Technical Analysis Of Major Markets

Gold

 

Gold reached a new low of 1065.80 in the overnight session, which is now a 50% retracement of the rally from 1045.40 to 1088.20. 

We did mention in yesterday’s Posts, that we thought we still had an incomplete impulsive sequence from the 1045.40 low to the current 1088.20 high and that we needed one more rally above the 1088.20 high to complete that sequence. That could still be possible.

In either case, we are still working on elements of our wave .b. rally, and should find in the next day or so, which option gold is following in the short term, but we still see further upside in wave .b. in the coming week or so, as a minimum.

If the impulsive sequence from 1045.40 to 1088.20 is complete, then our retracement levels of this current correction are:

50% = 1066.80;

61.8% = 1061.60.

We are currently working on our wave .b. of -v- rally, and since it is a wave .b., this wave should consist of at least one 3 wave rally that will end within our 50 to 61.8% retracement zone, which is: 

50% = 1118.60;

61.8% = 1135.80.

In the bigger picture our current Options remain unchanged as follows:

Option 1: Wave .a. of -v- is now complete at the 1045.40 low;

Option 2: Wave 4 or wave ii of 3 is complete at the 1045.40 low and gold is essentially “heading to the moon”.  Our wave 4 Option will be eliminated we if we drop below 1033.00, which is the top of wave 1. Option 2 will only be confirmed as being correct if we break above the upper trend line connecting 1307.60 and 1191.70, as shown on the attached Daily Gold Chart.

This is our bigger ending diagonal triangle second wave (c).

Note that if the USDX is not in wave .iv., as our alternate suggests, then wave .b. may run a lot higher than we suggest, or Option 2 might be in play!

We are long 20 positions, with puts at 1085.00!

Crude:

Crude reached a new low of 36.81(at the time that this Post was being written), in the overnight session, but our idea that the drop from 50.91 to the current low is a wave ^c^ ending diagonal triangle remains unchanged, as we are now at the extreme of the formation. 

Although we are not sure how this dip below the 37.75 low fits into the bigger picture, we are still expecting a very large rally in crude to take place, likely starting from the current lows.

This rally should still take us at least to the 50.91 high, but likely much higher as it looks like from the 37.75 low we now have a corrective looking rally as follows:

*a* = 49.33:

*b*:

^a^ = 43.21;

^b^ = 50.91;

^c^ ending diagonal triangle = 36.81, if complete, to complete all of wave *b*;

*c* rally is next.

Our first projections for the end of wave *c* are:

*c* =1.618*a* = 55.55, assuming that wave *b* ended at 36.81. We will likely be adding to our long positions in the next 24 hours.

If oil players want to trade this market, to the long side, they can put a buy stop at 41.00, but they would need to risk to 36.80, or buy a put at a price of your choosing. 

We are long 15 positions, with 42.00 puts, as stops!                                                                               

S&P500 

The S&P Futures were lower in the overnight session, being down about 19 points at the time that this Post was being written. Our current Options remain valid and that will not change uncles the low at 2042.35 is challenged.  

As you can see on the attached 120 Min Chart, we have added a little more definition to our wave -iv- triangle Option.

If the triangle Option is correct, then we are rallying in wave .c. of -iv-. A rally above the wave -iii- high of 2116.48, now, would eliminate our wave -iv- triangle option.

Also, if the wave -iv- triangle Option is correct, then our lower ending diagonal trend line would connect with the end of wave -ii- and wherever wave -iv- ends.”

Longer term, our wave counts continue to suggest a horrific US stock market meltdown lies ahead.  Maybe the catalyst will be a terrorist event of size in America, or something else, but it’s going to be something very big, and very horrible.  Anyone playing this market on the long side needs to have some put options as major disaster insurance!

USDX

We shorted the USDX on Wednesday twice.  We were stopped out by a few ticks on the first tranche, but scored Babe Ruth style with the second, as the dollar crashed bigtime with the Draghi “less than expected” QE news that blasted the euro higher.  We booked immediate and juicy profits.

Now, on the Intraday Chart we appear to have a completed 3 drop in place from 98.90 to the overnight low of 98.43. This suggests that the USDX is going to head back to at least the 98.90 high. Our preferred Option suggests that we are correcting now in wave .iv. with the following internal wave structure:

*a* = 97.59, if complete;

*b* rally is next. wave *b* is expect to rally between 50 to 61.8% of the entire wave *a* drop. These values are 99.09 and 99.44, respectively;

*c* down to complete all of wave .iv.

The current high for this wave *b* corrective rally is 98.90, which is still below of 50% retracement level of 99.09, so we should expect some further gains, before wave *b* ends.

In the bigger picture our retracement target zone for end of wave .iv. is:

23.6% = 98.99;

38.2% = 98.00.  

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

.i. = 96.64;

.ii. = 93.83;

.iii. = 100.58;

.iv. drop is now;

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

We will short 5 new positions at 99.25, risking to 100.59!

NatGas

NG continued lower in wave .v. of -v- of (iii), in the overnight session reaching 2.014, at the time that this Post was being written.

We are getting close to your minimum target of 1.95, and also to the end of wave (iii). Upon completion of wave (iii), we expect wave (iv) is expected to rally between 23.6 and 38.2% of the entire wave (iii) drop.

HUI/GDX

Since our wave .b. in gold likely has more upside, we still expect the GDX to move higher with the gold market, but not above the 17.04, before we drop to a new low below 12.62, when gold falls in its wave .c..

That break would complete all of wave B.

On the Intraday Chart we do NOT see an impulsive wave structure from the 12.92 low to the 14.86 high, which support our view of another eventual drop back to 12.92, but more likely to 12.62.

As noted below, we have been aggressive buyers of gold stocks, with no stops.  While we see gold stocks generally making one more new low, it will only be a marginal one basis our wave counts, and stocks like Kinross may already have seen their final lows.  The price action of key gold stocks in the face of lower bullion must be respected.

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

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Website: www.captainewave.com

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