Tuesday, February 9, 2016
Now we get a chance to try and put some realistic wave counts into the oil again as Millennium Degree will never work. I am working a giant Primary degree "B" wave which contains a triangle. I was hoping that the "D" wave may have been finished, but my impulse wave has disintegrated at this time.
Oil has now made a good looking zigzag decline and I find it very difficult if not impossible, to count out a zigzag in a zigzag bull market, because they rarely happen. They always alternate in pattern. Can it still be part of a wave two bottom? It sure can be but it must perform like it has a rocket stuck up its rear end! Only time will tell if this will happen! Next we could get an "E" wave bull market, which will seal the fate of oil in the short term after it peaks.
Once the triangle is completed, then expect a decline that will break any support we presently have had. Even now if we were in an impulse heading down, oil would have to crash much further to add on the additional waves it needs, to make a good looking impulse decline.
This is pure science fiction, but it comes from a real wave count put out by Elliott Wave Internationl. (EWI) They start in 1859 and end up on a 4th wave in Millennium degree. I agree with the 1859 date, but very little else at this point. The 1859 high matches the 2002 low in this oil chart and oil would have to go below $20 to hit this price level again.
The big question is, "What are the 5 waves required to complete the one move in Millennium degree,". The answer is we need 5 waves up in the Submillennium degree, to complete the 5th wave in Millennium degree.
EWI has the 2008 peak as a Cycle degree peak, but this would make the 5th wave an extremely long one and completely removed from reality. Inhaling too much of the red dust of Mars can have the effect to create a wave count removed from reality.
What they don't realize is that the crude oil picture they are painting is an "EXTREMELY" bullish picture in the long run. It is a bigger bullish picture that is longer than the complete life span of oil on earth and then some. The main reason why, is that nobody is continuing the research to see what is reasonable for a wave count that will have a beginning and an end to it, Even though it still may be 89-144 years out.
Remember the whole world of wave analysis has been brainwashed with there SC degree top in 2008.
This is the idealized wave count created from a Millennium degree wave 4
base and at a minimum that specific wave count would require 5 waves up in Submillennium degree. Instead of only a Cycle degree run up to 2008 we have to make it a GSC degree run to 2008. Our present crash would be a GSC degree "ABC"crash with the last 5 waves in SC degree. "Impossible" you say, well you are right.
My wave counts are wave two based, with oil being in one SC degree pattern for its entire life span.
The world is in a bearish funk right now and Apple is just one stock that just can' sell enough smart phones. They are able to spend billions giving to investors that have nothing to do with the success of the company, but should be spending on research for new products.
I would rather seem they spend money on a big logo on a SpaceX rocket than give the money to shareholders. Apple could finance a trip to Mars and back, I stress "and back"
,out of petty cash.
But those are just my personal beliefs and have nothing to do where Apple's price may go next.
If the entire decline has been a diagonal, then we could see a big rally in Apple and all other stock indices as well. The VIX and HDGE being as high as they are, Apple has no choice but to rally.
How high nobody knows at this time because nobody thinks stocks will rally anytime soon. They are all waiting for that magical 20% bear market
number. It's a great magician act that the bears distract you when you should be watching for a potential bullish hand to be dealt.
The Apple chart is riddled with gaps with many small ones above present price levels and a few big ones still open up closer to the top. It would eventually take to the $120-$130 price ranges to close all the gaps. That is a tall order and may not be achievable at this time.
The gold/apple ratio at present is about 12.5:1, and at a peak in July 2015 was about 8.8:1. Until someone tracks it on a consistent basis, we still need to establish some better extreme numbers. The secondary peak in early November also hit an 8.8:1 ratio. This gives us a reasonable set of parameters for tops, and it seems that the 12:1 ratio, works for the bottom in August 2015 as well.
All sorts of fundamental induce news is used to justify the Apple stock crash and all of them will be forgotten once Apple starts to rally again.
