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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Midweek Market 31 Oct 2019

Oct 31st, 2019 No comments

Executive summary

US equities seem very close to the start of a significant decline. 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 weakening with reciprocating strength mainly in the Euro and British Pound, and precious metals and miners remain becalmed and stuck within higher breakout and lower breakdown levels. More time is required to identify whether gold and silver will perhaps breakout to new highs before the inevitable decline to much lower levels.

The US Fed cut the rate again yesterday in an attempt to reinvigorate the economy and prevent the looming recession, having also started the next round of QE during the previous week. The Process of QE includes ‘printing money’ by buying Treasury bonds, and this has the effect of increasing bond values which then have correspondingly lower yields. This is the mechanism central banks use to reduce interest rates to zero and negative in order to reduce servicing costs of ever higher levels of debt. But in spite of this, the US Treasury countertrend rally seems to have terminated and yields are increasing. 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 global recession draws nearer.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation. 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 some strength from the 50-Week moving average (red) with a slight bounce which should prove temporary.

The daily 12 month chart illustrates the temporary support off the 200-day moving average (green) as the dollar tests the bottom of the expanding triangle with a bearish-looking candle formation. The US Fed rate cut yesterday should propel further weakness in the dollar.

The short term 3 month daily chart provides a closer view of the dollar decline from the breakout which is now ready to resume further declines.

Japanese Yen

The dollar/Yen currency pair continues to hold its strength with Yen weakness exceeding dollar weakness, as price continues to edge up into the bear flag formation. It closed yesterday on a negative candle at a confluence with the 200-day moving average which may spark a reversal, all within the continued down-sloping declining channel..

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart now indicating a potential turnaround more clearly: Yield has a more definite breakout from the declining channel, and 10-Dema (blue) has a more definite cross-over 50-Dema (red). Yield still needs to increase beyond 1.9% into resistance, but a small correction is delaying this until later. The next period is critical in clarifying whether this is now the defining moment of the US Treasury market resuming the long term collapse which started in mid-2016 and which has been interrupted by central bank QE and the process of ‘printing money’ by means of buying bonds which has artificially increased prices and depressed yield.

Gold

Long term gold is still turned down from peak overbought levels and record volumes after meeting strong resistance from 2011 / 2012. The process has been somewhat ‘becalmed’ with as yet no clear indication of 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 expected to decline severely to much lower levels below those of Dec 2015 before the start of the next gold bull market.

Gold is mostly quoted in US$, but can of course be quoted in any currency. It is interesting to observe the long term gold chart quoted in Euros, which illustrates that price has in fact exceeded the previous peak in 2011. Equally, gold in Euros is also expected to still decline severely to much lower levels below those of Dec 2014 before the start of the next gold bull market in Euros.

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 is currently at 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 and bull flag with potential price movement either way. Key breakout levels are indicated at $1526/$1536 (to break up) and $1465/$1459 (to break down).

South African Rand

The Rand continues to drift weaker within the rising channel pattern, with a sharp decline yesterday (despite dollar weakness) caused by statements from the Reserve Bank Governor and the pending rating from Moodys. Further dollar weakness should reverse this trend, but politics is the overriding driver.

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, with the expanding triangle, rising wedge, and reducing wedge patterns nullifying each other. 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 at the 200-week moving average (green) reflecting the stalled metals market.

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. But the silver decline has actually stalled although with as yet 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). Price is currently at a confluence with the 10-day (blue) and 50-day (red) moving averages with the 200-day moving average (green) much lower down in the support zone. Volumes are declining sharply in support of lower prices.

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 the same bullish and bearish symptoms as silver itself, and the key level of $27.40 needs to be penetrated on the downside to prevent the bull flag from activating price to new highs.

Gold : Silver Ratio

The gold / silver ratio closed much lower this week at 83.77, reflecting recent increased silver outperformance of gold and also the development of a changed chart structure in a downward sloping expanding triangle that promises more positive precious metals performance. All the moving averages are now down-sloping, above the ratio, including a the 50-day (red) crossover of the 200-day (green) in a positive ‘gold cross’.

General Equities

The Dow Jones 12 month daily chart illustrates the price rally during October which may still go higher but is very close to rally termination with declining energy levels by all structural criteria. 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 now 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 24 Oct 2019

Oct 24th, 2019 No comments

Executive summary

Markets have become ‘becalmed’ and there is an eerie silence out there, except for currencies: The US$ is weakening with reciprocating strength mainly in the Euro and British Pound. With one or two exceptions, global equities, metals, miners, and Treasuries are where they were a month ago.

The next US QE phase has started, resulting in the weaker dollar and the almost certainty of a US rate cut at the next Fed meeting. So, MMT (Modern Monetary Theory) is again starting to gain momentum in a desperate effort to stall the approach of recession and the inevitable market collapse. But MMT today is in fact the very reason why the next collapse will dwarf any previous collapses in history, because of the collapse in currency values and negative interest rates threatening the sovereign bond market which is traditionally regarded as risk free.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018 within the bearish rising wedge formation. But the dollar is now weakening in the tail of the pattern as it declines to the bottom of the rising wedge under the force of negative divergence. It is now at a confluence with 50-Week moving average (red) which is acting as strong temporary support.

The daily 12 month chart illustrates the breakout through the bottom of the expanding triangle which propelled the dollar into earlier support down to the confluence with the 200-day moving average (green) which provided strong temporary support in a small rebound.

