jan 18 morning post!

CAPTAIN EWAVE MORNING POST!

 

Gold:

 

Short Term Update:

 

Gold was pretty quiet in the overnight session, and was kind of range bound. We had a high of 1093.30 and a low of 1087.40, at the time that this Post was being written.

 

On the Intraday Chart the drop from Friday’s high of 1097.20 looks to be a bullish triangle, which suggests that we could see a thrust back to at least the 1097.20 high, as the next big event.

 

In the bigger picture all of our current Options remain valid. As you will see in the “GDX and Related Gold Stock” commentary below we have attached the 120 Min and Long term ABX charts, and they are indicating, unfortunately in the short term, that this gold stock is likely heading back to its 5.89 low., which appears to support Option 1 below.

 

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

 

In this option wave .a. of would have had to end as 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 white 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 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.

 

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

 

Crude:

 

Short Term Update:

 

The front month in crude reached a new low of 28.36, in the overnight session, before recovering somewhat. This dip was part of the Iran news about the sanctions relief.

 

I guess one good thing about that news for the crude bulls, is that the news is now out. In terms of our comments relative to crude, they have not changed since our last End of Week Post, so those comments are mostly repeated below:

 

“As you can see on the attached Daily and Weekly Crude charts, we still believe that we are at our 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 Post that we will know when crude has finally bottomed as 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 Futures were up about 1 point, in the overnight session at the time that this Post was being written. The comments that we made in our last End of Week Post remain valid and are repeated below, but we want to make an observation about the corresponding S&P Futures Chart, relative to the S&P Cash Chart, which we track and provide commentary on here. The continuous S&P Future Chart since has a valid wave (iv) triangle formation in play as follows:

 

-a-= 1815.25;

-b- = 2134.00;

-c- = 1831.00;

-d- = 2110.25;

-e- = 1849.25, if complete.

 

Until the wave –c- low is challenged at 1831.00, we still have a valid wave (iv) formation in the S&P Futures. This just adds to the uncertainty, at the moment.

 

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 and 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:

 

Short Term Update:

 

In our last End of Week Post we provided a graphical picture of our current wave .iv. triangle formation. It has satisfied all of the minimum requirements of a completed triangle formation at the current low of 98.42.

 

In the overnight session, nothing has change relative to our triangle except that we are on the verge of breaking above the upper trend line of that formation that connects 99.73 and 99.40.

 

The overnight session high is 99.25, at the time that this Post was being written. If this triangle formation is complete at the 98.42 low then the next big event will be a wave .v. thrust that has a minimum target of 100.71.

 

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.

 

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 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 long 10 positions, risking to 97.20!

 

NG:

 

Short Term Update:

 

NG reached a new low of 2.045, in the overnight session, before moving higher reaching 2.098, at the time that this Post was being written, We are now overdue for the end of wave .a. of -b-, and expect that our wave .b. rally is not that fall away.

 

It might have already started form the 2.045 low. If wave .a. is now complete, 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.

 

There is now an outside chance that ALL of wave -b- is complete at the current low of 2.045, but the drop from 2.494 to the current low looks impulsive which suggests a wave .a. as opposed to an completed .a., .b., .c. pattern.

 

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

 

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.089;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1.993

 

We were filled on our 5 long positions at 2.05, in the overnight session, and we now kind of hope that all of wave -b- is complete at the 2.045 low, but we doubt that is the case.

 

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 our 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1}/50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement zone shown above.

 

Active Trading Positions: Long 5 at 2.05, risking to 1.69!

 

HUI/GDX and Selected Gold Stocks:

 

See the attached Long Term ABX and 120 Min ABX Charts.

 

https://captainewave.com/wp-content/uploads/2016/01/2016jan18abx1.png

 

https://captainewave.com/wp-content/uploads/2016/01/2016jan18abx2.png

 

Short Term Update:

 

No change to our current thinking relative to the GDX, as we see a drop at least back to the 12.62 low, as our next target.

 

We want to focus on ABX this morning. As you can see on the attached Long Term ABX Chart, it looks like wave (iv) was a triangle, and that the current top at 8.78, was wave -iv- of (v).

 

Our detailed count of wave -iv- is shown on the attached 120 Min ABX Chart. Based on this Long Term and Short Term analysis of this gold stock we see it dropping back to at least the wave -iii- low of 5.89., before all of wave B will be completed. CRJ looks to still be working on wave ^iv^.

 

Unfortunately, ABX is telling us that gold is likely heading below the 1045.80 low, to complete all of wave .c. and either wave 4 or wave ii of 3.   The good news that vastly higher prices are to follow that marginal new low!

 

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 likely now heading to the 1.07 low and ABX 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!!!