JAN 21 MORNING UPDATE

Jan 21 morning update

Gold:

 

In yesterday’s End of Day Post we talked about the likelihood that we were getting close to the end of wave ^iii^ of .iii.. Our first target for the end of wave ^iii^ was 1301.80(nearest continuous futures), with yesterday’s high being 1297.20. In the overnight session gold continued higher hitting a high of 1303.60. Also in that post we had a detailed analysis of all of wave ^iii^, which included a possible alternative for wave *iv*, of a triangle. Well, on the intraday charts, it now looks like the wave *iv* triangle is the correct pattern. Based on that we have revised the internal count for wave ^iii^ as follows:

 

*i* =  1267.00;

*ii* = 1255.40;

*iii* = 1292.00; Note that *iii*=1.618*i*=1296.00.

*iv* triangle = 1290.70;

*v* = 1303.60, if complete, to complete all of wave ^iii^

On the intraday chart from the wave *iv* low of 1290.70 to the 1303.60 high we have a complete impulsive move. Since the 1303.60 we have a corrective pattern to 1296.50. This means either wave *v* and all of wave ^iii6 did not end at 1303.60, and we are going higher, or we have started wave .iv. down.

A drop below 1290.70, would likely indicate to us that wave ^iii^ is over at 1303.60. In this case we should expect a 23.6 to 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement of the wave ^iii^ rally for the end of wave ^iv^. A break above 1303.60, likely means that wave ^iii^ is not over.

Should wave ^iii^ continue higher our next target would be the 1.618^i^ level of 1349! This is shown on the daily gold chart.

No change to current 7 long positions, risking to 1225.00.

Crude:

 

Crude was pretty stable in the overnight session. We continue to work on the assumption that wave iii ended at 44.20 and within wave iv we have a wave (a) ending at 51.20 and a wave (b) triangle that currently looks like:

-a- = 45.96;

-b- = 49.14;

-c- = 46.41. Wave -c- cannot break below the wave -a- low of 45.96;

-d- rally is now and cannot rally above the wave -b- high of 49.14.

-e-  drop will come after wave -d- ends.

As we said in our earlier posts, even if wave -d- rallies above the wave -b- high of 49.14, it likely just means that the triangle is expanding further and in that case all of the trading from the wave -a- would just be wave -b-.

As we have said many times that triangles very difficult to analyse in real time.

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:

 

The S&P was lower in the overnight session, but that does not really change anything. We are working on the assumption that wave -ii- of (iii) is going to become at least a double .a., .b., .c. pattern. There are still a number of alternates still available for how wave -ii- will unfold, and we have shown one possible outcome in the 10 min S&P chart. If our current thinking is correct the S&P should drop in wave .b. then rally one more time to at least the 2028.94 high, to complete wave .c. and all of wave -ii-. We plan to short at the end of wave .c.. Our retracement target range is between

2026 and 2035.

 

Recommendation: Short 4 at 2031.00, risking to 2057”

USDX:

 

No sign of a top here, as the rally wave patterns are impulsive looking and the setbacks corrective looking, on the intraday charts.

 

NG:

 

Our best count for this market is that all of wave -ii- ended in a very deep correction at 2.82.

In the overnight session NG did rally. If our analysis is still correct then we should expect NG to blast higher in wave -iii-. Our first target for the end of wave -iii- is 1.618-i-= 3.74. We are still long, but have raised our stops to 2.81.

We are long 3 NG positions at 3.03, risking to 2.81.

HUI/GDX:

 

With gold being up, we are expecting the HUI/GDX to reach our next target for the end of wave .iii. at 23.35.

The wave ^iii^ is gold ends then we should expect wave .iii. in the HUI/GDX to end also. If gold heads to the 1349 level, then expect the HUI/GDX to move to our next target which is the 6.25.i. level of 26.01.

If wave .iii. ends today, then we expect wave .iv. to retrace between 23.6 to 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire wave .iii. rally. We will provide those numbers once we are sure that wave .iii. is over.

 

We remain long all GDX positions, with stops at 19.87.”