The short term 3 month daily chart provides a closer view of the dollar breakout down to the confluence with the 200-day moving average (green) providing short temporary support.

Japanese Yen

The dollar/Yen currency pair continues to strengthen into the bear flag as it holds strength with Yen weakness exceeding dollar weakness, as it meets the 200-day moving average (green) which should supply strong resistance. The chart is likely to reverse in due course when the bear flag activates into Yen strength and dollar weakness which should continue the negative bias in the large declining channel.

US Treasuries

The US Treasury countertrend rally completion is close to confirmation with the chart now indicating a potential turnaround more clearly . Yield has a breakout from the declining channel, and 10-Dema (blue) has a cross-over 50-Dema (red) for the first time in 14 months. Yield still needs to increase beyond 1.9% into resistance, but both oscillators are showing strength within respective rising channels.

Gold

Long term gold is still turned down from peak overbought levels and record volumes after meeting strong resistance from 2011 / 2012. Despite short term gyrations gold is initially expected to correct down towards the $1380 level, which is described by many as the greatest buying opportunity of a lifetime. The multi-year basing pattern in the support zone (red) is certainly a powerful propellant for much higher prices, but resistance in the 2011-2013 period will be powerful resistance indeed before penetration is achieved, and the next gold bull market accelerates ahead.

There are numerous arguments for and against gold declining or advancing from here, and some of these are dealt with in more detail later in the document. But either way, gold is still expected to decline to much lower levels below those of Dec 2015.

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. Key levels are indicated on the chart at $1459 and $1526, with volumes declining and both oscillators drifting lower.

The 3-month daily chart illustrates in more detail the formation of the topping pattern and bull flag with potential price movement either way. More time is required to identify which of the key levels are penetrated first.

The gold volatility index chart illustrates gold investors’ are losing interest with a clear flat to down bias over the recent 5 months.

South African Rand

The Rand continues to drift weaker within the rising channel pattern, but with strength during October to coincide the recent dollar weakness phase. This trend is forecast to continue at least over the next short term period. which should test further into the support zone.

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, with the expanding triangle, rising wedge, and reducing wedge patterns nullifying each other. Both oscillators are drifting lower which could perhaps shift the balance of power towards lower price (rather than higher).

GDX US miners ETF

Similar commentary applies to the GDX chart, as well as the GDX Juniors and XAU charts (not shown). GDX actually produced 2 (two) failed H&S activations.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, is similar but in reverse direction and perhaps not as accentuated. The bottoming pattern is changing to up bias but price has yet to breakout. There are 3 consecutive breakouts of 3 consecutive reducing wedges, but still no clear breakout to test resistance.

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. But, as with gold, despite short term gyrations silver is initially expected to correct down towards the $16.87 level and much lower levels beyond that.

As with gold, there are numerous arguments for and against silver declining or advancing from here, and some of these are dealt with in more detail later in the document. But either way, silver is still expected to decline to much lower levels than those of Dec 2015 at $13.80.

The weekly 5 year chart indicates Silver is declining to test support at $16.87 which should see price drop towards $15.70 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 both oscillators are moving down in support of lower silver prices.

The top pattern is preparing to break down to lower levels. But, as with gold and miners, a clear bull flag is evident and failure to penetrate $16.87 will activate the bull flag to new highs. Volumes are declining sharply in support of lower prices.

The 3-month daily chart illustrates in more detail the formation of the topping pattern and bull flag with potential price movement either way. More time is required to identify which of the key levels are penetrated first.

Silver miners exhibit the same bullish and bearish symptoms as silver itself, and the key level of $27.45 needs to be penetrated on the downside to prevent the bull flag from activating price to new highs.

Gold : Silver Ratio

The gold / silver ratio closed slightly lower this week at 85.08, indicating a slight drop in gold outperformance of silver which is positive for precious metals. But the up and down performance each week only testifies to the ‘becalmed’ nature of the markets. Therefore gold’s overall leadership role continues which maintains the slight negative impact on metal prices, for the time being.

General Equities

The Dow Jones 12 month daily chart illustrates the price rally during October which could now move either way. This is a prelude to unfolding the basically 2 (two) outcomes developing out of the massive topping pattern of the last two years, whether moving to a new high now or not:
• 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);
• 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);

Because of the Oct rally it is now not obvious which of these 2 (two) options is unfolding.

Consider the chart below which includes the two options.

Neither option is unfolding at the moment and more time is required to forecast which, more accurately. Key elements include whether the rally does not achieve a new high (option red), or whether it achieves a new high and new position for D but still within the expanding triangle (also option red), or whether it achieves a new high beyond the expanding triangle (option blue).

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.

Once we identify which option is unfolding, we nevertheless need to still verify the chart structure to make doubly sure that this option is in fact playing out. 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.

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 17 Oct 2019

Oct 17th, 2019 No comments

Executive summary

The US Fed announced last week its next QE phase to start Tuesday this week (15th Oct) in a program of buying Treasury bills to the value of $60 billion per month until the 2nd quarter of 2020: That could exceed $500 billion. It has also tried to disguise this balance sheet expansion for some reason by stating it not to be QE but rather only “repo market interventions“ which will boost liquidity in the banking system to prevent recurrence of the recent ‘repo failures’ in New York.

The complaint that the current precarious position faced by major economies is due to a shortage of money is untrue. The problem is actually escalating expenditures. The response to any shortage as we saw recently with the New York ‘repo failures’ is simply to issue more money. But that is no solution, it only makes the eventual crisis worse.

