jan 12 morning post!

CAPTAIN EWAVE MORNING POST!

 

Gold:

 

Short Term Update:

 

Gold reached a low of 1085.00, in the overnight session, at the time that this Post was being written. We had been working on the assumption that either wave ^iii^ of *c* had ended at 1112.20 or that it was possibility still extending to our next projected top of 1148.10.  

 

Based on the overnight trading we can now eliminate the idea that we are still working on wave ^iii^.

 

As a minimum wave ^iii^ has ended at 1112.20. if the current drop is wave ^iv^ it has now exceeded our 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of 1091.50. The 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of all of wave ^iii^ is 1084.85.

 

We would not want this wave ^iv^ correction to drop much below that value.

 

What is even more important is that our current wave ^i^ high is 1081.40, and if gold drops to below that level then we have a 3 wave rally in place from the 1046.80, which could suggest that wave .b. is undergoing a much different pattern then we are currently assuming.

 

Our last retracement level for wave ^iv^ are:

 

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1084.85.

 

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;

*c*:

^i^ = 1081.40;

^ii^ = 1057.50;

^iii^ = 1112.20;

^iv^ = 1085.00, if complete;

^v^ rally is next to at least our wave ^iii6 high of 1112.0 to complete all of wave *c* and possibility wave .b.

 

A very bullish case would be that wave ^iii^ is subdividing as follows:

 

!i! = 1112.20;

!ii! = 1084.85, if complete

!iii! super rally is next.

 

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 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!

 

Crude:

 

Short Term Update:

 

Crude reached a new low of 30.42 in the overnight session, before turning marginally higher. On the Intraday Chart we do see a small impulsive sequence developing from the 30.42 to the current overnight session high of 31.59.

 

In order to give us some confidence that the 30.42 low is indeed the end of wave b of B, we will want to see a very sharp rally higher as a sign of a major reversal. As we stated in yesterday’s End of Day Post:

 

“This market is heavily oversold and due for a rally of biblical proportions. We expect the end of wave b of B is very near and its end will announced by a rally of 10 to 15{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} in crude in a single day. We need to see a powerful impulsive wave sequence to develop from the 30.89 low. The final confirmation for the end of wave b 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!

 

S&P: 

 

Short Term Update:

 

The S&P Futures are up about 16 points, at the time that this Post was being written.

 

We are working on the assumption that all of our wave (iv) triangle is now complete at the 1901.10 low that we are now moving sharply higher in a wave (v) thrust.

 

This thrust should see the S&P reach all time new highs. Our minimum target is the 2134.72 all-time high.  

 

A break now of the wave -c- low of 1867.01, would eliminate this triangle formation and suggest that the S&P is heading much lower. We plan to be long for this entire wave (v) and will likely add on the corrective sell-offs!

 

Long Term Update:

 

A large wave (iv) bullish triangle is nearing completion, and we are now long looking to capture all or most of wave (v).

 

Active Trading Positions: Long 5 positions, with 1900 puts as stops!

 

USDX:

 

Short Term Update:

 

The USDX continued to rally in a choppy pattern, in the overnight session reaching 99.14, at the time that this Post was being written.

 

It is clear on the Intraday Chart that the rally from 98.14 to the current high of 99.14 is full of overlapping waves, which suggests that when this rally ends we are going back to the 98.14 low.

 

However, at the moment, we are now sure how this rally fits in to the bigger picture. It looks likely we are at least heading back to the 99.26 high and possibility to the 99.73 high in some kind of complex wave *b* correction.

 

We have decided to exit our short positions for a small profit.

 

Long Term Trading Update:

 

Our updated current count for wave .iv. is:

 

*a* = 97.59;

*b* = 99.73, if complete;

*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: We exited our short positions for a small profit, and are now flat!

 

NG:

 

Short Term Update:

 

NG continues to breakdown as expected, as we are now working on wave -b- of (iv). The overnight low was 2.318, at the time that this Post was being written. In yesterday’s End of Day Post we said:

 

“Since we are in a wave -b- we should expect that it will consist of at least one *a*, *b*, *c*, pattern but could become more complete have up to three such patterns, mixed in with some triangles also. It is a bit too early to try and determine what type of internal wave structure that wave -b- will consist of, so we will give this market another day or so to give us more clues.”

 

On the Intraday Chart NG seems to be working on an INCOMPLETE impulsive sequence, from the wave -a- high of 2.494, which could be wave *a* of our 3 wave corrective setback that consists of all of wave -b-.

 

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

 

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.089;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1.993

 

We plan to go long 5 positions at 2.05, to try and capture the upcoming wave -c- rally.

 

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:

 

The current weakness in gold is likely going to send the GDX back to the 13.57 low. If that happens we will need to take a second look at our current short term count.    

 

Looking at our current selected gold stocks:

 

CRJ:  CRJ is likely still working on wave ^iv^.

 

ABX: A drop below the wave *i* high of 7.86, would have a 3 wave rally in place from the 6.94 low, which could suggest that we are heading back to the 6.94 low again.

 

Kinross: Unfortunately, it could be heading back to 1.35 low again.

 

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;

-iii-:

.i. = 13.95;

.ii. = 13.19;

.iii.:

*i* = 14.29;

*ii* = 13.57;

*iii*:

^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!