Technical Analysis Of The Markets

Gold

Short-Term Update

Gold reached a low of 1201.80 in Monday's electronic trading session. In the overnight session gold reached a high of 1216.50

Gold has now traded slightly below our 38.2% retracement level and it would be helpful to our cause if it rallied higher from here. 

In general our current analysis remains valid as we still think wave *iv* is NOT complete, at least in terms of time. It may however be complete in terms of price as we expect a near-term rally, to be followed by a drop back down again as described in more detail below.  

On the Intraday Chart the drop from the wave *iii* high of 1306 to the current low of 1201.80 is corrective looking but likely still not complete.

It looks like wave *iv* has become a double 3 wave corrective pattern.

The first 3 wave pattern ran from 1306.00 down to 1258.00. We then had a wave !x! rally to 1290.40 and we are now falling in our second 3 wave pattern, which appears incomplete at the current lows. This current drop from the wave !x! high is likely all or most of our second wave !a!. In this case wave .a. would likely have ended at the 1201.80 low.

We suspect that our second wave !b! rally is about to begin and it should rally between 50 to 61.8% of the drop from 1290.40 to 1206.00. Upon completion of our second wave !b! we should expect another drop in our second wave !c! to likely complete all of wave *iv*.

The minimum target for the end of our second wave .c. would be 1201.80.

Of course we can still not rule out the possibility that wave *iv* is going to also become a multi-month bullish triangle. In this case we are just finishing wave !a! of that triangle pattern.

Gold is currently trying to break above a downtrend that started at the 1290.40 high. If we are successful then this would likely announce the start of our second wave ^b^ rally, and confirm the end of our second wave ^a^ at the 1201.80 low.

We have shown the above pattern on the Daily Gold Chart.

Another much more bullish option for wave *iv* is that it is complete or almost complete at the current low of 1201.80. In this case the count would be:

^a^ = 1270.50;

^b^ triangle = 1283.70

^c^ = 1201.80, if complete to complete all of wave *iv*.

When wave *iv* is complete we expect another impulsive rally in wave *v* to complete all of wave .iii.. Our minimum target for wave *v* is the wave *iii* high of 1306.00, but we should expect a challenge of the 1346ish high, as the likely ending point.  

Longer Term Update

Based on the current count, gold is still working on its first impulsive sequence out of its wave (2) of 3 low, and we still have a little way to before this sequence is complete.

We should now be falling in wave *iv*. We are thinking that all of wave .iii. in our current gold count is going to end at the red trend line shown in our previously attached Long Term Gold Chart.

The location of that intersection is looking like it could be in the $1340/$1360 area, depending on long it takes for gold to get there.

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

Crude

Short Term Update

In the Monday electronic trading session and in the overnight session crude remained range bound between 50.21 and 48.70.

There is change to our current analysis as we still expect further gains in wave !iii! of ^iii^.  

We should see a run to the $52.00 area before all of wave !iii! of ^iii^ ends, although we have a higher projected target at 55.62.  

Our current count is:

^i^ = 43.69;

^ii^ = 39.00;

^iii^:

!i! = 46.78;

!ii! = 43.04;

!iii! rally is now underway. Our first projection for the end of wave !iii! is: !iii! = 1.618!i! = 55.62

Projections for the end of all of wave ^iii^ are 

^iii^ = 1.618^i^ = 52.67;

^iii^ = 2.618^i^ = 61.11 

Our first projection for the end of wave *iii* is:

*iii* = 1.618*i* = 61.84 

No change also, to our current thinking around Suncor. Once wave .b. ends, if it has not already done so at the 27.83 high, then we still expect a drop in wave .c., below the wave .a. low of 25.31 to complete all of wave -ii-.

Our minimum target for wave .c. is the wave .a. low of 25.31, but more likely to our retracement levels, before all of wave -ii- ends.  Retracement levels for all of wave -ii are:

50% =24.31;

61.8% = 22.98

The other option is that all of wave -ii- ended at the 25.31 low and Suncor is now started to rally in wave -iii-.  

Long-Term Update

We are now working on the assumption that a major low in wave b of B was reached at the 26.05 low. If this assumption is correct, then crude is now heading sharply higher, at least back to the all-time high of 147.27. 

Active Trading Positions: We will go long Suncor at 23.75.

S&P500: 

Short-Term Update

The S&P500 was stable in Monday's electronic session and the overnight session. The S&P Futures are up about 2 points in the overnight session.    

