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Midweek Market 25 Oct 2018

Oct 25th, 2018 No comments

Executive summary

World equities are beginning to roll over in response to their overwhelmingly precarious positions as a new different dynamic starts to grip the markets with various ‘flight to safety’ mechanisms becoming increasingly apparent. Equity wave structures are defining the shape of things to come and the markets are starting to collapse with money moving into the US$, the bond market, and the beginning of a revival in metals and miners.

This is manifesting in the start of a countertrend relief rally in US bonds and a strengthening US$, while oversold (and neglected) metals and miners are beginning to move up slowly. This is all consistent with both the gigantic fundamental and technical issues plaguing markets in parabolic debt levels, interest rate cycle turning up, and over-valued assets in over-valued currencies.

The US$ index continues to strengthen and has a breakout through a H&S pattern which could propel the dollar to $98 which would trigger a larger H&S to take the dollar to $104. US$ Cots data and the stronger Yen suggest this will not happen quickly and that the gold rally is likely to complete first before an ultimate stronger dollar.

The Gold rally is continuing although there are a number of negative impacts suggesting that progress will be hampered before the rally gets underway again. The strongest of these is the silver underperformance of gold which continues to retard performance of the whole precious metals complex.

 

US$

The US$ index breaks up through a H&S pattern indicating continued strength toward $98. This is consistent with collapsing equities although the Slow Stochastic seems to be topping out. The Cots data suggests some weakness ahead which keeps alive the question as to whether the Elliot Wave ABC correction is complete, or not, and whether the B wave is more complex and still in process to generate a much lower C.

 

 

 

The US$ COTs data chart illustrates the wider dilation which is consistent with a weaker dollar, which should therefore decline in value.

 

 

 

The 3 year weekly chart illustrates the larger H&S which is developing, and if price advances to $98 then this will activate and propel the dollar to $104. The higher price level of $104 is consistent with the still much lower gold price which is likely to decline towards $1000 or $900 once the gold rally has terminated.

The jury is therefore still out as to dollar value in the short term.

 

 

 

Japanese Yen

One of the major currencies making up the US$ index is the Yen which has been strengthening through the month of Oct. In the process it has developed an inclined H&S which if penetrated will result in a short term weaker dollar and stronger gold price.

 

 

 

US Treasuries

The US bond market collapse continues although a countertrend relief rally has developed with impetus from collapsing equity prices. This is likely to test the diagonal support line (red) before the main bond market collapse resumes to eventually much higher yields.

The oscillators are dropping in support.

 

 

 

The US 10 year Treasury Cots data chart illustrates the wide dilation which will propel prices higher, which by definition means lower yields. This is consistent with the countertrend relief rally.

 

 

 

Gold

The Gold multi-month rally continues after the breakouts, although it closed yesterday on a threatening Harami candle. The oscillators are overbought and indicate the potential for a reversal although sentiment remains bullish with still positive Cots data.

 

 

The gold COTs data continues to indicate the bullish dilation which is likely to generate additional gold strength and by definition also a weaker dollar.

 

 

 

South African Rand

The South African Rand is developing a H&S pattern against the US$ and needs to strengthen to penetrate the neckline which will propel the ZAR to R12.50. The oscillator positioning suggests penetration is unlikely, and the Cots data supports that view.

 

 

The ZAR cots data indicates the Commercials long the dollar and short the Rand which is consistent with the bullish reverse dilation indicating a continued stronger dollar and weaker ZAR.

 

 

HUI / Gold Ratio

The HUI / Gold ratio has lost some momentum, turning down at resistance at the level of 0.1276. The chart structure is still intact and the H&S breakout is likely to propel the ratio up to a level of 01375, well into resistance. The oscillators are peaking and therefore this might take a while longer to achieve.

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and it also exhibits similar commentary, although slightly less bearish. Once momentum starts to build again it may well generate it’s own energy as the miners lift the gold price as the gold price lifts the miners.

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite and is positive for US miners if it declines. It too has lost momentum with oscillators turning up with a delay in positive moves for gold and miners.