If I wasn't looking at other indicators as well, I could paint you a very bearish picture in stocks. I would be joining the crowd of bears that have come out of the woods and basically I would be in sympathy with the majority. That would be no fun at all and I would sound the same as all the other parrots do. Redraw and bend my parallel lines a bit and I could show you an extremely bearish wave count.
I can sure paint this RUT crash as a 3 wave zigzag, but a distorted expanded pattern could also have happened, in which case I would have 5 waves down coming to an end soon. When the bullish phase starts we will have to see if a diagonal pattern emerges or worse, another choppy pattern that just will not fit into any bullish pattern. Another 4th wave at this point is far too early, but we will watch it, if it coincides with the VIX and HDGE the next time they are extremely low.
At a minimum the RUT should pop up to the 1035 price level in the next few weeks, and more if we are at a stronger turning than what the majority expect.
My last wave count did not hold, but a new one always emerges. If it is a better wave count remains to be seen. Sure, this can keep right on going south, but the pattern has already changed, with a spike now also being formed.
This can terminate on a zigzag this week and crude oil may rise if the stock market cranks up again.
Investors only see doom and gloom and the crude oil is just part of it. It's a feedback loop as stocks go down it shows no hope for oil. East coast Inventories are bursting at the seams and are far above averages with the world or the mid east pumping as much as they can as well.
All it would take is a little bit of news that demand is getting bigger than supplies and crude oil becomes the new bull market on the block.
If we take a quick glance at this chart you would say, "Oh Shit, this is crashing and I better get out".
You're too late already and as soon as you get out this market will turn and soar the opposite way. Then when you get back in, figuring you made a mistake, as soon as your buy orders have been hit, this market will turn and crash again.
I think this market has a bullish run left in it that will surprise most of the experts that are bearish right now. Several indicators like the VIX and HDGE are also showing top heavy patterns, with many open gaps below. Combined with the choppy decline which is impossible to force into an impulse. With all the sharp spikes to the downside (6) in the last two years, keeps me thinking bullish thoughts.
The last decline I am calling it a diagonal decline, and since it dipped into wave two, I would have to call it an ending diagonal. Yes, it could go lower, but I am more bullish than I am bearish and only time can confirm this. If you think that 5th waves in diagonals can behave like this then, think again as it is more normal than we think. Any two trend lines I draw will be as parallel as I can make them as "ABC" declines will cut through these lines with little problem.
The entire rally with the Euro started back in March 2015 and a new record low has not been created since then. All critical waves have overlapped each other so there is no way we can ram or force this into a true Elliott Wave impulse count.
This could end up piercing my top trend line and even breaking into a new bullish high. This could happen in a flash or still take some time to play out, or not even get that high, before it turns and crashes one more time.
I see this as a 4th wave triangle and heading up to an "E" wave top. This entire pattern looks much like oil did back in the 90's, except in a much shorter time frame.
If the Euro is still going to crash, then I would bet that gold will also see another major decline as well.
Monday, February 8, 2016
HDGE has pushed to a new high, ending in a secondary spike. If we count the waves from the November 2015 bottom we have a count of 7 waves at this time. A 7 count wave structure, is corrective in nature which usually means a complete retracement should happen in time. We would have to add two more waves about the same size to kill this bear rally idea.
Any diagonal run will create the same wave count, so either way we should at a minimum get a correction. I also have a minimum of 4 open gaps below present prices, which are also bearish indicators for HDGE. With many of the stock indices having many gaps above present prices, this makes it more likely than not, a rally should close all the gaps off.
The VIX has also pointed up along with HDGE and between the two make excellent indicators for when stocks make a potential reversal.
From August 2015 top to the November 2015 bottom was a three wave crash,
( more flat) this has several implications in any asset class. It could be a perfect expanded pattern, a diagonal ending, or part of a triangle. Either way all the wave counts I suggested do not support a big bull run in the HDGE at this time.
Stock market live blog recap: End lower, but trim losses after Dow’s 401-point
fall - The Tell - MarketWatch
This cash chart of the Mini DJIA has a different wave count that actually fits my outlook better.
That can be very subjective, but any wave count will break a subjective wave count very easily.
