Sunday, October 4, 2015
Below is the US dollar cash contract which the majority of experts are calling a bull market. The Austrian economists keep telling us that they are printing US dollars which would eventually push gold to $5000 or $10,000, yet the US dollar has soared. As much as I love Austrian economics, the concept of printing money in an electronic world is a myth. Only 1.3 Trillion dollars has seen any ink at all and all the rest of the so called US dollars is a mythical number created from inflation. Every 9 years or so the entire US dollar cash supply has to get reprinted as it wears out, so the presses are pretty busy already.
In China they create electricity from burning old worn out money!
Just recently the world markets have lost $11 Trillion worth of assets and the US dollar has still remained high. Just imagine who the accountants or financial advisors are that can lose $11 Trillion for investors.
$11 Trillion is also a small drop in the bucket when we look at total world assets in US dollar terms.
The US dollar has gone on super rallies before and it is quite normal, but it wreaks havoc with the US dollar gold price.
In 2011 stock mania possessed investors and all the inflated US dollars charged into the stock markets. Of course during that time we had to kiss the price of gold/silver and oil goodbye.
I increased my degree in this US dollar chart by one degree for now, but it is virtually the same as my Euro wave count is when I invert the Euro. I am treating the US dollar like it's in a 45 degree upward sloping triangle. This does not mean it can stay that way if we have a "D" wave plunge, as "D" waves are know to give us big surprises. Any "D" wave decline can get confused with the start of a new US dollar bear market as they act much like a wave 1 would.
Since the 2011 bottom the US dollar has soared to new record highs as an inverted zigzag. This move will eventually get retraced by 100% or more but if any "D" wave decline will do it this time remains to be seen.
At this time the US dollar has peaked at about the 100 price level and if we are in a potential "D" wave decline then the US dollar 100 price level should hold.
The commercial traders have added to their US dollar short positions and are still net short overall. To help confirm a potential US dollar bearish move, our Canadian dollar and the Australian dollar should also move up in value when compared to the US dollar. Of course the Euro should also move up as commercial traders are net long in the Euro as well. Many other currencies show commercial net long positions when compared to the US dollar which are all good signs.
Most reports about traders positions talk about the speculators, but this is the group that chases the markets and I trust them the least.
The way the US dollar is starting a potential decline it is already giving me a clue that a future bullish run is still in store for the US dollar, as overlapping waves seemed to be in progress right now.
If we look in the past of the US dollar pattern we can see that the US dollar can drop like a rock when it wants to and when it does then gold will shine.
As usual most investors have been brainwashed to stay away from gold stock investments but they made that same mistake back in 2001 and 2008. When the world turns extremely bearish on the US dollar and gold, oil soars in price, then chances are good we have to switch our thinking again. Hopefully gold stock insider selling will give a clue when a bullish reversal is about to happen.
Even though many contrarians have seen a large drawdown on their gold stock accounts, they will be well rewarded if gold stocks only go back to 2014 highs. It is amazing that more analysts have not noticed that when gold stocks are low and regular stocks are high that a reversal can happen very quickly.
Saturday, October 3, 2015
Chances are very slim that you have seen the Euro looking like this. The reason is that it's an inverted Euro chart turning a bear market into a bull market. A bull market with many overlapping waves is a potential bearish rally and in this case a potential triangle would be in progress.
If a triangle is in play then it would travel between two trend lines and a "D" wave crash would get us to the bottom trend line before reversing. For this I have moved my degree levels up by one degree so the entire Euro pattern would be a 4th wave triangle followed by 5 waves down in Intermediate degree.
The link above they talk about a physical shortage of silver blanks and bullion with demand for the physical metal being very high, yet the price has not moved up reflecting any fundamental shortage.
Many other sites also report that there is very little above ground silver available at any one time. This is all good news in the long run but only the smart money buys physical metals or oil when they think the price is low enough.
Even China bought crude oil to fill its reserve tanks when the recent price was low.
We had a price bounce on Friday but silver is still not looking the way I would like it to look before a very strong reversal. Silver could be in a diagonal 4th wave decline, where we still need a strong "B" wave rally.
Depending on what type of "B" wave pattern we may get, will determine how high it may go.
Any "B" wave rally can retrace 4 or 5 different retracement levels so telling you how high it may go is a futile effort at best. I use the standard 40,60 or 80% numbers or any previous dip will work just as well.
