jan 11 morning post!





Short Term Update:


In the last day or so we have been talking about the end of wave ^iii^ of *c*, in this market.


Gold did reach our ^iii^=1.618^i^ target of around 1113.00, by hitting 1112.20, but gold stocks are showing a much more bullish pattern which suggests that maybe wave ^iii^ in gold is not complete at the 1112.20 high, and is instead heading to our second projected target of 1148.10.


If wave ^iii^ is still underway then the current setback from the 1112.20 high is wave !iv! of ^iii^, with a wave !v! rally above the 1112.20 high still to come. Our projections for the end of wave ^iii^ are:


^iii^ = 1.618^i^ = 1113.50;

^iii^ = 2.618^i^ = 1148.10.


On the Intraday Chart we can now see a bullish triangle formation from the 1112.20 high. So if the observation is correct, then we are certainty in a 4th wave, but is it wave ^iv^ or wave !iv!?


We are starting to think that wave ^iii^ is NOT complete at the 1112.20 high, and if this triangle formation analysis is correct, then we should expect a sharp thrust higher in gold when it ends, as the next big event. For now we will stay with the idea that we are working on a wave ^iv^ triangle, as opposed to the much more bullish wave !iv! triangle.


Our retracement levels for wave ^iv^ are:


23.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1099.70;

38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1091.50.


Projections of the end of wave *c* are:


*c* =1.618*a* = 1116.20.

*c* = 2.618*a* = 1159.10  


Our current count for wave .b. is as follows:


*a* = 1088.30;

*b* = 1046.80;


^i^ = 1081.40;

^ii^ = 1057.50;

^iii^ = 1112.20;

^iv^ triangle correction is underway.


Longer Term Update:


Our current retracement level for wave .b is:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1118.60;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1135.80.


Wave .b. is expected to consist of at least one *a*, *b*, *c* pattern.


There is an outside chance that all of wave 4 or wave ii of 3 is complete at the 1045.40 low also.


A break above the upper red down trend line connecting waves -ii- and -iv-, as shown on the attached Daily Gold Chart would confirm that wave 4 or wave ii of 3 ended at 1045.40.


This idea is gaining some traction with us as a few gold stocks are breaking major multi-year downtrend lines which would not support the idea that gold is going lower.


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




Short Term Update:


Crude reached a low of 32.34, in the overnight session, at the time that this Post was being written. We suspect that a drop back to the 32.10 low will occur, as we are searching for end of wave b of B is at hand.


In order we to get more confidence in this count we need to see an impulsive wave sequence to develop from the 32.10 low. The final confirmation will come when we break above the down trend line connecting 43.46 and 38.39.    


Long Term Update:


if our current analysis is correct a major low in wave b of B is at hand and crude is starting a new run back to the $150 area.


Active Trading Positions: Long 15 positions, with 42.00 puts, as stops, plus long 5 positions with 37.00 puts, as stops!






Short Term Update:


In our last End of Week Post, we suggested that the S&P was almost complete a very large wave (iv) bullish triangle. We provided the Weekly Long Term S&P Chart of what we were thinking in our last End of Week Post.


In today’s Morning Post we have attached the Daily S&P Chart, that shows all of what we think the wave (iv) triangle looks like. We are getting close to its completion, although we could drop to the wave (c) low of 1867.01, and this formation would remain valid.


If this analysis sis correct, then there is a buying opportunity at hand that we a likely going to be part of shortly.


We are just looking for a signal that all of wave (e) is complete. We will likely attach our updated 120 Min S&P showing all of wave (e) in today’s End of Day Post.


In the overnight session that S&P Futures reached a low of 1894.50, but have since recovered to be up about 8 points, at the time that this Post was being written. Wave (iv) maybe be over, at Friday’s the 1918.46 low!


Long Term Update:


A large wave (iv) bullish triangle is nearing completion, which sets up a possible buying opportunity.


Active Trading Positions: Looking to go long at the end of wave (iv).

Watch for an Intraday Note!




