jan 28 morning post!





See the attached Daily Gold Chart




Short Term Update:


Gold ultimately reached a high of 1128.00, after the FED press release yesterday, but then cooled off an little in the overnight session reaching a low 1117.20.


Our next  projected target for the end of wave *c* and wave .b. are both around the 1135.00 level, which would be around upper red trend line of our wave -v- ending diagonal a triangle, as shown on the attached Daily Gold Chart.


A break and close above that upper trend line would indicate that something much more bullish is happening in this market than we now believe to be the case.


On the Intraday Chart the drop from the 1128.00 high to the current low of 1117.20 is inconclusive as it relates to whether this drop is impulsive or corrective.

In any case, we need to be on guard for the end of wave *c* and .b. to occur at any time now, although a run to our clustered projection area of 1135.00 would not be a surprise for the location where wave *c* and .b will end.


Our current projections and retracements are repeated below:


“With wave *b* being complete at the 1092.60 low, we can provide projections for the end of wave *c*, as follows:


*c* = *a* = 1135.40;

*c* = 1.618*a* = 1061.90. We doubt this will happen as this type of rally would break the upper red trend line on the attached Daily Gold Chart, which would eliminate the current diagonal triangle formation.


Retracements for the end of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1118.60;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1135.80.


Our current count for wave .b. is:


*a* = 1088.30;

*b* triangle = 1092.60;

*c* = 1123.20, if complete, although we have higher projections shown above, for end of all of wave .b.


Longer Term Update:


Watch for the completion of wave .b. and the start of wave .c. lower, which has minimum target of the wave .a. low which is 1045.60. Only a clean break of the down trend line connecting 1307.80 and 1191.70, would suggest that much more bullish things are happening in this market.


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




Short Term Update:


Crude reached a high of 32.92, in the overnight session at the time that this Post was being written. We see no change to our current comments and believe that in the short term at least we are going higher.


But…..:  “We are currently conflicted between what we see as a possible major low in crude at 27.56(daily continuous futures chart), and what we have presented on the Suncor Weekly Chart. As long as the rallies remain impulsive looking and setbacks corrective looking, expect crude to move higher.”


Long Term Update:


We now think that crude is still going lower, before wave b of B, ends with a 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 go long Suncor at 13.05!




See the attached Daily S&P Chart.





Short Term Update:


We said this in our last End of Day Post: “As you can see on the attached S&P chart we made a new high today, above the wave .i. high of 1908.85, and then quickly went lower. We suspect that this brief rally above the wave .i. high of 1908.85 is likely wave *b* of an irregular type wave .ii. correction. We expect further weakness in wave *c* as the next big event in this market.”


Yesterday’s End of Day Post was written about 90 minutes prior to the market close, so it looks like the previous statement, for the time being at least was correct!!


Yesterday’s low was 1872.70, which is below the wave *a* of .ii. low of 1875.97, but still above our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level for wave .ii. of 1860.57.


We have satisfied the minimum requirements for a completed wave .ii. with a drop below he wave *a* low of 1875.97, but we cannot rule out further early weakness to get us to at least the 1860 level before all of wave .ii. ends.


That wave .ii. correction looks like:


*a* = 1875.97;

*b* = 1916.99;

*c* = 1872.70, if complete, but more likely to our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 1860.57, before wave .ii. ends.


Our retracement levels for wave .ii. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1860.57;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1849.18.


A significant rally above the wave .i. high of 1908.85 would suggest that all of wave .ii. ended at 1872.70, and that we have started wave .iii. higher. Likewise a break below 1812.29, would eliminate our wave (iv) pattern and suggest that the S&P has topped out and is heading substantially lower.


In the overnight session, the S&P Futures were up about 7 points at the time that this Post was being written.


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: Going long at 1850.00, risking to 1812.00!




Short Term Update:


No significant movement in the USDX in the overnight session. We are not sure whether all of wave *c* of our wave .iv. triangle is complete at the current low of 98.75, or whether it is still underway.  


If our wave .iv. triangle is now extending then our current count is:


*a* = 97.21;

*b* = 99.89, if complete;

*c* = 98.75, if complete;

*d* rally is now

*e* drop to complete all of the wave .iv, triangle.


Wave *c* cannot drop below the wave *a* low of 97.21, for this triangle formation to remain valid. A move above 99.89, would indicate that wave *b* is still underway.


The other option for wave .iv. is:


*a* = 97.21;

*b* = 99.89;

*c* drop now to at least the 97.21 low to complete all of wave .iv.


We have lowered our stops to 99.90.


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 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 short, risking to 99.90!




Short Term Update:


NG dropped to 2.101, in the overnight session at the time that this Post was being written. We have indicated in previous Post that we doubt that all of wave .b. is complete the 2.214 high and that wave .b. is likely becoming more complex.


Our current analysis indicates that our first *a*, *b*, *c* pattern ran from the wave .a. of 2.045 to 2.214, and that we are now working on a wave *x*.


On the Intraday Chart, the drop 2.214 to the current low of 2.101 looks corrective and could very well be all of wave *x*. If that is the case, then we should start to rally in our second *a*, *b*, *c* pattern , that should reach our ultimate retracement zone between 2.271 and 2.324.


Our updated current count for all of wave .b. is:


*a* = 2.170;

*b* triangle:

^a^ = 2.069;

^b^ = 2.189;

^c^ = 2.082;

^d^ = 2.171;

^e^ = 2.129;

*c* = 2.214;


^a^ = 2.115;

^b^ = 2.211;

^c^ = 2.101, if complete to complete all of wave *x*

*a* rally should be now underway.


Our retracement levels for all of wave .b. remains as:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.271;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.324


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;


.a. = 2.045, if complete;

.b. is becoming more complex with the detailed count above;

.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:


No change here!


Long Term Update:


Expect lower prices in the XAU and HUI, before wave B ends. 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 the 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, except on the morning of 02/03, where there will be NO Morning Post.