jan 16 end of week post!

CAPTAIN EWAVE END OF WEEK POST!

 

Gold:

https://captainewave.com/wp-content/uploads/2016/01/2016jan16goldew.png

 

Short Term Update:

 

Gold was higher in Friday's day session reaching a high of 1097.70. You would have thought however, that with the volatility in the stock market that gold would have been up $30/40, not less than $20. 

 

In terms of our current analysis we are still looking at our three valid options, which we have been described below. Until some of the extremes within these options are reached or achieved we cannot eliminate any of them.

 

What is interesting is that even though gold was up by about $20 on Friday, most gold stocks were down, with Kinross being crushed. See more details in our "GDX and Related Gold Stocks" commentary below.

We have attached the Daily Gold chart, which shows Option 1, but on the Intraday Chart the drop from the 1112.20 high to the current lows, is looking more corrective then impulsive, which does not support a wave .c. drop, unless it is becoming an ending diagonal triangle.

 

Option 1: Wave .b. is now complete at the 1112.20 high!

 

In this option wave .a. which would have had to end as a failure at 1046.80, as shown on the attached Daily Gold Chart and our count for wave .b. is:

 

*a* = 1081.40;

*b* = 1056.50;

*c* = 1113.10.

 

We are now heading lower in wave .c. to at least the 1045.40 low to complete all of wave .c. of -v- of (c). This option is now our preferred, as the drop in gold is starting to accelerate, although we do NOT have a clear impulsive sequence from the 1113.10 high.

 

This option will be eliminated if we now rally above the 1112.20 high.

 

Option 2: A major low in gold has occurred at 1146.80 in wave 4 or wave ii of 3!

 

In this option are would be working on a series of bullish subdividing impulsive wave sequences as follows:

 

*i* = 1081.40;

*ii* = 1056.50;

*iii*:

^i^ = 1112.20

^ii^ = 1071.10, if complete.

^iii^ rally will be next.

 

Retracements for the end of wave ^ii^ are:

 

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1077.80;

78.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1068.40.

 

A drop below the 78.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level would eliminate this option.

 

A sharp rally now above the 1112.20 high, would support this outcome.

 

Option 3: Wave .b. is still underway but is becoming more complex!

 

We had assumed that wave .b. was going to become a simple *a*, *b*, *c* rally, but in this Option something more complex is now happening, which will include a series of *a*, *b*, *c* patterns.

 

This option is the most difficult to identify in real time. We need a rally above the 1112.20 high to keep this option alive. As we noted above the overlapping wave structure on the drop from 1112.20 to the current low of 1071.10, might be suggesting this outcome.

 

Longer Term Update:

 

Wave .b. is now complete at the 1112.20 high, and we should now be heading lower in wave .c. to complete a major low in gold, in either wave 4 or wave ii of 3.

 

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

 

Crude:

https://captainewave.com/wp-content/uploads/2016/01/2016jan16crudeew.png

https://captainewave.com/wp-content/uploads/2016/01/2016jan16crudeweeklyew.png

 

Short Term Update:

 

Crude continues to make new lows almost everyday now. Friday was no different, as we reached a new low 29.15.

 

As you can see on the attached Daily and Weekly Crude charts, we still believe that we are at or near the end of a major low in wave b of B.

 

On the Daily Crude Chart we have dropped below the lower red trend line of our wave (c) ending diagonal triangle. This drop below the lower red trend line of an ending diagonal triangle are called a throw-over, and are the result of extremes in market trading. In this case, this event indicates an extreme oversold sold condition.

 

In a bull market this would represent an extreme oversold condition. These throw-overs do get quickly corrected, and when they are corrected the reversal is usually very violent. We have indicated in previous Posts that we will know when crude has finally bottomed. We should expect a reversal day that see at possible $10 to $15 swing day, marked by a key daily and likely weekly reversal pattern. 

 

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 was down sharply in Friday's session and traded below our wave -c- of (iv) low of 1867.01, as we reached a low of 1857.83.

 

So we have a couple of options moving forward.

 

Option 1: Our wave (iv) triangle is expanding, and only wave -c- ended at 1057.83!

