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Midweek Market 28 Nov 2019

Nov 28th, 2019 No comments

Executive summary

Global equities have continued the longest bull market in history from the low point in 2009 after the global financial crisis took the world to the edge of the abyss. Using the Dow Jones Industrial Average as a proxy for global equities this asset bubble continues to exhausted new highs in the final stage of the rally. This has been accompanied by numerous sentiment and momentum indicators signalling the end of the rally and therefore by all structural criteria the start of the next bear phase is imminent.

US Treasury yields have started to increase and world bond markets are resuming the long term collapse which started in mid-2016. This certainly provides a defining moment with titanic forces (Treasury yields increasing) against supposedly immovable objects (Government and central banks cutting rates) acting in opposite directions.

The US$ has all but completed a retracement rally and is set to resume its multi-month weakening phase which eventually will develop into a multi-year weakening phase. Gold is in a period of moving with the dollar (as opposed to the more normal against) and is also in a multi-month weakening phase, and the whole precious metals complex is set to decline further after key breaks below trigger levels.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. The dollar retreat down from resistance has stalled, although it appears to be set to resume its decline soon. By a number of different yardsticks the long term dollar decline is likely to take the index into the low 60’s in the next 5 years.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation. It has, once again, received strong support from the 50-week moving average (red) and has also advanced above the 10-week moving average. Despite this, the dollar is set to resume a weakening phase which will eventually take it down towards the support zone. Negative divergence remains evident and this will provide much energy to breach 50-Wema and break out of the rising wedge into further weakness.

The daily 12 month chart illustrates the current dollar strength which has in fact broken up through the diagonal trendline into resistance. But we are close to a reversal and resumption of declines, which will require breaking through moving averages before testing support much further down.

The short term 3 month daily chart provides a closer view of the breakouts to strength and testing resistance, as the chart develops into a bear flag. The dollar advanced for 6 weeks into the breakouts which will require major reversal power to disengage the upward momentum.

Japanese Yen

Recent dollar strength is evident in the currency pair advancing towards resistance in a bear flag. This too will require major reversal power to disengage the upward momentum as some negative divergence energy plus the bear flag engage the necessary force. This signals eventual Yen strength / dollar weakness, all within the declining channel which should eventually break up to Yen weakness.

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart indicating that the breakouts are holding: Breakout from the declining channel, 10-Dema crossing over 50-Dema, and yield moving toward breach of 1.9% to test resistance. But weakness is increasing with 10-Dema (blue) virtually equal to 50-Dema (red) and a potential negative crossover. Confirmation now requires yield to increase to possibly both 1.9% and 1.94% before advancing further up. This will confirm the US Treasury market is in fact resuming the long term collapse which started in mid-2016. The whole process has been interrupted by central bank QE and artificially depressing interest rates.

Certainly a defining moment with titanic forces (Treasury yields increasing) against supposedly immovable objects (Government and central banks cutting rates) acting in opposite directions.

Gold

Long term gold continues to decline slowly after key levels were breached on the downside. Gold is forecast to decline further in the next period.

Gold is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next gold bull market which will eventually provide the structure to the reset of the international monetary system after the existing one collapses.

The weekly 5 year chart indicates $Gold has declined into the 1st support zone which is likely to see gold eventually testing the $1383 level. This level is equally likely to provide energy to significant reversal activity.

Gold declines again to establish a mini-double bottom at the key support level of $1449. It is set to decline further down into support, possibly down towards $1383. Price has decisively penetrated the 50-day moving average (red), and the partial retracement up is set to drop further soon.

The 3-month daily chart illustrates in more detail the penetration of the key level of $1459, and the negative bias of the chart. Gold is likely to breakdown further in the next phase, with the next key level at $1449.

Gold volatility continues to decline and has dropped down into the support zone. This illustrates the increasing loss of investor interest, and both oscillators exhibit a continued 5 month decline which amplifies the trend. This of course may also indicate an unlikely reversal any time soon.

South African Rand

The Rand continues to weaken slightly within the rising channel. But a large topping pattern (circle) could activate into Rand strength provided by dollar weakness (as forecast).