 

 

Silver

Silver regained some momentum this week but still continues to develop a H&S pattern which remains incomplete. Silver continues to underperform gold and this remains the strongest impact resisting any meaningful advance in the precious metals complex.

The neckline is at $14.97 which remains the key level to be breached. Penetration of this level will assume ignition force, and at the same time the diagonal support needs to be held.

 

 

 

The silver COTs data remains very positive with continued bullish reverse dilation, indicating silver strength and likely stronger rally.

 

 

Gold : Silver Ratio

The data deteriorated again very slightly this week due to silver’s non-confirmation of the gold rally. It closed at 83.89 although there appears to be potential for a consecutive lower high with a diagonal resistance line developing (blue). Much may develop in the next period.

 

 

General Equities

The Dow Jones bear market collapse is underway having now penetrated the key support levels at 25 760 and 24 950, with the oscillators dropping substantially. The general equity markets have turned solidly bearish.

 

 

 

The negative trend of narrow low energy persists on the New York Stock Exchange with new lows continuing to exceed new highs. The lethargic bear market rally has terminated and new lows are exceeding new highs massively to signal a continued market collapse, closing yesterday at -458.

 

 

The market collapse on the New York stock exchange is now in unison, with all the major indices displaying the same negative signals. The Dow closed below 200 day moving average for the first time in a long time. The first real zone of support is now only 4% below current levels.

 

 

The longer term 3 year weekly illustrates penetration of the H&S pattern which is likely to propel the index down to the next major region of support.

 

 

 

Categories: Currency, Equity, Gold Tags:

Midweek Market 18 Oct 2018

Oct 18th, 2018 No comments

Executive summary

There is little change to world financial markets from a week ago as they remain poised to weaken and roll over in response to their overwhelmingly precarious positions, both fundamentally and technically. The US bond market is leading the charge, already in the 3rd year of a long term bear market, which is gradually going global as it also now begins to spill over into stock markets and other markets such as commodities, currencies, etc.

The US$ index spiked up yesterday but in a complex wave structure that could still decline further providing short term strength to other currencies like the Euro as well as precious metals. This is supported by COTs data projecting further dollar declines and gold strength, but in relatively indecisive mode with silver still not confirming gold’s recent strength. But most of the precious metals and ancillary associated charts are looking positive with a number of key breakouts.

 

US$

The US$ index spiked yesterday after recent weakness in a complex wave structure that could move either way. The question remains as to whether the Elliot Wave correction is complete or whether the B wave is still in process to still generate a much lower C.

The oscillators are seemingly becalmed in a sideways drift.

 

 

 

The US$ COTs data illustrates the ever wider dilation in the chart which supports further weakness.

 

 

 

The 3 year weekly chart illustrates the dollar poised below resistance, and with bearish Cots data, may still fully develop the potential H&S pattern in further declining to the 61.8% Fibonacci target zone at the level of 91 in line with the Sep 2017 low.

 

 

 

US Treasuries

The US bond market collapse continues although a short term relief reversal is possible with yield likely to test the lower blue horizontal. Additional bond weakness will of course test the higher blue horizontal which in time will take yields much higher.

 

 

The longer term 5 year weekly chart illustrates US bonds in a long term bear market since mid-2016. Yields have punched through the multi-H&S patterns which are likely to take yields higher by the depth of the head to above 5% as the first stage target.

 

 

 

Gold

Gold has broken up through the sideways wedge and the earlier high at $1221 in a positive thrust in it’s multi-month rally. With strong gold COTs data and weak dollar COTs data the rally is likely to gain further momentum, although the ultra short term may see a reversal which is indicated by the oscillators.

 

 

The gold COTs data continues to indicate the bullish reverse dilation which is likely to generate additional gold strength and by definition also a weaker dollar.

 

 

 

The longer term weekly 3 year chart illustrates the sideways wedge breakout together with much more scope for additional strength in the oscillators.

