jan 23 end of week post!





Short Term Update:


Gold did not accomplish much in Friday's day session. We are waiting for confirmation that wave ^e^ of *b* is complete the 1092.60 low, or whether it is still developing. In any case, if our current analysis is correct then the next big event in gold will be a wave *c* thrust higher, to at least the 1113.10 high, but more likely to our target zone between 1118.60 and 1135.80. This thrust will complete all of wave .b. Wave ^e^, and might also becoming a triangle in itself.


For our current triangle formation to remain valid we cannot, NOW drop below the wave ^c^ low of 1071.10. 


Our current wave *b* triangle formation looks like:


^a^ = 1046.80;

^b^ = 1113.10;

^c^ = 1071.10;

^d^ = 1109.90, if complete

^e^ = 1092.60, if complete to complete all of our wave *b* triangle.


Retracements for the end of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1118.60;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1135.80.


Once we are sure wave *b* is complete, we can also provide projections for the end of wave *c*.


Our current count for wave .b. is:


*a* = 1088.30;

*b* triangle (details above) = 1092.60, if complete;

*c* thrust higher is next, with projections shown above, for end of all of wave .b.


Longer Term Update:


Wave .b. has now become more complex, and we are expecting further gains to complete all of wave .b. Upon completion of wave .b., we expect a drop back to the 1045.40 low, in wave .c., to complete a major low in gold in either wave 4 or wave ii of 3.


Active Trading Positions: Long 20 positions, with puts at 1085.00!






Short Term Update:


Crude was sharply higher during Friday's day session, reaching 32.31.


On the Intraday Chart, the rally from 27.37 to the current high is clearly impulsive, and it does NOT appear complete, so we should see higher prices early next week. 


Has crude finally bottomed? Based on what the attached Weekly Suncor Chart is telling us, we doubt it, and think that this current rally in crude is just another corrective rally. We still think that we are in a wave (c) ending diagonal triangle, but it is likely extending.


We will give this market a couple of days of additional trading before we post our updated Daily and Long Term Crude Charts, as we want to see how significant this corrective rally turns out to be. If our current analysis for Suncor is correct, then crude has NOT bottomed.


Long Term Update:


We now think that crude is still going lower, before wave b of B, ends with below $20 as being likely.


Active Trading Positions: Long 15 positions, with 42.00 puts, as stops, plus long 5 positions with 37.00 puts, as stops. Going to long Suncor at 13.05!






Short Term Update:


We have been struggling with this market in terms of Ewave analysis, after our wave (iv) triangle formation was eliminated this week. Our challenge has been that we do NOT see a credible impulsive wave structure from the all-time of 2134.72 to the current low of 1812.29, unless we adopt some kind of failure analysis.


We do not want to do this, unless it is the only option available to us, which we believe it is NOT!


We have attached the Daily S&P Chart, that still shows wave (iii) ending at 1975.88, but instead of wave (iv) being a triangle, it now looks like it includes a wave -b- triangle. Our count for wave (iv) is:


-a- = 1820.66;

-b- triangle = 2081.56;

-c- =  1812.29, to complete all of wave (iv).


If this analysis is correct, then we should expect an impulsive type rally that at least reaches our all-time high of 2134.72, to complete all of wave B.


We plan to go long this market on its first pullback. A break below 1812.29, would eliminate this wave (iv) option, and requires a look at some kind of failure top, as we expect the S&P to fall sharply lower in that event.


Long Term Update:


Wave (iv) took a different path then our triangle option, and it now looks like we are heading sharply higher in wave (v), to at least the all-time high of 2134.72.


Active Trading Positions: Flat!




Short Term Update:


The USDX was higher in Friday's day session. This market continues to churn, but what is clear on the Intraday Chart is that the rally from 92.21 low is corrective.


Our wave .iv. triangle was eliminated this week as our thrust to 99.89, was reversed, but the market had not really moved lower. We are now thinking that our wave .iv. triangle could be extending, and in that case we would have the following count:


*a* = 97.21;

*b* = 99.89, if complete;

*c* drop is next;

*d* and *e to go.


A move above 99.89, would indicate that wave *b* is still underway. If wave *c* has begun then we cannot drop below the 97.21 wave *a*, for this current triangle count to remain valid.


We are short this market, but will raise our stop to 100.59, just in case wave *b* does not complete the 99.89 high.


Long Term Trading Update:


It now looks like our wave .iv. triangle is extending, and will likely churn for another couple of weeks.


Our current count for all of wave -v- is:


.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. triangle is still underway.

.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 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 short, risking to 100.59!




Short Term Update:


NG continued to churn in today's day session, and did not get very far in a positive or negative sense. Based on that we do not have much more to add to our last Morning Post comments, so we have repeated most of them below:


"On the Intraday Chart the rally from our assumed wave .a. low of 2.405 has an overlapping wave structure which supports our view that we are rallying in wave .b.. We do not believe that wave .b. is complete at the current high of 2.189. It also looks like there is a triangle formation within this corrective wave .b. rally, which could be setting up a sharp thrust higher to complete all of wave .b. This sharp thrust higher could coincide with the big storm that is about to hit the US Northeast over the weekend. In any event, we are still looking for higher prices within this wave .b. rally and expect that we should reach our retracement levels as follows, 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


We are currently long this market, and will take profits at the end of wave .b. We have put in a sell stop at 2.29, and will again at the end of wave .c. of -b-.


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, but will take profits at 2.29!


HUI/GDX and Selected Gold Stocks:






Short Term Update:


On the Intraday Chart, the rally from the 12.40 low to the current high does NOT look impulsive, which supports our view that it is unlikely that wave B is complete at the 12.40 low. This thinking aligns on what we are seeing in gold also. If we get our wave *c* thrust in gold, we should expect the GDX to rally, but then fall back when wave .c. in gold heads back to the 1045.60 low. 


It looks like CRJ has completed wave ^iv^ at 0.835, and that we are now heading to at least the 0.95 high, to complete all of wave ^v^ and *iii* of -v-.


We have attached the Daily CRJ Chart. It might also be possible that wave ^iv^ is becoming a triangle, although if we get our wave *c* thrust in gold it might get this stock to above the 0.95 level, to complete all of wave ^v^ and *iii* of -v-.


Kinross still looks like it wants to go lower, as the rally higher has been weak.


ABX has almost returned to the 8.83 high, so it might be possible that wave -iv- is becoming more complex then just a simple *a*, *b*, *c* rally. The rally from 5.89 to 8.83 is NOT impulsive looking on the Intraday Chart, so we doubt that the 5.89 low will be the end of wave B in this stock.


Long Term Update:


We have attached the Long term HUI and Long Term XAU Chart. As you can see we have satisfied the minimum requirements for a wave -v-, at the 38,37 low, but it looks like the HUI needs to drop just a little more to do the same.


The next big event in the HUI and XAU is our wave C rally, and we suspect that it will begin before the start of Q2. We continue to hold all of our gold stocks and may just start to add more, as this sector is about to turn sharply higher.


Active Trading Positions: We are long GDX, ABX, KGC, NEM, CRJ, and TSX:XGD with no stops!


Note: The Captain will be in the USA between 01/31 and 02/03. Posting should remain unaffected.