jan 20 end of day post!





See the attached Daily Gold Chart.




Short Term Update:


Gold reached a high of 1109.90, in today’s day session, at the time that this Post was being written.  


In today’s Morning Post we talked about a different outcome for wav*b* of .b. that included a triangle formation. As you can see on the attached Daily Gold Chart, that triangle formation looks like:


^a^ = 1046.80;

^b^ = 1113.10;

^c^ = 1071.10;

^d^ = 1109.90, if complete

^e^ drop is next to complete all  of wave *b*. For this triangle formation to remain valid wave ^d^ cannot rally above the wave ^b^ high of 1113.10, and wave ^e^ cannot drop below the wave ^c^ low of 1071.10.


Considering the drop in world stock markets the reaction from gold has frankly been poor at best, and it is very unlikely that we are NOT going to revisit the 1045.40 low again to complete all of wave 4 or ii of 3. This drop will occur after wave .b. ends.


In the meantime all of our other Options remain valid, as described in detail below, but we are starting to lean to the wave *b* triangle option.


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.

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!




Short Term Update:


The front month February contract reached another new low of 26.19, in the today’s day session. We still see no end in sight to this drop in crude, in spite of record shorting!


As you can see on the attached Weekly Suncor Chart:




…we might still have another $5 to $10 drop in crude before we get a reversal of biblical proportions!!


It looks like Suncor has further downside to at least the wave a low of 13.10 to complete all of wave B.


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 for oil.


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 was down over 60 points at one point today, with the low being 1812.29. Option 1, which was our wave (iv) triangle has not been eliminated and we exited our positions!


At the moment we only have Option 2 to work with but the reservations we have with that Option remain unchanged. Those reservations are described below.


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. 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.


Long Term Update:


Unknown at the moment.


Active Trading Positions: Flat!




Short Term Update:


The USDX remained within its current triangle formation both on the top and bottom side, of their specific trend lines. We have the bullish triangle case as follows:


*a* = 97.72;

*b* = 99.73;

*c* = 98.14;

*d*= 99.40;

*e* = 98.68, if complete, to complete all of wave .iv. triangle.


Until we break the wave *b* high of 99.73, this current triangle formation could continue to expand. If this triangle formation is correct, then all of wave .iv. would be complete at the 98.68 low and we should expect a wave .v thrust to rally to at least the 100.71 high.


Our bearish case remains valid also and we repeat it below:


“We also need to be on guard for a different outcome for wave .iv. In this case our current triangle is not bullish but bearish and that pattern is as follows:


*a* = 97.21;

*b* triangle is now

*c* drop to at least the 97.21 wave *a* low to complete all of wave .iv.”


A drop below 98.14, would suggest that the bearish case is unfolding.


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 98.13!




Short Term Update:


NG rallied to 2.138 and then dropped back down to 2.069, in today’s day session. This type of trading is more of the overlapping structure that we normally see in wave .b. rallies.


No change to our current outlook, as we still expect wave .b. is NOT complete and that we should at least rally to our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level which is 2.271.Our current retracement level for all of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.271;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.324


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:


See the attached 120 MIN ABX and Daily CRJ Charts.






Short Term Update:


With gold being up, the GDX was up but if our current wave *b* of .b. triangle formation is correct, it is likely that the GDX will turn lower!


Both Kinross and ABCX rallied today with gold, but we still would not be surprised to see Kinross drop to the 1.07 low.


As you can see on the attached 120 MIN ABX Chart it looks like all or most of wave *ii* is complete at the of -v- is complete at the 8.25 high. Wave *iii* down should be, unfortunately, the next big event if all of wave *ii* is complete at today’s high!


As you can see on the attached Daily CRJ Chart, we are either completed wave ^iv^ at 0.835 or it could become a bullish triangle.


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 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!