In this case the DJIA would have to crash much lower, but it already came back hard at the end of the day. To prove all the super bears wrong, that are far too early, this market has to push higher.
Preferably I would like to see it above what looks like a small recent double top. The secondary top is lower in price so this can all be part of another zigzag correction.
This chart would have to travel a minimum of 2350 points to create another world record high, and I am sure many bears will say fundamentals do not justify the DJIA to go that high. Since when does the market care about the fundamental opinion of the majority?
Everybody already knows that a bearish trend is in progress, so are millions of investors, just getting ready to get out, or is panic buying about to set in?
When markets do high speed crashes like it started to do last night is usually a "C" waves crash.
None of these moves change the fact, that the top rounding process looks like a diagonal decline which still has to be resolved. The VIX has a minimum of 5 gaps to close below present prices so this also helps to keep my bullish opinion alive.
My impulse wave has broken down to another pathetic choppy rally, which also is traveling very sideways right now. This usually does not last for very long and will eventually break out, into some unexpected direction. The age old relationship to gold has also taken its toll as the gold/ratio is constantly reminding us of that fact. The gold/oil ratio just hit 37:1 with the April contracts and is still a far cry from the normal of about 15:1. Flip the numbers around and try to predict were gold should be, is 15X$32 = $480 for the price of gold. I always use gold as the money, as oil has no real life span when it goes up in smoke out the tailpipe of our cars.
Crude oil is far too early to even hit a zigzag top, but a triangle could be in progress where we could see one more push higher. If this push is very choppy and erratic, then it could be confirming a "C" wave bullish phase.
Gold has gone vertical and some gold stocks have gone vertical as well. The HUI is the main index which has gone vertical, but also has several gaps that opened up in the rocket ride, The GDX is loaded with open gaps, with about 4 gaps open on my count. Gaps will always get filled and it is just a matter of time when they do get filled. I have a pretty clean impulse with this GDX rally, but "C" wave bull markets can contain them.
Gold itself is a diagonal as this GDX is not. That is very normal and I don't read anything into that. For those who are ignoring a 40% gift dumped
on your lap, and you want more, you will pay dearly for this greed. Sure, there is no way of knowing if only a correction is due, but this will show up in due time, but if this pattern is actually an expanded pattern, then the GDX could crash to a new bear market low. All it takes is for stocks to find a base and slowly work their way back up and stock mania could be back on!
Shorter term I am extremely bearish, unless I see a very corrective pattern starting to play out.
GDX at this time has gone higher than GDXJ which I think is due to the fact there are less stocks inside GDX than GDXJ.
Gold on the cash basis has touched $1200 this morning, achieving the price level I said it could do.
It has also ended on a vertical move which cannot be ignored, as these moves are
the highest speeds, we can physically have. They cannot be maintained without a correction or a down right reversal of the trend.
also hit a several year top trend line, so this can offer serious resistance. We also have the makings of a huge big fat Head, so that just adds to my short term bearish mood.
Since the start of Dec 2015 gold has started off slow and then the afterburners kicked in and gold blasted like it wants to go to the moon. All the early waves in this impulse looking wave structure, overlapped, which must not happen in a true impulse so I can see this as a part of an old bearish rally and at best, we may be coming to another "A" wave type top.
The last wave of any diagonal wave structure can and does act just like this, which can fool the very best. Those that are just jumping on the gold bandwagon are going to pay dearly as the gold bears can come out and slash this gold bull to shreds.
The HUI has also gone vertical, but it contains many open gaps below which can all get filled before this market makes a new run north.
This is not the Mini but the cash contract. With its sharp decline this morning it has not pushed to a new record low, but now has formed two long spikes to the downside. I see this as a positive, but a new downside could still happen. It would do so as a 3 wave structure, not with a 5 wave impulse.
I am a real stickler into watching how a new low is created as there are huge differences in their outcomes. Being lazy and calling a 3 wave decline a 5 wave decline will never work. In case no new low is achieved in the next few days, then this can stand as the start of a diagonal 5 waves.