 

 

US Treasuries and Gold

The relationship between gold and the US Treasury 10 year price is reflected in the chart below with rising bias in strong gold / weak bond price, and reducing bias in weak gold / strong bond price. The chart is starting to indicate bullish gold bias as it breaks up against a declining bond price. This may now move strongly toward the neckline of the H&S pattern which will be bullish gold and bearish US bonds.

 

 

 

HUI / Gold Ratio

The HUI / Gold ratio has a breakout through the H&S neckline which will add momentum to the US gold miners’ outperformance against gold. This in itself will also add momentum to gold.

 

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and it also exhibits a breakout through the H&S neckline which will add momentum to the GDX, as it also will to the gold price itself.

 

 

 

In the longer term 3 year weekly chart you can see that whilst GDX is gaining momentum it is still below the earlier range-bound region between 21 and 25. So, although positive it has much still to do.

US gold miners could well ignite and explode up if gold moves up strongly. There is much internet commentary about ‘BANGS’ superceeding ‘Faangs’ as the next super performers in equities. ‘FAANGS’ we all know but few of us know who the ‘BANGS’ are. How about Barrick, Anglogold, Newmont, Goldfields, and Sibanye?

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite and is positive for US miners if it declines. Well, it too has a breakout through the neckline of the H&S patter, and is building momentum to the downside which promises a lower Dust price and higher GDX and gold price.

 

 

Silver

Silver regained some momentum this week and is also developing a H&S pattern with the neckline at the key level of $14.97. It needs to penetrate this level and is likely to do so with all the impact factors at present, principally the bullish COTs data.

But silver still continues to underperform gold and still does not confirm gold’s rally. This will be achieved with penetration at $14.97. Otherwise silver will continue to impact negatively on the whole complex, although it continues to hold support levels.

 

 

 

The silver COTs data remains very positive with continued bullish reverse dilation, indicating silver strength and likely stronger rally.

 

 

An interesting silver ratio to watch is the US Silver Miners vs Dow.  This illustrates the balance between silver miners and general equities and indicates a large double bottom with the potential to move. IE Silver miners up and/or Dow down.

The oscillators are bullish in support.

 

 

 

Gold : Silver Ratio

The data deteriorated very slightly this week due to silver’s non-confirmation of the gold rally. It closed at 83.71 although there appears to be potential for a consecutive lower high. Much may develop in the next period.

 

 

General Equities

The Dow Jones bear market is underway having completed initial down waves that are retracing some losses. In simple terms the Elliott Wave structure has the impulse down wave moving to 5 (below 3) after 4 has run it’s course. The interim collapse support at 25 760 has been penetrated and the final collapse support level awaits at 24 950.

 

 

 

The negative trend of narrow low energy persists on the New York Stock Exchange with new lows continuing to exceed new highs. Although there has been some recovery, closing yesterday at -114 compared to -468 a week ago, it is still signalling a market collapse.

The index closed at -114 yesterday.

 

 

 

The fractured character of non-confirmations across all platforms on the New York Stock Exchange has finally changed to the start of a collapse in unison. Now the key questions are more involved in timing and quantity.

The first serious support level on the Dow Jones will be encountered between 23 600 and 23 250, about another 9% further down.

 

 

 

 

Categories: Currency, Equity, Gold Tags:

Midweek Market 11 Oct 2018

Oct 11th, 2018 No comments

Executive summary

World financial markets are starting to roll over in response to the overwhelmingly precarious position they are in. The liquidity cycle is finally beginning to bite as the interest rate cycle continues to turn up in the US, which will eventually move worldwide. Together with parabolic global debt, rising inflation, currency value deterioration, and various other threatening criteria, central banks certainly will need to expertly manage the next period. If mismanaged, which is likely given history, then stagflation or worse will result.

The US bond market is in a long term bear market (yields rising) which will ensure equities follow the same route. This will continue to drive interest rates up and potentially generate a collapse in all markets which will by definition include commodities. Will gold, and other precious metals, fall foul of this collapse or will it rise above the rest for all the traditional reasons included in ‘Safe Haven’ as the international monetary system is put to the test? The answer is probably hidden in the US$ and how it fares during this time, and whether it survives it’s ‘international reserve currency status’ or not.