US fiat money quantity in circulation and held in reserve on the US Fed’s balance sheet is about $16 trillion. This grew from 1960 at a compound growth rate of 5.86% up to the global financial crisis in 2008. After that during the massive monetary expansion (which we call QE) it grew at a much higher compound growth rate and is now $5 trillion more than it would have been without QE at a continued growth rate of 5.86%. The apparent money shortage is because debt creation to fund current expenditure is spiralling out of control.

This all points to the next (and third) US rate cut for 2019.


The US$ has started to decline since the start of this month, in anticipation of and in sympathy with the next round of US QE. So too has US equities started to increase for the same reason as the myth of prosperity due to monetary expansion lives on.

The US Treasury market is starting to behave as if the end of the countertrend rally is in, which means resumption of the long term collapse in US Treasuries with corresponding increases in yield. It will be fascinating to observe the impact on yield of the new round of QE.

Precious metals appear to be turning down as the bear market begins to manifest. This is supported by potential and actual break downs in US miners as charts begin to look ominous. But there are contrary theories suggesting that a final rally back up to new highs is possible.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018, within the bearish rising wedge formation, which is now close to completion at the apex. There is the start of minor weakness in the tail of the pattern together with the still active negative divergence.

The daily 12 month chart illustrates the breakout through the bottom of the expanding triangle as the dollar index starts a decline phase. The breakout takes the dollar decisively through 50-Dema to the top of the next support zone immediately below.

The short term 3 month daily chart provides a closer view of the dollar breakout down to the next support level. The start of the decline phase with clear lower lows and lower highs is also energised by the negative divergence which is finally kicking in.

Japanese Yen

The dollar/Yen currency pair has strengthened this week as Yen weakness exceeds dollar weakness. Breakout through the top of the small declining channel has taken price to the resistance zone as well as meeting additional resistance from 200-Dema (green). This is all likely to move price lower and to continue with the generally negative bias in the chart.

US Treasuries

The US Treasury countertrend rally completion still seeks confirmation. Yield has started a sequence of higher high and higher low, but this may have stalled for now partly from normal investor behaviour and partly from impact of the new round of US QE. Yield needs to break up through the declining channel and exceed 1.9% before testing resistance.

Gold

Long term gold turned down from peak overbought levels and record volumes after advancing to $1557 and meeting strong resistance from 2011 / 2012. Despite short term gyrations gold is initially expected to correct down towards the $1380 level, which is described by many as the greatest buying opportunity of a lifetime. The multi-year basing pattern in the support zone (red) is certainly a powerful propellant for much higher prices, but resistance in the 2011-2013 period will be powerful resistance indeed before penetration is achieved, and the next gold bull market accelerates ahead.

There are numerous arguments for and against the next gold bull market having already started, and most are for, few are against. Those for have many obvious reasons, and those against have few. One powerful reason against is that gold has still not nearly hit bottom yet, because to do so gold must be the cause of great despair and financial loss: When confidence is totally lost and it becomes forgotten, dispensed with, and hated. This could still see gold at levels of $1000 – $900.

Gold is declining to test the 1st support zone which should see price drop towards $1383. Both oscillators are moving down from overbought levels in sympathy with eventual lower gold prices.

The daily 12 month chart illustrates development of the topping pattern which has formed to promote further potential price declines. The key support level is $1465 below which further declines will occur, but the pattern also resembles a bull flag and if this level is not breached then it could propel gold to new highs.

The 3-month daily chart illustrates in more detail the formation of the topping pattern which includes a sequence of lower highs and lower lows in a declining channel, as well as the key $1465 level at the top of the support zone. Failure to penetrate down through $1465 might activate the bull flag to new highs.

South African Rand

The Rand continues to drift weaker within the rising channel pattern. Much depends on dollar movement, and a weaker dollar will strengthen the Rand and, like gold, may activate the bull flag towards a stronger Rand.

HUI / Gold Ratio

The ratio top pattern continues to develop as it prepares to break down and activate the H&S pattern, as miners underperform gold and in fact continue to depress the metal price. This has not quite happened yet despite a developing weaker bias which should test support soon. Failure to break down will see the ratio continue to drift up into the rising wedge.

GDX US miners ETF

The GDX topping pattern has a breakout to activate the H&S pattern as well as the rising wedge, although price has moved back up to test. The topping pattern also includes a reducing wedge with a sequence of lower lows and lower highs. The sequence is bearish, the reducing wedge is bullish, and the H&S is bearish, with price at a pivotal point which may move either way. The balance of probability suggests lower prices but failure to break down further could have the opposite effect.

The GDX Juniors and the XAU are virtually identical to the GDX commentary above, indicating this condition applies right across the board.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, is similar but in reverse direction and perhaps not as accentuated. The bottoming pattern is changing to up bias but price has yet to breakout. There are 3 consecutive breakouts of 3 consecutive reducing wedges, but still no clear breakout to test resistance.

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. But, as with gold, despite short term gyrations silver is initially expected to correct down towards the $16.87 level and much lower levels beyond that. This continuation down in the silver bear market is likely to witness prices below the Dec 2015 low ($1.80) before true bottom is reached and the eventual start of the next silver bull market. There are a number of additional support levels indicated on the chart and these will of course provide temporary price improvements as they are reached.

Silver is declining to test $16.87 support down to $15.70. Both oscillators are dropping in support of lower silver prices.

The top pattern is preparing to break down to lower levels. But, as with gold and miners, a clear bull flag is evident and failure to penetrate $16.87 will activate the bull flag to new highs.

