Midweek Market 27 Feb 2020

Feb 27th, 2020 No comments

Executive summary

Markets are unfolding at critical pivot points which are indicating the early stages of the major systemic collapse which has been developing in the financial and monetary system for some time now. US equities, using the Dow Jones Industrial Ave as a proxy, are breaking down through key levels which indicate confirmation of a top, and this has implications for global stock markets as well. At the same time US Treasuries are at new historic highs with yields at new historic lows, with the US yield curve plummeting down into inversion yet again. This all begs the question whether the US Fed is soon to cut the rate again as well as intervening in increased QE and possibly other ‘easing’ measures to once again manipulate an increase in asset values. Short term 2 and 3 month US Treasuries are not decreasing yields and therefore the US rate is not likely to be cut just yet.

The US dollar has seemingly topped and is starting a weakening phase which may or may not follow through just yet. Whilst this is expected, it is still not confirmed although the Eurodollar, as the inverse, has seemingly also bottomed. Gold has seemingly topped, and given the plethora of sell divergence signals in both the metals and US miners, this is likely to hold and move lower.

So, all is in the balance between ‘The Everything Bubble’ being pricked sooner or later, depending on the ability of central banks to continue propping up the system, and whether there is any confidence left to support that.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2008 to a new high. However the dollar is now beginning to retreat down from these levels and we need more time and data to determine confidently where to next

The 5 year chart indicates the dollar starting to react down from the peak, in what could be the start of a weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to still propel the dollar lower.

The dollar turns down into the start of a weakening phase after its recent new high with a correction somewhat overdue.

The reaction down from very overbought conditions has penetrated the 10-Day MA after 16 trading days above, in achieving at least one of a number of necessary confirmations of a top. The 50- and 200-Day MAs are still much lower down.

EuroDollar

The Eurodollar, as the near inverse of the dollar index, has seemingly bottomed from very oversold conditions having depleted the power of the bearish H&S pattern. The Euro chart and one or two other currency charts as well, indicate that the dollar may well have topped.

US Treasuries

The benchmark 10 year US Treasury yield plummets to an all time low as the US bond market reaches an all time high. This may be something of a meltdown with every likelihood of a yield bottom now, or soon. Despite the knowledge that investors flow from weaker equities into bonds, it nevertheless cannot be that an ever-higher bond market survives in a collapsing equity market.

The long term 30 year chart illustrates the new historic low yield (red circle). As the US bond bull market started in about 1981 with interest rates then at above 15%, it can be seen that this has now endured 39 years. All bubbles burst eventually.

US Yield Curve

The US yield curve inverted again this week with a plummet. This illustrates the poison in the US system which boils to the surface: All is not well in the US economy, and markets in the next period will put the US Fed to the test.

Gold

The recent gold rally has intensified the sell divergence in that the oscillators have ‘lagged’ the gold price. The gold price has now started to react down as a consequence. This is a harbinger of lower prices ahead, and even much lower prices before the next gold bull market drives price many times higher in a battle fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the renewed intensification of the sell divergence which has caused the price to start declining and potential confirmation of the top.

The 12 month chart illustrates depletion of the pennant breakout and the sell divergence in more detail. Gold turns down from the top as the power of divergence kicks in.

The 3-month chart illustrates how marginal the new high is and the price decline from the top. Gold is likely to next start testing support.

Dilation between red and green is increasing as respective positions by Large Speculators and Large Commercials increase. This indicates the gold price is likely to continue decreasing, with increased long positions by Large Speculators ((green) usually incorrect) and increased short positions by Large Commercials ((red) usually correct).

South African Rand

The Rand continues to edge weaker towards the previous peak within the potential bear flag. But this could easily reverse into strength next as the dollar continues to weaken.

HUI / Gold Ratio

The ratio is declining down from resistance, as the power of divergence kicks in. The sell divergence should continue to weaken the ratio which means US miners are weakening faster now than gold is weakening.

GDX US miners ETF

The GDX has a breakout to a new high and in the process created a sell divergence signal with the oscillators failing to confirm. The price has now started to decline as the sell divergence kicked in. In fact there are dual sell divergence signals and GDX could well break lower to test support, in line with the new softer metals and miners prices.

This pattern is also similarly reflected in the GDX Juniors, XAU, and by the inverse Dust US Miners bear Index (all charts not shown).

Silver

The long term silver trend continues sideways to down after the recent ever-lower peaks. This continues to be a major non-confirmation with gold, typical at major trend changes. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold is the reason the Gold / Silver ratio continues to increase, in silver’s price drift sideways with no obvious direction evident (as it is in the shorter term charts).

The 12 month chart illustrates a new sell divergence created with silver’s recent peak and non-confirmation by the oscillators. This triggered a price decline from a double top which will be activated once silver starts to test support.

The 3-month chart illustrates the sell divergence and double top in more detail, followed by the price decline.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.

Silver miners chart mirrors that of silver, with a double top, sell divergence, and price decline. It is nearly identical and promises lower prices, especially if price penetrates $29.75 to test support. This will trigger the double top.

Gold : Silver Ratio

The gold / silver ratio closed much higher at 91.72 as gold continues to outperform silver. The ratio continues to edge up, which is negative for metal prices. The general trend continues up and this trend looks likely to continue.