The US$ index continues to decline slightly in a decline phase which could move either way in an Elliot Wave ABC corrective mode which suggests the correction is either complete or that the B wave is still in process to still generate a much lower C, before the next advance begins. The US$ Cots data indicates further weakness still to come.

Precious metals and all the ancillary associated charts are looking equally undecided, moving approximately opposite to movements in the dollar. Gold is currently in an upward corrective wave that is particularly sluggish and, once complete, will see value move down to the completion of the current bear market. There are many reasons for this upward correction to finally gain momentum (detailed in the main commentary), the most important of which is a continuing weaker dollar. But there are also negative impacts based really on silver which has begun to underperform gold.

 

US$

The US$ index declined this week after the recent high and looks likely to fall further because of oscillators rolling over. The question remains as to whether the Elliot Wave correction is complete or whether the B wave is still in process to still generate a much lower C.

 

 

 

The longer term 12 month chart illustrates the dollar bouncing down from the resistance zone (blue), but closing above 10-Dema and hence not confirming a top yet. The wave structure strongly suggests the Elliot Wave corrective wave is far from complete and much lower C is likely to test much lower levels. The COTs data supports this as do the oscillators rolling over.

 

 

The US$ COTs data illustrates the wider dilation which supports further weakness.

 

 

 

The 3 year weekly chart illustrates the dollar turning down at resistance with a bearish Star candle which indicates further weakness. If this corrective phase is to be multi-month (suggested by the timelines in the upward impulse wave structure) then we may well see the dollar test the 61.8% Fibonacci retracement level in line with the Sep 2017 low.

 

 

 

US Treasuries

The US bond market collapse has resumed although a short term relief reversal is possible with yield likely to move down between the blue horizontals.

 

 

The longer term 5 year weekly chart illustrates the end of the 35 year bond bear market and the start of the long term bull market at the cycle bottom at a yield of 1.37%. Yield has increased above 3.2% penetrating a number of H&S necklines in the process. This is likely to propel yield higher by the depth of the head to above 5% in the next phase.

 

 

 

Gold

The gold multi-month rally is still in very slow process, hemmed in by the sideways wedge. But with likely dollar weakness ahead and strong gold COTs data the rally is likely to gain some momentum. Gold therefore remains at a tipping point with the key support and resistance levels indicated.

 

 

The gold COTs data continues to indicate the bullish dilation which is likely to generate gold strength and by definition also a weaker dollar.

 

 

 

The longer term 12 month view illustrates the sluggish rally between well-defined support and resistance zones. There are 2 Doji-type candle closes which usually indicate a reversal, in this case up.

 

 

 

The US$ / Yen currency pair illustrates how the Yen has increased 15% against the dollar in this last week. This adds credence to a stronger gold price and weaker dollar.

 

 

 

HUI / Gold Ratio

The HUI / Gold ratio is holding it’s more positive structure, just. The H&S pattern continues to develop and the data ended on 2 consecutive bullish Engulfing candles, both presupposing better times ahead for gold.

 

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and it also exhibits a bullish Engulfing candle to close, promising a stronger gold price.

 

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite and is also developing a more positive bias with a potential bullish H&S breakout. It also ends on an Engulfing candle which promises a lower Dust price (and higher gold).

 

 

 

Silver

Silver has lost momentum this week and is now underperforming gold, which is negative for the whole complex. It has taken out lower key initial levels but continues to hold a positive diagonal support line (red). The silver COTs data continues to be bullish.

 

 

 

The silver COTs data remains very positive, indicating silver strength. The bullish dilation pattern continues which promises increased prices.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) chart is virtually a replica of the silver chart and commentary. So this is the worst aspect of the precious metals commentary.

 

 

 

Gold : Silver Ratio

The data has deteriorated this week due to the less better silver performance. It closed at 83.30 and is therefore still well above the bellweather level of 80.