The 3-month daily chart illustrates in more detail the formation of the topping pattern as well as the key $16.87 level at the top of the support zone. A clear bull flag is evident which includes a sequence of lower highs and lower lows which will potentially cause further declines, or activate the bull flag to new highs if $16.87 is not penetrated decisively.

Silver miners exhibit the same bullish and bearish symptoms as silver itself, and the key level of $27.45 needs to be penetrated on the downside to prevent the bull flag from activating price to new highs.

Gold : Silver Ratio

The gold / silver ratio closed slightly higher on the week at 85.73, indicating slight gold outperformance of silver which is negative for the whole precious metals complex. Therefore gold’s leadership role continues which maintains the slight negative impact on metal prices, for the time being.

General Equities

The Dow Jones 12 month daily chart illustrates the price rally during October which is now likely to equal or exceed the previous top, in a potential new triple top. This is a prelude to unfolding the basically 2 (two) outcomes developing out of the massive topping pattern of the last two years:
• 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);
• 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);
Because of the Oct rally it is now not obvious which of these 2 (two) options is unfolding.

Consider the chart below which includes the two options.

Neither option is unfolding at the moment and more time is required to forecast which, more accurately. Key elements include whether the rally does not achieve a new high (option red), or whether it achieves a new high and new position for D but still within the expanding triangle (also option red), or whether it achieves a new high beyond the expanding triangle (option blue).

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.

Once we identify which option is unfolding, we nevertheless need to still verify the chart structure to make doubly sure that this option is in fact playing out. 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.
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 10 Oct 2019

Oct 10th, 2019 No comments

Executive summary

US equities are declining (and by implication world equities) as the structure and performance in the Dow Jones indicates: More detail in the body copy. US Treasuries have all but completed a countertrend rally which will be confirmed within a week or two. This means resumption of the long term collapse in US Treasuries with corresponding increases in yield.

The US$ is in the last throes of a strengthening phase and is soon to start weakening. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The big decline in precious metals is underway as prices are forecast to drop below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The 5 year weekly chart illustrates the steady dollar advance since the start of 2018, within the bearish rising wedge formation, which is now close to completion at the apex. This is likely to end in dollar weakness soon, especially with the added negative divergence in both oscillators.

The daily 12 month chart illustrates the accelerated dollar advance in the last 4 months with the added negative divergence evident in the MACD. The advance is within an expanded triangle, all within a rising channel, as it holds the 10-Dema line towards ultimate and likely weakness soon.

The short term 3 month daily chart provides a closer view of the dollar advance as it completes higher highs and higher lows in hugging 10-Dema (blue) and remaining above 50-Dema (red). Confirmation of a top is likely to include penetration down through 50-Dema and a change to lower highs and lower lows: It may be that the first lower high might already be in.

Japanese Yen

The dollar/Yen currency pair has started weakening (dollar weakness / Yen strength) in the last month, with a sequence of lower highs and lower lows within both the small and large declining channels. This may now be the start of the next weakness phase in a chart with overall negative bias.

US Treasuries

The US Treasury countertrend rally is still incomplete as yield in the 10 year US Treasury continues to drop, in an overall declining channel. Yield increased slightly this week to create a higher low, but much more is still needed to confirm a bottom. Confirmation of a bottom would need penetration of the declining channel plus penetration through 1.9% to at least start testing resistance.

Gold

Long term gold turned down from peak overbought levels and record volumes after advancing to $1557 and meeting strong resistance from 2011 / 2012. Despite short term gyrations gold is initially expected to correct down towards the $1380 level, which is described by many as the greatest buying opportunity of a lifetime. The multi-year basing pattern in the support zone (red) is certainly a powerful propellant for much higher prices, but resistance in the 2011-2013 period will be powerful resistance indeed before penetration is achieved, and the next gold bull market accelerates ahead.

There are numerous arguments for and against the next gold bull market having already started, and most are for, few are against. Those for have many obvious reasons, and those against have few. One powerful reason against is that gold has still not nearly hit bottom yet, because to do so gold must be the cause of great despair and financial loss: When confidence is totally lost and it becomes forgotten, dispensed with, and hated. These are ‘socionomic’, affecting the mood of the market, and that stage is probably not reached yet. Some Elliott Wave practitioners (and others) are forecasting gold to still go down towards $1000 – $900.

This leg down in the gold bear market is likely to witness prices below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of additional support levels indicated on the chart and these will of course provide temporary price improvements as they are reached.

Gold is correcting up after the first wave down and, once complete, the next wave down should test minor support down to the $1383 level. Both oscillators are moving down from overbought levels in sympathy with eventual lower gold prices.



The 3-month daily chart illustrates in more detail the formation of the topping pattern which includes a sequence of lower highs and lower lows in a declining channel, as well as the key $1465 level at the top of the support zone.

South African Rand

The Rand continues to weaken as price drifts within a rising channel pattern. Much depends on dollar movement, but the chart suggests a continuing weakness in the Rand.

HUI / Gold Ratio

The ratio is essentially moving sideways with a strengthening in this last week. However, the price drift up the rising wedge pattern continues, and this has eventual bearish connotations. If price breaks down into support this could trigger a H&S which will then have developed. Both oscillators are drifting with a neutral bias.

GDX US miners ETF

The GDX topping pattern includes a bearish sequence of lower highs and lower lows after the peak, and this could move price further down to activate the H&S which is developing. Both oscillators are at or near to neutral.