I changed my trend lines for a reason as this is what a diagonal crash can do. It's just a smaller version of the 2007-2008 decline. You don't want to think impulse decline when in reality it is a diagonal or an "ABC" decline.
The January 11th decline sure looks like it can fit an ending diagonal very well, so that also helps to support a potential bullish reversal. This SPY00 has about 300 points to go, to break a new world record high, which not too many believe can be done. It is a big mistake to underestimate the markets to rally after they have been pointing down for sometime, especially if it is pointing down, with a 3 wave structure.
The Nasdaq has plunged again this morning, and created a new bearish low at the same time. I counted this decline as a diagonal impulse and not as a true impulse, as there are huge differences between the two types of waves and their results. Yes, it can still go lower and hit the bottom trend line, but there is no law or that says they have to get hit. Diagonals can end up being short as they plunge to new lows with a 3 wave structure. We are still short a few hundred points or less from entering into a conventional bear market of a 20% decline.
Elliott waves can travel much further than that in a 4th wave correction as I have always used 40%. All this depends on the degree we are in and if we use net or gross numbers.
With this chart the Nasdaq 100 hit its highest point on December 2 2015 and has only looked back briefly before resuming its trend.
I would like this to come to an end and end soon and start a trend back up but that may be wishful thinking. If the bearish leg is to continue a counter rally would only take this market back up to my 4th wave peak before it resumed its trip south one more time.
Any market move far past my top trend line will help confirm my short term bullish picture.
We only have about 900-1000 points to go and the Nasdaq 100 would create a new bullish record high. Reversals can be very violent as all the protective buy stops get hit.
Gold has responded to this stock decline as investors run to gold out of fear.
Saturday, February 6, 2016
Even with all the bearish trash talk and warnings from the experts that the markets are on a one way trip into the disaster zone, it still does not change the patterns that have already emerged.
In the last year or so there are so many overlapping wave structures that it is impossible for me to force a clean set of impulse waves except for very small degree sequences.
Elliott Waves will always work in such a way as to always travel the opposite of the trend what the majority is thinking or hyping, because otherwise the 99% would be rich and the 1% would be poor.
It works contrarian in nature. Any wave count that confirms or is in sympathy with the herd for very long will never work, as 2009 proved that beyond a shadow of a doubt.
On Jan the 20th the DJIA landed with a big spike and proceeded to rally, in a choppy fashion. This can work as part of a diagonal wave structure so I have to follow it until it is trashed beyond a reasonable doubt.
Either way the next few weeks should make or break this bearish mood the market is in. Also, many are talking that we are in a bear market, but we are not even close to a gross 20% decline which is the mainstream definition that a bear market has arrived.
This is my Cycle degree wave count and any trend lines are parallel to the top line, with no forced throw-over. The entire structure is also running at an angle across the corners of the chart, which is what I like to see happen as well. Most of all there is no SC or GSC degree wave counts present and there will not be any present until all 5 Cycle degree waves are found.
This is the mathematical and sequential nature of Elliott Waves. I can't call my "D" wave top completed yet as it is still gyrating around without any clear impulse waves showing the way.
In the end, we could end up at a Cycle degree low with a major bear market completing below the 2009 lows. Even if these lows materialize the majority will not be satisfied, but will be
calling for the worst still to come. By that time I am sure we will see many other indicators telling us that the exact opposite will happen, as insider buying will be one big clue. Also the Warren Buffet indicator works if he is still active by that time. (2021) The solar cycle bottom will be the biggest indicator as solar cycle #25 will usher in the Roaring 2020s. I would expect 5 waves up in Primary degree lasting 8 years or more.
Our CAD had a great blast up, but it had a small section where it was extremely choppy. This could be part of an inverted "ABC" with the potential to be part of a bigger zigzag, yet to come. If all the fears are about the economy getting worse as well as deflation fears, thrown in for good luck, why should or dollar go anywhere but down? Fundamentals at the extremes will always tell us the wrong things.
