jan 20 morning post!

CAPTAIN EWAVE MORNING POST!

 

Gold:

 

See the attached Daily Gold Chart.

 

https://captainewave.com/wp-content/uploads/2016/01/2016jan20gold1ew.png

 

Short Term Update:

 

Gold was higher in the overnight session, reaching 1103.00, at the time that this Post was being written.

 

On the Intraday Chart we seem to have lots of overlapping waves in both directions. This could indicate that the rally from the 1045.80 low could be some kind of a complex triangle formation.

 

Wave .b. could be a triangle, by itself. We have shown on the attached Daily Gold Chart is what this formation would look like.

 

What we like about this outcome for wave .b. is that wave .a. did not end as a failure as it would have ended at 1045.40. the key to this pattern staying valid is that gold cannot rally above the 1113.10 high.

 

Once our wave *b* of .b.  triangle ends we should see a wave *c* thrust higher to complete all of wave .b. and then we would drop back down in wave .c. to complete all of wave -v-, as shown on the attached daily Gold Chart.

 

In the meantime all of our other 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;

*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 February contract reached another new low of 27.32, in the overnight session at the time that this Post was being written. We would suspect that you probably will not find another trader on the long side of this month as the record short positions continue to build! 

 

On the March Intraday Chart we did talk about that bearish triangle formation, and if that analysis was correct we are now thrusting lower out of that triangle. We still believe that a huge reversal is not that far away.

 

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 are sharply lower in the overnight session, being down about 35 points, at the time that this Post was being written. The low in the S&P futures in the overnight session was 1829.00, which is below the current wave -c- low of 1831.00.

 

This now eliminates the anomaly between the futures and the cash markets.

 

In spite of the huge price swings our current Option , described below remain valid.

 

Option 1: Our wave (iv) triangle is expanding and only wave -c- ended at 1857.83:

 

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. 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 are looking for the end of wave -c- of our wave (iv) triangle, if it has not already occurred at the 1857.83 low. Upon completion of wave -c-, we should expect a sloppy wave -d- rally, as the next big event. A break below 1820.66, eliminates the wave (iv) triangle Option.

 

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:

 

The USDX drooped to a low of 98.68, in the overnight session, at the time that this Post was being written. We still believe that we are working on our wave .iv. triangle, and it could now be possible that all of wave *e* is complete at the overnight low of 98.68. In that case our wave .iv. triangle would look like:

 

*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.

 

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.

 

We will raise our stop to 98.13.

 

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). We also have an option here that is also described 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.

 

NG:

 

Short Term Update:

 

NG reached a low of 2.068 and then rallied to a high of 2.138, in the overnight session. On the Intraday Chart we continue to see an overlapping wave structure which support our wave .b. of -b- rally analysis.

 

We still expect that at the end of the day, NG will at least reach the following retracement levels, before wave .b. ends:

 

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;

-b:

.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:

 

With gold being up, we expect that the GDX and related gold stocks should be up today also. However, until we see some evidence to the contrary we expect that the drop in the GDX, Kinross and ABX are likely not complete. CRJ has likely completed wave ^iv^, unless it becomes a more complex 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!!