We know that it would have to go high enough to allow the "C" wave decline lots of room so it will not hit zero or even $4.
Any "B" wave counter rally can take silver back up to the $30-$40 price range before imploding once again down to the $10 price level. Just to get back to the $34 price level silver would jump more than 100% in price from todays level, but I bet the majority will not jump on the bandwagon until this $30 price range. For those late comers they would be leaving a 100% gain on the table before they decide it's safe enough to buy silver.
All this is just speculation of a specific future wave count and we will know more once silver does make a substantial rally. Any asset class that is moving in its real trend will form more impulse looking waves as the asset classes that travels against the trend will form more "ABC" choppy type patterns.
The so called silver bull market has been going since the 1993 bottom as the 2001 bottom did not travel any lower.
SIL the silver producer ETF bounced well above $6.50 from a low of about $6. If you managed to average in at $6.50 then you would make a 100% gain by the time SIL reaches the 2014 price levels.
Friday, October 2, 2015
When I posted on Friday the SP500 blasted up another leg. Besides it creating what looks like a perfect zigzag, this pattern can be the start of a bigger impulse wave. By next week it should be a bit more clear but if this does keep going then my top trend line would become support for the last wave 4 bottom.
I have a small degree wave two labeled, but anything much lower or the return of impulse waves down, then the SP500 would be resuming its real trend which from my perspective is still down.
Any wave move in any direction, working within a specific degree I can always have 5 simple patterns to pick from. Of course this has to get narrowed down to one, but most of the time I am working on two wave counts at the same time.
In this case I am showing you one as a potential impulse but talk about a potential zigzag as well.
Nobody would be faulted to short this move next week but they must be prepared to bail out if it starts going down in a choppy pattern.
We should always expect a wild ride on the first Friday of a new month and this time it did not disappoint. We saw wild reversals in gold and oil with a fast down move and then charge up again.
Since the last day of August 2015 crude oil has begun a sideways pattern and I can use an idealized triangle to make most of the waves fit. How we turn the chart from bar to line mode produces different wave counts.
Of course if this was part of a double zigzag or even a very compressed flat we eventually should see crude travel much higher in price. If this is the case I am sure gold may even be leading the way.
At this time we may be lucky to get oil to move past that August peak before it implodes one more time as triangles have a certain ending quality to them. One more move up in a trust and then another reversal as world glut fears return.
At this time I would be looking for a $55 "C" wave bull market peak before another big reversal would be due.
With all the wild swings the gold/oil ratio has change very little. This is cash gold to the Dec oil contract and that ratio is at 24.67:1
When we use the cash contract for both then this ratio is at 25.43:1, which is not a big difference as both ratios are shouting very cheap oil.
Sure it may take awhile but I am sure that crude oil will once again pass that $100 price level and pass the all time peak in the future.
What may be a real party crasher in the future is if commodities do the same as what happened in 1919. A 13 year bear market that took until 1932 to bottom out. 2021 would be the 89th year anniversary date to that 1932 bottom. In the mean time there should be many great rallies to bring all the bulls back into the game.
Every index that I can use to create a wave count with will have slight differences, but many of these slight differences always seem to be at critical turnings. The mid September bottom crossed as a three wave affair as others never went that low. This wave count could be an expanded version as others would not be. In the end they will all end up in the gutter together.
This morning markets tanked due to the jobs report not filling expectations. You would have to do some fancy maneuvering to short the report and then switch fast enough to go long again for the rest of the morning. At this time I see this as a potential counter rally with an expanded "B" wave and then another "C" wave bullish phase this morning. It was over by 10:45 AM PST.
Still for all this to get confirmed this E-Mini would have to decline and break to new bear market lows, or at least travel below all of September lows.
In mid September gold the HUI has seemed to hit a bottom with a nice small spike down.
What followed I can fit into the start of an impulse, which I started with a Miniscule degree label.
Still gold stocks were rather indifferent to the gold spike, but only time will tell if we compound impulse waves higher. We really don't know how high this potential rally may take us but any wave 1 that I need would have a bullish mood attached to it. I wait until a full set of 5 waves is completed before I start my wave 1-2, 1-2 count.
Any strong bearish rally on the way down will offer a potential resistance price level, but they will also offer jumping points where bullish traders jump on the gold stock bandwagon.
