Gold has certainly been giving us a run for our money, as we have been trying to determine whether wave .ii. ended at 1170.70, or not. Today we traded below 1170.70, hitting a low of 1167.70. Our challenge has been trying to determine what this market has been doing since it hit the 1238.90 high. On the intraday chart the overlapping wave structure had confused our outlook. We had previously assumed that the drop from 1238.90 to 1170.70 was a conventional contracting diagonal triangle, which can occur in a wave *c* position. Typical diagonal triangles consist of numerous overlapping wave structures but general contract as we get closer to the end of the formation. Note the diagonal triangle we talked about in the 10 min S&P chart. After we broke above the upper down trend line, earlier this week, we had thought that was our signal that wave .ii. had indeed ended at 1170.70. Also the 1170.70 low was our 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of the wave .i. rally that ran from 1141.70 to 1221.00.

Then the very next day...12/31/14, gold dropped below the upper down trend line of our assumed diagonal triangle and then today we broke below the 1170.70 low. While all of this was going on the HUI/GDX was remaining rather stable.

Well, there is a rather rare diagonal triangle that can occur from time to time, which is called an expanding diagonal triangle. This can occur in the wave *c* position also. In this formation the triangle expands as we get closer to the end of the formation as opposed to contracting, which happens in most diagonal triangles.

See that sent updated daily gold chart, to see what this formation looks like in its current position.

Legs of diagonal triangles, whether the contracting or expanding type must consist of at least one 3 wave pattern. In very long, multi-month/year patterns they could have up to 3 x 3 waves patterns separated by x waves. On the intraday chart it is not clear whether the last leg of the diagonal triangle that started at the 1208.70 high has a complete 3 wave pattern to the 1167.70 low. So we are not sure, at the moment whether wave .ii. ended at today's low of 1167.70, or whether we will revisit that level, one more time, before wave .ii. actually ends. A break now to the upside, of the down trend line connecting 1223.80 and 1208.70 will finally confirm to us that this expanding diagonal triangle is over, along with wave .ii. at 1167.70.




We advised in an intraday post to go long crude and risk 52.05, on the assumption that all of wave iii was complete at that low. Since that recommendation this market has revisited that low hitting 52.06 and then snapped higher. We cannot rule out the possibility that the 52.05 low is the end of wave iii, but like NG our persistence should pay off, even if we are stopped out again. A big rally in wave iv feels just around the corner.



See the sent updated 10 min S&P chart.


It is very difficult to know in real time if certain legs in an impulsive rally or decline are going to extend in real time. The sent chart shows our current thinking, although we need to advise that there are other even more bearish options! We show that wave .iii. ended at 2046.04, which is pretty close to our 2.618.i. projection of 2048.88. We have indicated that wave .iii. did subdivide as shown on the chart. It could be possible that wave .iii. could also still be underway.

If our current analysis is correct then we are now rallying in wave .iv. to be followed with another drop to new lows for this setback in wave .v.. This will complete a five wave sequence from 2093.55, for all of wave -i-.

Projections for the end of wave .iv. are:

23.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of wave .iii. = 2055.37;

38.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of wave .iii. = 2061.30.

More importantly it currently appears that the S&P has topped!

We are short 2 positions, still risking to 10 ticks above 2093.55.




See today's 3rd and final updated GDX 60 Min Chart:

We have undated our current thinking for the HUI/GDX from our wave ii low of 17.08 is as follows, to include today's trading (Note that the number of subdivisions, with rallies being impulsive and setbacks being corrective is incredible. This market is probably going to move sharply higher, and likely next week!:

-i- = 18.91;

-ii- = 17.16;


.i. = 18.48;

.ii. = 18.76


*i* = 18.71;


^a^ = 18.05:

^b^ = 18.60;

^c^ = 17.95, to complete all of wave *ii*:


^i^ = 18.80;

^ii^ = 18.40. Note that 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement is 18.38:

^iii^ rally is now.

This market is suggesting that wave .ii. in gold is over at 1167.70. There is also a remote chance that the HUI/GDX is going to re-visit the wave *ii* low of 17.95, one more time in some kind of complex wave *ii* correction, that we are holding as our short term bearish alternate. A significant rally above 18.91 would eliminate this possibility.



Nothing new to add to this market, that was not said in the Morning Post. This market is now very over extended.




We believe that wave ii of C ended at 2.83,and we are now long 4 positions, risking to 2.82. Today's in the day session we broke above the down trend line connecting wave .ii.(3.72) and iv.(3.19)of wave -v-. On the intraday chart we likely completed all of wave .i. of -i- at today's high of 3.10, and are now correcting wave .ii.

Projections for wave .ii. are:

50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of wave .i. = 2.97;

61.8 retracement of wave .i. = 2.93.

Anyone who wants to go long this market should do so during this wave .ii. correction, risking to the overnight low.