General Equities

The two consecutive sell divergences in the Dow chart plus the build-up of negative divergence over the past year has triggered a sharp drop in price from the unfolding topping pattern. The Dow dropped 8.5% in two weeks from exhaustion plus the numerous triggers impacting the system indicating eventual collapse.

Markets are unfolding at critical pivot points which are indicating the early stages of the major systemic collapse which has been developing in the financial and monetary system for some time now. US equities, using the Dow Jones Industrial Ave as a proxy, are breaking down through key levels which indicate confirmation of a top, and this has implications for global stock markets as well. At the same time US Treasuries are at new historic highs with yields at new historic lows, with the US yield curve plummeting down into inversion yet again. This all begs the question whether the US Fed is soon to cut the rate again as well as intervening in increased QE and possibly other ‘easing’ measures to once again manipulate an increase in asset values. Short term 2 and 3 month US Treasuries are not decreasing yields and therefore the US rate is not likely to be cut just yet.

This is aside of all the central bank generated problems in money printing and low or negative interest rate manipulation which provided the liquidity to generate the ’The Everything Bubble’ which, once pricked, will devastate the confidence that is holding everything up at the moment.

One Elliott Wave view of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top. Two critical levels have been penetrated at 28 150 and 27 380 which should confirm the top is in. This will herald the start of a major systemic collapse that could extend into most of the next decade.

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Midweek Market 20 Feb 2020

Feb 20th, 2020 No comments

Executive summary

US equities continue to peak in exhaustion mode as the topping patterns develop numerous triggers indicating eventual collapse. US investment protocols continue to manifest danger signals such as alarmingly low levels of portfolio cash and hopelessly underfunded pension funds which, once the share and bond markets roll over (as they must) will ratchet up levels of danger, fear and anguish in the decline phase. This is aside of all the central bank generated problems in money printing and low or negative interest rate manipulation which provided the liquidity to generate the ’The Everything Bubble’ which, once pricked, will devastate the confidence that is holding everything up at the moment.

The US Treasury countertrend rally completion remains delayed with no immediate likelihood of yield rising beyond the breakout level. A break, either up or down, seems likely soon. But the whole question needs to unfold further before resolving into mainstream bond market direction.
The US yield curve inverted fleetingly again for the third time this week (based on the 10 year / 3 month) indicating that all is not well in the US economy and that recession is a matter of when and not if. The dollar is in long term decline but has extended periods of strength, such as now. The current rally is strong although forecast to end very soon and resume dollar weakness, which is likely to reduce the US$ Index value down from 98 towards 95, which in turn will strengthen the Euro and British pound, amongst others.

Gold and silver rallied strongly these past 2 weeks but continue to display a bearish non-confirmation which is typical at major trend changes, and hence the gold bear market rally could peak soon before the start of the next decline. The next gold bull market will drive price to many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a strong rally to a new high now correcting back up into testing earlier resistance. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ once equity and bond markets decline.

The 5 year chart indicates a short term rally with multi-breakouts in strong gains to new high, in a rising wedge which has broadened out. This implies more gains before any true reversal kicks in. However, the dollar remains under the bearish influence of negative divergence stretching back nearly 2 years, and this is likely to still propel the dollar lower.

The dollar rally extends gains to a new high and, although a correction is overdue, it is likely to still get stronger before the start of an inevitable weaker phase.

The short term 3 month daily chart provides a closer view of the strong dollar rally with oscillators indicating overbought conditions and the start of a correction soon.

EuroDollar

The Eurodollar, as the near inverse of the dollar index, is in a precipitous drop after activating the H&S. Comparing the decline against the height of the H&S head, the decline may have run its course and be close to completion at about 1.075. Both oscillators indicate gross oversold conditions.

The long term 10 year chart of the EuroDollar indicates testing of long term support is close at hand, and this will likely result in a reversal soon.

US Treasuries

10 Year yield continues to look vulnerable as it continues to drift sideways to down, and the chart indicates a likely break will occur soon, either up or down with the probability about equal. This means an extended delay in the US Treasury countertrend rally completion is likely. The chart needs to develop further to provide any kind of confidence either way.

US Yield Curve

The US yield curve inverted fleetingly yet again this week (based on the 10 year / 3 month), indicating that all is not well in the US economy and that recession is a matter of when and not if. This is symptomatic of the false state of US markets which are all propped up with an oversupply of cheap fake money, and it is only a matter of time before confidence in the system is lost and the next systemic crisis begins.

Gold

The rally in long term gold continues and in the process it has renewed the sell divergence with higher price and lower oscillators. This is a harbinger of lower prices ahead, but energy in the rally has not played out yet and short term higher prices are forecast first. The next gold bull market will drive price many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights renewal of the sell divergence which may be signalling that a top is close.

The 12 month chart illustrates the breakout to a marginally new high. This has now formed into a pennant breakout which presupposes further gains, equal to the height of the pennant base, to about $1675. But a double top has also been created and this has bearish implications, if activated.

The 3-month chart illustrates how marginal the new high is.

Importantly, gold Cots data continues to indicate lower gold prices with massive dilation between Large Spec longs ((green) usually incorrect) and Large Commercial shorts ((red) usually correct).