It is amazing how much money investors leave on the table when they wait and jump in after the stock or index price has already jumped . It took me a long time to understand this mathematical concept but contrarians practice this all the time, by buying low or on the way down. They accumulate ETFs this way and by the time the majority even think about jumping on a gold stock bandwagon contrarians can be up 100% or more.
A small example would be if the contrarian averaged in about the $10 price level of an ETF, then those that wait to be clear and jump in at the $20 price level, they have already left 100% on the table.
Most gold stock investors buy high as they wait for the market to stabilize in a bullish phase.
This is what a simple jobs report can do to the markets, which was no surprise to the keen observers.
The question now is if gold has some power behind this move? Most of this rally would clean out many of the stops first, but if gold was to push higher we should get a correction. Some type of flat or zigzag would do. If this move ended up as another inverted wave 1-2 then the gold price is in trouble, at least in the short term.
I will have to look at gold stocks to see how they reacted as they did not follow golds exact decline.
Since I added like wait looks like an extra 4th wave the entire decline can be a zigzag, and if so then gold has much more upside potential left.
This was about a $35 price jump in just minutes, which is also very close to a Fibonacci number.
Thursday, October 1, 2015
Without a doubt we have a very complex sideways pattern that looks like it just finished another fake rally. If this is true then my bottom trend line will get pierced and a new short term bearish low would be created. There are too many smaller "ABC" tops since late August, and all of then should get retraced, including that August peak.
The gold/oil ratio is still sitting at a very healthy 24:1 ratio as that would give us lots of upside potential in the future. Fundamental analysts will never tell us that a bull market will come or that a crash will come as they to are brainwashed by the fundamental news reports that constantly barrage us.
We may constantly get bearish forecasts but if you notice they have no clue where any asset class will go once their bearish forecast does gets hit. Any $20 crude oil forecast would only work if we were in Cycle degree, but I think we are still far away from a Cycle degree top in crude oil. The last degree we would be in is SC or GSC degree. I have mentioned it many times but there are very specific technical requirements that have to develop, before we can call that any specific corrective degree has finished.
In due time I believe that crude oil will go through another big bullish cycle that will shock all the fundamentalist once again. They see no upside potential when we are faced with another world oil glut.
From the 2008 peak to the 2008 bottom, crude oil imploded but these types of implosions usual contain some type of "ABC" pattern, if this is the case then 100% of that crash will get retraced in time. World car drivers will not have to drive an extra mile to do it as shutting down all uneconomical wells will do the same thing.
Gold has created another new bottom since my yesterdays post and it did this as a three wave pattern.
Besides gold imploding much deeper after and 5 wave decline something has to go the opposite way.
This would mean my top trend line has to be left in the dust or in this case gold dust, and what type of pattern this may take will be very important.
The good thing is that stocks are still imploding while gold has thumbed its nose at the turmoil. All we need is the US dollar to decline along with stocks and gold should see a bullish rally.
Worst case scenario is that gold will still crash to new bear market record lows before it starts another bullish campaign. Way back in August we had what I saw as an ending diagonal and it most certainly ended something, now lasting well over 1.5 months.
A new month and a new quarter will make things interesting to say the least. If you have noticed, the gold stocks have not confirmed the same pattern as the gold decline has shown, this is a very good and positive sign as I always like to see gold stocks bottom before the metal does.
This also happens at major tops as many analysts noticed. They all were claiming that gold stocks would catch up to gold as gold keep on soaring while gold stocks lagged.
The gold/oil ratio to the Dec oil contract is still about 24.5:1.
The little blue book gives us over 5 possible counter rally retracement ratios depending on what type of pattern we would get. This makes counter rally forecasting rather a waste of time as "B" wave tops can travel 130% and then crash again. In this case an 80% rally would have to happen otherwise a zigzag will no longer fit.
Not much to report on, as the SP500 spiked and now has started another decline. It looks like an inverted zigzag has just occurred. If this is correct then a 100% or more retracement is due. October is also one of the worst crash months of the year as the 1987 crash came in late October. I think we still have well over 2 weeks before the 1987 crash anniversary date is upon us.
We may not be facing the same type of decline as we did in 2007-2009 as this one could be much slower and take much longer. What I am looking for is all this to turn into better quality impulse waves, especially if we are just resuming the old trend. Resuming the old trend would mean that a "B" wave top has already completed and it also means that eventually the 2009 bottom would be revisited.
