jan 29 morning post!





Short Term Update:


Gold reached 1108.80 in the overnight session at the time that this Post was being written. This drop coincided with the announcement of the Japanese FED to take some interest rates in Japan negative.


The task at hand in this market is to determine whether all of wave *c* and .b. are now complete at the 128.00 high.


As you know we have a cluster of projections at the 1135.00 area. On the Intraday Chart the drop from 1128.00 to the current low of 1108.80 is a completed impulsive wave. This could suggest that we have started wave .c. lower. The other option is that wave *c* is subdividing as follows:


^i^ = 1128.00;

^ii^ corrective drop is now;

^iii^ rally is next.


In order for the above count to come to pass we would need this market now to rally and then drop again back to at least the 1108.80 low, to complete a 3 wave correction.


A significant drop now below the 1108.80 low that also drops below the 1092.60 wave *b* triangle low would confirm that wave and *c* and .b. ended at 1128.00 and that we are now heading back to at least the 1045.60 low to complete all of wave .c.


We will give this market another day to decide, but we are leaning to the idea that wave *c* and all of wave .b. are now complete at the 1128.00, and that wave .c. lower has now begun.


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* = 1128.00, 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!




See the attached Weekly Suncor Chart.




Short Term Update:


Crude was relatively stable in the overnight session, as our 34.81 still remains the high for the rally out of the 27.57 low.


Crude is now at a critical juncture. We have rallied to the major down trend line connecting all of the highs that started at the from the 50.92 high.


Also on the Intraday Chart we appear to have a clear 3 wave pattern from 27.57 to the current high of 34.81. This 3 wave pattern can become a bullish 5 wave pattern is we continue to move higher.


A break below the 32.74 high, would likely confirm that 3 wave rally, and this would suggest that crude is once heading lower to below the 27.57 low.


Conversely a sharp break above 34.81 would break the major down trend line and suggest that the 27.57 low is a lot more important that we currently think it is.


Of course, we still have issues with proclaiming a major bottom in crude based on what we see on the Weekly Suncor Chart. If one of our Charts is wrong, we unfortunately do not know which one is at the moment, so we will confine our current comments to short term.


We have attached the updated Weekly Suncor Chart and as you can see we are likely rallying in wave (ii) of c. Our current high is 23.52, which is still a little short of our 50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} retracement level of 24.59,


There is some talk in market about a deal between Russia and Saudi Arabia regarding production cuts, and the results of those discussion, if even partially true, will set the tone for crude in the days ahead. Our current EWave analysis suggests that they will fail and Suncor and crude will be heading lower.


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!




Short Term Update:


The S&P Futures are higher based on the Japanese FED moves on interest rates. We are up about 12 points, at the time that this Post was being written. We really have no further comments, so we have repeated yesterday’s End of day Post below:


“So either all of wave .ii. is now complete at the 1872.70 low and wave .iii. higher has begun, or wave .ii. is becoming more complex then just a simple *a*, *b*, *c* pattern as we show below, and wave .ii. will then make a new low below the current 1872.70 low, to then complete all of wave .ii. If wave .ii. is not complete at the 1872.70 low, then the current rally is a wave *x*..


Our assumed  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.


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:


The USDX was higher in the overnight session, again reacting to the Japanese FED interest rate moves. In the overnight session, we reached a low of 98.45 and then rallied to a high of 99.29, at the time that this Post was being written.


In terms of our current wave .iv. triangle, it looks like wave *c* ended at 98.45 and we are now rallying in wave *d*. If that is the case then wave *d* cannot rally above the wave *b* high of 99.89. The other option is that wave *c* is becoming more complex and 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* = 98.45, if complete;

*d* rally is now

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


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 reached a high of 2.282, in the overnight session.


This high has now put us into our retracement zone for the end all of wave .b. of -b-.


Our retracement levels for all of wave .b. are:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.271;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 2.324


That being said we still believe that we are only working on our second wave *a* of a second *a*, *b*, *c* pattern , that is part of a complex wave .b. pattern. We believe that all or most of our second wave *c* is complete at the 2.282 high and that we should now expect  a drop in our second wave *b*.


Our second wave *b* should retrace between 50 to 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire second wave *a* rally. Once we are sure that our second wave *b* is complete we will provide those retracement levels.


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^ = 2.099, to complete all of wave *x*

*a* = 2.282, if complete;

*b* drop is next.


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 2.09, but will take profits at 2.29!


HUI/GDX and Selected Gold Stocks:


Short Term Update:


If wave *c* and all of wave .b. in gold are complete at the 1128.00 high we should now, unfortunately, expect the GDX, ABX and Kinross to make new lows. CRJ would have completed wave *iii* of -v- and would now start to drop in wave *iv* of -iv-.


Long Term Update:


WE 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.