HUI / Gold Ratio

The metal miners charts epitomise the continued strength of miners against a weakening metals background. This therefore presents severe reversal potential once gold breaks down. Development of the large topping pattern could prove extremely bearish for miners soon.

GDX US miners ETF

The GDX commentary is more bearish with a well developed H&S pattern likely to break down and activate soon: This represents even more severe reversal potential once gold breaks down.

The GDX break down potential applies equally to the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

Long term silver continues to decline slowly after key levels were breached on the downside. Silver is forecast to decline further in the next period, and is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next silver bull market.

The weekly 5 year chart indicates that Silver has declined to the support zone which extends down to $15.70. Silver has touched and bounced up off the 200-week moving average (green) which it needs to breach decisively if it is eventually to test $15.70. This level is equally likely to provide energy to significant reversal activity.

Price has bounced off the 200-day moving average (green), having decisively penetrated the 50-day moving average (red), and the partial retracement up is set to drop further soon to test key support levels at $16.59 and $15.90.

The 3-month daily chart illustrates in more detail the negative bias of the chart, and the late penetration up through 10-Dema. Despite current strength Silver is likely to decline further in the next phase.

The earlier bullish attitude of silver miners has turned bearish with a breakout through the diagonal trendline and a decline down to support having breached 50-Dema decisively. This breakout promises lower prices and a potential test of 200-Dema (green)

Gold : Silver Ratio

The gold / silver ratio closed lower this week at 85.65, reflecting the slight increase in silver outperformance of gold. There is a continued sideways drift into the triangle apex which will break either up or down. An upward break is negative for metal prices and a downward break is positive. The slight drift in the chart does appear to be upward at this stage.

General Equities
Global equities have continued the longest bull market in history from the low point in 2009 after the global financial crisis took the world to the edge of the abyss. Using the Dow Jones Industrial Average as a proxy for global equities this asset bubble continues to exhausted new highs in the final stage of the rally.

This is evident in the Dow one year chart indicating a break below 27 680 should finally confirm termination of the rally. This is, and has been for a while now, accompanied by numerous sentiment and momentum indicators signalling the end of the rally, including diminishing advance / decline readings, extreme investor sentiment and complacency, which are typical of the start of major bear markets.

Famous Elliott Wave type analyses include the expanding triangle illustrated above, which has repeatedly signalled the end of earlier bull markets. This chart provides a more detailed view of the topping pattern and how it unfolds in such a circumstance, together with normally powerful negative divergence. covering the 2 year period which is providing much of the energy for the imminent collapse.

This pattern is estimated to unfold in a severe collapse from D to E followed by recovery in 2020 in completing the (3)(4)(5) pattern to the start of a major systemic collapse that will be larger and more powerful than anything the world has witnessed before.

An important aspect of this is the nature of the collapse from D to E. Because, if it is similar and rapid like the decline in Dec 2018 (from B to C), then the program will unfold as described (red in the chart above). But if it is not, and the decline from D to E is slower in an Elliott Wave impulsive structure (blue in the chart above), then the final systemic collapse will unfold much earlier during 2020.

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Midweek Market 21 Nov 2019

Nov 21st, 2019 No comments

Executive summary

Three major markets in – Bonds, Gold, and Equities are now beginning to indicate key turning points as they evolve in response to the asset bubbles that have formed in the longest bull market in history from the low point in 2009 after the global financial crisis took the world to the edge of the abyss. Bonds, equities, and indeed most asset classes such as property, fine art, etc., developed into asset bubbles driven by modern monetary theory (MMT) which included money printing in QE programmes, dwarfing everything that went before, that has resulted in ultra-low interest rates down to zero and negative. This has been a failed process that tried to encourage economic growth and has in fact driven currency values on a path towards zero when measured against gold. This toxic cocktail of gross mismanagement by global central banks is about to come apart at the seams in the next systemic crisis which will be more catastrophic than any earlier crisis.

US Treasuries have been in a countertrend rally for a year now, propelled by MMT, having peaked in mid-2016 at the start of a long term bond bear market. US Treasury yields are now finally developing a bottoming pattern which indicates the countertrend bond market rally is over with yields beginning to increase. It looks like this will be validated within the next number of weeks, and if interest rates are now increasing again this will exert unbelievable pressure on world economies as the cost of servicing astronomic debt levels spiral in the face of approaching global recession. Also, this probably puts an end to the ability of the US Fed to again cut the rate, which in turn will apply significant pressure to all asset markets – notably the US stock market and indeed global stock markets.