South African Rand

Surprisingly, the Rand has moved sideways against recent dollar strength, all within the extended potential bear flag. It is however all dollar dependant and could break up or down: Likely up first which is a weaker Rand.

HUI / Gold Ratio

The ratio has a breakout to start testing resistance. This means US miners are now strengthening faster than gold, and this ends a period of weakness in the miners stretching back 30 trading days from the peak in the chart.

GDX US miners ETF

The GDX is more bullish than the HUI / gold ratio, and is close to a breakout to a new high. However, there is no breakout yet, whilst there is in gold itself. This means a degree of non-confirmation between gold and GDX which would be bearish.

This pattern is also similarly reflected in XAU (chart not shown).

However, the GDX Juniors do have a breakout which in the process has created a sell divergence which presupposes lower prices ahead.

This pattern is also similarly reflected (in reverse) in the Dust US Miners bear Index (chart not shown).

Silver

The long term silver trend continues sideways to down after the recent peak as it declines against a gold increase. This continues to be a major non-confirmation which is typical at major trend changes. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold is the reason the Gold / Silver ratio continues to increase, despite the opposite in the very short term.

The 12 month chart illustrates silver’s short term multi-breakouts, but with no new high. Silver continues to essentially move sideways.

The 3-month chart illustrates the multi-breakouts in more detail, as silver continues to underperform gold.

Silver miners have a breakout but also not to a new high. So, miners and silver are moving in tandem at the moment.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.

Gold : Silver Ratio

The gold / silver ratio closed lower at 88.02 as silver outperforms gold in the very short term. The ratio continues to edge up, which is negative for metal prices (and vice versa). The general trend continues up as gold continues to outperform silver in the overall, and this trend looks likely to continue.

General Equities

The Dow Jones creates another consecutive sell divergence as the topping pattern continues to unfold. The twin sell divergences at the top of the market includes divergence stretching back more than 12 months. Equities continue to peak in exhaustion mode as the topping pattern develops numerous triggers indicating eventual collapse. US investment protocols continue to manifest danger signals such as alarmingly low levels of portfolio cash and hopelessly underfunded pension funds which, once the share and bond markets roll over (as they must) will ratchet up levels of danger, fear and anguish in the decline phase. This is aside of all the central bank generated problems in money printing and low or negative interest rate manipulation which provided the liquidity to generate the ’The Everything Bubble’ which, once pricked, will devastate the confidence that is holding everything up at the moment.

One Elliott Wave view of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top. The top should be confirmed once the Dow drops below 28995, but definitely below 2815. This is a matter of time now, and it will herald the start of a serious decline that could extend into most of the next decade.

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Midweek Market 13 Feb 2020

Feb 13th, 2020 No comments

Executive summary

US equities continue to peak in exhaustion mode as the topping patterns develop numerous triggers indicating eventual collapse. US investment protocols continue to manifest danger signals such as alarmingly low levels of portfolio cash and hopelessly underfunded pension funds which, once the share and bond markets roll over (as they must) will ratchet up levels of danger, fear and anguish in the decline phase. This is aside of all the central bank generated problems in money printing and low or negative interest rate manipulation which provided the liquidity to generate the ’The Everything Bubble’ which, once pricked, will devastate the confidence that is holding everything up at the moment.

The US Treasury countertrend rally completion remains delayed with no immediate likelihood of yield rising beyond the breakout level. The whole question needs to unfold further before resolving into mainstream bond market direction, with increased money flows from equities to bonds whenever US equities indicate a potential top. Despite pronouncements from the US Fed to hold rates steady throughout 2020, it seems very likely that the rate will be cut by June, because of lower yields by then.

The US yield curve inverted fleetingly again this week (based on the 10 year / 3 month) indicating that all is not well in the US economy and that recession is a matter of when and not if. This impacts massively on the whole question of debt and funding and the actions of central banks and interest rates. The dollar is in long term decline but has extended periods of strength, such as now. The current rally is forecast to end very soon and resume dollar weakness, which is likely to reduce the US$ Index value down from 98 towards 95, which in turn will strengthen the Euro and British pound, amongst others.

Short term gold and silver trends display a bearish non-confirmation which is typical at major trend changes, and hence the gold bear market rally could now have peaked as prices start to decline. Silver is leading the way down as gold continues to outperform with an ever higher gold / silver ratio, which is negative for the whole precious metals complex. The next gold bull market will drive price to many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a strong rally now correcting back up to resistance. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ once equity and bond markets decline.

The 5 year chart indicates a short term rally with multi-breakouts in strong gains which has invalidated the rising wedge break down. However, the dollar remains under the bearish influence of negative divergence stretching back more than 2 years, and this is likely to still propel the dollar lower.

The dollar rally is evident in the 12 month chart, illustrating multi-breakouts as the push towards the previous top continues.

The short term 3 month daily chart provides a closer view of the strong dollar rally as it invalidates the potential bear flag in rising above the previous high of Nov 2019.

EuroDollar

The Eurodollar, as the near inverse of the dollar index, continues to weaken in a series of multi-breakdowns to just below its previous low. This has powerfully penetrated earlier supports to form a double bottom, which may or may not hold depending on the dollar. However, this has activated a H&S pattern which could propel the Euro down towards 1.075, being a drop equal to the height of the head.

