Major Market Update via Ewave Analysis

Gold

Gold has become a very confusing market, as we make a major low. We do not think that most people understand the significance of the low that is about to be made in this market, from a financial point of view!

We believe that this upcoming rally in gold will be driven by a recognition that debt levels have now reached unstainable levels, at a country level. Puerto Rico is now added to that list.

The drop in gold from last Friday's high of 1102.70, to the overnight session low of 1080.30, was not impulsive.   That’s bullish!

In the short term, from the China sell-off low, the market rallied to 1117.80 and then fell in a diagonal triangle to the current low of 1076.20. We had wondered if that was the end of the gold drop and that we were now starting higher in wave 5 or iii of 3. In order for that to be true we needed to see a small impulsive rally higher. We had thought that the rally from 1076.20 to 1104.90, was that rally. It turns out that is not the case.

It appears on the Intraday Chart that gold is currently in a small bearish triangle that started at the 1076.20 low. That triangle looks like:

.a. =1104.90;

.b. = 1079.30;

.c. = 1102.70;

.d. = 1080.30;

.e. rally is now and cannot rally above the 1102.70 high, for this triangle formation to remain valid.

With gold and all associated gold indices and stocks, so oversold, we believe that the final thrust lower out of the triangle will be weak.

This thrust will mark the low in gold.

So, we plan to buy 10 positions at 1072.00, which is just below the Daily Continuous Chart low of 1072.30. We will also buy 1070 puts!

We are long 5 positions, with 1100 puts, 5 long positions, with 1150 puts, and will buy 10 more positions at 1072, with 1070 puts!!

CRUDE OIL

Crude finally rallied in the overnight session, reaching a high of 46.03, at the time that this Post was being written. 

As we suggested in our last End of Day Post, we have likely reached the end of wave *iii* of -v- at the 45.11 low, although we are still a little short of our ideal target of 44.75.

If wave *iii* is now complete at the 45.11 low, and we think it is, then we should expect to see a wave *iv* rally that is expected to retrace between 23.6 to 38.2% of the entire wave *iii* drop. 

When we can confirm that wave *iii* is complete we will provide those retracement levels. As a minimum wave *iv* will consist of at least one ^a^, ^b^, ^c^ pattern, unless it turns out to be a triangle.                                                                              

S&P500

The S&P futures are down about 4.5 points at the time that this Post was being written. We do not see any change in our current outlook.  We expect this market to move lightly higher in wave *iii* of .c, assuming that wave *ii* ended at 2087.31.

Our wave *ii* retracement levels are:

50% = 2088.88;

61.8% = 2082.90.

Upon confirmation that wave *ii* is complete, we will provide some projections for the end of wave *iii* of .c.

Our minimum target for the end of wave .c. is 2134.72, but we have a projection of:

.c. = .a. = 2152.38.

We are looking at what is essentially a 1929-style situation.  Back in 1986, Paul Tudor Jones used Ewave analysis to predict the 1987 SP500 crash.  He thought it would play out like 1929, but it was a short term crash.  Our view is that everything that Paul thought was going to happen in 1987, is going to happen very soon. 

We believe unsustainable debt is the ultimate catalyst, as Paul did, but it’s much more unsustainable now, than it was in 1987.  We expect the dollar and the SP500 to fall hard, and create significant flow of capital into gold. 

USDX

 The USDX rallied to 97.74 in the overnight session. We suspect that is the high of our third wave .a. of -ii-.

If that is the case we should now be falling in our third wave .b. Since our third wave .a. looks impulsive, we would expect that our third wave .b. should retrace between 50 to 61.8% of the entire third wave .a. rally.

Those retracements are:

50% = 97.06;

61.8% = 96.90.

Upon completion of our third wave .b., we expect another rally in our third wave .c.. Our minimum target for the end of our third wave .c. and all of -ii- is  98.30, but the 78.6% retracement level of the wave -ii- rally is 98.75.

This last wave .c. should mark a significant high in the USDX.

We will modify our projection for the end of wave -iii-, once we know where wave -ii- ends.

Our minimum target for end of our third wave .c. is the 98.30 high!

NATGAS

 After our last skip down to complete our second wave ^b^ or .c., to 2.7074 yesterday, the trading NG is higher in the overnight session, reaching 2.8029, at the time that this Post was being written.

We now appear to be rallying our second wave ^c^, with a minimum target of 2.96.

Our current wave -iv- triangle count looks like:

.a.= 3.11;

.b. = 2.56;

.c.:

^a^ = 2.92;

^b^ = 2.44;

^c^= 2.96;

^x^ = 2.64;

^a^ = 2.9324;

^b^ = 2.7074, if complete;

^c^ rally to at least the 2.96 high, to complete all of wave .c.

.d. and .e. to go to complete all of this wave -iv- triangle.

HUI/GDX/XAU

With gold likely to make one more new low we expect the HUI, XAU and GDX to also make a slight new low before wave B finally ends and we start wave C higher.

We continue to suggest that the GDX, and all gold stocks be accumulated at these levels!!!

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

KINROSS

Our analysis suggests Kinross could trade down to the $1.07 lows before turning higher, in all its C-wave glory!  We are buyers now, and buyers if it goes to $1.07!

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