jan 9 end of week post!







Short Term Update:


Gold clearly had a very good start to 2016, as for the bullish camp. As you can see on the attached daily Gold Chart we reached a high of 1113.10. This week's rally was at least wave ^iii^ of *c* of .b.


The debate that we have right now is whether all of wave ^iii^ is complete at the 1113.10 high, or whether it will extend to our second projected point. We have the following projections for wave ^iii^:


^iii^ = 1.618^i^ = 1113.50. Our preferred;

^iii^ = 2.618^i^ = 1148.10.


The reason that we are a little suspicious, is that the GDX and the related gold stocks that we are watching have much more bullish patterns. This could be suggesting that wave ^iii^ could end at the 1148.10 high versus the current 1113.10.


For the purpose of our analysis we will take the conservative approach and assume that all of wave ^iii^ ended at 1113.10, as shown on the attached Daily Gold Chart. So if wave ^iii^ ended at 1113.10, what about wave ^iv^. Our retracement levels for wave ^iv^ are:


23.6{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1099.70;

38.2{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1091.50.


Friday's low on the attached Daily Chart was 1091.80. Based on what we see on the Intraday Chart and Friday's low being within our wave ^iv^ retracement zone, we can say that all of wave ^iv^ is now complete at the 1091.80 low. If this observation is correct then we should now be heading higher in wave ^v^.

Projections for the end of wave ^v^ and all of wave *c* and possibility wave .b. are:


Projections of the end of wave *c* are:


*c* =1.618*a* = 1116.20. Our preferred;

*c* = 2.618*a* = 1159.10


Our current count for wave .b. is as follows:


*a* = 1088.30;

*b* = 1046.80;


^i^ = 1081.40;

^ii^ = 1057.50;

^iii^ = 1112.20, if complete;

^iv^ correction is next.

The two wild cards that we have are:


Is wave ^iii^ complete at the 1113.10 high, or will it extend to the 1148.10 level;


If wave ^iii^ ended at 1113.10, did wave ^iv^ end at 1091.80.


In any event we expect that gold will make a new high above the 1113.10 high next week.


Longer Term Update:


Our current retracement level for wave .b is:


50{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1118.60;

61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} = 1135.80.


Wave .b. is expected to consist of at least one *a*, *b*, *c* pattern.


There is an outside chance that all of wave 4 or wave ii of 3 is complete at the 1045.40 low also. A break above the upper red down trend line connecting waves -ii- and -iv-, as shown on the attached Daily Gold Chart would confirm that wave 4 or wave ii of 3 ended at 1045.40.


This idea is gaining some traction, with us as a few gold stocks are breaking major multi-year downtrend lines which would not support the idea that gold is going lower.


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




Short Term Update:


This week we proposed an alternate count for crude that suggest that a major bottom in wave b of B is at hand. In order to get more confidence in this count, we need to see an impulsive wave sequence to develop from the 32.10 low. The final confirmation will come when we break above the down trend line connecting 43.46 and 38.39.  


In Friday's day session, crude had a low of 32.66, and we do not see any sort of impulsive wave sequence, at the moment. This could suggest another drop below the 32.10 low, next week.


Long Term Update:


If our current analysis is correct a major low in wave b of B is at hand and crude is starting a new run back to the $150 area.


Active Trading Positions: Long 15 positions, with 42.00 puts, as stops, plus long 5 positions with 37.00 puts, as stops!





Short Term Update:


The significant drop in the S&P this week was a surprise as it eliminated our current short term count. It is unlikely we are in wave -v-, and as we have mentioned a few times the drop from "2116.48 are full of overlapping waves, which suggests this drop is corrective". Unless some sort of wave -v- failure top has happened, we are now looking at a very larger wave (iv) triangle as being an option.


The attached Long Term S&P Chart shows the triangle. If this analysis is correct, then the end of wave -e- of our wave (iv) triangle is very close, and we then expect a large rally higher in wave (v) to reach at least the 2134.74 high.


As a minimum the S&P is likely due for a large relief rally, as the next big event.