I am not completely convinced of a five wave decline but the only way to eliminate it is when it constantly fails.
If we are to see another major bottom by the next solar cycle bottom around 2020-2021 then this means that it would take about a 5 year decline. This does not fit very nice as some commodities are at extreme lows already.
My favourite contrarian has the SP500 top back in May 2015 which I cannot argue with as each index may have a different exact top.
Wednesday, September 30, 2015
The Russell 2000 (RUT) has been creating impulse waves heading down at a higher quality than any of the other indices. There is far less overlapping going on and the recent rally sure did not get the RUT all cranked up.
If the impulse wave decline is corrected then more compounding waves will happen, but I am sure I will have to change the initial wave count. For now I am treating the top as a "B" wave top and I would need 5 waves down in Minor degree to confirm this wave count. Will the others all join in? If so then my 2009 bottom will need adjusting.
I have lots of time for adjusting as the most important thing is to track any 5 wave sequence. When a five wave sequence is pointing down then this is pointing us in the direction of the new trend or the resumption of an old trend.
Hate to say it but if the RUT decline is part of the bigger decline then no support price level on this planet will hold. It would just keep declining like a leaf floating in the autumn breeze, up down and sideways. The only thing that will give us any warning that a bottom may be near is when the majority of insiders of the RUT companies start buying their own shares back.
I am sure that once this insider buying starts it will be across all indices not just one index. We may get any surprise counter rally you can imagine, but the RUT seems to be on a stealth bearish decline right now.
The Nasdaq has another different wave pattern in its decline. Still from the late August bottom to the mid September peak all looks like it has travelled against the main trend. If this is the case then that late August 2015 low should get completely retraced.
If the recent bottom is an expanded pattern then another down phase in stocks is coming if we like it or not. Traders that can play both ways do not care if the index goes up or down, but investors are always bullish and get burnt when the market crashes. So far $11 trillion dollars has be wiped of the books in global markets. Good thing that this $11 trillion is only E-Money because there is not enough ink in the world and not enough horsepower on a printing press to print that money back into existence.
One reason is that this E-Money was never there in the first place . It is pretty hard to comprehend but none of this $11 trillion lost, has transferred into gold. What happen to the old story about gold being a safe haven asset?
The gold crash sure looks impulsive as I think a strong bottom should come to a conclusion soon if not today. This impulse even fits between a couple of non manipulated trend lines which is a shocker as they are so rare. When gold wants to crash it will do so and the best we can do is track it.
Now that I think 5 waves are completed then a counter rally should start and send gold flying. What type of pattern this gold rally will make will determine if any bullish phase will run out of steam.
Any wave two up could send gold crashing through my top trend line and even touch $1130 or so. If a "B" wave rally is coming then the "B" wave should go much higher than an inverted wave two would. Any inverted wave two scenario would eventually drive gold to a new bear market record low.
Gold stocks have not followed with the same decline which I see as a very good sign as I like to see gold stocks hit a bottom before gold does.
The ending of a month or the ending of a quarter can produce some wild moves or reversals.
There is a big problem between many of the indices as they do not confirm each other regarding critical wave patterns.
With this DJIA cash contract I have circled just one are that is a wave counting problem as this wave pattern did not go to new lows making it a perfect wave count to a potential impulse run. For that to come true the DJIA has to rally and impress us where we become speechless.
This is the E-mini SP500 which matches the big SP500 contract but here we see what in the DJIA can be the start of a big impulse move to a potential expanded inverted move. (bear market rally)
Technically there is a big difference between the two but the E-mini could have had a diagonal 3 wave low where we could also be at a wave one this morning. Violent moves like this show themselves first in the Forex overnight moves where they trade a SP500 unit, so the jump like this would not be a surprise to anyone trading the Forex units.
Now we have to wait and see how deep any correction will go and what type of pattern it will make.
The decline between my two trend lines are low quality impulse waves, which means they could also be diagonal waves. Right now the markets are correcting again so what pattern this correction makes will determine if another leg up will happen.
