We Told You U.S. Stocks Were Topping Out

Last week's trading saw the gold market dropping into a Wednesday bottom of 1832.40 - before turning higher off the same into early-Friday, here pushing all the way up to a peak of 1878.90 - before backing off the same to end the week.

Gold Continues to Chop

As mentioned in past articles, gold is expected to be choppy in the coming months, due to the opposing position of the mid-term cycles that we track. That is, the 154-day wave bottomed back in November, and is seen as heading higher at the present time - while the larger 310-day component is pointing south into what is projected to be the early-April timeframe, but with a decent plus or minus variance in either direction:

Having said the above, the ultimate resolution is expected to be to the upside into later this year, due to the position of the larger four-year wave for gold, shown again below:

In terms of price, there is an open upside target with this four-year cycle to the 2212.00 - 2340.56 region, which we expect to be hit at some point in the coming months. Likely, this target has the best odds of being met on the next upward phase of the 360-day cycle, once it does bottom out later this Spring.

For the bigger picture, we also expect major resistance at or into this four-year target zone - and, if tested, seems to have the highest-odds of topping this four-year wave, for what is expected to be a larger-degree decline into next year. In terms of price, the 48-month moving average will be the expected magnet as this wave lows-out. From there, another bull market phase is anticipated to play out, lasting into the year 2024 or later.

U.S. Stocks in Correction Territory

As noted last weekend, U.S. stocks were seen as topping out - which was forecast to give way to the first really good correction phase of this year, now confirmed to be in progress. In terms of time, our 2021 forecast identified the January 27th date as the key turning point high for the market, with the actual high registered on January 26th - well within the normal plus or minus variance of the expected turn.

Going further with the above, the high that was forecast to play out into late-January was expected to come from our 90-day cycle, which is shown again below:

In terms of time, this 90-day wave is next due to trough later in the month of February, with the ideal path looking for additional weakness into that timeframe. In terms of price, the 70-day moving average will be hit on approximately 85% of the correction phases of this wave, though I have noted the potential for additional weakness through the same - due to other (technical) factors. One of these other factors came from our proprietary Mid-Term Breadth index for U.S. stocks, which had formed a multi-week divergence against the new price highs:

As can be seen on the above chart, the last time that Mid-Term Breadth was diverging from price was back in August of last year. That action was followed by the early- September price peak in U.S. stocks, and the subsequent 10% correction phase into the late-September timeframe.

In terms of patterns, however, until proven otherwise, the current assumption is that the correction phase of the 90-day cycle will end up as a countertrend affair, holding above that late-September, 2020 bottom. If correct, a push back to new all-time highs is expected to materialize on the next upward phase of this wave, which, when seen, will be the technical setup for our next mid-term peak. That peak is expected to come from our larger 360-day wave, which is shown again below:

In terms of price, back in the Summer of last year, we confirmed an upside price target with this 360-day cycle, to the 3812.56 - 3960.44 SPX CASH region - which we noted had an 85% probability of being met in the months to follow. This target was obviously hit with the action seen in recent weeks, a zone which we also noted as being key a key resistance level to the recent rally.

Having said the above, with more time left before the upward phase of this 360-day cycle is projected to top, the overall assumption is that higher highs are still out there for this wave, though with a normal correction in-between - due again to the smaller 90-day component. With that, we have identified the next key date for a low for the smaller downward phase to conclude, with the precise details noted in our Market Turns report, which focuses on the U.S. stock market. More on all as we continue to move forward.

Jim Curry
The Gold Wave Trader
http://goldwavetrader.com/
http://cyclewave.homestead.com/