Technical Analysis Of The Markets

Short-Term Update

 

Gold continued to fall in the overnight session as we reached a low of 1240.50, at the time that this Post was being written. Our current analysis: 

On the Intraday Chart the drop from the wave *iii* high of 1306 to the current low of 1240.50 is corrective looking and likely still not complete.

It is starting to look like wave *iv* is becoming a double 3 wave corrective pattern.

The first 3 wave pattern ran from 1306.00 to 1258.00. We 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!.

We suspect that our second wave !b! rally is about to start soon. Upon completion of our second wave !b! we should expect another drop in our second wave !c! to likely complete all of wave *iv*. Of course we can still not rule out the possibility that wave *iv* is going to also become a multi-month bullish triangle.

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.   

Our retracements for the end of wave *iv* are;

23.6% = 1247.10;

38.2% = 1210.70.

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 the 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

Crude did not accomplish very much in the overnight session as yesterday’s day session low of 47.41 was not challenged. In the overnight session crude reached a high of 48.27, at the time that this Post was being written. No real change to our current analysis.

We still expect further upside in wave !iii! of ^iii^ and see a run to the $52.00 area as being very achievable, 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 to our Suncor analysis as we expect all or most of wave .b. is complete at the 27.50 high, and that we should see one more drop in wave .c. to at least 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

We will go long Suncor at 23.75.

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 are long 42.50, risking to 38.99, and also will buy Suncor at 23.75.

S&P500

Short-Term Update

 

The S&P Futures are up about 9 points in the overnight session, at the time that this Post was being written.  

We are starting to like the idea that all of wave -iv- is now complete at the 2025.91 low and that we are now starting wave -v- higher to all time new highs. We will give this market a couple more days to confirm that thinking.

We cannot fully rule out the idea that wave -iv- is going to take much longer to develop and could become a bullish triangle that will take all summer to unfold.

Our expected retracements levels for all of wave -iv- are as follows:

23.6% = 2057.41;

38.2% = 2025.61.

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- could now be complete at the 2039.45 low, but we need to be on guard for something more complex happening in this corrective wave, before we are ready to confirm its completion.

Our minimum target for the end of wave (v) is the all-time high of 2134.72.

Upon completion of wave -iv, we expect a wave -v- rally to complete all of wave (v) and a major top in the S&P. 

Active Trading Positions: Flat.

USDX

Short-Term Update

The USDX made a marginal new high for the rally, reaching 94.54, at the time that this Post was being written. No change to our current analysis as we are looking to short this market at higher levels.

As you can see on the Daily USDX Chart, we have updated our count to show a complex wave !ii! correction, that appears to be nearly complete. We suspect that we have some further gains which should take us to the red downtrend line shown on that Chart.

This top should be all of wave !ii!.  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.

Upon completion of wave !ii! we expect a very sharp drop in wave !iii!, as the next big event in this market.

We will short this market at 96.00, risking to 96.43.

Long-Term Trading Update

We have struggling with our longer term count on the USDX, but continue to believe that gold has made major bottom and that it is now rallying to new all-time highs in the years ahead. If this is assumed to be correct, then we do not see how the USDX can rally back to its highs around the 101 level. 

Active Trading Positions: Will short at 96.00 risking to 96.43.

HUI/GDX and Selected Gold Stocks:

Short-Term Update

With gold being weaker we expect more weakness in the GDX and our selected gold stocks today, and likely for the remainder of this week.

We expect that the corrections in the GDX and our selected gold stocks should reach our targets before their respective corrections end. 

GDX 

As you can see on the 60 Min GDX Chart, we have now satisfied the minimum requirements, from an EWaves point of view, that all of wave ii is now complete at the 22.78 low. This is because wave (c) traded below wave (a).

What is still outstanding is that wave ii is still above our 50% retracement level which is 19.29. We will work on the assumption that wave *iv* in gold is still not complete, so we expect further downside in wave (c). Our current count for all of wave ii is: 

(a)  = 23.29;

(b) = 25.85;

(c) = 22.78, if complete, to complete all of wave ii.

ABX

As you can see on the 120 Min ABX Chart, we have now satisfied the minimum requirements from an EWaves point of view that all of wave (ii) is now complete at the 17.05 low. This is because wave .c. traded below wave .a..

What is still outstanding is that wave (ii) is still above our 50% retracement level which is 16.27. Using the same logic as we did for the GDX, we are assuming that wave .c. and wave (ii) are NOT complete at the current low of 17.05, and expect a drop into our retracement zone. Our count for all of wave (ii) is:

.a. = 17.21;

.b. = 19.73,;

.c. = 17.05, if complete, to complete all of wave (ii) of iii.

KGC 

As you can see on the 60 Min KGC Chart, it looks like wave ^ii^ of (c) is complete at the 5.47 high and that we are now falling in wave ^iii^ of (c). Our current count for all of wave ii is:

(a)    =  5.03;

(b)   =  5.80;

(c):

^i^ =  4.93

^ii^ = 5.47;

^iii^ drop is now underway, and not complete.

^iv^ rally is next after wave ^iii^ ends.

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!

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