The US$ is set to resume its multi-month weakening phase which eventually will develop into a multi-year weakening phase. Gold is in a period of moving with the dollar (as opposed to the more normal against) and is also in a multi-month weakening phase despite some very short term strength. Precious metals have recently signalled weakness after key breaks below trigger levels, although miners continue to hold price levels despite weaker metals.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. The dollar retreat down from resistance has stalled, although it appears to be set to resume its decline soon. By a number of different yardsticks the long term dollar decline is likely to take the index into the low 60’s in the next 5 years.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation which is starting to be tested in the lower regions. Despite recent strength the dollar is beginning to weaken towards the 50-Week moving average (red) which has been providing recent strength. Negative divergence is evident and once the dollar breaches 50-Wema it will lead to significant dollar weakness.

The daily 12 month chart illustrates the temporary support off the 200-day moving average (green) as well as the more recent weakness which is set to resume, potentially testing the support zone.

The short term 3 month daily chart provides a closer view of the negative bias developing in the dollar chart and the potential test of support lower down as declines resume.

Japanese Yen

The dollar/Yen currency pair starts declining as Yen strength exceeds dollar strength and the breakout through the bear flag signals further Yen strength / dollar weakness. This is all within the declining channel which should eventually break up to Yen weakness.

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart indicating that the breakouts are holding: Breakout from the declining channel, 10-Dema crossing over 50-Dema, and yield moving toward breach of 1.9% to test resistance. Yield appears set to resume its advance up and once 1.9% is breached decisively this will confirm the US Treasury market is in fact resuming the long term collapse which started in mid-2016. The whole process has been interrupted by central bank QE and artificially depressing interest rates.

Certainly a defining moment with titanic forces against supposedly immovable objects acting in opposite directions.

Gold

Long term gold is still turned down from peak overbought levels and record volumes in a market that required penetration through key levels either up or down, to energise becalmed markets in both metals and miners moving sideways for about 2 months. This has now happened to the downside with gold likely to now start declining further in the next period.

Gold is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next gold bull market which will eventually provide the structure to the reset of the international monetary system after the existing one collapses.

The weekly 5 year chart indicates $Gold has declined into the 1st support zone, with major support starting at $1380. The next phase is likely to see gold eventually testing the $1383 level which is equally likely to provide energy to significant reversal activity.

The daily 12 month chart illustrates the topping pattern break down through the key level of $1459, fleetingly, to start the process of testing support and nullifying the bull flag potential. Price has decisively penetrated the 50-day moving average (red), and the partial retracement up is set to drop further soon.

The 3-month daily chart illustrates in more detail the penetration of the key level of $1459, and the negative bias of the chart. Gold is likely to breakdown to decline further in the next phase.

Gold volatility continues to decline, illustrating the increasing loss of investor interest, and both oscillators exhibit a continued 5 month decline which amplifies the trend. This of course may also indicate an unlikely reversal any time soon.

In revisiting the COTS data we can identify that gold is likely to decline further in line with the dilation illustrated in the red circle. This identifies Large Commercials with large short positions and Large Speculators with large long positions. Large Commercials are usually correct and large Speculators are usually incorrect.

South African Rand

The Rand continues to weaken slightly within the rising channel. The trend is obvious, but a breakdown to strength could be provided by dollar weakness activating the large topping pattern.

HUI / Gold Ratio

The metal miners charts epitomise the continued strength of miners against a weakening metals background. The opposite of this is therefore more likely to happen in the next period, which portends exaggerated miner weakness against less exaggerated metals weakness.

Also, this chart includes a degree of conflicting patterns with the developing H&S and rising wedge more conspicuous suggesting breaks to the downside are probably next.

GDX US miners ETF

The GDX commentary is less bullish with severe reversal potential once the gold rally terminates. Development of the large topping pattern could prove extremely bearish for miners once this activates.

