US Stock Market: The Meltdown Begins

S&P500

Short-Term Update:

After starting up strongly early in Fridays trading session the SP500 ending up giving back all of those early gains. In the overnight session the SP500 Futures are down about 21 points.

We are working on the assumption that a major top has occurred at the 2954.13 high in the form of wave V.

Ominously, a H&S top pattern is now possibly in play on the SP500 daily chart.  This adds to the concern level for the stock market.

We are now falling in the initial stages of a multi-year wave A low. For the time being we think that wave -i- ended at the 2801.43 low and it is now possible that all of wave -ii- is complete at the 2892.15 high. Our retracement levels for all of wave -ii- are:

50% = 2877.78;

61.8% = 2895.80.

We have reached our 61.8% retracement level and we now need to be guard for a very sharp drop in the SP500 in wave -iii-. Wave -ii- may still be underway as it becomes more complex also. 

Trading Recommendation: Stay short with a call option as a stop.

Active Positions: Very Short with an updated call as a stop!

GOLD

Short-Term Update:

Gold was lower in Friday’s day session and that trend has continued in the overnight session as we reached 1273.40.  

Wave *ii* is still underway and it has become a double 3 wave pattern as shown on the update daily chart.  We are falling in our second wave $c$, which a minimum target of 1267.30, but more likely we will drop into our retracement zone which is:

50% = 1258.50;

61.8% = 1236.90

All of our second wave $c$ and *ii* may end this week.

We will provide our first projections for the end of wave *iii*, when we are sure that wave *ii* is complete.

Longer term our first projection for the end of wave .iii. is:

.iii. = 1.618.i. = 1447.20.

We do have higher projections and wave .iii. should subdivide into a 5wave impulsive sequence on its journey higher.  

Trading Recommendation: Long gold. Use puts as stops.

Active Positions: We are long, with puts as stops!

GDX and Gold Stocks

 Short Term Update:

The GDX was higher in Friday’s trading session, as we reached a high of 20.76.

 

It now looks like our wave *iv* of -c- triangle has expanded and extended as shown on the 60 Min GDX Chart. We should expect one more small rally to complete this bearish triangle before we move lower again in wave *v*.

Our minimum target for end of wave *v* is 20.14. Our wave *iv* bearish triangle may be complete at the 20.76 high.

Longer-term our first projection for the end of wave 3 is:

3 = 1.618(1) = 48.95.

We have the following counts, for the following:

Kinross: Has now completed its minimum requirements for a completed wave (ii), at the 2.38 low. Wave  (iii) rally is now underway.

Barrick:  We have completed the minimum requirements for a completed wave (ii) at the 9.53 low. Wave (iii) rally is now underway.

HUI: We have completed the minimum requirements for a completed wave (ii), at the 131.12 low. Wave (iii) rally is now underway.

XAU: We have completed the minimum requirements for a completed wave 2 at the 60.59 low. Wave 3 rally is now underway.

Trading Recommendation: We continue to suggest buying all of the above gold stocks and indices, for a long term hold.

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

Free Offer For Gold-Eagle Readers:  Please send me an Email to [email protected] and I’ll send you our latest Wave Counts Tactics report!  We include key wave counts for oil and the CDNX junior stocks index, to help investors make money!

Captain Ewave & Crew

Email: [email protected]

Website: www.captainewave.com

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