Tuesday, September 29, 2015
This is the Dec 2015 crude oil contract and for all of September 2015 crude oil has gone sideways with a slight downward slope. This can all work as a triangle, but if it is completed then crude oil has to perform. This would be part of a bigger inverted zigzag but the training 5 waves should alternate in pattern. Choppy and an erratic rally could happen and those usual drag out in time as well. In other words it would take longer than it took the leading 5 waves.
Even if crude oil crashes to a new low like the majority of fundamental analysts are forecasting, then crude oil prices would still come back and completely retrace every failed peak created for the month of September. I believe crude oil still has to take out the late August crude oil price peak, which is close to $51
With the pattern I have, we could be looking at $55+ as a potential "C" wave peak.
As I mentioned in my gold update the gold/oil ratio is about 24.50:1 which is still very cheap when buying oil with real money like gold.
There is a huge difference between technical analysis and fundamental analysis and all the news you hear about prices going up and down are based on fundamentals. News is fundamental information as technical analysts really don't care about the news as it is nothing but white noise.
From my perspective the only thing that matters is the volume of the white noise not its content. I recently had a friend explain to me that Iran is going to flood the market with crude oil but this news is already many months old. Any fundamental news you hear repeated more than three times or repeated once by three different people, then this data is already irrelevant.
We are living in an electronic age where data flies around the world faster than the fundamentalist can absorb. The chart above has tens of thousands of different input data lines from all the individual traders from around the world, so why should I waste my time trying to figure out the impact of fundamental news when traders have their fingers on the trigger called a mouse.
Gold has definitely trashed my last wave count, which is nothing new. Every trashed wave count forces me to look for an alternate as quickly as I can, as each failed wave is just part of the elimination process.
Now gold looks like it has 5 waves down which I am using Submicro degree at this time.
There are always alternates as any move has at least 5 paths that can happen, with one of them being an expanded flat coming to a potential conclusion. When expand flats end you can bet a powerful move to the upside will happen and that these 5th waves get very extended.
If we are just ending on an "A" wave then we still could be in a wave 2 correction but a "B" wave rally would have to happen.
Of course the real ugly path would be for gold to crash to a new record low. As I mentioned there are still a few options that can keep gold in a bullish wave count but if stocks start on a big rally then gold will not shine.
The gold/oil ratio is sitting at 24.50:1 which still makes oil very cheap when compared to real money like gold. If the ratio was about normal then oil would be around $80 per barrel.
I dropped my degree level down by one degree which would make the decline 5 waves down in Subminuette degree. The last five waves would be in Micro degree but this may not be finished.
The large spike could be another expanded wave 4th wave peak as well so this week should tell us if this pattern will hold.
I have started another bullish wave count in Micro degree which also depends on yesterdays bottom to hold. A good looking upside breakout would go a long way to confirm that another impulse wave has started.
Monday, September 28, 2015
Many traders or investors do not like it when gold is so volatile and I say to those that do, "Take a pill as volatility is the name of the game in gold".
We are dealing with a leveraged product in commodities and they are all volatile when you least expect them to be. It is all the fear that produces the wild swings and spikes.
If this has a chance of being a completed zigzag then we are at the maximum already. I can switch the present wave count to an impulse which means the entire rally from mid September could get retraced. Otherwise we may be at a wave two bottom which if identified correctly is the best technical spot to be for a bullish run.
From the September low gold traveled up about $55 which is a Fibonacci number. 55x1.618 gets us to 89 the next Fibonacci number. When I add my $89 to our present $1128 low gold price I get about $1217 as a potential wave three peak.
The US dollar continues to surprise us by pushing higher but I think this is all due to a potential triangle "B" wave I am in, which may not be finished just yet. This sideways market has been going on since early March 2015 with many overlapping waves that do not fit into an impulse wave structure.
If all this is reasonably close then a future plunge in the US dollar is already written on the wall with Elliott Wave graffiti. This last "C" wave bullish phase I am working can fit a diagonal "C" wave as a small zigzag still needed to complete. It would be nice if the US dollar jumped up to 98 but it would not have to go passed 100 this time. From the "B" wave top and plunge should break all records in trashing all easily spotted support price levels.
Also I would not want to fix my "C" wave bottom as a "C" wave flat can have a real long "C" wave trailing section. How steep any future US dollar decline will take will also give us clues as to what type of decline we are having.
The US dollar has to give us a clear sign that its bullish phase is over and a new down trend wants to start. Until then gold, gold stocks and oil can act very sluggish.
