Major Markets Analysis

GOLD

See the attached Daily Gold Compressed Wave (b) Chart:

Gold was up smartly in the overnight session, reaching 1182.50, at the time that this Post was being written.  We are working on the assumption that that we are now rallying in wave -d- of our compressed wave (b) Option 1. Wave -c- of this Option ended at last Friday’s low of 1162.20.

Since we are within the legs of a triangle we know that each leg must consist of at least one .a., .b., c. pattern, but could have up to three. It is difficult to know what form this pattern will take, but for the time being we will assume that wave .a. of -d- is going to be an impulsive sequence. So within wave .a. we could have:

^i^ = 1177.00;

^ii^ = 1168.90;

^iii^ rally is now with the following projections:

^iii^=^i^ = 1183.70;

^iii^ =1.618^i^ = 1192.80

For our compressed wave (b) option to remain valid, wave -d- cannot rally above the wave -b- high of 1232.00.

Note: Some Subscribers have asked us whether the drop from 1232.00 to 1162.20 could become a five-wave affair. 

The answer is no, as the current rally has now overlapped with the 1180.20 low.

This drop from 1232.00 to 1162.20 is now confirmed to be a 3 wave drop, which is bullish. We will repeat our current Options one more time, for new Subscribers:

Option 1(Compressed Wave (b)):

-a- = 1141.60;

-b- = 1232.00;

-c- = 1162.20, if complete;

-d- rally should be starting now;

-e- to go.

In this Option we should now be rallying in wave -d-. Wave -d- will consist of at least one .a., .b. .c. pattern, but can have up to three, and wave .b. could be triangle. This Option will likely take a couple of months to complete.

Option 2: (Standard Wave (b)):

-a- = 1141.60;

-b-:

.a. = 1224.50;

.b. = 1168.40;

.c. = 1232.00;

.x. = 1162.20;

In this case we should now be starting our second .a, .b. ,.c. pattern within wave -b- only.

This Option will likely that 6 plus months to complete.

Our preferred is Option 1, as this would line up with our thinking in regards to the HUI/GDX.

No change to our current 17 long positions, risking to 1141.50.

CRUDE

We are working on the assumption that wave *iv* in crude is a triangle, as follows:

^a^ = 56.52;

^b^ = 61.58;

^c^ = 56.86;

^d^ rally is now underway;

^e^ to go.

For this triangle Option to remain valid we cannot drop below the wave ^a^ low of 56.52.

In the overnight session, crude was stable, but on the Intraday Chart, the wave pattern from the 59.22 high to the 58.43 low look corrective. Crude should move higher.

We are long 8 positions with 58.00 puts.

S&P500

 

The S&P is now at the cross roads as we are clinging to the lower red redline of our ending diagonal triangle. In the overnight session, the S&P did not accomplish very much.

As you can see on the attached 120 Min S&P Chart, this market is trying to stay above the lower red trend line of our ending diagonal triangle.

We are already short this market , and would be very happy to see this support line break, but you can also see on the above 120 Min Chart that the trading patterns between our second wave .a. and second wave .b. are full of overlapping waves.

This action is bullish, unless some sort of failure analysis is used, which we do not want to consider that this time.

Based on what we see, we are still expecting a rally in our second wave .c. to at least reach the 2134.72 high. A significant break of the lower red redline would likely suggest that something else is going on, and that a major top is in!

We are short 3 S&P500 positions at 2115, with 2125 calls and will add 5 more short positions at 2065.  

USDX

 

The USDX was lower in the overnight session reaching 95.98, at the time that this Post was being written.

We believe that our second wave *b*, ended at 96.95.

Our current wave -iv- count looks like:

*a* = 94.88;

*b* = 100.27;

*c* = 93.16;

*x*:

^a^ = 95.94;

^b^ = 94.89;

^c^ =  97.87, to complete wave *x*;

*a* = 94.67;

*b* = 96.95, if complete;

*c* is now. 

The minimum target for the second wave *c* is the bottom of the first wave *c* which is 93.16. Another projection is:

*c*=1.618*a* = 91.77

We are short 5 positions, risking to 97.88.

NATGAS

See the attached Daily NG Chart

Over the weekend we made a significant revision to the long term direction of NG.

AS you can see on the attached Long term NG Chart, we now believe that NG is ultimately going significantly lower, likely to the 1.30/1.50 area, perhaps over the next year or so.

It now appears that we are falling in our second a, b, c, pattern within B. We had previously thought that the 1.90 low was the end of wave B. So we expect that we are getting close to completing our second wave a, that started at the wave x high of 6.49.

The detailed count of our second wave a is shown on the attached Daily NG chart. We are likely now in the tail end of wave -v-  and wave (c). Our minimum target for end of wave -v- is the wave -iii- low of 2.48.

Upon completion of our second wave a we should see NG rally all the way back to the 6.49 area. This is because our second wave a was a three wave drop. This means that our second wave b will either be a flat or irregular correction.

In the case of a flat, our second wave b will come very close to 6.49, and in the case of an irregular type correction it will exceed 6.49. We will trade the second wave b rally. It will consist of at least one (a), (b), (c) pattern, but could have up to three.

In the overnight session NG was higher reaching 2.65, at the time that this Post was being written. We are likely rallying in wave .iv. of -iv-, as can be seen on the attached Daily NG Chart.

HUI/GDX

Note the -c-=0.618-a- projection of 18.62.

We are assuming that wave (c ) is now complete at 18.67, and that the next big event will be a nice rally in wave (d)!!

Long GDX, risking to 17.28!

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Website: www.captainewave.com

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