Long Term Update:


See the attached Long Term S&P Chart. This wave (iv) triangle option will be eliminated if we drop below the wave -a- low of 1821.66.


Active Trading Positions: None!








Short Term Update:


The USDX rallied to a high of 99.26, after the release of the US Employment Report, and then gave almost all of that rally back, by the time that the day session had ended.


Our preferred count is that we are still in wave *c* of .iv., as shown on the attached Weekly USDX Chart. Within wave *c* we have the following count:


!i! = 98.24;

!ii! = 99.26;

!iii! drop is now!


We also lowered our stop to 99.30. We expect that the USDX should continue to move lower in wave !iii! of *c*.


Long Term Trading Update:


Our updated current count for wave .iv. is:


*a* = 97.59;

*b* = 99.73;

*c* should now be underway, with a target of at least the 97.59 wave *a* low.


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


.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. is still underway;

.v. rally to go to at least the 100.71, wave -iii- high.


We want to bring attention to a couple of alternate counts. On the attached Weekly USDX Chart, we have another count for wave -iv-, that suggests it did not end at 92.52, and that we are now falling in wave .c. of -iv-. In this case, the minimum target for wave .c. is the wave .a. low of 92.52.


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: Short 5 positions at 99.45, risking to 99.30!






Short Term Update:


Our wave *v* thrust continued to unfold on Friday, as we reached a high of 2.494. On the Intraday Chart, we do not see any indications of an end in our wave *v* thrust, but we suspect that most of this rally is complete at these levels.


The next big event in the market will be the end of wave -a- and a drop in wave -b-, as shown on the attached Daily NG Chart. Upon completion of wave *v* and -a-, we are expecting that the wave -b- setback should consist of at least one *a*, *b*, *c* pattern, and retrace between 50 to 61.8{6662cb326f536db879050e93fbe8de36d93608a2a48b01f600643f4328fc39a1} of the entire wave -a- rally.


We will provide the retracement zone for the end of wave -b-, once we are sure that wave -a- is complete.


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, if complete;

-b- drop is next;

-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: Plan to buy again, when we drop into our yet to determined wave -b- retracement levels!


HUI/GDX and Selected Gold Stocks:









Short Term Update:


The GDX was down on Friday, as shown on the attached 120 Min GDX Chart. As we mentioned in the Gold Update above it looks like the GDX and related gold stocks have much more bullish patterns, then we are assuming for our gold analysis.


This could be suggesting that the 1045.40 is a much bigger low then we are currently suggesting. It could be the end of wave ii of 3 of 4. As we said in our Gold Update above, only a break of the upper red trend line (1307.80 and 1191.70) of our ending diagonal wave (c) in gold, would confirm this.


Looking at our current selected gold stocks:

CRJ: It looks like wave ^iii^ ended at 0.95, and likely all of wave ^iv^ at 0.85. If this analysis is correct, then we should be moving higher in wave ^v^ to above the 0.95 high to complete wave *iii* of -v-, as shown on the attached Daily CRJ Chart.


ABX: ABX reached our wave *iii* projected top of 8.78, by hitting 8.83, on Thursday. On Friday, we corrected it, and possibly all of wave *iv*, and even tested the major breakout at 8.31, as shown on the attached 120 Min ABX Chart. If this analysis is correct we should be moving higher in wave *v* of  -iii-, as the next big event.


Kinross: This stock is still the laggard, but we expect that will catch up soon. We expect that Kinross will move higher in wave ^iii^ of *iii*.


Long Term Update:


It looks like wave B ended at 12.62, and we have started wave C higher. Within the initial stages of wave C, we have the following count:

-i- = 17.04;

-ii- = 12.92;


.i. = 13.95;

.ii. = 13.19;


*i* = 14.29;

*ii* = 13.57;


^i^ = 1501;

^ii^ = 14.26, if complete;

^iii^ higher is next.


We need to see a break of 15.61, to confirm our current count for this market....wave B ending at 12.62.


We need to watch for major breakouts in both ABX and Kinross, for their long down trend lines. This would be a very significant event.

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