The GDX break down potential applies equally to the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

Long term silver commentary is in essence similar to commentary for gold, except silver is more extreme with the decline from 2011 nearly double that of gold. Long term silver is still turned down from peak overbought levels and record volumes in a market which, like gold, has finally turned down after becalmed markets in both metals and miners moving sideways for about 2 months. This is now likely to decline further in the next period.

Silver is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next silver bull market.

The weekly 5 year chart indicates that Silver has declined into the support zone which extends down to $15.70. Silver has touched and bounced up off the 200-week moving average (green) and decisive penetration will eventually see $15.70 tested. This level is equally likely to provide energy to significant reversal activity.

Price has bounced off the 200-day moving average (green), having decisively penetrated the 50-day moving average (red), and the partial retracement up is set to drop further soon to test key support levels at $16.59 and $15.90.

The 3-month daily chart illustrates in more detail the penetration of the key level of $16.87, and the negative bias of the chart. Silver is likely to breakdown to decline further in the next phase.

The relatively bullish chart includes a cautionary topping pattern which will break down after the silver rally terminates. However, price is well supported by the 50-day moving average (red) which must be penetrated if support is to be tested.

In revisiting the COTS data we can identify that silver is likely to decline further in line with the dilation illustrated in the red circle. This identifies Large Commercials with large short positions and Large Speculators with large long positions. Large Commercials are usually correct and large Speculators are usually incorrect.

Gold : Silver Ratio

The gold / silver ratio closed slightly lower this week at 86.13 in continuing to drift sideways into the triangle apex, with an eventual break up or down to follow. The general drift of the chart indicates higher ratios to follow, and a break up is negative for metal prices, and vice versa. A break up reflects gold outperformance of silver which is negative for the whole precious metals complex.

General Equities
Global equities have continued the longest bull market in history from the low point in 2009 after the global financial crisis took the world to the edge of the abyss. This developed into an asset bubble driven by modern monetary theory (MMT) which included money printing in QE programmes, dwarfing everything that went before, that has resulted in ultra-low interest rates down to zero and negative. This has been a failed process that tried to encourage economic growth and has in fact driven currency values on a path towards zero when measured against gold. This toxic cocktail of gross mismanagement by global central banks is about to come apart at the seams in the next systemic crisis which will be more catastrophic than any earlier crisis.

Using the Dow Jones Industrial Average as a proxy for global equities, it can be seen how the bull market has developed into a huge topping pattern over the past 2 years which is forecast to eventually collapse. Certain Elliott Wave practitioners have analysed this expanding triangle structure to evolve into a collapse from D (where we are now) to E, leading up to the final market collapse from (5) that will destroy the international financial and monetary system. This will be the first retooling of the system since Bretton Woods in 1944.

This chart provides a more detailed view of the topping pattern and how it unfolds. There is a strong negative divergence between the Dow and the oscillators covering the 2 year period which is providing much of the energy for the imminent collapse.

The one year chart illustrates the Dow turning down through the 10-day moving average, but more is required to confirm the potential top that has formed.

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Midweek Market 14 Nov 2019

Nov 14th, 2019 No comments

Executive summary

Market commentary is similar to last week, give or take limited exceptions. US equities continue to ‘drift’ sideways to up with increased lack of energy and breadth, and remain very close to the start of a significant decline.

The US$ is correcting up after recent weakness although it continues to now move sideways with the likely resumption of weakness soon. It is in a multi-month weakening phase which eventually will develop into a multi-year weakening phase. Gold is in a period of moving with the dollar (as opposed to the more normal against) and is also in a multi-month weakening phase despite some very short term strength. Precious metals have recently signalled weakness after key breaks below trigger levels, with becalmed markets in both metals and miners moving sideways for about 2 months.

US Treasury yields are developing a bottoming pattern which indicates the countertrend bond market rally is over with yields beginning to increase. It looks like this will be validated within the next number of weeks, and if interest rates are now increasing again this will exert unbelievable pressure on world economies as the cost of servicing astronomic debt levels spirals in the face of approaching global recession. Also, this probably puts an end to the ability of the US Fed to again cut the rate, which in turn will apply significant pressure to all asset markets – notably the US stock market and indeed global stock markets.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. The dollar and gold (quoted in dollars) have been moving in sync (as opposed to opposite) for about 13 months now, and will presumably do so only for a short while longer if judged by history. Therefore, once they start moving opposite again dollar and gold values will move against each other with low gold if high dollar, and vice versa. But the next period is forecast to see lower dollar and gold values which means they are actually forecast to move in sync for longer than usually occurs historically.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation which is starting to be tested in the lower regions. But the dollar is strengthening in the tail of the pattern, supported by the 50-Week moving average (red). Once this is breached it will lead to significant dollar weakness.