The GDX Juniors and the XAU are virtually identical to the GDX commentary above, indicating this condition applies right across the board.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, is similar but in reverse direction. A bottom is in development with the bias changing to up as the trend change develops, but the Dust chart is not as positive as the GDX is negative. The earlier wedge breakout is nevertheless gathering some sort of momentum. Although both oscillators are neutral, the run up in the last 3 months (especially in the MACD) has been strong which suggests this might push through to a more positive bias chart.

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. But, as with gold, despite short term gyrations silver is initially expected to correct down towards the $16.93 level and much lower levels beyond that. This continuation down in the silver bear market is likely to witness prices below the Dec 2015 low ($12.70) before true bottom is reached and the eventual start of the next silver bull market. There are a number of additional support levels indicated on the chart and these will of course provide temporary price improvements as they are reached.

The next wave down in silver will test support at $16.93-down to $16.20, and later down to $14.20: The decline will outpace that of gold. Both oscillators are moving down from overbought levels in sympathy with eventual lower silver prices.

The 3-month daily chart illustrates in more detail the formation of the topping pattern as well as the key $16.93 level at the top of the support zone. There is a clear declining channel formation which includes a sequence of lower highs and lower lows which will potentially cause further declines. A key level is $15.92 below which support fails.

Gold : Silver Ratio

The gold / silver ratio closed slightly lower as the oscillations within the rising channel continue. This indicates slight silver outperformance of gold this week, but with the rising channel indicating gold is slowly assuming a leadership role, which is negative for the whole precious metals complex.

General Equities
US equities have started to decline with the structure in the Dow Jones chart now indicating further strong declines, probably into year end 2019. Using the Dow as a proxy for US equities it can be seen that there are basically 2 (two) outcomes developing out of the massive topping pattern of the last two years:
• 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);
• 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);
In watching these two options carefully, it appears that the former is in fact happening, and that the latter is not.

Consider the chart below which includes the two options.

Option 1 (red) This pattern is playing out. It will decline towards E to complete (3)(4)(5) before the start of the final market collapse probably at the start of 2021.

Option 2 (blue) This pattern is not playing out, because the Dow is declining now and not rising now. This would have meant a new high in 2019 and the start of the final market collapse in 2019.

Since the Dow is following the Red option, we nevertheless need to still verify the chart structure to make doubly sure that this option is in fact playing out. 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.

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 3 Oct 2019

Oct 3rd, 2019 No comments

Executive summary

The US Fed cut the rate in Sep 2019, but the US economy is indicating a lot more is needed in yet lower rates and increased new credit. But rates are already perilously close to zero and the usual leeway is no longer available.

As US recession looms, the news just keeps getting worse:
• Manufacturing decreases to levels last seen in 2008;
• Treasury yields weaken as recession fears increase;
• Gross national debt jumps by $1.2 trillion to $22.7 trillion;
• Growth keeps declining;
• Student loan debt now totals $1.6 trillion in 2019;
• A Repo ‘squeeze’ resulted when banks stopped lending to each other and the US Fed had to step in to ease liquidity;
• Mid-west economies are faltering and begin spreading pain nationwide;
• Equities finally respond with the Dow Jones dropping 1000 points yesterday;

The US economy, and its president, requires even lower rates and increased money supply to avoid financial and monetary arrest. Are we now to witness the US join the EU and Japan in a coordinated round of aggressive easing, possibly joined by the rest of the world.

US Dollar

The long term monthly US dollar index chart edged down this week from highs at the rising wedge apex. Although both oscillators are neutral they reflect the negative divergence which is now likely to weaken the dollar in the next phase.

The daily 12 month chart illustrates the dollar starting to weaken although still well within both rising patterns. Negative divergence is evident in the MACD and this is likely to continue to weaken the dollar.

The 3 month daily chart provides a closer view of the dollar turning down after 6 consecutive closes above 10-Dema. The closing candles have long shadows above indicating weakness next, together with the force of negative divergence.

Japanese Yen

The dollar has started weakening against the Yen as it maintains position within both declining channels, and the overall essence of a negative bias chart. This would suggest further Yen strength and dollar weakness.

US Treasuries

The US Treasury countertrend rally is still incomplete as yield in the 10 year US Treasury continues to drop. It is assisted by the fear of US recession which in turn provides the US Fed with cause to cut the rate again as yield declines. Yield needs to increase and penetrate the top down-sloping trendline before completion of the countertrend rally can be confirmed.

Gold

Long term gold has turned down from peak overbought levels, but is rising again in a correction which, once completed, will see gold drop to new lows. The correction is likely to increase further before again resuming the decline which will test minor support down to $1383 before serious support levels are reached further down. $1383 is likely to provide a serious platform for additional potential upward corrections.


This leg down in the gold bear market is likely to witness prices below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of additional support levels indicated on the chart and these will of course provide temporary price improvements as they are reached.

Gold is correcting up after the first wave down and, once complete, the next wave down should test minor support down to the $1383 level. Both oscillators are moving down from overbought levels in sympathy with eventual lower gold prices.

The daily 12 month chart illustrates the topping pattern which has formed to promote further potential price declines. Key support levels are indicated on the chart which will also provide bounce potential.

The 3-month daily chart illustrates in more detail the formation of the topping pattern as well as the key $1465 level at the top of the support zone.

South African Rand

The Rand weakened sharply into earlier resistance, as it closed above 10-Dema on the last 10 consecutive trading days. The RSI is approaching oversold levels as the Rand moves closer to the top trendline in the rising channel, which suggests a reversal soon. If this coincides with a weaker dollar then the support region is likely to be tested, perhaps even down towards 200-Dema (green).