The sentiment bullish consensus reading hit such a crazy low last week that virtually leaves nobody left to get out of the CAD. Also, any panic out of the CAD at this point shows very little knowledge about when something is oversold. Bullish readings of only 6% bulls, means there is nobody left to get out, as this is the most extreme reading I have personally ever seen.
A small impulse has started on the way down and if this was not a big fake, it would have to find a bottom and then soar again. On the daily charts we have a wicked spike that formed to the upside so a correction was definitely due.
Since our CAD has travelled to a crazy bearish side, our Vancouver SFD has gone the opposite direction. Look how the listings have imploded, as it seems nobody wants to sell their SFD at a high price. A 44 % gain in two years or so is not real and cannot be maintained, but picking the exact top is tricky with any real estate market. If Our CAD rockets upward should that not make the SFD cheaper?
This is the march contract for the Russell 2000 and it is showing the best impulse decline out of all the other indices that I watch. It still looks like we are in a 4th wave and technically should be heading to a new bear market low. How it crosses to the new
low, is very important as a three wave low can be part of a diagonal decline.
If this all works does it have to hit the bottom of my trend line? No, that's a myth created by forcing or turning the trend lines. I keep my two trend lines parallel all the time and only change them when I think I'm in a different degree.
On the monthly scale I can work this as a wave 1-2-3 in Minor degree, so the next low would be wave 3 in Minor degree, unless and ending diagonal shows up to this bear party.
This all has the makings of an impulse decline, but it is short and stubby so it may give us a 5th wave extension.
Friday, February 5, 2016
Gold is on a rip snorting move that reflects fear more than common sense and it has been going into a vertical accent. This can't last and a correction should be due and it is this correct that will determine if gold is going much higher. I have not noticed and gaps that formed which is a good thing.
It is impossible for me to fit this run from the December start into a clean impulse, which has now lasted close to 8-9 weeks. In that time it has moved about $124 or so which works out to about $15 per day. It was that January low that really broke the impulse wave which tells me gold is still in a bearish rally even though it could be a rather large bearish rally. Only time will tell when it truly corrects.
I will be busy for the rest of the day so any more updates will have to wait.
I hope this link works as I edited the spelling, but it points towards the EWI big picture Elliott Wave count of WTI crude oil. They do not fill out all the wave tops as they want to sell subscriptions, but their wave count starting in 1859 has a triangle, which they labelled with capital letters (ABCDE).
Capital letters can only be one of three degree levels, and it is not rocket science as we can eliminate Minscule and Minor degree. This only leaves one option and that is, the triangle they show is a Millennium degree correction with 5 Submillennium degree subdivisions.
Now I am a real stickler for drawing out the idealized wave count many times to understand what is required to fill out the rest of the Millennium degree 5th wave. This is not a mistake or a misprint, and it will only make sense if you download their chart and print it out, as a reference.
A Millennium degree 5th wave needs 5 waves up in the Submillennium degree to fill out a completed run. Now what do think we would need for the wave degree to fill out wave 1,3 and 5?
We would need three sets of 5 waves in GSC degree. Yes, this is not a misprint or a sick joke, but the big picture they are painting in the long run is an "EXTREMLEY" bullish picture for oil.
I have duplicated their wave count up to the 2008 peak, and it would have to be a GSC degree peak at a minimum. They have a Cycle degree "AB" started, but they need a SC degree to correct a GSC degree wave 1. This shows that there is a potential for a flat as a wave 2 correction that may hit an expanded top before a crash to $10 can happen.
This is what the idealized chart would look like if we were to think 5 waves up in GSC degree.
From my perspective, I think the 1859 time period is the start of wave zero, but from a SC degree top.
This means that there is one set of 5 waves in SC degree in the life of oil on this planet, after all aren't we supposed to run out of oil? The wave count must come to an end as well if oil is no longer being pumped. My gold/oil ratio would also cease to work!
There are many alternate ways to run a car or a bus as it only takes people with vision to make it happen. Who needs oil when we can drive in an electric car or zoom around the planet in a Hyperloop!