The SP500 pushed much lower and an expanded bottom is now becoming less of an option. At the least a correction should happen which could take us back up to the 1950 price level. It seems many turnings come closer to the end or the beginning of each month. If the SP500 and the US dollar spikes with gold declining some more, then we are being hit with another stock mania phase.
Friday, September 25, 2015
The price action I have boxed in may be a diagonal 5 wave decline as the rally in the last few days has been weak or lethargic. I have not posted it very much but I call the corrections (tracks in the snow) the "drunken sailer" routine as they wander one way and then the next.
If the crude oil suddenly gets up and runs north over the fence, then that September 24 bottom should hold. Crude oil has to perform much better than that as it eventually should clear all September rally peaks.
The SP500 made a large drop today which could be a "C" wave bottom. This means that another bullish phase can happen next week. Now if a bigger expanded pattern is also in play then the markets have more upside yet. In the case of the SP500 my "B" wave top should get completely retraced. With the full moon being a super moon as well, these dates can make for very powerful reversal periods.
At this time gold has lost its impulse power more than what I would like to see. We could also be in an expanded pattern but then the $1122 and $1120 price levels would be a target.
Another worst case scenario would be that the entire mid Sept rally to now is a triangle "B" wave rally. If this is true then another complete retracement below $1100 can also happen. Stocks also made another rally so a small comeback of stock mania can cause gold to crash.
Right now the $1141 price level must hold as my old small degree 4th wave bottom as anything below I no longer can fit into my previous impulse pattern.
The full moon and it being a super moon can make for major turning points as they can be very bullish for stocks. Anything bullish for stocks can still be bearish news for gold as they are always in direct competition with each other.
Thursday, September 24, 2015
The markets got hammered again today but I think another correction is due. On this wave count I do have a 1900 price target if we are in another bigger inverted zigzag. This would be a diagonal move from a 4th wave bottom in Intermediate degree.
Nothing is certain but the decline has been very choppy and I have to push it to put this decline into a high quality impulse wave. Only impulse waves that compound on top of each other will push a market higher in a bull market or lower in a bear market. Our other option is that we have corrective waves and corrective waves all get retraced by 100% or more. This is always specific to the degree I am working in.
The VIX spiked up as well but it was a very lethargic move.
This is the chart for HDGE inverse to the stock markets and we can see a very steep run up with only very small corrections. What nobody will tell you is that the rally contains at least three gaps, which I have never seen in this HDGE ETF before. I would have to check back much further to see if I missed any open gaps in the HDGE.
The jury is out if the June bottom to the August spike top is an impulse, if so then any anticipated correction should not travel to new lows. With that awesome August spike it usual needs an equal awesome spike to the downside which could take HDGE to new record lows.
Gold broke that $44.50 price level which corrected all the sideways patterns and then immediately turned back up. This pattern works much better as a triple zigzag but I had to create one expanded pattern to make it fit a triangle. For now I have also switched oil over to a potential zigzag rally and these September sideways patterns will all get retraced. If not this time then another time in the near future.
Fear dominates commodities and when oil goes down fear of the $20 oil price level comes back to haunt us. It only haunts those that do not look at charts or know nothing about Elliott Wave patterns and their meanings.
From the August low to the August high oil traveled about $11 so when I add this amount to our present low I get about $55 which is a Fibonacci number.
In the big scheme of things price has little meaning but pattern is everything. How markets behave is more important than why because why is the easy part as markets are driven by human emotions and a bunch of liquidity.
Gold soared overnight but I think it is time for a correction in a 4th wave. This would be a 4th wave in Submicro degree. What type of correction we get can be decided by the flip of a coin, but ultimately we should end on another wave one peak in Subminuette degree. Another 5 wave run in Subminuette degree would be my final run if what we really have, is just another big zigzag in Minuette degree.
For now I am going to put the big impulse wave structure on the back burner, as I have to explore other options. Chances are good I do not need to deviate very far as I am still working an impulse.
Eventually our mid August peak has to be retraced and push much higher.
This gold rally got its extra push from the decline of the US dollar so this just confirms that gold needs the US dollar to help gold push higher. Gold is not going up because a bunch of buyers that are buying physical gold all at once. At best it is all about traders jumping on the paper gold bandwagon.
A few weeks or months from now nobody will know what fundamental reason drove gold higher except the same old excuse of safe-haven buying.