US Treasuries

10 Year yield edges up marginally but the chart needs to develop further to provide any kind of confidence in forward yield movement. It needs to penetrate 1.94% on the upside but could as easily drop lower to test support or even penetrate support to a new low. This means a further delay in the US Treasury countertrend completion and any resolution into mainstream bond market direction. For now, key levels in the chart present at about 1.45% at the lower end and 1.94% at the upper end. Penetration of the upper level will indicate resumption of the bond market collapse, and at the lower end as an extension of the bond bull market.

US Yield Curve

The US yield curve inverted fleetingly again this week (based on the 10 year / 3 month) indicating that all is not well in the US economy and that recession is a matter of when and not if. This impacts massively on the whole question of debt and funding and the actions of central banks and interest rates.

Gold

The sell divergence in the gold long term chart is impacting in lower gold prices going forward. Virtually all gold commentaries worldwide indicate higher gold prices ahead, whilst Elliott Wave analysis indicates the opposite, with the current rally being a bear market rally only with prices still likely to weaken considerably. The next gold bull market will drive price many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

It is of course interesting to note that the gold price chart in Euros presents as a bullish proposition with every indication that higher prices lie ahead. This applies equally to all other currencies as well, and it is only the gold price represented in US$ that is different. It therefore begs the question, that if Elliott Wave analysis is correct, and that gold (in US$) is only in a bear market rally with eventual prices below the previous low at $1045, then how will this reflect in the EuroGold chart and in fact any other currency as well.

The answer of course might be a very weak dollar.

The 5 year weekly chart highlights the sell divergence and that price decline momentum is starting despite the current sideways drift. Price is still well ahead of all the moving averages and the 1st support zone which starts at $1450.

The 12 month chart illustrates decline momentum turning sideways which could develop into a pennant flag which is usually a continuation pattern, meaning up.

The 3-month chart illustrates price moving sideways. Key break levels could be at $1551 and $1536 if momentum picks to the downside.

Importantly, gold Cots data continues to indicate lower gold prices with massive dilation between Large Spec longs ((green) usually incorrect) and Large Commercial shorts ((red) usually correct).

South African Rand

Surprisingly, the Rand has corrected to strength against a strong dollar. This is all in a potential bear flag which, if the dollar weakens, will break to the downside for further Rand strength. Dollar movement will dictate here.

HUI / Gold Ratio

The ratio continues to break lower in the wake of divergence, indicating US miner weakness against gold. It could be that the miners will assist in driving the metal price lower, as usually happens. A H&S pattern has activated in the process and technically this could drop the ratio towards 0.1275 level.

GDX US miners ETF

The GDX is less bearish than the HUI / gold ratio. However, the earlier multi-breakdowns below the bear flag are holding as is the ‘Goodbye kiss’. But price is being supported by the 50-day MA (red) which needs to be penetrated if support is to be tested. It would appear investors in US gold miners are now increasingly less confident of higher gold prices.

This pattern is also similarly reflected by the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

The silver general trend continues down after the recent peak as it declines more than gold, reflected in the higher gold / silver ratio. Silver is probably now unlikely to still make a late charge to higher prices. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold is the main driver in generating lower prices, as the decline gathers momentum. The chart structure now suggests yet lower prices to soon test yet lower support levels.

The 12 month chart illustrates the decline gathering momentum as silver drops faster than gold. The next support is close at $17.28.

Lower silver prices continue to gather momentum, as the 50-day MA (red) is penetrated decisively. The next key level to be breached is at $17.27.

The decline in silver miners is poised to gather momentum in the wake of the sell divergence and break from the bear flag and rising wedge. The next support level is close at $29.75.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.

Gold : Silver Ratio

The gold / silver ratio closed higher at 89.82 as it continues to edge up, which is negative for metal prices (and vice versa). The general trend continues up as gold continues to outperform silver. This trend looks likely to continue.

General Equities

The Dow Jones racks up another sell divergence on the back of the previous one, as equities continue to peak in exhaustion mode as the topping patterns develop numerous triggers indicating eventual collapse. US investment protocols continue to manifest danger signals such as alarmingly low levels of portfolio cash and hopelessly underfunded pension funds which, once the share and bond markets roll over (as they must) will ratchet up levels of danger, fear and anguish in the decline phase. This is aside of all the central bank generated problems in money printing and low or negative interest rate manipulation which provided the liquidity to generate the ’The Everything Bubble’ which, once pricked, will devastate the confidence that is holding everything up at the moment.

One Elliott Wave view of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top. The top should be confirmed once the Dow drops below 28995, which is only 556 points below yesterday’s close (1.88%). This is a matter of time now, and it will herald the start of a serious decline that could extend into most of the next decade.

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Midweek Market 6 Feb 2020

Feb 6th, 2020 No comments

Executive summary

US equities, represented by the Dow Jones Industrial Average, have rallied back to the top after the declines of last week. Numerous indications have been developing for some time now in support of a top, and all the data and supporting impact factors need to unwind further before resolving into higher levels of certainty. This involves the complete gambit including US Treasuries, the dollar, debt and funding options, interest rates, and much more. So for now, the longest bull market in history since 2009 remains in place. However, this is nevertheless a major topping pattern which is now threatened by eventual and final collapse.