The daily 12 month chart illustrates the temporary support off the 200-day moving average (green) as the dollar retraces some of the recent declines. A breach here will lead to weakness and further testing of the support zone.

The short term 3 month daily chart provides a closer view of recent dollar strength having penetrated up through all moving averages. Once the dollar correction completes it is likely to resume further declines.

Japanese Yen

The dollar/Yen currency pair continues to hold its strength, although weakening in the tail as Yen strength begins to exceed dollar strength. The nearly 4 month long bear flag indicates eventual dollar weakness / Yen strength is likely in due course. all within the continued downward sloping large declining channel in a negative bias chart.

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart indicating that the breakouts are holding: Breakout from the declining channel, 10-Dema crossing over 50-Dema, and yield moving toward breach of 1.9% to test resistance. Both oscillators are in rising channels which reflect the developing chart pattern of higher highs / higher lows from the bottom at the start of Sep 2019. This all portends a turnaround more clearly, but yield still needs to test resistance beyond 1.9% to confirm the US Treasury market is in fact resuming the long term collapse which started in mid-2016. The whole process has been interrupted by central bank QE and artificially depressing interest rates.

Certainly a defining moment with titanic forces against supposedly immovable objects acting in opposite directions.

Gold

Long term gold is still turned down from peak overbought levels and record volumes in a market that required penetration through key levels either up or down, to energise becalmed markets in both metals and miners moving sideways for about 2 months. This has now happened to the downside with gold likely to now start declining further in the next period.

Gold is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next gold bull market.

The weekly 5 year chart indicates $Gold has declined into the 1st support zone, with major support starting at $1380. The next phase is likely to see gold eventually testing the $1383 level which is equally likely to provide energy to significant reversal activity.

The daily 12 month chart illustrates the topping pattern break down through the key level of $1459, fleetingly, to start the process of testing support and nullifying the bull flag potential. Price has decisively penetrated the 50-day moving average (red), and should eventually provide reversal potential as price nears the $1383 level or the 200-day moving average (green).

The 3-month daily chart illustrates in more detail the penetration of $1459, and the likelihood of further price declines.

Gold volatility continues to decline, illustrating the increasing loss of investor interest, and both oscillators exhibit a continued 5 month decline which amplifies the trend. This of course may also indicate a reversal any time soon.

South African Rand

The Rand continues to weaken slightly within the rising channel. The trend is obvious, but break down to strength could be provided by dollar weakness, or break up to weakness by SA politics or further economic weakness.

HUI / Gold Ratio

The metal miners charts epitomise the continued strength of miners against a weakening metals background. The opposite of this is therefore more likely to happen in the next period, which portends exaggerated miner weakness against less exaggerated metals weakness.

Also, this chart includes a degree of conflicting patterns with the developing H&S and bear flag more conspicuous suggesting breaks to the downside are probably next.

The long term 10 year chart illustrates the large consolidation at the top edge of the triangle could be a coiled spring to break down once gold resumes its decline. Additional momentum is provided by the 200-week moving average (green) above and once the 50-week moving average (red) is penetrated below the ratio should break down to test support.

GDX US miners ETF

The GDX commentary is more bearish with a breakout through the bottom of last week’s rising wedge and a topping pattern ready to activate H&S after gold completes its rally. The GDX break down potential applies equally to the GDX Juniors, XAU, and inverse Dust (charts not shown).

The long term 10 year GDX is declining from resistance in a large consolidation set to break down after the gold rally completes. The ratio is supported by the 50-Week moving average (red) just below at the start of the support zone, which once penetrated will ensure a thorough testing of support.