HUI / Gold Ratio

Successive breakouts in the ratio is building toward more breakouts as US miners underperform gold. Criss-cross H&S necklines are about to be breached which is likely to test the support region below.

GDX US miners ETF

Similar commentary to the HUI/Gold ratio with GDX indicating the start of a bearish negative bias as the trend change develops. The breakout from the rising wedge is followed by a developing H&S pattern which could activate soon. Both oscillators are just below neutral.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, is similar but in reverse direction. A bottom is in development with the bias changing to up as the trend change develops. There is now potential for a thrust up into resistance to confirm the bottom, which is in support of lower US miner prices.

Silver

Silver is correcting up after the first wave down and, once complete, the next wave down should test minor support down to the $15.62 level. Both oscillators are moving down from overbought levels in sympathy with eventual lower silver prices.

The daily 12 month chart illustrates the topping pattern plus the correction up after the first wave down. The chart structure promotes further potential price declines to test support down to the $15.90 level. Both oscillators are still trending down in support of lower silver.

The 3-month daily chart illustrates in more detail the formation of the topping pattern as well as the key $16.90 level at the top of the support zone.

Gold : Silver Ratio

The gold / silver ratio continues to bounce around within a rising channel which indicates that gold is slowly assuming the leadership role, which is negative for the whole precious metals complex.

General Equities
US equities have started to decline with the Dow Jones dropping by 1000 points yesterday, and with every indication of further declines. Using the Dow as a proxy for US equities it can be seen that there are basically 2 (two) outcomes developing out of the massive topping pattern of the last two years:
• 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);
• 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);
In watching these two options carefully, it appears that the former is in fact happening, and that the latter is not.

Consider the chart below which includes the two options.

Option 1 (red) This pattern is playing out. It will decline towards E to complete (3)(4)(5) before the start of the final market collapse probably at the start of 2021.

Option 2 (blue) This pattern is not playing out, because the Dow is declining now and not rising now. This would have meant a new high in 2019 and the start of the final market collapse in 2019.

Since the Dow is following the Red option, we nevertheless need to still verify the chart structure to make doubly sure that this option is in fact playing out. 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.
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 19 Sep 2019

Sep 19th, 2019 No comments

Executive summary

The US Fed cut the rate by 25 basis points yesterday to keep in touch with yield movement of short term US Treasuries, as they try to fend off recession in America. The US yield curve has weakened correspondingly but, contrary to logic, the US dollar has not, probably because the ‘balance of power’ still resides in the dollar with recent rate cuts elsewhere (notably the EU). Despite a slight weakening in long term US Treasury yields, the end of the countertrend rally seems to have arrived. This means the resumption of the long term collapse in US Treasuries with corresponding increases in yield. It will be interesting to witness how this will affect attempts to continue to cut rates.

US equities continue to remain elevated as they continue to development of a major topping pattern that is leading to the next global systemic crisis and market collapse. Using the Dow Jones Industrial Average as a proxy for US equities it can be seen that there are extremely interesting elements in the wave structure as it develops. These are discussed in more detail in the body copy, but can be grouped basically into 2 (two) outcomes:
• 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;
• Continued advance now to new highs, invalidating the Elliott Wave expanding triangle pattern, before the final market collapse begins in 2019;

These two options are being watched carefully to verify outcomes as soon as possible.

The big decline in precious metals is underway as prices are forecast to drop below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of support levels (especially $1383) to the gold price and these will of course provide temporary price improvements as they are triggered.

The US$ has sustained a strengthening phase since the start of 2018 which is soon likely to correct into weakness, especially with the likely round of more US Fed rate cuts to fend off recession. During this phase gold and the dollar will therefore weaken together, and not opposite to one another which is more usual. Many commentators are forecasting dollar strength in the period ahead, especially once chaos increases in markets and the dollar is perceived as a ‘safe haven’. Once gold starts to decline seriously it may be that the dollar at that stage will strengthen, and move opposite to each other in the more usual format. Much depends on equity and bond market behaviour.

US Dollar

The continued format in the US$ index is overall long term decline with a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The dollar index increased this week as it continues towards the wedge apex. This is a bearish pattern with the promise of weakness ahead together with the force of the powerful negative MACD divergence.

The daily 12 month chart illustrates the dollar edging up from the bottom of the expanding triangle pattern, still within the rising channel. Both oscillators are declining and with negative MACD divergence we are likely to see dollar weakness ahead.

However, the 3 month daily chart illustrates dollar consolidation at the bottom edge of the expanding triangle plus oscillators that appear to be bottoming, which suggests still further short term dollar strength before weakness.

Japanese Yen

The dollar has strengthened against the Yen for 4 weeks now with a breakout through the top of the small declining channel. This is still only at the centreline of the large declining channel though, reflecting strong Yen performance earlier. Dollar strength is much the result of negative MACD divergence but the oscillators are reflecting overbought conditions which will assist dollar weakness ahead.

US Treasuries

The US Treasury countertrend rally looks complete with determined breakouts up from support. The breakout through 50-Dema is being tested and there could still be further slippage, but an eventual increase to 1.9% yield through the resistance zone will confirm that a bottom has been reached. The global sovereign treasury market continues to hold more risk than at any time in history, and the period of central bank ‘silly season’ continues with still more issuing of global bonds yielding negatively. This means ultra-low interest rates and a ‘bubble’ in the so-called risk free Sovereign bond market as well as a few more US Fed rate cuts in trying to fend off recession. With this fundamental background it is difficult to understand how the US Treasury 10 year yield could possibly have bottomed.

