that the SPX should remain above the prior 90-day trough from back in late-March.

Stepping back then, a countertrend decline with the 45 and 90-day cycles should give way to higher highs on the next swing up with these waves, ideally playing out into the August - October timeframe of this year. From there, we will be looking for key technical indications of the next mid-term peak forming for U.S. stocks - which should come from a larger 180-day cycle that we track.

The Bottom Line

The overall bottom line with the above is that gold's cyclic upward phase continues to be in force, and should remain higher in the coming weeks - before forming the next key price peak. From that high, the second largest-percentage decline of the year is expected to unfold - though with that move favored to end up as another countertrend affair. As for the U.S. stock market, additional weakness is expected to play out in the days/weeks ahead, before giving way to the next semi-important low - with the decline favored to end up as countertrend, giving way to a push back to or above the early-June highs, upon completion. Stay tuned.

Jim Curry
The Gold Wave Trader
http://goldwavetrader.com/
http://cyclewave.homestead.com/