Captain Ewave End of Day Update Jan 22



So, we are still working on the assumption that ^iii^ ended at 1305.10. After today’s overnight and day session trading activity what are our thoughts on whether wave ^iv^ ended at the overnight session low of 1279.70?

As we mentioned in today’s Morning Post we appear to have a 3 wave drop from 1305.10 to 1279.70, which ended within our 23.6 to 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement zone. The 38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level was 1274.35. The challenge we have at the moment is that it does not look like the rally from 1279.70 to today’s high of 1306.60 was impulsive. This is suggesting to us that wave ^iv^ did NOT end at 1279.70 and that we are going to drop to that level at least one more time to complete all of wave ^iv^. Wave ^iv^ looks to be a flat type correction.

 St comments: I detected incredible bullishness briefly within the gold community today in that 1305 area, making me believe this correction is not over either… Now back to the captain:

The other option is that wave ^iv^ is becoming a triangle. Remember that legs of triangles are full of overlapping waves, not impulsive waves.

The other concern that we have with declaring that wave ^iv^ has ended is that the HUI/GDX intraday chart looks to have NOT completed its wave -iv- correction. Although the HUI and gold do not have to rally together it would be very unlikely that gold would rally sharply and the HUI/GDX would fall. See more about this discussion under of HUI/GDX section below.

Once we are sure that wave ^iv^ is complete, which we are not, we will provide projections for the end of wave ^v^ and all of wave .iii..

We note that there is still an outside chance that wave ^iii^ could still be extending, but we will consider that option as our alternative. In this case wave an extended wave ^iii^ is headed to our next target of 1349.00, which is the ^iii^=1.618^i^ projection.

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



With the drop below 45.96, our wave (b) cannot be a triangle formation. More in tomorrow’s Morning Post.

We are long 4 positions, risking to 44.20.




We were surprised to be stopped out our short S&P positions.

St comments: The Draghi news seemed to overwhelm everything, temporarily…

Our immediate thinking is that wave (ii) did not end at 2064.43, but at this current high. It would be the following count from the wave (i) low of 1988.44:

-a- = 2064.43;

-b-= 1988.12;

-c- = 2064.41, if complete to end all of wave (ii).

This is a flat type correction.

We will provide a more detailed update in tomorrow’s morning post, but can already advise that we will likely be shorting this market at the opening.

St comments: Soon the Captain will be joined by Goldman Sachs in shorting this market!



Nothing new to add here.




We were stopped out of our long NG trade today. Back to drawing board on this one. A drop back to 1.90, now seems likely.



Please click here now:



As you can see from the attached 60 Min GDX chart, the rally from the wave .a. low of 22.10 to our assumed wave .b. high of 22.95, is full of overlapping waves. This suggests to us that the low at 22.10 is going to be challenged again, before wave -iv- ends. We also have a projection for the end of wave .c. at 22.14, which is within our retracement zone.

This incomplete pattern in the HUI/GDX is why we are skeptical that the wave ^iv^ low in the gold ended at 1239.70.

Upon completion of the wave .b. rally we expect the HUI/GDX to drop, in wave .c., to within our retracement zone to end all of wave -iv-. Wave -iv- could also become a triangle, which we mentioned in an Intraday Post today.

There is an outside chance that wave -iii- did not ended at 23.22 and the HUI/GDX is going to go higher from here, but we will have this option as our alternate.


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

Captain Out!