Updated February, 7, 2016
Once I looked at my first chart above, I noticed a huge error in my sequence, but I will leave it up just the same. Overall, the EWI count would still be working from a Millennium wave 4 base.
The question we always have to ask is, what idealized wave count, is it that we need, to complete the entire 5th wave in Millennium degree? This is the one question I always ask at every turning the markets will make, and it is the same question I ask when drawing up an idealized impulse wave structure. It is only when the idealized structure is drawn out and understood, is when we have a clue in what to look for.
My answer to that is that we would need five waves up in Submillennium degree. Of course 5 waves up in Submillennium degree must all contain subdivisions. As long as wave 1 is always the shortest and wave three and 5 can be the same lengths. If extensions happen then they are usually the last degree of the sequence.
The chart above is another updated chart showing Submillennium degree wave one completed at the 2008 peak. This also makes what used to be a Cycle degree run, now has to turn into a GSC degree 5 waves up. This makes 1999 a GSC degree bottom and then the run up would be 5 waves in SC degree. Sound crazy? Of course it does, but this is what you would have to count out if the Millennium base was true.
Our present crash would be a GSC degree crash and should not contain a triangle in anyway, except maybe inside the "B" wave. Also, our 5 waves down since mid 2014 would be five ways down in SC degree, which is also impossible.
As you can guess, I do not believe in the 4th wave base as how Elliott waves unfold, especially in oil which historically would have a limited life span. Again, I believe oil is on one big 5 waves in SC degree, and it still has 89, or 144 years to play out. Once this SC degree 5th wave is completed, then oil would crash and eventually have to flat line
The market gut reaction to the job reports are most always impossible to forecast, but we know that dramatic swings happen. From my perspective, it is all about the emotional herd and has very little to do with logic and reason. If the expert economist gets surprised by a reporter how would the average person forecast how the markets will react.
Right now the DJIA looks like it has completed the same pattern as the crude oil crash just it is much smaller in scale. So if this was part of an "ABC" crash, then technically we should see a 100% retracement in the next week or so. This has been one ugly rally, pattern wise, and when I say that you can just about always assume, it is a bearish rally.
The bad part about it is that diagonals 5th waves can start up exactly the same, so we are stuck between a rock and a hard place. I always look for a potential "ABC" crash which swings to a bullish trend or an inverted "ABC" rally which will swing to a bearish trend. This is all very specific to the degrees, as one degree ends and a new degree starts.
Since this impulse looking wave is much bigger physically than the others in the sequence that started On January the 20th, I have to explore a potential bearish rally wave count. I don't create mindless wave counts for trade setups as you don't need Elliott Wave knowledge to do that, and I won't put a bunch of alternate wave counts on the same chart.
I can promise you, there are always alternate wave counts, and I run one to see if it can get confirmed or killed.
It all depends on where we count from, and how long we can get fooled into thinking a true impulse is in progress. In short, there are "always" three potential corrective patterns, specific to the degree.
In this case oil would have to fly like an Eagle to confirm a potential "C" wave bull market. The pattern above is a flat with and expanded flat for the "B" wave part. Many times the picture is not clear enough until the very end of a move, and then you have to scramble to find a better fit.
This move can also fit into a bigger zigzag, so all options are still on the table. Recent news stories paint an absolute bearish crude oil picture with, "east coast bloated inventories". There is no hope for oil to ever rise and lower prices are still being forecast. These forecasts
change with the wind and the fundamental news will drive you nuts as investors react to it.
When the market is in consensus and the majority only seeing the bearish side, then eventually the markets will go the opposite way. This has happened after every glut crude oil was ever in.
I have gone over the EWI crude oil wave count starting back in 1859 and it makes no sense at all, as they are bouncing from a 4th wave triangle bottom in Millennium degree. They are posting to their subscribers an extremely large degree and long term crude oil bullish wave count, which I can't post as it would be a copyright issue.
Here is just a small example how the jobs report can send shock waves through all asset classes. In a few days everybody will forget about it and then this wild move will become part of any other wild move we get in the markets.
