jan 30 end of week post!





Short Term Update:


Gold was really not that active in Friday's day session, as the 1108.80 low held and we rallied to a high of 1118.60.


We are now basically waiting to see if we have any more upside in wave *c* of .b., or whether wave *c* is now complete at the 1128.00 high. As you know we have a cluster of projections at the 1135.00 area.


Everything that we said in our last Morning Post remains valid, and we have repeated some of those comments below:


"On the Intraday Chart the drop from 1128.00 to the current low of 1108.80 is a completed impulsive wave. This could suggest that we have started wave .c. lower. The other option is that wave *c* is subdividing as follows:

^i^ = 1128.00;

^ii^ corrective drop is now.

^iii^ rally is next.


In order for the above count to come to pass we would need this market now to rally, and then drop again back to at least the 1108.80 low, to complete a 3 wave correction. A significant drop now below the 1108.80 low drops below the 1092.60.


Wave *b* triangle low would confirm that wave *c* and .b. ended at 1128.00, and that we are now heading back to at least the 1045.60 low to complete all of wave .c.


We will give this market another day to decide, but we are leaning to the idea that wave *c* and all of wave .b. are now complete at the 1128.00, and that wave .c. lower has now begun!


Our current projections and retracements are repeated below:


“With wave *b* being complete at the 1092.60 low, we can provide projections for the end of wave *c*, as follows:


*c* = *a* = 1135.40;

*c* = 1.618*a* = 1061.90. We doubt this will happen. As, this type of rally would break the upper red trend line on the attached Daily Gold Chart, which would eliminate the current diagonal triangle formation.


Retracements for the end of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1118.60;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1135.80.”


Our current count for wave .b. is:


*a* = 1088.30;

*b* triangle = 1092.60;

*c* = 1128.00, if complete, although we have higher projections shown above, for the end of all of wave .b.


Longer Term Update:


Watch for the completion of wave .b. and the start of wave .c. lower, which has minimum target of the wave .a. low which is 1045.60. Only an clean break of the down trend line connecting 1307.80 and 1191.70, would suggest that much more bullish things are happening in this market.


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




Short Term Update:


The trading in crude in Friday's day session, did not change from what we said in Friday's Morning Post, so we have repeated that Post below:


"Crude is now at a critical juncture. We have rallied to the major down trend line connecting all of the highs that started at the from the 50.92 high. Also on the Intraday Chart we appear to have a clear 3 wave pattern from 27.57 to the current high of 34.81. This 3 wave pattern can become a bullish 5 wave pattern is we continue to move higher. A break below the 32.74 high, would likely confirm that 3 wave rally, and this would suggest that crude is once heading lower to below the 27.57 low. Conversely a sharp break above 34.81 would break the major down trend line and suggest that the 27.57 low is a lot more important that we currently think it is.


Of course, we still have issues with proclaiming a major bottom in crude based on what we see on the Weekly Suncor Chart. If one of our Charts is wrong, we unfortunately do not know which one is at the moment, so we will confine our current comments to short term. We have attached the updated Weekly Suncor Chart and as you can see we are likely rallying in wave (ii) of c. Our current high is 23.52, which is still a little short of our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 24.59,


Long Term Update:


We now think that crude is still going lower, before wave b of B, ends with a below $20 as being likely.


Active Trading Positions: Long 15 positions, with 42.00 puts, as stops, plus long 5 positions with 37.00 puts, as stops. Going to go long Suncor at 13.05!”








Short Term Update:


The S&P was sharply higher on Friday, being up over 45 points.


We were hoping that our wave .ii. correction was NOT complete at the 1872.70 low, as that low was still a little short of our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 1860.57.


Projections and retracements do not always happen, and are always secondary to correct Ewave analysis. We have cancelled our buy order. It now appears that wave .iii. of -i- of (v) is now underway, as shown on the attached Daily and 120 Min Charts.


Projections for the end of wave .iii. are:


.iii.= .i. = 1969.26;

.iii. = 1.618.i. = 2028.93


It is very important that this current rally becomes impulsive. If it became corrective (ie: only a 3 wave rally), then the S&P has topped in some kind of failure at the 2100/2150 level, and this market is heading significantly lower!


Long Term Update:


We are moving higher in wave -i- of (v), with wave (v) having an ultimate target of at least the all-time high of 2134.72. 


Active Trading Positions: Flat!




Short Term Update:


The USDX rallied to 99.88, in Friday's day session, just 1 tick below our current wave *b* high.


If our current wave .iv. triangle formation is correct, then it would look like:


*a* = 97.21;

*b* = 99.89, if complete;

*c* = 98.45, if complete;

*d* = 99.88; if complete;

*e* drop will be next to complete all of the wave .iv. triangle. Wave *e* cannot drop below the wave *c* low of 98.45, for this triangle formation to remain valid.


It could also be possible that wave *b* is still underway, and that our current triangle formation is expanding.