US Treasury yield bounced up off support after recent weakening, but the US Treasury countertrend rally completion remains delayed with no immediate likelihood of yield rising beyond the breakout level. The whole question needs to unfold further before resolving into mainstream bond market direction, with increased money flows from equities to bonds whenever US equities indicate a potential top. Despite pronouncements from the US Fed to hold rates steady throughout 2020, it seems very likely that the rate will be cut by June, because of lower yields by then.

The US yield curve inverted again this week (based on the 10 year / 3 month) indicating that all is not well in the US economy and that recession is a matter of when and not if. This impacts massively on the whole question of debt and funding and the actions of central banks and interest rates. The dollar is in long term decline but has extended periods of strength, such as now. The current rally is forecast to end very soon and resume dollar weakness, which is likely to reduce the US$ Index value down from 98 towards 95, which in turn will strengthen the Euro and British pound, amongst others.

The gold bear market rally could now have peaked as prices start to decline, with an active sell divergence in place to propel prices lower. Silver is leading the way down as gold continues to outperform with an ever higher gold / silver ratio, which is negative for the whole precious metals complex. The next gold bull market will drive price to many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although trending sideways since retreating down from resistance in slow progress. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ once equity and bond markets decline.

The dollar is still correcting up after the break from the rising wedge. This has now developed into a potential ‘goodbye kiss’ which could activate resumption of the downtrend which is still under the influence of negative divergence stretching back to Aug 2018.m

The dollar rally extends gains as the push towards the previous top continues, but the reverse sell divergence should reverse trend soon. The strong rally achieving multiple breakouts en-route is in a potential bear flag which will lead to lower dollar values once the flag is activated.

The short term 3 month daily chart provides a closer view of the strong dollar rally in the potential bear flag. It is now pushing resistance towards it’s previous high, well above all the MAs. The reverse sell divergence indicated in the 12 month chart should encourage lower dollar values soon.

EuroDollar

The Eurodollar, as the near inverse of the dollar index, continues to weaken in a series of multi-breakdowns towards it’s recent low. Having broken down through the rising channel the recent mini-rally created a ‘’goodbye kiss’ before declining towards a potential H&S. This presents as a bearish chart which can only be rescued by a weaker dollar.

US Treasuries

10 Year yield bounces up off support after recent weakening. But the US Treasury countertrend rally completion remains delayed with no immediate likelihood of yield rising beyond the breakout level of 1.94%. This chart structure needs to unfold further before resolving into mainstream bond market direction, with increased money flows from equities to bonds whenever US equities indicate a potential top. Despite pronouncements from the US Fed to hold rates steady throughout 2020, it seems very likely that the rate will be cut by June, because of lower yields by then.

For now, key levels in the chart present as about 1.5% at the lower end and 1.94% at the upper end. Penetration of the upper level will indicate resumption of the bond market collapse, and at the lower end as an extension of the bond bull market.

US Yield Curve

The US yield curve, represented by 10 year / 3 month, was again briefly inverted this week (red circle). The chart has a weakening bias since Nov 2019 which indicates technically that another inversion is likely soon. This indicates that all is not well in the US economy and that recession is a matter of when and not if.

Gold

The sell divergence in the gold long term chart is impacting in lower gold prices going forward. Virtually all gold commentaries worldwide indicate higher gold prices ahead, whilst Elliott Wave analysis indicates the opposite, with the current rally being a bear market rally only with prices still likely to weaken considerably. The next gold bull market will drive price many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.y

The 5 year weekly chart highlights the sell divergence and that price decline momentum is starting. Price is still well ahead of all the moving averages and the 1st support zone which starts at $1450.m

Price decline momentum is starting after the sell divergence triggered the top. The next key support level is at $1538.m

The 3-month chart illustrates lower prices gathering momentum after the gold price backed down from a late charge.

Importantly, gold Cots data, which is usually correct, continues to remain increasingly gold bearish, with Large Commercials short and Speculators long.

South African Rand

Divergence in the US$/ZAR currency pair weakened the Rand by about 8% before resistance started the correction which is still in progress. The chart structure indicates sideways movement next, but forecast dollar weakness will be the stronger deciding factor.

HUI / Gold Ratio

The ratio is beginning to break lower after the initial sell divergence. The break through the rising channel and bear flag includes a ‘goodbye kiss’ which could send the ratio lower to test support at a key level including a mini-triple bottom. This all presupposes US gold shares are declining faster than the gold price (also forecast to decline).

GDX US miners ETF

The less bearish GDX has a break down through the rising channel and bear flag, with a potential ‘goodbye kiss’ to come. It would appear investors in US gold miners are now increasingly less confident of higher gold prices.

This pattern is also similarly reflected by the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

The silver general trend continues down after the recent peak as it declines more than gold, reflected in the higher gold / silver ratio. Silver is probably now unlikely to still make a late charge to higher prices. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.y

Silver’s non-confirmation with gold is the main driver in generating lower prices, as the decline gathers momentum. The chart structure now suggests yet lower prices to soon test yet lower support levels. m

The 12 month chart illustrates the decline gathering momentum as silver drops faster than gold. The next support is close at $17.28.m

The ominous Shooting Star candle at the peak did in fact have a strong influence on silver’s decline as lower prices continue to gather momentum. Silver is being supported by the 50-Day MA (red) which it needs to penetrate if the next support level at $17.28 is to be tested.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.s

The decline in silver miners gathers momentum as it breaks through the rising wedge and bear flag (black circle), after triggering the sell divergence at the peak. The next support level is close at $29.75.