 

 

 

General Equities

The Dow Jones has finally penetrated down through the rising wedge of the last period, and in so doing initiated a mini-collapse losing about 1000 points yesterday, or 3.5%. It penetrated the interim collapse support level at 25 750 and the final collapse support level awaits at 24 950. The climb up to the peak was based on ever lower energy levels with new lows continuing to increasingly outnumber new highs.

 

 

 

The recent negative trend on the New York Stock Exchange of new lows continuing to exceed new highs extended to more than 6 weeks in closing yesterday by a margin of minus -468, in what is now a strong signal that the market is collapsing.

The index closed at -468 yesterday.

 

 

 

The fractured character of non-confirmations across all platforms on the New York Stock Exchange has finally started to act in unison as the Dow Jones fell in line with other major indices like the S+P500 and Nasdaq as the US market begins to collapse. This mini-collapse is now likely to start declining in earnest to mirror the already long-standing collapse in the US bond market.

The first serious support level on the Dow Jones will be encountered between 23 600 and 23 250, about another 8% further down.

 

 

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Midweek Market 4 Oct 2018

Oct 4th, 2018 No comments

Executive summary

World financial markets have reached an overwhelmingly precarious position as the reduction in QE gains momentum while QT begins the arduous task of draining inflated liquidity from the system. This is being led by the US as the interest rate cycle turns up with evermore power.

To appreciate how hazardous this is you need only to examine the US bond and stock Markets to realise how they relate to one another and how they will impact on the commodities market.

Today the world is on the cusp of equities plummeting and a huge wave down in the commodities market: All brought on by the excesses of central bank behaviour since removing gold backing from currencies. This is also happening at a time of extreme rampant optimism which camouflages the imminent seismic shift in fortunes.

It is said the bond market is 3 to 4 times larger than the stock market. The US bond market bottomed in mid-2016 when the benchmark US 10 year Treasury note began to increase yield from as low as 1.3%. This week yields spiked up as the US bond market continued to collapse with the 30 year at a new 4 year high, the 10 year at a new 7 year high and the 2 year at a new 10 year high. This culminated after the US bond market had enjoyed a 35 year bull market from 1981, and now is suffering a long term bear market which of course could last another 10, 20, or 30 years. It is at this time that the US stock market is enjoying new highs.

The new highs have been generated by ever-less shares in a fractured market displaying non-confirmations across all platforms, driven mostly by a few IT shares and probably a high degree of computer algorithms. The New York Stock Exchange continues in exhaustion mode with new lows continuing to exceed new highs in closing yesterday by a margin of minus -189, extending the negative trend for over 6 weeks now in what appears to be a prelude to a collapse.

The US$ index advanced this week, after the recent declines, to stall at and reverse down from the previous high. The question remains as to whether the Elliot Wave correction is complete or whether the B wave is still in process to still generate a much lower C. The US$ Cots data indicates further weakness still to come.

Precious metals and all the ancillary associated charts are looking slightly more positive even with the development of some bullish H&S patterns.

 

US$

The US$ index advanced this week, after the recent declines, to stall at and reverse down from the previous high. The question remains as to whether the Elliot Wave correction is complete or whether the B wave is still in process to still generate a much lower C.

The oscillators are mixed and the dollar may still move either way.

 

 

 

The longer term 12 month chart illustrates the bounce off the 38.4% Fibonacci retracement level, stalling at resistance. It still begs the question of whether the decline is complete or not, because both the stalling at resistance and the COTs data suggest further potential declines.

The daily (short term) indicators suggest further dollar strength.

 

 

 

The US$ COTs data illustrates the wider dilation which supports further weakness.

 

 

US Treasuries

Yield on the benchmark US 10 year Treasury spiked up this week to a new 7 year high. This signals the end to the countertrend rally (increasing bond price) although a short term relief reversal is possible. This indicates a strong continuation of the US bond collapse is again underway.