 

In this case our triangle is expanding, and as long as we stay above the wave -a- low of 1820.66, then this option will remain valid. If this option is correct then we would now expect that the S&P will start to rally in a complex wave -d- pattern that will be full of overlapping waves.

 

This option also indicates that the S&P will be range bound for most of 2016, as waves -d- and -e- of our wave (iv) triangle unfold.

 

Option 2: All of wave B ended at 2134.72 or 2116.48!

 

Our major top in the S&P is in at either 2134.72 or 2116.48. From Ewaves analysis point of view we are not sure how this option would be valid, unless we base our analysis on a bunch of failed market tops.

 

Our preferred is now Option 1.

 

Long Term Update:

 

We have just completed wave -c- of our wave (iv) triangle and now expect a sloppy wave -d- rally, as the next big event.

 

Active Trading Positions: Long 5 positions, with 1900 puts as stops, but we will exit if we break below the 1857.83 low!

 

USDX:

https://captainewave.com/wp-content/uploads/2016/01/2016jan16usdxew.png

 

Short Term Update:

 

We are still working on the idea that wave .iv. has become a triangle.

 

On Friday, we dipped below the current wave *e* low of 98.64, reaching 98.42, but we did not fall below our wave *c* low of 98.14, so our current triangle remains valid. We have shown the entire triangle pattern on the attached 60 Min USDX Chart.

 

If the current wave .iv. triangle is complete at 98.64, then we should expect our wave .v. thrust as the next big event. This wave .v. thrust is expected to reach the previous 100.71 high. Do not forget that triangles can expand and extend!

 

Our current updated wave .iv. triangle count is as follows:

*a* = 97.72;

*b* = 99.73;

*c* = 98.14;

*d*= 99.40;

*e* = 98.42, if complete, to complete all of wave .iv. triangle.

 

A break above the 99.73 high would likely confirm that our wave .v. thrust is underway. If we break above the wave *d* high of 99.40, and then fail to break above 99.73 and then fall back, then it is likely that this triangle is expanding and extending.

 

Long Term Trading Update:

 

We are now working on a wave .iv. triangle formation. Once this formation is complete we should expect a final thrust in wave .v., to reach at least eh 100.71 high.

 

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

 

.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. = 98.64, if complete (detailed count above);

.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. 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 long 10 positions, risking to 97.20!

 

NG:

https://captainewave.com/wp-content/uploads/2016/01/2016jan16ngew.png

 

Short Term Update:

 

NG continued to drop in Friday's day session, reaching a slightly new low of 2.086.

 

As you can see on the attached Daily NG Chart, we are working on the idea that all or most of wave .a. of -b- is complete at the current low. If that is the case then the next big event in the market will be a wave .b. rally that should retrace between 50 to 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire wave .a. drop.

 

The assumed path for all of wave -b- is shown on the attached Daily NG Chart. It is interesting to note that Friday's low does satisfy the minimum requirements for our retracement target, as we have now reached the 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} level, of 2.089. There is now an outside chance that ALL of wave -b- is complete at the current low of 2.086. The drop from 2.494 to the current low looks impulsive, which suggests a wave .a. as opposed to a completed .a., .b., .c. pattern.

 

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;

-b:

.a. = 2.128, if complete;

.b. rally is next;

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

-c- rally to at least the wave -a- high, but more likely to rally 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:

 

As we indicated in our "Gold" commentary above, gold stocks were very weak in Friday's day session, considering that gold was still up by about $20.00.

 

We still see a run back to at least the 12.62 low in the GDX, to complete the final skip in this never ending wave B drop. We note that the XAU has now made a new low for its wave B drop, reaching 40.83, which is now lower then the 2000 low of 41.62. 

 

ABX and Kinross are expected to make new lows for this correction. CRJ appears to still be correcting in wave ^iv^ of its bull run to at least the 0.98 level. Hard to believe that with gold up almost $20, Kinross was down 7.5{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} on Friday.

 

Long Term Update:

 

We are now heading to at least the 12.62 low to complete all of wave B.

 

The major breakouts in ABX and Kinross have failed, which could suggest much lower prices ahead. Kinross is now likely heading to the 1.07 low, and ABX is back to 5.89. CRJ is likely completing wave ^iv^, and should be heading higher in wave ^v^, or wave ^iv^ could become a triangle.

 

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