Silver

Long term silver commentary is in essence similar to commentary for gold, except silver is more extreme with the decline from 2011 nearly double that of gold. Long term silver is still turned down from peak overbought levels and record volumes in a market that required penetration through key levels either up or down, to energise becalmed markets in both metals and miners moving sideways for about 2 months. This has now happened to the downside with silver likely to now start declining further in the next period.

Silver is still forecast to eventually decline severely to much lower levels below those of Dec 2015 before the start of the next silver bull market.

The weekly 5 year chart indicates that Silver has declined into the support zone which extends down to $15.70. Silver has touched the 200-week moving average (green) and decisive penetration will eventually see $15.70 tested. This level is equally likely to provide energy to significant reversal activity.

The daily 12 month chart illustrates the topping pattern break down through the key level of $16.87, fleetingly, to start the process of testing support and nullifying the bull flag potential. Price has bounced off the 200-day moving average (green), having decisively penetrated the 50-day moving average (red), and testing support should eventually take price down to $15.90 which will provide some reversal potential.

The 3-month daily chart illustrates in more detail the multiple breakdowns to penetrate $16.87, and the likelihood of further price declines.

The mini-breakout from the bull flag has proved false with price declines that should still see the topping pattern break down further as silver completes its rally. Price is supported by the 50-day moving average (red) and penetration of this should see further price declines to the next key level of $27.40 and the 200-day moving average (green).

Gold : Silver Ratio

The gold / silver ratio closed higher again this week at 86.52, after a penetrating breakout up through the expanding triangle. This reflects gold outperformance of silver which is negative for the whole precious metals complex.

The long term 30 year chart indicates a breakout up through a massive inverted H&S pattern which should still see much higher ratio levels and much lower metals prices.

General Equities

The Dow Jones 12 month daily chart illustrates the price rally since the low of late 2018 and the ever waning momentum as it creeps up yet higher. The Dow rally is now close to termination by all structural criteria as it conveys a compelling bearish picture. This is compatible with the end game in the chart structure we have been postulating.

This is the prelude to unfolding the basically 2 (two) outcomes developing out of the massive topping pattern of the last two years which is soon likely to start a serious decline phase:
• Strong decline now leading into strong recovery into 2020 to new highs to coincide with US presidential elections in Nov 2020, before the final market collapse begins (marked in red on the chart) – now more likely;
• Continued advance now to new highs, invalidating the Elliott Wave expanding triangle pattern, before the final market collapse begins in 2019 (marked in blue on the chart) – now less likely;

Consider the chart below which includes the two options.

It seems option 1 (red) is unfolding and more likely, and option 2 (blue) less likely.

Option 1 (red) Decline from D to E to complete (3)(4)(5) before the start of the final market collapse probably at the start of 2021.

Option 2 (blue) Penetrate up through the top of the expanding triangle before the start of the final market collapse in 2019.

In spite of this, we need still to identify the chart structures as the future begins to unfold. Consider the chart below:

If option 1 (red) is playing out, it needs to decline to E now in a replica ABC format (similar to the end of 2018 decline), to be followed by an impulse (1-5) wave count to a new high in 2020 before the final collapse occurs.

But if the decline to E is in fact an impulse (1-5) wave count (blue), then it is likely that the top of the market was in fact Sep 2019 and that the final market collapse is already happening.

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Midweek Market 7 Nov 2019

Nov 7th, 2019 No comments

Executive summary

US equities seem very close to the start of a significant decline, despite the approach of the festive season which usually produces ‘festive’ markets. Using the Dow Jones Ind Ave as a proxy for US equities (and indeed global equities) the chart structure indicates lack of breadth and volume plus the usual high level of investor euphoria, all pointing towards an advance that is close to termination. The plethora of inter-market non-confirmations continue which add significantly to this view.

The US$ is correcting up after recent weakness although forecast to extend the weakening phase in due course. Precious metals and miners have been in consolidation mode after responding down from recent peaks. More time is required to identify whether metals and miners will perhaps breakout to new highs before the inevitable decline to much lower levels.