I think the jobs reports are rigged anyways as it is put out for public consumption. Ever wonder where all the oil sector job losses count in this report? Besides next month they may just revise the numbers down and nobody pays attention to them.
The counter rally has produced a 7 wave rally, which at this time is still a corrective rally. Now the daily chart has to be reviewed, as this could also be a major top.
Thursday, February 4, 2016
I was wrong in using the December gold and oil contracts as volumes can dramatically rise and fall in any month. I try and work the next busiest month ahead as activity drops off dramatically when the contract expires. Any gold, oil ratio I calculate I will stay as close to the same months that I can.
The oil pattern in the near month is also different which I now have worked as a potential expanded pattern. If the impulse false apart anymore than I will have to look for a corrective wave structure.
We know from what the book says about expanding pattern and if they are true, we should see a dramatic oil push to the upside. This means our present decline has to find a bottom sooner than later, and then push much higher.
The April gold/oil ratio is still at a healthy 34.49:1 which is extremely cheap when using gold as money. If the oil rally is just another fake, then it too will plunge to a new bear market low.
I have been doing some research as to the biggest wave count that oil can have and what the charts may look like once
oil is gone. So far I can track the origins of the first well in the USA to August, 27, 1859. Is this where wave zero in oil started? The next year they had oil/wells in Poland and within 10 years oil wells were everywhere.
I will post a separate oil message talking about oil as an energy source that is eventually supposed to disappear or run out.
Here is a fun project for those who are really bored! Find out exactly what this new energy source is that all the big boys are spending billions on?
The HUI has added on another small leg, but it has gone vertical, which cannot last. A correction has to happen or a return to a bearish trend, sending gold stocks crashing. Do all the contrarians feel rich yet? They have been
adding to extreme bottoms any chance they get.
This move is a like somebody throwing many $100 bills on the table and the only way to grab those bills is to sell on the spike. Of course they will say no as they wait for higher prices to come. In other words, they become greedy leaving money on the table. I am sure many traders have done this and eventually they will pay for it when the prices implode or correct.
There are many open gaps below, with the GDX and GDXJ confirming many gaps as well, so at a minimum a correction is due.
The jobs report on the first Friday of the month can cause the markets to swing violently in both directions. This forces all the stops to get hit which only makes money for the trading houses as they collect commissions.
This rally is traveling with some pretty ugly waves that overlap with 3 wave rallies thrown in for good luck. Bad luck if you are on the wrong side trying to catch a trend. I prefer using the DJIA over the SP500 because every wave analyst covers the SP500 already and eventually they will both end up in the toilet at the same time.
So we have what looks like a bearish rally, which means a new low should happen, to confirm this.
But the chances are also very high that after a violent correction, the DJIA keeps going as a diagonal wave structure. I'm not going to force my "D" wave top at this time as I have many tops to work with making the exact top more illusive. Even after a new low may get hit it still has the chance of coming back with a diagonal wave bull market.
I am using the April contract with gold and I will be using the April contract with WTI. Too far out throws the gold/oil ratio out dramatically. The gold cash contract works very well, but I always look for the chart that has the most volume in it. Volume can make dramatic shifts as well, but overall I am always looking for consistant chart filling.
Gold has gone beyond my top trend line and many times I would panic and adjust. There is nothing to adjust to just yet and since I have many waves, we could be in a diagonal wave, and my "ABC" in Minsicule degree would be about 1/2 way. I have also shown some Micro degree waves, but unlabeled waves are still
visable, which would be Submicro degree waves.
In other words I am scraping the bottom of the degree stack. Gold may not make my target of $1190, which the daily chart will have to be checked.
The US dollar dipped a little lower overnight, which breaks the impulse wave I was working but still does not rule out an ending diagonal or a bigger triangle. Besides a wild correction any decline in the US dollar is a good thing for gold. I have repeated this many times as without the US dollar starting a sustained trend down, gold will not hold in a sustained bull market.
Yes, we could be on a bigger decline, but there are still too many options (wave patterns) to consider.