Updated later in the day September, 24, 2015
From the bottom of my 4th wave in Micro degree gold has soared in a very typical impulse wave. It's not over yet as gold has started to pick up steam again. I may be early in calling a bottom but if it holds then one more leg higher should happen. This could take us to the $1160 price level from which we should see another wave 1 peak in Subminuette degree followed by a corrective crash that can take us back down between wave 3 and wave 4 in Micro degree.
I have used up all my 3 smallest degrees right down to the Miniscule degree level and if I wanted to label lower degrees I would have to make up the next 3 lower levels.
Wednesday, September 23, 2015
- Symbol - GD
- Name - GSCI - Goldman Sachs Commodity Index (GD)
- Exchange - CME
- Trading Months - FGHJKMNQUVXZ
- Trading Unit - $250 times Index
- Tick Size - 0.05 points ($12.50 per contract)
- Daily Limit - None (Globex 3,000 points)
- Trading Hours - 5:00p.m. - 4:00p.m. (Sun-Fri) CST
- Last Trading Day - Futures trading shall terminate on the business day immediately preceding the day of determination of the Final Settlement Price
- Value of one futures unit - $250
- Value of one options unit - $250
This is the cash GD chart I am using
Once I looked at this commodity index I see that our present rally is a shrimp compared to other rallies we have had. Since the peak in 2011 the GD has gone sideways and then a big crash down. It is the top sideways pattern that looks like it contains a triangle "B" wave followed by a big "C" wave plunge. We can argue all day long that commodities will never reach a certain height again but any "ABC" crash will eventually always make the bears look like fools.
Many times with big "C" wave crashes the bottom can contain an ending diagonal. This could turn our present rally into a 4th wave zigzag which also contains a triangle "B" wave. Any "C" wave leg up would get us close to the 400 price level which would dip well into my wave two of the diagonal, followed by another three wave plunge to new record lows.
Any new diagonal 5th wave low does not have to reach my bottom trend line but the 300 price level may be a target.
This GD fits well with the crude oil pattern especially after today, as crude oil crashed.
We should still see one more leg up and then we could be faced with a reversal that will stun many contrarians.
Gold would just complete another leg up of a zigzag rally so this instant calls for a review to any of my impulse wave counts.
Many times I start wave counts with an impulse and the sooner it falls apart the sooner I clue in that another potential fake rally is still in progress.
As I was creating this, crude oil was crashing breaking some key wave patterns. I am looking at a potential triangle at this time with one last chance if crude oil stops before 44.67 on the above Dec contract. At $44.50 crude oil would achieve a downside breakout but it to should have its limits.
The US dollar has move much further than what a wave two top normally is so an alternate wave count should be ready to go. With so many waves overlapping I am looking at a potential triangle inside a potential "B" wave.
If this holds true then the US dollar would have a crash but with limits as to its downside. I think the 89-88 price level would be a reversal target which would give all the commodities a big boast. It would also indicate that this gold bullish phase will be a fake.
After this pattern is completed then the US dollar can come back hard and even hit a new record high.
Once this potential "C" wave decline starts to clearly show itself then I would suspect the commercials to become net long as well, as right now they are still net short the US dollar.
So far so good even with a few changes. My recent wave 4 bottom I thought would be another corrective rally but once I counted it a diagonal 5th wave then the following small impulse in Submicro degree fit very well.
If this is going to continue then gold should have another short correction to $1129, before it cranks up again. This would then be the final 5 waves in Submicro degree finishing a potential 5th wave.
If this all falls true then we could be at another wave 1 in Subminuette degree from which I would need another full 3-4-5 waves in Subminuette degree, before another wave 3 target is reached.
I may bump up my degree levels by one degree but I am not in a hurry to do it. Once I run into a big impulse failure then I will adjust my degree levels. As long as I can maintain impulse wave counts it all seems to fit well, but I am fully aware that on a short term basis anything can happen.
Tuesday, September 22, 2015
Since late August the markets have rallied but when it came time to correct that show impulse like waves. These waves overlap and are impossible to fit into an impulse so I have to take this all as a bearish rally at this time. The markets are in a small rally as I post this, but if a 4th wave top has completed then all late August lows should get retraced.
Another possibility is that the markets or the SP500 crashes down to the 1900 price level as an expanded flat, then the August 17 peak will still get retraced. This would be the setup for a diagonal 5th wave to come.