Short Term Update:


The USDX dropped to 98.14, in the overnight session, but then recovered to the current high of 98.78. On the Intraday Chart, it looks like the rally from 98.14 to the current high of 98.78 is corrective, so we suspect it is all part of our wave !iii! drop.


Also the 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of that same drop is 98.83, which is around the current highs. We expect the USDX to turn lower again after this small correction, within wave !iii! ends. Within wave *c* we have the following count:


!i! = 98.24;

!ii! = 99.26;

!iii! drop is now.


We also lowered our stop to 99.30.


Long Term Trading Update:


Our updated current count for wave .iv. is:


*a* = 97.59;

*b* = 99.73;

*c* should now be underway, with a target of at least the 97.59 wave *a* low.


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


.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. is still underway;

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


We want to bring attention to a couple of alternate counts: On the attached Weekly USDX Chart, we have another count for wave -iv-, that suggests it did not end at 92.52, and that we are now falling in wave .c. of -iv-. In this case the minimum target for wave .c. is the wave .a. low of 92.52. 


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: Short 5 positions at 99.45, risking to 99.30!




Short Term Update:


We are working on a wave *v* thrust to complete all of wave -a- of (iv). The current high for wave *v* is 2.494. We indicated in our last End of Week Post that:


On the Intraday Chart, we do not see any indications of an end in our wave *v* thrust, but we suspect that most of this rally is complete at these levels. The next big event in the market will be the end of wave -a- and a drop in wave -b-, as shown on the attached Daily NG Chart. Upon completion of wave *v* and -a-, we are expecting that the wave -b- setback should consist of at least one *a*, *b*, *c* pattern, and retrace between 50 to 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire wave -a- rally.


In the overnight session NG reached a low of 2.401, and we now suspect that all of wave *v* and -a- are complete at the 2.494 high. Retracement levels for the end of wave -b- are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.089;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1.993


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, if complete;

-b- drop has begun;

-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: Plan to buy 5 at 2.05, risking to 1.69!


HUI/GDX and Selected Gold Stocks:


Short Term Update:


No change to our current GDX and Selected Gold Stock comments, so we have essentially repeated our last End of Week Post below:


“The GDX was down on Friday, as shown on the attached 120 Min GDX Chart. As we mentioned in the Gold Update above it looks like the GDX and related gold stocks have much more bullish patterns, than we are assuming for our gold analysis.  

This could be suggesting that the 1045.40 is a much bigger low then we are currently suggesting. It could be the end of wave ii of 3 of 4. As we said in our Gold Update above only a break of the upper red trend line(1307.80 and 1191.70) of our ending diagonal wave (c) in gold, would confirm this.


Looking at our current selected gold stocks:


CRJ: It looks like wave ^iii^ ended at 0.95 and likely all of wave ^iv^ at 0.85. If this analysis is correct, then we should be moving higher in wave ^v^ to above the 0.95 high to complete wave *iii* of -v-, as shown on the attached Daily CRJ Chart.


ABX: ABX reached our wave *iii* projected top of 8.78, by hitting 8.83, on Thursday, and then on Friday we corrected in possibility all of wave *iv*, and even tested the major breakout at 8.31, as shown on the attached 120 Min ABX Chart. If this analysis is correct we should be moving higher in wave *v* of  -iii-, as the next big event.


Kinross: this stock is still the laggard, but we expect that will catch up soon. We expect that Kinross will move higher in wave ^iii^ of *iii* also.


Long Term Update:


It looks like wave B ended at 12.62, and we have started wave C higher. Within the initial stages of wave C, we have the following count:


-i- = 17.04;

-ii- = 12.92;


.i. = 13.95;

.ii. = 13.19;


*i* = 14.29;

*ii* = 13.57;


^i^ = 1501;

^ii^ = 14.26, if complete;

^iii^ higher is next.


We need to see a break of 15.61, to confirm our current count for this market....wave B ending at 12.62.


We need to watch for major breakouts in both ABX and Kinross of their long down trend lines. This would be a very significant event.


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