Many will start to jump on the US dollar bearish bandwagon, but if a decline has only a limited short term life span then us dollar short players are going to get into a trap. This usually develops very fast and violent counter rallies.
Gold has pushed a bit higher to the $1154 price level with the April contract, and there still may be a few waves left to go before another much bigger correction.
The HUI blasted up as well but now has several big gaps that need back filling.
The Fridays trading session could turn very violent early in the morning as swings in both directions can happen with the release of the jobs report.
Wednesday, February 3, 2016
Gold stocks have made a great run, but this run has several big open gaps below, and gaps on an index is something I would not want to ignore. I think a correction is due as no market can speed along at this pace without at least a correction.
If this rally is actually a wave 1 then, we still should see an obvious correction if not a down right return to the bear market. This great run from an all time low could be the tail end of a "C" wave bull market, then if that's the case then the HUI is a sell.
The same thing applies to the GDX as it also has gaps below and now has added the spike as well.
At best we should get a correction, but if an impulse correction does not form, then gold stocks could make a death spiral to a new record low. I would be far more bullish if I though the US dollar was ready for a major decline, but I don't see this as being the case at this time. It is next to impossible or it's very rare that any asset class can keep going in a vertical move without a correction.
Still, what has to happen if this is a much bigger bull than what we may think? The market has to impulse going up and any deviation will confirm a bearish rally. It would just be a bigger bearish rally.
Price is irrelevant in telling us anything as pattern recognition is far more useful.
Since the March 2015 bottom of the Euro, the subsequent rally is not an impulse by any stretch of the imagination. The waves overlapped right from the start, so I can only call what I see, keeping a specific starting point in mind.
If this 4th wave proves true, then this Euro rally should run out of gas and come crashing back down, like the SpaceX rockets did on their floating drone ships. Any decline in the Euro will also be bad for gold as the Euro is still in the US dollar basket of currencies.
Any dip back down to the 1.10 Euro range would confirm my short term bearish outlook
.This daily chart shows a nice spike so either way a correction or a reversal is due.
This is a perfect little nose dive or a dramatic crash depending on how you look at it. Yes by all means this decline could keep right on going, but this is a very steep decline with gold enjoying a rather steep accent in reaction to the US dollar drop.
The US dollar is sitting on the crossroads where it can rally violently from a 4th wave bottom. I have very little room to wiggle with this pattern, so it will not take much to kill it. This drop in the US dollar helps to confirm the entire sideways move as being a counter rally or a "B" wave top.
Since I can't fit that sideways pattern into a wave 1-2 then technically the US dollar should retrace its entire drop and soar one more time above all peaks you see on this chart. That would not be a good thing for gold.
All it takes is for stocks to soar, US dollar to fly again and gold would drop like a rock as a bit of stock mania returns.
Gold is on a great run as it looks like it is also in an extension. My dual parallel trend lines help to define a smaller channel, and when it crashes out and far away from these lines, then chances are good a degree change is also in progress. At the top we have what looks like a flat type pattern so that could mean this run is not coming to an end today or even this week.
What I will be looking for in the coming days is that the pattern changes to a diagonal, which usually indicates a radical shift in direction is still to come. Any rally that we can see beforehand that forces all the traders to change positions is what I like to. Some call this swing trade, but that is too vague as all trades can be called swing trades.
There are virtually no traders that can stand a bearish counter rally like gold may be on because buy orders are triggered all the time as gold rises.
The US dollar has plunged which gold has reacted perfectly too, but silver is lagging far behind. Gold stocks are reflecting gold better that they have been, with the HUI soaring past some ugly corrective patterns.
If the bigger 5 wave sequence in Subminuette degree is true, then a three wave correction is still to come. If this last 4th wave sprouts or develops a triangle then we are assured that the gold run is coming to an end. As I post gold is already at $1145 which is close to my top trend line.
Updated 12:05 PST
Gold spiked to the top of my parallel trend line at $1145 so a strong correction or trend reversal should happen. This is one of the longer spikes created so when I see that, then it's time to change our thinking as well.