JAN 20 MORNING UPDATE

JAN 20 MORNING UPDATE

Gold:

Gold rallied as expected in the overnight session as predicted, hitting a high of 1294.30. We had suggested in yesterday’s Morning Post that after this small consolidation was complete gold would go higher!

Late Sunday night we posted a “Special Weekend Post” that provided our updated views on gold. This updated view was also shown on the attached daily gold chart. In the short term we are working on wave ^iii^, and our next target for this wave was at the 1301.80 level(nearest daily futures). Also from the wave ^ii^ low of 1226.40, it looks like wave ^iii^ is subdividing as follows:

*i* =  1267.00;

*ii* = 1255.40;

*iii* = 1294.30, if complete? Note that *iii*=1.618*i*=1296.00.

If this analysis is correct we should now be correcting in wave *iv* of ^iii^. Wave *iv* is expected to retrace between 23.6 and 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the wave *iii* rally, which would be 1285.10 and 1279.40 respectively. We cannot rule the possibly that wave *iii* is still underway and will subdivide further.

No change to current 7 long positions, with stops at 1204.00

Crude:

 

As we said in our “Special Weekend Post” and in yesterday’s Morning Post we believe that we are now rallying in wave iv of C, and that the current initial corrective pattern within wave iv appears to be a developing (a), (b) triangle, (c). Wave (a) has an impulsive structure and ran from 44.20 to 51.20. The current setback is wave (b) which is looking like a triangle. For the longer term Subscribers to this Site, you have heard us talk about how triangles like to subdivide and for that reason they are rather difficult to analyse. You get a lot of false breakouts. In fact, as we write this post, wave (b) on the intraday chart looks like:

-a- = 45.96;

-b- = 49.14;

-c- = 47.45;

-d- = 48.24;

-e- = 47.85, to complete all of wave (b). A break now of 47.45, will indicate that this triangle formation is expanding.

It is likely that the above triangle will expand, as they normally do.

If the wave (b) triangle is complete, then we should now thrust higher in wave (c). Projections for the end of wave (c) are:

(c) = 51.02;

(c) = (a) = 54.85;

(c) = 1.618(a) = 59.18

The “Special Weekend Post” detailed our trading strategy for this market, which also remains unchanged from those comments.

 

We are long 4 positions, risking to 44.20.

 

S&P:

 

No change to yesterday’s Morning Post, so we have repeated it here. We note that the S&P was higher in the overnight session which we had expected.

 

“Over the weekend we updated our 10 min chart of the S&P, and provided that information in a rare weekend post. There is really nothing different in that weekend updated, except we provided some discussion around the time it should take for wave -ii- of (iii) to unfold. We also talked about our trading strategy for this market. The updated 10 chart that we attached in our weekend post provides targets for where we think wave -ii- will end.

In the overnight session the S&P down a little, and that changes nothing for us.

Recommendation: Short 2 at 2031.00, risking to 2057”

USDX:

 

We still need to do some more work on this market, in the days ahead, although our overall view is that this rally is still part of wave ii of C.

 

NG:

 

NG was lower in the overnight session. We are still working on the idea that wave ii ended at 2.78 and that wave -i- of iii ended at 3.35. The current setback is wave -ii-.

The drop in NG is now below our 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 3.00. Our 78.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level is 2.90. The overnight low is 2.89. For our analysis to be correct, we would want the drop in NG to stop now. Otherwise we are likely looking at new lows for his market, below 2.78.

We are long 3 NG positions at 3.03, risking to 2.77.

HUI/GDX:

 

No change to yesterday’s Morning Post, which we have repeated here:

“The HUI broke a major down trend line and after a little bit of testing, early this week, we expect this market to moving sharply higher, with gold. Our next short term target is 23.35, which should mark the end of wave -iii- on the GDX. Note that we have higher targets for the end of wave -iii- also.

We remain long all GDX positions, with stops at 18.80!