Key Elliot Wave Counts Update

S&P500

 

The extent of this rally eliminates our idea that this is likely a wave -iv- of (i) rally, which now opens up the possibility that wave (i) ended at 2039.69, and the current rally is all or most of a wave (ii).  

Some projections, from the 2119.59, wave B top are:

50% = 2079.64;

61.8% = 2089.07.

Our current high is 2080.99.  If wave (i) ended at 2039.69, we likely have a completed the following correction:

-a- = 2066.41;

-b-= 2041.07;

-c- = 2080.99 if complete. Note that -c-=1.618.a.= 2084.30.

We will update our 10 Min Chart and attach it to next Morning Post.

Here’s a look at it now:

A shorting opportunity is likely at hand again, at the end of wave (ii).                                                                                                                               

USDX

The USDX was lower in today’s day session, but, unfortunately, it looks like the drop from the overnight high of 100.67 was not impulsive.

We expect the USDX to rally back to the 100.67 high….. one or more times.  Here’s a look at the daily chart that could produce at a double top in the 100 – 103 area:

NEWMONT

Some gold stocks have made serious attempts to launch C wave surges, and that include behemoth Newmont!  We need to see more stocks make similar move, and that would indicate the entire sector, and gold, is ready to launch the C wave advance!

CLAUDE RESOURCES

Here’s a look at one of the gold stock sector leaders, Claude Resources.  We bought it in late 2014, expecting a dramatic C wave advance to begin, and ultimately lead gold bullion higher.

We’ve stepped to the sidelines for now, from a trading perspective, but are eyeing much higher prices, both for Claude and for gold!

GDX 

We know it’s disappointing that GDX could make a new low, after the next rally, but regardless of what Elliot Wave analysis you apply, the low for gold stocks, and GDX in particular, appears to be very near, and if Claude and Newmont are correct…. It’s already here!

Gold

Gold moved lower in today’s day session reaching 1149.60, at the time that this Post was being written.

We do not see any indication that wave (b) is complete at these levels and we are still expecting one more drop below the 1146.60 low, to complete all of wave (b) of b of our wave 4 triangle. Our trading strategy remains unchanged.

Recommendation: Buy 5 COMEX gold 100oz contracts at 1141.60 and buy 5 x 1150 puts as stops.

(We always trade the near-term contract, but if close to expiry, can go out to the next one, June in this case) 

Up until this week, we had been working on the assumption that wave i of 3 of V had ended at 1923.70, and that we were falling in wave ii of 3 of V. We had also thought that wave ii had ended at 1130.40.

Based on the weakness in gold, we had also considered the possibility that all of wave V had ended at 1923.70 and that we were falling in a very long term ABC pattern. We had even suggested drops in gold to the 750, or 350 area.

This option is valid and remains in our minds, but we think now that something more bullish is happening.

As you see on the attached Long term Gold Chart of wave V, we are now thinking that only wave 3 of V ended at 1923.70.

Our problem with saying that all of wave V ended at 1923.70, is that we do not see a clear five wave advance from the end of wave IV of 254.80.

Since it appears the rally from our previous wave ii low of 1130.40, is not impulsive, it can only be a triangle in this position.

Triangles on their own can only appear in a wave 4 position. Triangles consist of a single or multiple three wave patterns. As you see on the attached chart, we have graphically shown a possible series of three patterns that form wave b of our wave 4 triangle.

If our thinking is correct, then gold should rally, but it will be messy.

So how could this bullish scenario go bust? Well, we must stay above the wave 1 high of 1033.90, and we likely need to stay above the 1130.40 low also.

If wave a of our wave 4 triangle ended at 1130.40, then we have already started higher in wave b, in our first (a), (b), (c) pattern as follows:

(a) = 1307.80,

(b) = 1146.50, if complete,

(c) rally to go.

So if for argument’s sake, wave (b) ended at 1141.00, then some projections for the end of wave (c) are:

(c) = (a) = 1318.40;

(c) = 1.618(a) = 1428.00.

That is why we are planning to go long! We are watching our key lead indicator stocks like TSX:CRJ (you’ll see Ewave analysis on that as you read this report)… and they is telling us that gold is going… higher!

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