Gold : Silver Ratio

The gold / silver ratio closed lower at 88.79 and in so doing closed the gap created last week. While a lower ratio is positive for precious metals (and vice versa) the general trend continues to be up as gold continues to outperform silver. This trend looks likely to continue.

General Equities

The Dow Jones rallied back up towards the previous top, despite the sell divergence and decline of last week. This therefore continues the peaking mode of the last period. Numerous indications have been developing for some time now in support of a top and pending collapse, and all the data and supporting impact factors need to unwind still further before resolving into higher levels of certainty supporting a final top. This involves the complete gambit including US Treasuries, the dollar, debt and funding options, interest rates, and much more.

So for now, the longest bull market in history since 2009 remains in place. However, this is nevertheless a major topping pattern which is now threatened by eventual and final collapse.

One Elliott Wave view of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top. Once this top is confirmed, which is only a matter of time now, it will herald the start of a serious decline that could extend into most of the next decade.

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Midweek Market 30 Jan 2020

Jan 30th, 2020 No comments

Executive summary

US equities have started to decline amidst a degree of non-confirmations amongst major indices, which presents as a potential top still to be confirmed. Numerous indications have been developing for some time now in support of a top, and all the data and supporting impact factors need to unwind further before resolving into higher levels of certainty. This involves the complete gambit including US Treasuries, the dollar, debt and funding options, interest rates, and much more.

The start of equity decline has moved funds into bonds and the benchmark 10 year US Treasury has once again reduced yield levels which need to unfold further before resolving into bond market direction. This impacts massively on the whole question of debt and funding and the actions of central banks and interest rates. The dollar is in long term decline but has extended periods of strength, such as now. The current rally is forecast to end very soon and resume dollar weakness, which is likely to reduce the US$ Index value from 97.8 down towards 95, which in turn will strengthen the Euro and British pound, amongst others.

The gold bear market rally could now have peaked as prices start to decline, with an active sell divergence in place to propel prices lower. Silver is leading the way down as gold continues to outperform with an ever higher gold / silver ratio, which is negative for the whole precious metals complex. The next gold bull market will drive price to many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although the decline is now just visible in this long term chart. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ as equity and bond markets decline.

The dollar is still correcting up after the break from the rising wedge. It has broken up through the MAs in a strong mini-rally and is now poised to resume declining down to support, with assistance from negative divergence to propel the dollar lower.

The daily 12 month chart illustrates multi-breakouts in the correction up, including penetration of a trendline and the bearish dome structure. But the rally top includes 2 bearish top candles which are likely to assist in a lower dollar.

The short term 3 month daily chart provides a closer view of the dollar triple breakout as well as the twin bearish top candles. There is also the suggestion of a reverse sell divergence in the making.

EuroDollar

The Eurodollar, as the near inverse of the dollar index, presents in multi-breakdowns as the Euro weakens against the dollar. In similar fashion, this is now likely to start strengthening anytime soon as the dollar weakens.

US Treasuries

US Treasury 10 year yield is weakening in multi-breakdowns as a consequence of increased money flows from equities to bonds, as US equities indicate a potential top. This chart structure needs to unfold further before resolving into bond market direction. This impacts massively on the whole question of debt and funding and the actions of central banks and interest rates.

Key levels in the chart present as about 1.5% at the lower end and 1.94% at the upper end. Penetration of the upper level will indicate resumption of the bond market collapse, and at the lower end as an extension of the bond bull market.

Gold

The sell divergence in the gold long term chart is impacting in lower gold prices going forward. Virtually all gold commentaries worldwide indicate higher gold prices ahead, whilst Elliott Wave analysis indicates the opposite, with the current rally being a bear market rally only with prices still likely to weaken considerably. The next gold bull market will drive price many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the clear sell divergence which should lead to lower gold prices. Price is still well ahead of all the moving averages and the support zones which start at $1450.

The daily 12 month chart illustrates the gold reversal momentum, powered by the sell divergence, as it gathers momentum to the downside with the first support level at $1538.

The 3-month chart illustrates lower prices gathering momentum from the peak, as gold backs down from a late charge.

Importantly, gold Cots data, which is usually correct, remains gold bearish.

South African Rand

Divergence in the US$/ZAR currency pair indicates continued Rand weakness and dollar strength. The earlier contra indications have been eliminated with de-activation of the H&S pattern and the ‘Goodbye kiss’.

HUI / Gold Ratio

Decline in the HUI / Gold ratio is still powered in the post sell divergence mode. Also, the breakdown through the rising channel and bear flag has presented as a potential ‘Goodbye kiss’ which should assist in further declines.

GDX US miners ETF

The more bullish GDX continues to advance up the potential bear flag, above all the MAs. This supports a continued rising gold price which will need a decisive break lower to turn the GDX chart negative. So, investors in GDX (US gold miners) are still more confident of higher gold prices.