No change to our current analysis as we have a clear 5 wave sequence from the 2025.91 low to today’s high of 2099.06. Since we believe that wave -v- is going to subdivide, we need to be on guard for a correction of that entire first 5 wave move out of the 2025.91 low.

Upon completion of wave .i. we would expect a wave .ii. correction that retraces between 50 to 61.8% of the entire wave .i. rally. Once we are sure that wave .i. is complete we will provide the retracements levels for all of wave .ii..

We have graphically shown the expected path for all of wave -iv- on the 120 Min S&P Chart above.

We plan to short this market at the 2140 level, but will wait for another week or so before we execute that trade.                  

Long-Term Update

Wave -i- of (v) is complete at the 1946.70 high; wave -ii- at 1891.00, and wave -iii- at 2111.05. Wave -iv- is now complete at the 2025.91 low and we have started our wave -v- rally to all time new highs. Our minimum target for the end of wave (v) is the all-time high of 2134.72.

Active Trading Positions: Flat

USDX

Short-Term Update:

In Monday's electronic session the USDX reached a high of 95.96, and in the overnight we dropped to a low of 95.53, at the time that this Post was being written. We are now short from 95.85. No change to our current analysis, as we should now have completed all of wave !ii!.

If all of wave !ii! is not complete at the 95.96 high, we should now be falling in a sharp wave !iii! drop, as the next big event in this market.

For this count to remain valid we cannot trade above the wave ^ii^ high of 96.42. Also a break and close above the red downtrend line would be disturbing development.

Long-Term Trading Update 

We are expecting that a sharp drop in wave !iii! is just around the corner that will see this market move below the 91.00 level. 

Active Trading Positions: We are short at 95.85 risking to 96.43!

HUI/GDX and Selected Gold Stocks

Short-Term Update

Our current corrections in the in the GDX and our selected gold stocks remain incomplete from a retracement point of view, so we should still expect some further weakness in the days ahead, although it might now be possible that those corrections are now complete, but we need to see some confirmation first.

Even if the corrections are not complete at their current lows, we expect that additional losses will be limited. Our detailed analysis remains unchanged, for the GDX and our selected gold stocks.

Of course there is always the chance that our respective corrections could become more complex and last much longer that we currently are expecting.

GDX  

As you can see on this 60 Min GDX Chart, we may have completed all of wave ii at 21.94, but we are still short of our 50% retracement level. We will need to see how the GDX trades over the next day or so before we can confirm that all of wave ii is complete at the 21.94 low. Our current count for all of wave ii is:

(a)  = 23.29;

(b) = 25.85;

(c) = 21.94, if complete to complete all of wave ii.

Upon completion of wave ii we expect a very sharp rally in wave iii.

ABX

As you can see on the 120 Min ABX Chart, it might be possible that all of wave (ii) is complete at the 16.25 low. This low is 2 ticks below of 50% retracement level of 16.27.

We have non-confirmation with the GDX and our other selected gold stocks relative to retracement level targets so we will need to see if ABX is telling us something more about where gold stocks are heading. Our count for all of wave (ii) is:

.a. = 17.21;

.b. = 19.73,;

.c. = 16.24, if complete to complete all of wave (ii).

Upon completion of wave (ii) we are heading sharply higher in wave (iii).

KGC  

As you can see on the 60 Min KGC Chart, it is likely that all of wave ^iv^ ended at the 4.67 high and that we are now falling in wave ^v^. If this analysis is correct then wave ^v^ has a minimum target of 4.22, which we reached on Friday. WE are still technically short of our retracement zone that is shown on the attached 60 Min KGC Chart, but open to a big rally now anyways.  Our current count for all of wave ii is:

(a)    =  5.03;

(b)   =  5.80;

(c):

^i^ =  4.93

^ii^ = 5.47;

^iii^ = 4.22,;

^iv^ = 4.67;

^v^ = 4.22, if complete, to complete all of wave (c) and ii.

Long-Term Update

Our first impulsive sequence out of wave B lows of the GDX and our selected gold stocks, is likely now complete at the current highs and we are correcting in wave ii, except in ABX, which will be correcting in wave (ii) of iii.  

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

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Free Trades Offer For Gold-Eagle Readers:  Send me an email to [email protected] and I’ll send you my next couple short term ewave trades for free!

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