The VIX does not offer any special insight at this time except that there are several or more open gaps above and below present prices. The VIX is also declining with overlapping waves which indicates a correction is still in play.
I may just consider this decline as part of a correction but the majority would be freaking out with such a gold price plunge. At anytime my impulse waves can fall apart, and the trick is to know as early as possible when that may happen.
At present I am working 5 waves up in Micro degree with another wave 1 target in Subminuette degree. What I am showing would give us a 5th wave extension. We are getting very close to where the impulse wave structure can start to fall apart, especially if I become too much of an eager beaver and not give a correction enough time to play out.
Crude oil had made a move down with conviction but also this morning crude oil made a mad dash to the upside. This is one time that my crude oil wave count can fall apart quickly if crude falls below my Miniscule wave 2. If the impulse is going to keep going then crude oil still has to build many more compounded 5 wave structures.
Brent crude has also imploded and it would have to move much the same as WTI would. From the September 17 top I do have an "ABC" starting out heading down so I still think oil should retrace this entire decline. All my wave two bottoms would have to hold in price to keep confirming that an impulse is still in progress.
With all the wild gyrations in gold and oil today we are just a bit above a 24:1 gold/oil ratio.
Monday, September 21, 2015
The mainstream talking heads are starting to change their focus towards the bullish side as some blame China for buying like crazy to fill their reserve tanks. Now we are at a potential $80 price forecast and we will hear less and less of the $20 price forecast. The $20 forecast will hit the news again the next time oil makes a huge spike down.
The $80 forecast is closer to a normal gold/oil ratio so it's not that crazy of a forecast!
One thing this all does is that the bears are being stung every time crude oil make a rally and once they get burned to often they to will join the bullish herd! Of course when this happens crude oil will be ripe for another correction. The majority of one sided traders will never be allowed to keep the big money they make on paper.
So far so good on the wave count but a correction should be due on this smaller scale.
I write a few places showing you the degree that I am using and right now I show a wave 1 which is in Miniscule degree, and my smallest degree from a list of 15.
The US dollar rallied this morning as stocks took a jump as well. The big question is if there is another impulse leg up or is the move just another zigzag? If it is another zigzag then the US dollar will drop like a rock and break to newer lows.
Since March 2015 the US dollar has been in what appears to be a sideways market containing zigzags that all indicate that a bull market correction is still in force. Bull market corrections can be very large which does fool the best analysts forcing them to think the bull market is over. If that were the case then the US dollar bull market would have been finished in March 2015.
Commercials are net short the US dollar and net long a few other currencies that favour commodities which is a good sign.
Sunday, September 20, 2015
I have been working on creating a new list of degree tables that I have been using for the last few years. It contains all 15 degree levels in a PNG format. The largest degree starts at the top and you will never find charts where you can use these high degree levels or have enough paper to draw one completed Idealized 5 waves up in Millennium degree.
If we draw out 5 waves in Cycle degree and make sure that wave three is extended buy at least 3 degree levels then we know what to look for in the real world. I use the idealized impulse wave as my guideline as it determines what is supposed to come next. As I post this I am sure no Cycle degree wave 3-4 or 5 has completed since 1932!
There are 5 sets of three degree levels and one set repeats itself three times. One big thing to remember is that One degree of numbers is always corrected by one degree lower letters. For an example Cycle degree wave 4 can only use Primary or lower degree letters.
At the Miniscule numbers there is no 16th degree level to use but I would just repeat levels 10,11,12
I call these Atom, Proton and Quark degree levels. :) With everything being traded electronically one more lower set of three degree levels is needed.
The B wave I show is in Minor degree and if we are crashing down to a potential 4th wave in Intermediate degree then I require any type of 5 waves down in Minute degree. The problem is with that big down spike we had as this spike does not show when I switch to line mode. The real bottom happen on the 25th of August. The problem with line mode is you will never see any gaps.
Clearly the Nasdaq has gaps all over and a big open gap exists just below, at the 4200 price level. Right now I show a zigzag that could have completed, but the Nasdaq could crash down to the 4100 price level and then kick into another "C" wave bull market roaring to new highs as a diagonal 5th wave.
When the markets are not giving us clean impulse waves then I have to keep it in mind that a correction may still be in force.