The US Treasury yield curve has turned down again towards inversion below 1.00. There is obviously much consternation in America concerning the approach of recession, and this is reflecting in the yield curve which, at inversion below 1.00, reflects Treasury yield on long term 10 year below short term 2 year.

Gold

The gold price as this is written is about $1500 and has been as low as $1480 in spending most of today below $1500. But the gold price reflected in the charts is $1515.80 because of the ‘Stockcharts’ data the charts are based on. This causes a somewhat irritating dysfunction in not only the metals charts but also the miner charts.@#$%

Long term gold has turned down from major resistance, and indicates the start of the next leg down in the gold bear market which is likely to witness prices below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of support levels (especially $1383) to the gold price and these will of course provide temporary price improvements as they are triggered.

The start of the gold downturn meets some support, but the next wave down should breach $1490 to test the major support zone. Both oscillators are turning down from the top of their range in support of lower prices.

The daily 12 month chart illustrates the price drop from the peak as well as declining to the support level from where a small rally activated. There is a whole range of intermediate support levels to the bottom of the support zone at which $1383 is likely to provide strong support for a meaningful rally.

The 3-month daily chart illustrates the downturn towards support with $1490 at the entry level and $1383 at the bottom. 50-Dema is at $1483 just below the support entry level and this may provide additional support, just as 200-Dema is just below 1383 which will no doubt provide additional support to a meaningful rally.

South African Rand

The dollar /ZAR currency pair is consolidating between support and resistance, after recent Rand strength in closing below both 10- and 50-Dema. The price consolidation is on the centreline of the rising channel, indicating a slow drift towards Rand weakness, but some dollar weakness is forecast instead.

HUI / Gold Ratio

The ratio has successive breakouts from the rising wedge and H&S pattern as miners increasingly underperform gold. This is in line with the negative MACD divergence but both oscillators are oversold indicating a ratio increase ahead.

GDX US miners ETF

Similar commentary to the HUI/Gold ratio with GDX indicating a bearish negative bias as the trend change develops. The breakout form the rising wedge is followed by developing H&S pattern which could activate soon. But both oscillators are oversold indicating a price increase ahead first.

GDX Junior Gold ETF

GDX Juniors have an identical commentary to the GDX indicating a bearish negative bias as the trend change develops. The breakout form the rising wedge is followed by developing H&S pattern which could activate soon. But both oscillators are oversold indicating a price increase ahead first.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, is similar but in reverse direction. A bottom is in development with the bias changing to up as the trend change develops. There is now potential for a thrust up into resistance to confirm the bottom, which is in support of lower US miner prices.

Silver

Long term silver turned down within the confines of the rising wedge in meeting some support. But the next wave down should penetrate $17.50 with both oscillators overbought and turning down.

The daily 12-month chart illustrates penetration of the bear flag which should propel price downwards. The next decline could be strong in penetrating $17.50 and possibly $16.80. Both oscillators seem to have space to decline further in support.

Gold : Silver Ratio

The gold / silver ratio continues to bounce around with increased volatility, typical of a trend change. There is a net increase in the ratio which means gold is again assuming a leadership role again. Both oscillators have more space to increase further in support of an increasing ratio which is negative for the whole precious metals complex.

General Equities
US equities continue to remain elevated as they continue to development of a major topping pattern that is leading to the next global systemic crisis and market collapse. Using the Dow Jones Industrial Average as a proxy for US equities it can be seen that there are extremely interesting elements in the wave structure as it develops. These are discussed in more detail in the body copy, but can be grouped basically into 2 (two) outcomes:
• 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;
• Continued advance now to new highs, invalidating the Elliott Wave expanding triangle pattern, before the final market collapse begins in 2019;

These two options are being watched carefully to verify outcomes as soon as possible.

Consider the chart below which includes the two options.

Option 1 (Red) Could complete the pattern (3)(4)(5) into the start of major collapse in 2021.
Option 2 (Blue) Could rise to a new high in 2019 into the start of major collapse in 2019.

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Midweek Market 12 Sep 2019

Sep 12th, 2019 No comments

Executive summary

The big decline in precious metals appears to be finally underway and what we see now is the beginning of the final stage of the prolonged decline that started in Aug 2011. The trigger seems to have been the US Labour Day (1st Monday in September) which annually has the seasonal effect of starting a decline phase in precious metals. The decline is likely to witness prices below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of support levels (especially $1383) to the gold price and these will of course provide temporary price improvements as they are triggered.


The US$ has sustained a strengthening phase since the start of 2018 which is soon likely to correct into weakness, especially with the equally likely US Fed round of more rate cuts to fend off recession. During this phase gold and the dollar will therefore weaken together, and not opposite to one another which is more usual. Many commentators are forecasting dollar strength in the period ahead, especially once chaos increases in markets and the dollar is perceived as a ‘safe haven’. Once gold starts to decline seriously it may be that the dollar at that stage will strengthen, and move opposite to each other in the more usual format.


US equities are strengthening, probably due to the forthcoming Trade War summit between China and the US early next month, with the hope that this may lead to compromise of some sort. Using the Dow Jones Industrial Average as a proxy for US equities (as well as global equities) it can be seen that the wave structure of the Dow chart is now developing into 2 (two) basic options as it continues development of a major global topping pattern that is leading to the next systemic crisis and market collapse. These two options are being watched carefully to verify outcomes as soon as possible.