 

 

 

The much longer term 40 year chart illustrates the 35 year bond bull market reaching a bottom yield point in mid-2016. This point represents the head of the inverted H&S formation which indicates that yield of 5% will be forthcoming in the long term bond bear market as it unfolds (being the depth of the head projected up).

 

 

 

Gold

The gold multi-month rally is still in very slow process, hemmed in by the sideways wedge (and a stronger dollar). The chart has developed a slightly more positive bias but much is still to be achieved. The key support and resistance levels are indicated. Gold therefore remains at a tipping point with slightly positive oscillators and strong COTs data.

 

 

The gold COTs data is now beginning to move from a bullish convergence to an even more bullish dilation, indicating gold strength and by definition a weaker dollar.

 

 

The longer term 3 year weekly chart indicates the sideways wedge which could break up or down. This is a much more positive chart with the oscillators turning up in support of a breakout up. The gold rally still needs to become a reality however and if a breakout up does not occur then a break down will be followed by lower prices down to test the $1125 level.

 

 

 

A look at the Gold : 10 year US bond price ratio on a 6 year weekly chart indicates the beginning of a more positive picture with gold preparing to breakout against a weaker bond. This has been a long time coming and the oscillators too are pointing up and positive.

 

 

HUI / Gold Ratio

The earlier US miner jolt up against gold is once again moving up, after an interim decline, as the rally in US miners gains momentum. The chart is developing a more positive bias together with supporting oscillators and a potential bullish H&S breakout.

 

 

 

GDX US miners ETF

The GDX chart is of course similar to the Hui:Gold ratio chart and the same commentary applies. US miner investor optimism needs to be supported with higher gold prices, and a higher GDX will in turn assist the gold price to increase.

The chart is developing an improved positive bias with a potential bullish H&S breakout.

 

 

DUST US Gold Miners Bear Index

The Dust chart displays virtually the exact opposite ais also developing a more positive bias with a potential bullish H&S breakout.

 

 

Silver

Silver has begun outperforming gold, although with a slight retracement this week. The chart pattern is very much more positive than gold but it needs to sustain it’s upward momentum. This is positive for precious metals and hopefully the position can be maintained with the silver COTs data now even more bullish.

Hopefully, key initial levels can be tested on the upside while it is critical to hold the bottom support line at $14 otherwise much lower levels will be tested.

The oscillators are somewhat mixed without promising much either way.

 

 

 

The silver COTs data remains very positive, indicating silver strength. The bullish dilation pattern continues which promises increased prices.

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) chart is developing a more positive bias although it is still very weak. The upward momentum needs to be maintained, and the oscillators are mixed and do not promise much.

 

 

Gold : Silver Ratio

The data continues to improve despite some retracement this week to close at 82, still below 10-Dema. The oscillators are mixed and the ratio could move either way.

 

 

 

General Equities

The New York Exchange continues to achieve new highs, one week in one index and the following week in another, generated by ever-less shares in a fractured market displaying non-confirmations across all platforms. It is driven mostly by a few IT shares and probably a high degree of computer algorithms, as it continues in exhaustion mode.

The rising wedge pattern continues in this mode with interim and final collapse levels at 25 750 and 24 950.

 

 

 

The recent negative trend on the New York Stock Exchange of new lows continuing to exceed new highs extended to more than a month in closing yesterday by a margin of minus -189, as the market continues to be driven by ever lower energy in what appears to be the prelude to a collapse.

The index closed at -189 yesterday.

 

 

 

It is said the bond market is 3 to 4 times larger than the stock market. The US bond market bottomed in mid-2016 when the benchmark US 10 year Treasury note began to increase yield from as low as 1.3%. This week yields spiked up as the US bond market continued to collapse with the 30 year at a new 4 year high, the 10 year at a new 7 year high and the 2 year at a new 10 year high. This culminated after the US bond market had enjoyed a 35 year bull market from 1981, and now is suffering a long term bear market which of course could last another 10, 20, or 30 years. It is at this time that the US stock market is enjoying new highs.

It is just a matter of time before equities collapse into a long term bear market.

 

 

 

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