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In yesterday's End of day Post, we said this:

"It appears that the correction in gold from the 1244.30 high is taking to the form of a flat type abc three wave movement. In this case wave a ended at 1225.40 and wave b ended at 1244.40. Wave c will at least challenge the wave a low of 1225.80, to complete all this correction. In a flat type correction, b wave trades to within 10{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the start of the correction. In this case the correction started at 1244.30 and wave b ended at 1244.40. More importantly ,once this correction ends, gold is likely going much, much, much higher!"


In the overnight session wave c of the above noted correction ended at 1226.40, which is a little above our wave a target of 1225.80. This does happen from time to time in the thinly traded overnight sessions. Of course, of more importance is what gold did after making the 1226.40 low. We have surged, thanks to the Swiss, hitting a high of 1261.00. Based on our current analysis that is shown on the attached Daily Gold Chart, our next target, after closing above the 1255.40 high, will be the 1295 area.


No change to current long positions or stop location, although we will likely be moving our stop higher in our End of Day Post.



Crude made an overnight high of 49.54, which is a little above our .iii.=1.618.i. target of 49.14. After hitting that hit we corrected to 47.17, and are again rallying to the overnight high of 49.54. It is looking like this first rally out of the wave iii low of 44.20 is going to be an impulsive five wave rally. So far this impulsive rally looks like:


.i.= 46.76;

.ii.= 45.02:

.iii. = 49.54;

.iv. = 47.17, if complete;

.v. is now, to complete possibly all of wave (a). This could also be the end of a wave (i) of A.

Remember that we view this as a wave iv correction, and not a new bull leg in crude. We believe that after wave iv ends that we are heading back down to the 2008 low of 33.55 to complete all of wave C and the bear market in crude.


Since crude has been so oversold we cannot rule the possibly that above 5 wave impulsive rally is going to extend. We will give this market another 24/48 hours to see what happen.


We are long 4 positions risking and have raised our stops to 46.75



The S&P did nothing in the overnight session to change what we said in yesterday's End of Day Post, so we have repeated that Post below:

"The S&P continued to fall today as we suggested in today's Morning Post. However, based on today's day session trading we have couple of options on where we are within wave -i- of (iii). We have modified our preferred option to what is shown on the attached updated 10 min chart as follows:

As you can see from the attached chart it appears that we have also a perfect .iii.=1.618.i. projection hit at today's low of 1988.44, or 16 ticks off the exact projected value. We are now rallying in wave .iv. which should retrace between 23.6 and 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the wave .iii. drop. These values are 2004.60 and 2014.60 respectively. For this analysis to remain valid we cannot overlap with the wave .ii. formation which would be 2022.58.

The alternate option is that only wave *i* of .iii. ended at 1988.44 and the current rally is wave *ii*. In this case wave *ii* will retrace between 50 to 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the wave *i* drop. These values are 2022.69 and 2030.77 respectively.

In either option, after either wave .iv. or wave *ii* end the S&P is going lower. The alternate option is much more bearish in the short term, than the preferred.

We remain short 4 positions with our stops at 2057.00"



After the Swiss made their announcement the USDX spiked higher to 92.76, and we were stopped out of our 2 short positions. However, after the spike high the USDX dropped again and we were filled on our 2 short positions at 91.60.

We believe that the high at 92.76, is finally the end of our wave iii of C. We will likely also see a key daily reversal down day today in this market. Also on the intraday chart we have a clear impulsive drop from 92.76 to 91.51. As the USDX starts to fall, watch for the gold rally to accelerate!

Spec Trades Update: We have shorted 5 more USDX at the market, risking all 7 positions to 92.77.




NG is likely getting close to finishing a five wave impulsive rally from the 2.78 low. We will be looking to go long this market on the ensuing correction. We will provide more details on our suggested entry point , likely in today's End of Day Post. We will update our long term and daily NG charts this weekend.



With gold being up sharply in the overnight session, so will the HUI/GDX. It is now likely that wave .iv. ended at 19.88 and we should now be heading higher in wave .v. Since the wave .iv. correction was so deep we cannot rule the possibility that the GDX has subdivided further. We will monitor this situation and provide and update as appropriate. This possible subdivision really means nothing and if it is true it only means that the HUI/GDX is going to rally higher, and faster!

We remain long all GDX positions.