US Treasuries are developing a bottoming pattern which indicates the countertrend bond market rally is potentially over with yields beginning to increase. It looks like this will be validated within the next month or two, and if interest rates are now increasing again this will exert unbelievable pressure on world economies as the cost of debt servicing spirals.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. The dollar and gold (quoted in dollars) have been moving in sync (as opposed to opposite) for about 13 months now, and will presumably do so only for a short while longer if judged by history. Therefore, once they start moving opposite again dollar and gold values will move against each other with low gold if high dollar, and vice versa. But the next period is forecast to see lower dollar and gold values which means they are actually forecast to move in sync for longer than usually occurs historically.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation which is starting to be tested in the lower regions. But the dollar has weakened in the tail of the pattern as it declines to test the bottom of the rising wedge under the force of negative divergence. It has gained support from the 50-Week moving average (red) but once this is breached will lead to significant dollar weakness.

The daily 12 month chart illustrates the temporary support off the 200-day moving average (green) as the dollar retraces some of the recent declines. A breach here will lead to weakness and further testing of the support zone.

The short term 3 month daily chart provides a closer view of proceedings with the dollar at the upper edge of the bracket between the 50- and 200-Day moving averages. Once the dollar correction completes it is likely to resume further declines.

Japanese Yen

The dollar/Yen currency pair continues to hold its strength as current dollar strength exceeds Yen strength. Value is rising within a bear flag which indicates a reversal break down into relative dollar weakness / Yen strength, all within the continued downward sloping large declining channel in a negative bias chart.

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart indicating that the breakouts are holding: Breakout from the declining channel, 10-Dema crossing over 50-Dema, and yield moving toward breach of 1.9% to test resistance. Both oscillators are in rising channels which reflect the developing chart pattern of higher highs / higher lows from the bottom at the start of Sep 2019. This all portends a turnaround more clearly, but yield still needs to increase beyond 1.9% into resistance to confirm whether the US Treasury market is in fact resuming the long term collapse which started in mid-2016. The whole process has been interrupted by central bank QE and artificially depressing interest rates.

Certainly a defining moment with titanic forces against supposedly immovable objects acting in opposite directions.

Gold

Long term gold is still turned down from peak overbought levels and record volumes in a market that has become becalmed as reflected in the consolidation of the last 2 months. The process still depends on whether gold is to decline to test support or whether it is first to advance towards a new high before declining. More time is required to clarify this, but nevertheless gold is still forecast to decline severely to much lower levels below those of Dec 2015 before the start of the next gold bull market.

The weekly 5 year chart indicates $Gold is declining to test the 1st support zone which should see price drop towards $1383 eventually. However, the pennant formation is a continuation pattern which suggests higher prices first, even perhaps to a new high. All the moving averages are pointing up, but price is still in the upper regions of the rising channel which presupposes lower prices from here with support from both oscillators moving down.

The daily 12 month chart illustrates development of the topping pattern within a bull flag with potential price movements either up or down. More time is required to clarify whether the next thrust is up or down, and key levels to be breached are indicated on the chart as $1526 (to break up) and $1459 (to break down). Price still sits at the a confluence with the 50-day moving average (red) with the 200-day moving average much lower down in the support zone.

The 3-month daily chart illustrates in more detail the formation of the topping pattern with potential price movement either way. Key breakout levels are indicated at $1526/$1536 (to break up) and $1465/$1459 (to break down).

The gold volatility index indicates continued weakness reflecting continued loss of investor interest. The chart structure therefore supports the gold weakness option but both oscillators are dropping to the bottom of their range which might support the opposite view.

South African Rand

The Rand gapped down as it gained strength against the dollar because of Moody’s rating, but this only buys more time. The chart continues to reflect a gradual weakening increase in the rising channel, with both oscillators neutral. Much depends on dollar and gold values, and whether these continue to move in sync or start moving opposite to one another.

HUI / Gold Ratio

The metal miners charts epitomise the ‘becalmed’ nature of markets at present with numerous conflicting patterns in the HUI / Gold ratio indicating indecision. The H&S patterns have not activated, but in fact the ratio has increased into a bear flag due to recent miner outperformance of gold. Both oscillators are rising to just above neutral and, as with the metals, more time is required to clarify chart direction.

The long term 10 year chart illustrates the large consolidation reflecting the stalled market, as it moves towards the triangle apex. The ratio is bracketed by the 200-Week (green at top) and 50-Week (red at bottom) moving averages, with more time required to clarify chart direction.

