We feel there will be one more rally to a new all-time high for US stock markets before there is a meltdown like the crash of 1929.
Long-term, the market is building towards what is likely to be one of the biggest Wave Five tops in history.
If wave (iii) is complete, then we should expect a wave (iv) correction that retraces between 23.6 to 38.2% of the entire wave (iii) rally.
We are working on the assumption that all of wave (iii) is complete at the 4545.85, and we are now falling in wave (iv) which has the following retracement levels:
23.6% =4125.95
38.2% = 3866.19
It is much too early to determine what type of corrective pattern wave (iv) will take.
Trading Recommendation: Go flat and stay flat.
Active Positions: Flat!
Gold:
All of wave -iii- ended at the 2089.20 high and that we are now correcting in a wave -iv- bullish triangle as shown on our Daily Gold Chart.
Within wave -iv- we completed all of wave .c. at the 1675.90 low and we are now rallying in wave .d.
Wave .d. cannot rally above the wave .b. high of 1919.20 for this current triangle pattern to remain valid. Legs of triangle formations are full of overlapping waves, so the internal wave structure is sometimes difficult to analysis in real time.
Within wave .d., it now looks like wave $a$ ended at 1836.90, and wave $b$ has now reached our 61.8% level at the 1737.50 low. Our retracement levels for all of wave $b$ are:
50% = 1756.50 (hit last week)
61.8% = 1737.40
We have now entered that retracement zone, so we need to be on guard for the completion of wave $b$ and the start of anther rally in wave $c$ of .d. We have projection for the end of wave $c$ and .d as:
$c$ = $a$ = 1898.50
Another outside possibility is that all of wave .d. ended at 1836.90 and all of wave .e. at 1745.50. This would mean that all of wave -iv- is now complete and that the next rally in gold will be substantial in wave -v-.
This would create a very non-symmetric triangle, although triangles do not have to look pretty. This will be our alternate count for now.
Major resistance is still the 1835.00/1840.00 level.
Also note the potential head and shoulder bottom on our Daily Gold Chart.
Trading Recommendation: Go long gold. Use puts as stops.
Active Positions: We are long, with puts as stops!
GDX:
It looks like a very complex triple 3 wave corrective pattern is still underway within wave *ii*.
Our retracement levels for all of wave *ii* are:
50% = 30.48
61.8% = 27.49
We have reached our 50% retracement level, so we now need to be on guard for the completion of all of this very length wave *ii* correction and the start of a multiple month wave *iii* rally.
We are now waiting for confirmation of the end of wave *ii*.
We have updated our count for all of *ii* as it now looks like we are getting close to completing all of our second wave ^c^… which looks to be an ending diagonal triangle.
Only a break and close above our upper blue down trendline will confirm that all of wave *ii* is complete at the 29.89 low.
Our updated projection for the end of wave -3- is:
3 = 2.618 (1) = 66.37.
We added to our long GDX positions recently.
We do have higher projections, however, as our long-term wave counts suggest gold is likely heading well above $5000/oz.
Trading Recommendation: Enter “buy and hold” positions for most gold stocks and indices.
Active Positions: We are long the GDX, ABX, KGC, NEM, SSRM, and TSX:XGD with no stops!!
Thank-you!
Captain Ewave & Crew
Email: admin@captainewave.com
Website: www.captainewave.com
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