Technical Analysis Of The Markets

Gold

Short-Term Update:

Gold was higher in the overnight session, reaching 1223.40, at the time that this Post was being written. We believe that we are in wave !iv!. The first option that we are following is the triangle, as follows:

$a$ = 1191.80;

$b$ = 1240.60;

$c$ = 1202.60, if complete;

$d$  rally is now

$e$ to go after the completion of wave $d$ to complete all of wave !iv!

Note that triangles can extend also.

Wave $c$ cannot trade below the wave $a$ low of 1191.80, for this triangle formation to remain complete. If wave $c$ is complete at the 1202.60 low then wave $d$ is now underway and cannot trade above the wave $b$ high of 1240.60.

We suspect that no matter which pattern wave !iv! takes it will likely end this week.

The second option is a simple zig zag correction that looks like: 

$a$ = 1191.80;

$b$ = 1240.60;

$c$ drop to at least the 1191.80 low to complete all of wave !iv!.

Based on the overnight trading, the triangle option is now our preferred.

Our initial count for wave (3) of 3 is as follows:

*i* = 1088.30

*ii* = 1046.80;

*iii*:

^i^ = 1081.40;

^ii^ = 1056.60;

^iii^:

!i! = 1113.10;

!ii! = 1071.10;

!iii! =1263.40, 1262.90(Daily Continuous Futures);

!iv! is still underway.

!v! rally is next and should reach the 1307.80 level to complete all of wave ^iii^.

Projection for the end of wave *iii* is:

*iii* = 6.25*i* = 1314.90 

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 long way to go before this sequence is complete.

WE are still working on wave !iv!, and if it turns out to be a triangle, upon its completion we expect a very sharp thrust higher in wave !v!, will be the next big event!

Active Trading Positions: Long 20 COMEX 100 ounce futures contract positions, with puts at 1085.00!

Crude Oil

Short-Term Update:

We have moved to the April contract as our lead month, so we have gained about $2.00 due to that switchover.

In the overnight session, crude reached a low of 32.46, before recovering. On the Intraday Chart we are NOT seeing a clear impulsive sequence from the 26.05 low, but since we are in wave -iv- within a diagonal triangle, this wave could become very complex. 

We are going to go with the idea that wave -iv- is becoming a simple .a., .b., .c. pattern with wave .a. still being underway. The internal wave structure of wave -iv- could become something totally different, and will make modifications as the internal wave structure develops, if necessary.

We expect higher prices within wave -iv-.

We should get filled in our short positions soon, in Suncor.

Long-Term Update:

Wave -iii- is complete at the 26.05 low and we should now be rallying in wave -iv-, as the next big event in the market. 

Active Trading Positions: Will short Suncor at 24.75, risking to 27.00, and will also go long Suncor at 13.00!

S&P500

Short-Term Update:

We are now waiting for the end of wave -i-, after which we are then expecting a corrective drop in wave -ii-.

This drop should retrace between 50 to 61.8% of the entire wave -i- rally.

In the overnight session, the S&P is down about 3 points, at the time that this Post is being written. We still our doubts about this count, based on the trading patterns in the USDX and gold. Once we are sure that wave -i- is complete we will provide those wave -ii- retracement levels.   

Long-Term Update: 

If the S&P breaks below the 1810.10 lows then a major top in the S&P has occurred somewhere as a failure top in the 2100/2140 area. Wave -i- of (v) is complete or almost complete at the 1946.70 high, and if that observation is correct, then the next big event in this market will be a wave -ii- correction.  

Active Trading Positions: Flat!

USDX

Short-Term Update:

The USDX was stable in the overnight session.  We have basically reached our 50% retracement level, so we need to be on guard for a top and a sharp drop in wave *iii*, as shown on the attached Daily USDX Chart.

On the Intraday Chart, interestingly, we have NO indication of a top so we are expecting that the 97.61 high will be challenged, likely in the overnight session. The other thing that we are NOT sure about, is whether this rally is all of wave *ii* or just wave ^a^ of *ii*.

Our current count for wave -c- is:

.i. = 97.59;

.ii. = 99.95

.iii.:

*i*:

^i^ = 98.45;

^ii^ = 99.88;

^iii^ = 96.04;

^iv^ = 97.50:

^v^ = 95.28, to complete all of wave *i*;

*ii* = 97.61, if complete. 

Projections for the end of wave *ii* are: 

50% = 97.62;

61.8% = 98.17.

We have the following projections of all of the wave .iii. drop:

.iii. = 1.618.i. = 94.53;

.iii. -= 2.618.i. = 91.18;

.iii. = 4.236 i = 85.76. 

Long-Term Trading Update: 

We should be falling sharply in wave .iii. in the next couple of weeks or months. Within wave .iii., we are now rallying in wave *ii*, which could be also complete at the 97.61 high.

Active Trading Positions: Will short at 97.90, risking to 99.89!

NatGas

Short-Term Update:

NG rallied to 1.881, in the overnight session, at the time that this Post was being written, but the count around wave -b- continues to remain unclear.

We still do not have a handle on what is happening within wave -b-. Wave -b- could be ending soon, or it could still become a long drawn out triangle.

Long-Term Trading Update:

Our retracement levels for all of wave (iv):

38.2% = 2.91;

50% = 3.29. 

For the time being we will assume that wave (iv) is a simple -a-, -b-, -c- pattern, and within that count we have:

-a- = 2.494;

-b- is still underway:

-c- rally would be next and should rally to at least the wave -a- high, but more likely to our 38.2%/50% retracement zone shown above.

Active Trading Positions: Flat!

HUI/GDX and Selected Gold Stocks

Short-Term Update:

GDX and our selected gold stocks have lots of momentum now so corrections are still expected to be shallow.   

In terms of the GDX, we appear to have a 3 wave correction on the Intraday Chart from 18.91 to 17.75

This could indicate that wave .iii. is subdividing, which suggests that we still have a lot more upside to go before we see an kind of meaningful correction.

For Claude Resources (CRJ), our bell weather gold stock, we are now leaning to the idea that wave (iii) in CRJ is likely going to extend higher. 

This could be the start of wave (iv), or we still could head higher in wave (iii), as it continues to subdivide. Our other selected gold stocks and the GDX do not indicate  a major correction is in the offing, so we are now thinking that wave (iii) in CRJ did NOT end at the 1.27 high and that we are still going higher in that wave.  

Like the GDX, it looks like wave .iii. is subdividing in this market, as shown on the attached 120 Min ABX Chart. If that is the case then we should expect higher prices in ABX also.   

Our current count for ABX is:

.i. =12.66;

.ii. = 11.49. Note that wave .ii. did retrace at least 50% of the wave .i. rally, with the 61.8% level being 11.41.

.iii.:

^i^ =12.94;

^ii^ = 12.12;

^iii^ rally is now.  

In terms of Kinross, we have attached 60 MIN Kinross Chart. It looks like wave ^iii^ is subdividing in this market. If this observation is correct, expect higher prices as the next big event!

Long-Term Update:

Most gold stocks and gold stock indexes have all broken major down trend lines, which is technically signaling a major change in direction. All of those stocks/indices have finally completed their respective wave B lows.

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

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