GDX US miners ETF

Similar commentary applies to the GDX chart, as well as the GDX Juniors, XAU, and inverse Dust (charts not shown). The topping pattern is held back by the stalled metals market, with the developing H&S still dormant.

The long term 10 year GDX is declining from resistance at a 3-year double top and 6-year triple top in a large consolidation reflecting the stalled gold market. Although this is well above the 200-week moving average (green) which has just been crossed by the 50-week moving average (red) in a bullish ‘gold cross’. More time is required to clarify chart direction from here.

Silver

Long term silver commentary is in essence similar to commentary for gold, except silver is more extreme with the decline from 2011 nearly double that of gold. Long term silver is still turned down from peak overbought levels and record volumes after meeting strong resistance from 2011 / 2012. There is still no clear indication of whether silver is to decline to test support or whether it is first to advance towards a new high before declining. More time is required to clarify this, but nevertheless silver is still expected to decline severely to much lower levels below those of Dec 2015 before the start of the next silver bull market.

The weekly 5 year chart indicates the Silver decline is losing momentum into a pennant formation which indicates a new high is still possible (being a continuation pattern). All the moving averages are pointing up with the 200-week moving average still well below which suggests higher prices first, even perhaps to a new high.

The daily 12 month chart illustrates development of the topping pattern within a bull flag with potential price movements either up or down. More time is required to clarify whether the next thrust is up or down, and key levels to be breached are indicated on the chart as $18.78 (to break up) and $16.87 (to break down), although silver has a mini-breakout from the expanding triangle to support the break down option. Price has in fact broken down through the 50-day (red) moving average with the 200-day moving average (green) still much lower down in the support zone.

The 3-month daily chart illustrates in more detail the formation of the topping pattern and bull flag with potential price movement either way. Key breakout levels are indicated at $18.78 (to break up) and $16.87 (to break down).

Silver miners exhibit a non-confirmation with silver itself and with gold miners, in that there is a mini-breakout from the bull flag, with none in silver or HUI or GDX, etc. This is rather peculiar because normally this would inspire a silver price advance but silver has in fact even underperformed gold this week. Maybe this is pointing towards weaker metals and miners prices finally to break the deadlock.

Gold : Silver Ratio

The gold / silver ratio closed higher this week at 84.84, reflecting recent increased silver underperformance of gold which is negative for the whole complex. However, the development of the downward sloping expanding triangle does indicate silver outperformance of gold, unless the chart structure is about to change into something different.

The long term 10 year chart indicates a potential breakout through the bottom of the rising wedge, unless a broader wedge is in fact in play. It seems to be a pivot point though in the ratio which could have further meaningful implications, still up or down.

General Equities

The Dow Jones 12 month daily chart illustrates the price rally during October is still likely to extend higher into November, despite being close to termination and with continued force from negative divergence. This remains the prelude to unfolding the basically 2 (two) outcomes developing out of the massive topping pattern of the last two years which is soon likely to start a serious decline phase:
• Strong decline now leading into strong recovery into 2020 to new highs to coincide with US presidential elections in Nov 2020, before the final market collapse begins (marked in red on the chart) – now more likely;
• Continued advance now to new highs, invalidating the Elliott Wave expanding triangle pattern, before the final market collapse begins in 2019 (marked in blue on the chart) – now less likely;

Consider the chart below which includes the two options.

It seems option 1 (red) is unfolding and more likely, and option 2 (blue) less likely.

Option 1 (red) Decline from D to E to complete (3)(4)(5) before the start of the final market collapse probably at the start of 2021.

Option 2 (blue) Penetrate up through the top of the expanding triangle before the start of the final market collapse in 2019.

In spite of this, we need still to identify the chart structures as the future begins to unfold. Consider the chart below:

If option 1 (red) is playing out, it needs to decline to E now in a replica ABC format (similar to the end of 2018 decline), to be followed by an impulse (1-5) wave count to a new high in 2020 before the final collapse occurs.
But if the decline to E is in fact an impulse (1-5) wave count (blue), then it is likely that the top of the market was in fact Sep 2019 and that the final market collapse is already happening.

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