This pattern is also similarly reflected by the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

The silver charts generally are more mundane with no divergence, as the general trend continues down after the recent peak. In fact, silver has actually declined more than gold, reflected in the higher gold / silver ratio. Silver is probably now unlikely to still make a late charge to higher prices. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold peaks is the main driver in generating lower prices, which in fact already breached earlier support levels. The chart structure now suggests yet lower prices to soon test yet lower support levels.

The 12 month chart illustrates the decline gathering momentum as silver drops faster than gold. The next support is close at $17.28.

The ominous Shooting Star candle at the peak did in fact have a strong influence on silver’s decline, as lower prices gather momentum.

As with gold, silver Cots data has a similar structure which remains silver bearish.

The decline in silver miners is powered by the post sell divergence mode. Price has broken down through the rising wedge and the bear flag which now presents as a potential ‘goodbye kiss’ to drop lower into support.

Gold : Silver Ratio

The gold / silver ratio gapped up this week to close substantially higher. This is negative for metal prices as the ratio continues to increase as gold continues to outperform silver. This trend looks likely to continue.

General Equities

The Dow Jones has started to decline amidst a degree of non-confirmations amongst major US indices, which presents as a potential top still to be confirmed. Numerous indications have been developing for some time now in support of a top, and all the data and supporting impact factors need to unwind further before resolving into higher levels of certainty. This involves the complete gambit including US Treasuries, the dollar, debt and funding options, interest rates, and much more.

Technically, this is prompted by the sell divergence after a relentless rise to new highs, after what has been the longest bull market in history since 2009. However, this is nevertheless a major topping pattern which is now threatened by eventual and final collapse.

Elliott Wave analysis of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top or very close to the final top. Once the top is confirmed it will herald the start This top is also to be the start of a serious decline that could extend into most of the next decade.

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Midweek Market 23 Jan 2020

Jan 23rd, 2020 No comments

Executive summary
US investor euphoria continues unabated, reaching extreme levels by a number of different criteria. This, despite major threats from many different directions, all as mentioned in this column numerously in the recent past. The rise since the Dec 2018 low has been relentless with ever higher highs and ever higher lows, culminating in a series of new highs. However, this is nevertheless a major topping pattern which is leading towards eventual final collapse, after what has been the longest bull market in history since 2009.

Other financial markets have tended to stall marginally, aided by the US$ which is forecast to weaken but which has steadfastly extended its rally which started at the beginning of 2018. US Treasury yields have stalled in starting to increase as world bond markets are slow to resume the long term collapse which started in mid-2016.

The gold bear market rally seems to have peaked as both precious metals and miners prices start to decline, with a multitude of sell divergences to propel prices lower. The next gold bull market will drive price to many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although the decline is now just visible in this long term chart. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ as equity and bond markets decline.

The dollar is still correcting up after the break from the rising wedge. It remains stuck at the confluence of the 10- and 50-Week moving averages, still well above the 200-Week MA. The negative divergence in the chart structure will assist further declines once the rally terminates.

The daily 12 month chart illustrates the bearish dome structure still in place as the dollar rally reaches increased resistance at the 200-Day moving average (green). The 3-week rally is likely to terminate in this region.

The short term 3 month daily chart provides a closer view of the triple dollar rollover as price reaches increased resistance at the 200-Day moving average (green). This, combined with added resistance from the 50-Day MA (red) is likely to assist resumption of the down trend from here.

EuroDollar

The Eurodollar continues to weaken as it reaches down to start testing the support zone. The bullish inverted dome formation is still in place as the Euro drops down through the 50-Day moving average (red). Any resumption of strength, with forecast dollar weakness, will need to break through resistance of all 3 moving averages above.

US Treasuries

US Treasury 10 year yield is showing small signs of weakness as it edges down through mini-trendlines to further delay completion of the countertrend rally. This delay may extend further before yield resumes it’s advance up towards the breakout level at 1.94%. The higher yields which appear to lie ahead will provide the structure upon which the US Treasury market will be said to be resuming its long term collapse which started in mid-2016. This will in time expose the US Government debt trap and hasten the spiral towards the collapse of the monetary system as we know it.

Gold

The sell divergence in the gold long term chart is likely to promote lower gold prices ahead, as price is still likely to weaken considerably. The next gold bull market will drive price many times higher but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the clear sell divergence which should lead to lower gold prices. Price is still well ahead of all the moving averages and the support zones which start at $1450.

The daily 12 month chart illustrates the gold reversal momentum, powered by the sell divergence, as it gathers momentum to the downside with the first support level at $1538.

The 3-month chart illustrates lower prices gathering momentum from the peak Shooting Star reversal candle.

Gold Cots data indicates a maintained build-up of Large Commercial short positions (red declining chart) as against a maintained build-up of Large Speculator long positions (green advancing chart). This is the perfect setup in massive dilation between the two, indicating strong declining potential in gold.

Gold volatility continues to decline in a weak chart structure as a measure of continued investor lack of enthusiasm. This should support continued weaker gold prices ahead.

South African Rand

Divergence in the US$/ZAR currency pair chart indicates continued Rand weakness, but with contra indications from an activated H&S plus ‘Goodbye kiss’. Forecast dollar weakness may win the day, however.

