jan 19 end of day post!





Short Term Update:


Gold remained range bound in today’s day session, as the overnight low of 1082.50 was not challenged in today’s day session. We reached a high of 10191.70, in today’s day session, at the time that this Post was being written.


Since the high of 1097.20, this market is displaying lots of overlapping waves, which is suggesting that we could be starting to develop a triangle formation.


We are not sure whether the triangle is bullish or bearish.


Also the GDX and Kinross have now satisfied their min requirements for completed wave B at their respective lows, which could become a very interesting development for the gold market, if it now rallies. ABX is still above its 5.89 low.


Longer term, all of our current Options remain valid, and are described in detail 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;


^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!




Short Term Update:


As we expected, crude has made another new low reaching 28.23, in today’s day session, at the time that this Post was being written.


The bearish triangle that we talked about in today’s Morning Post likely ended at 30.51, on the March contract. We should now see a sharp thrust lower in crude as the next big event.


Expect lower prices in the next 24 hours. Crude has a record short position which is now setting a huge reversal, and major bottom.


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:


The S&P started out strong and then dropped back, but we are still above the 1877.41 low. All of the confusing issues that we talked about in today’s Morning Post remain unresolved, and therefore valid. We have repeated most of our last Morning Post below:


“On the S&P Daily Continuous Chart we still have a valid wave (iv) triangle formation 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, the above triangle formation will remain valid, and we know could he heading higher in wave (v).


On the S&P Daily Cash Chart, our wave (iv) triangle has been eliminated and we now have the following options to consider:


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.


Not sure which Option will win the day and what is the S&P Futures Chart telling us also. In the short term, however, we should at least see a rather large relief rally due to the aggressive selling since the start of 2016.


We may choose to take profits on our long positions, as we see what type of wave patterns this expected rally develops into.  For the time being 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!




Short Term Update:


The USDX reached 99.40 in today’s day session, which is the same high as our current wave *d*, within our bigger wave .iv. triangle formation. In the last couple of Posts, we said the following:


“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.”


Based on the above statement we cannot rule the possibility that wave *d* ended at the second high of 99.40 and that we are now falling in wave *e*. Wave *e* could also become a triangle in itself.


Only a break above the wave *b* high of 99.73, NOW would keep our current triangle formation active. We are now going with the idea that wave *d* ended at the second 99.40 high, and that we are now working on wave *e*. We cannot drop below the wave *c* low of 99.14, for our current triangle formation to remain valid.


When our wave .iv triangle ends, 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* is now underway, to complete all of wave .iv. triangle.


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 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!




Short Term Update:


NG was sharply lower today, but we doubt that all of wave .b. is complete at the 2.170 high. Since we are in wave .b., we should expect that the trading patterns will be full of overlapping waves, which they are on the Intraday Chart. The 2.170 high is also well short of our expected retracement levels of:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.271;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.324


This complex trading action since the 2.045 low suggested that this rally is wave .c. and NOT wave -c- of (iv). It will be sloppy but we still expect NG to move higher to at least of 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 2.27, before wave .b. ends. Upon completion of wave .b. we expect one more drop in wave .c. to at least the wave .a. low of 2.045 to complete all of wave -b-.


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;


.a. = 2.045, if complete;

.b. rally is underway;

.c. drop to at least the wave .a. low of 2.045, 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:


Short Term Update:


As we suggested the GDX has finally made new low reaching 12.40. We have now satisfied the minimum requirement for a completed wave B now. On the Intraday Chart, we do not see any signs of low, at the moment, so further weakness could be anticipated. This new low was made without gold making a anew low, which is a bit interesting.  


Kinross has also satisfied its minimum objectives for its wave B low by reaching a low of 1.31, which is below the previous low of 1.35. Our ideal target for this stock is the wave a low of 1.07, as we are still falling in wave of B. More downside could be expected here also.


CRJ is still working on wave ^iv^ which is still 0.835. If wave ^iv^ is complete we are expecting a run higher in wave ^v^ to at least the wave ^iii^ high of 0.95, to complete all of wave *iii* of -v-. ABX was weaker, also but is still above its 5.89 low. We should expect lower prices here also.


Long Term Update:


We have now satisfied the minimum requirements for a completed wave B and are now looking for evidence of a bottom.


The major breakouts in ABX and Kinross have failed which could suggest 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!!