The other option for wave .iv. is:


*a* = 97.21;

*b* = 99.89, if complete;

*c* drop now to at least the 97.21 low to complete all of wave .iv.


Long Term Trading Update:


Our current count for all of wave -v- is:


.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. triangle is still underway.

.v. rally to go to at least the 100.71 wave -iii- high.


The other much more bearish count is shown on the attached Weekly USDX (Alternate) Chart. In this, our second (a), (b), (c) pattern from the wave i low of 71.33 ended at 100.72, and we are now falling in another 3 wave pattern. Within this 3 wave pattern we are working on wave -c-, with projections of 88.35 and 80.79.


All of our alternate counts will become valid if we drop below the 96.64 high!


Active Trading Positions: We are short, risking to 99.90!






Short Term Update:


NG continued higher in Friday's day session, reaching 2.315.


We took profits on our long positions at 2.29, and will wait for the end of wave -b- to go long again. In terms of wave .b. of -b-, we still think it is not complete, as we believe we are only working on the tail end of our second wave *a* of all of wave .b.


We believe that the next big event will be a drop in our second wave *b*, followed by one more rally back to the second wave *a* high to complete all of our second *a*, *b*, *c* pattern. That should then complete all of wave .b., and then we should head lower in wave .c. to our wave .a. low target of 2.045.


The attached Daily NG Chart tells our story.


Our retracement levels for all of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.271;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.324


We have reached the above retracement zone target.


Our updated current count for all of wave .b. is:


*a* = 2.170;

*b* triangle:

^a^ = 2.069;

^b^ = 2.189;

^c^ = 2.082;

^d^ = 2.171;

^e^ = 2.129;

*c* = 2.214;


^a^ = 2.115;

^b^ = 2.211;

^c^ = 2.099, to complete all of wave *x*

*a* = 2.315, if complete;

*b* drop is next.


Retracement levels for the end of wave -b- are:

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.089;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1.993.


There is an outside change that all of wave .b. is complete at the 2.315 high, in which case the next big event, will be a drop back to our wave .a. low of 2.045 in wave .c., to complete all of wave -b-.


Long Term Trading Update:


Our retracement levels for all of wave (iv):


38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.91;

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 3.29.


For the time being we will assume that wave (iv) is a simple -a-, -b-, -c- pattern, and within that count we have:


-a- = 2.494;


.a. = 2.045, if complete;

.b. = 2.315, if complete, with the detailed count above;

.c. drop to at least the wave .a. low of 2.045, to complete all of wave -b-;

-c- rally to at least the wave -a- high, but more likely to our 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1}/50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement zone shown above.


Active Trading Positions: Took profits, now flat!


HUI/GDX and Selected Gold Stocks:












Short Term Update:


For a while we have been suggested that the GDX is likely going to make one more new low below 12.40 to complete all of wave B. Based on the trading in the HUI and XAU, this week we are NOT SO SURE, that this is going to happen. It could now very be possible, and in fact now likely that wave B in the GDX ended at 12.40.


As you can see on the attached Long Term HUI and XAU we have now satisfied the minimum requirements for the completion of their respective wave -v- lows.


The HUI is 99.19, and the XAU is 38.27.


Of course what does not complicate this discussion is what gold is going to do. If gold is going to drop in wave .c. back to the 1045.60 low, we are not sure that the HUI and XAU have indeed bottomed. Seems like either our gold count is incorrect, or our thinking around the HUI/XAU and GDX is.


What we are sure about, is that the downside in gold stocks is very limited, and if we do drop lower in the HUI and XAU it is unlikely NOT to be by very much.


We have attached the Daily CRJ Chart, and we could still see some further upside in wave *iii*, but we need to be on guard for the start of our wave *iv* correction, as the attached chart indicates.


A major in Kinross could be in place at the 1.31 low, but wave a ended at 1.07, so a further drop to at least the 1.07 could still be possible.


In terms of ABX, it appears that wave B is complete at the 5.89 low, and that wave C has begun, as shown on the attached Long Term ABX Chart.


On the attached 120 Min Chart, we appear to be rallying in wave (iii), and within wave (iii), we likely completed all, or most of wave .i. of (iii). We expect some short term weakness in wave .ii. of (ii) to be the next big event. Wave .ii. should retrace between 50 to 61,{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire wave .i. of (ii) rally.


Long Term Update:


Wave B may now be complete in the HUI.


GDX and XAU now need to see a decided break of the associated major down trend lines, for all of these markets to confirm that idea. 


We plan to add to all of our current selected gold stocks holdings.


Kinross may be the only gold stock that could still drop to its wave a low of 1.07.


Active Trading Positions: We are long, and will now be adding to the GDX, ABX, KGC, NEM, CRJ, and TSX:XGD with no stop!


Note: The Captain will be in the USA between 01/31 and 02/03. Posting should remain unaffected, except on the morning of 02/03, where there will be NO Morning Post.