US Dollar

The continued format in the US$ index is overall long term decline with a rally since 2008. Despite any likely short term decline the dollar index may well strengthen as gold continues to decline, before eventually declining towards the low 60s in the next 5 years as the next gold bull market gathers momentum.

The dollar index increased this week as it continues towards the wedge apex. This is a bearish pattern with the promise of weakness ahead together with the force of the powerful negative MACD divergence.

The daily 12 month chart illustrates the dollar edging up within both the expanding triangle and the rising channel. Both oscillators are moving sideways in anticipation of a stronger breakout in either direction, although negative MACD divergence remains active.

The 3 month daily chart illustrates dollar strength edging back up to test resistance. Both oscillators are neutral and with all MAs moving higher for 9 weeks now the impression is one of slower strengthening before eventual weakening.

Japanese Yen

Finally the dollar is strengthening against the Yen with 3 weeks of gains up to test resistance, from a low point below which no dollar support exists. Both oscillators are rising and the negative MACD divergence could now possibly be activating. However, the chart maintains its negative dollar bias with price still within both declining channels.

US Treasuries

The US Treasury countertrend rally could now be ending with a pronounced increase in the benchmark US Treasury 10 year yield from 1.37% to 1.75% in a week. This means a correspondingly geared decrease in the value of the bond as value in the US Treasury market begins to decline. The yield bottom still has to be confirmed and, judging by the chart, it would seem at least decisive and sustained penetration of 50-Dema would help. The global sovereign treasury market continues to hold more risk than at any time in history, and the period of central bank ‘silly season’ continues with still more issuing of global bonds yielding negatively. This means ultra-low interest rates and a ‘bubble’ in the so-called risk free Sovereign bond market as well as a few more US Fed rate cuts in trying to fend off recession. With this background it is difficult to understand how the US Treasury 10 year yield could possibly have bottomed.

Gold

Long term gold has turned down from major resistance, and the big decline in gold appears to be finally underway. This is the beginning of the final stage of the prolonged decline that started in Aug 2011, which is likely to witness prices below the Dec 2015 low before true bottom is reached and the eventual start of the next gold bull market. There are a number of support levels (especially $1383) to the gold price and these will of course provide temporary price improvements as they are triggered.

Gold turns down from the top of the expanding triangle with 2 bearish Shooting Star candles adding propulsion. There may well be corrections up, but the next wave down should reach $1450 into testing main support. Both oscillators are turning down from the top of their range in support of lower prices.

The daily 12 month chart illustrates the price drop from the peak as well as declining to the support level from where a rally is likely. There are many support levels within the support zone, and the chart indicates 2 of them at $1462 and $1413. Both oscillators are dropping in support of lower prices.

The 3-month daily chart illustrates confirmation of the top in consecutive closes below 10-Dema and successive lower lows. There will no doubt be a rally from here but eventually breaking below $1490 will test support, with support bottom at $1383 providing strong support and likely strong correction up. Both oscillators are dropping in support of lower prices with MACD some way to go still.

South African Rand

The dollar /ZAR currency pair declined into earlier support as the Rand strengthens more than 6% against the dollar in this cycle. Price has consolidated in the middle of the expanding triangle after closing below 50-Dema and 8 consecutive closes below 10-Dema.

HUI / Gold Ratio

The ratio has a trend change to down as the top is confirmed with a breakout. Price has moved down sharply as both oscillators do likewise with MACD still further to go. The negative MACD divergence assisted the breakdown.

GDX US miners ETF

Similar commentary to the HUI/Gold ratio with GDX in a trend change with breakout through the bottom trendline of the rising wedge. The MACD continues to stair step down and the negative divergence assisted in the breakout.

GDX Junior Gold ETF

GDX Juniors have an identical commentary to the GDX in a trend change to down with a breakout. Therefore the breakout is right across the full spectrum of US miners.

Dust US Miners Bear Index

The US Miners Bear index, as the inverse of GDX, has an identical commentary, but in reverse direction. Therefore this counter is in full support of lower US miner prices.

Silver

Long term silver spiked up in a failed breakout to end in a bearish Shooting Star candle that represents a reversal and potential top at the apex of the rising wedge. Both oscillators are turning down in support of a confirmed top and start of a weakening phase.

The short term daily 3-month chart illustrates the silver reversal in a potential top after the failed breakout. Penetration through $17.50 will test support with support bottom at $15.92 providing strong corrective rally potential.

Gold : Silver Ratio

The gold / silver ratio bounced up and down to close higher at 82.73, as volatility increases with the trend change in precious metals. This indicates gold beginning again to slightly outperform silver. Both oscillators have turned up indicating further upward movement in the ratio.

General Equities
US equities are strengthening, probably due to the forthcoming Trade War summit between China and the US early next month, with the hope that this may lead to compromise of some sort. Using the Dow Jones Industrial Average as a proxy for US equities (as well as global equities) it can be seen that the wave structure of the Dow chart is now developing into 2 (two) basic options as it continues development of a major global topping pattern that is leading to the next systemic crisis and market collapse. These two options are being watched carefully to verify outcomes as soon as possible.
Consider the chart below which includes the two options.

Option 1 (Red) Could complete the pattern (3)(4)(5) into the start of major collapse in 2021.
Option 2 (Blue) Could rise to a new high in 2019 into the start of major collapse in 2019.

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