HUI / Gold Ratio

Mild retracement up in the HUI/gold ratio continues, but the sell divergence may terminate this. The ratio continues to hug the 50-Day moving average (red) but could resume declines once it breaks free towards the 200-Day MA.

GDX US miners ETF

The more bullish GDX continues to advance up the potential bear flag, above all the MAs. This supports a continued rising gold price which will need a decisive break lower to turn the GDX chart negative.

This pattern is also reflected by the GDX Juniors, XAU, and inverse Dust (charts not shown).

Silver

The silver charts generally are more mundane with no divergence, the general trend continues down after the recent peak. Silver, probably more so than gold, could still make a late charge and go to a high exceeding the recent high at $19.69. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold peaks is likely to promote lower prices, and the chart structure is also promising lower prices to soon test support (black circle).

The 12 month chart illustrates the reversal gathering momentum, with the first key support level close at $17.62.

The main driver of decline potential is the ominous Shooting Star candle and the lower prices gathering momentum with first support at $17.62.

Sell divergence in silver miners is in place and should propel prices lower. But the small retracement rally is above all the MAs, providing support, and this should increase the degree of difficulty.

As with gold, silver Cots data has the identical structure indicating lower silver prices ahead.

Gold : Silver Ratio

The gold / silver ratio closed higher at 87.32 as the drift up continues to rise slowly, which is negative for metal prices, and vice versa. Gold continues to outperform silver marginally as the ratio creeps up, and this looks likely to continue further.

General Equities

The sell divergence has prompted the Dow to start turning down. The rise since the Dec 2018 low has been relentless with ever higher highs and ever higher lows, culminating in a series of new highs. However, this is nevertheless a major topping pattern which is leading towards eventual final collapse, after what has been the longest bull market in history since 2009.

Elliott Wave analysis of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top or very close to the final top. This top is also to be the start of a serious decline that could extend into most of the next decade.

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Midweek Market 16 Jan 2020

Jan 16th, 2020 No comments

Executive summary

US investor euphoria continues unabated, despite increasing threats to the international monetary system, as equity markets remain elevated and buoyed by the expectation that Modern Monetary Theory will continue to solve all the problems. In fact Ben Bernanke was heard to say this week that zero interest rates are on their way. So the longest bull market in history continues as US stock markets continue to eke out moderately higher new highs, followed in sync by most world markets, as they grind towards a climactic end when the ‘Everything bubble’ finally bursts.

Other financial markets have tended to stall marginally, aided by the US$ which is forecast to weaken but which has steadfastly extended its rally which started at the beginning of 2018. US Treasury yields have stalled in starting to increase as world bond markets are slow to resume the long term collapse which started in mid-2016.

The gold bear market rally seems to have peaked as both precious metals and miners prices start to decline, with a multitude of sell divergences to propel prices lower. The next gold bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos, and it is critical to identify gold’s true bottom in the period that lies ahead.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although the decline is now just visible in this long term chart. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ as equity and bond markets decline.

The earlier dollar break from the rising wedge is likely to lead to yet lower values. There is negative divergence in the chart structure to assist further declines but the dollar is stuck at the 50-Week MA (red) support for now.

The daily 12 month chart illustrates the bearish dome structure which will lead to lower dollar values, and the dollar already appears to be turning down at the confluence of the 50- and 200-Day MAs (black circle). There are also a number of developing H&S patterns which could be triggered to add additional impetus.

The short term 3 month daily chart provides a closer view of the dollar rollover at the combined 50- and 200-Day MAs.

EuroDollar

The Eurodollar starts to strengthen again as it moves up from the 50-Day MA (red) towards the 200-Day MA (green), assisted by the bullish inverted dome pattern. Once the 200-Day MA is penetrated it will provide strong support for further gains.

US Treasuries

Although the US Treasury countertrend rally completion is all but confirmed, final yield breakout at 1.94% continues to stall. There is the first sign of minor weakness as a minor trendline is breached (black circle) as the attempt at breakout continues to delay. Breaching the key breakout level at 1.94% yield will confirm the trend which nevertheless still looks set to occur soon. The higher yields which appear to lie ahead will provide the structure upon which the US Treasury market will be said to be resuming its long term collapse which started in mid-2016. This will in time expose the US Government debt trap and hasten the spiral towards the collapse of the monetary system as we know it.

Gold

The strong gold bear market rally highlights a clear sell divergence which indicates likely lower gold prices ahead. The next gold bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

The 5 year weekly chart also highlights the sell divergence which should lead to lower gold prices. Price is still well ahead of all the moving averages and the support zones which start at $1450.

The daily 12 month chart illustrates the gold reversal momentum, powered by the sell divergence, as it approaches the first support level at $1521.

The 3-month chart illustrates the peak and ominous Shooting Star reversal candle powering price to lower levels.

Gold Cots data indicates a continued build-up of Large Commercial short positions (red declining chart) as against a continued build-up of Large Speculator long positions (green advancing chart). This is the perfect setup in massive dilation between the two, indicating strong declining potential in gold.

South African Rand

The US$/ZAR currency pair chart indicates divergence: Rand sell and dollar buy, indicating Rand weakness ahead. However, this can be contradicted in some way by forecast dollar weakness ahead and the potential ‘good bye kiss’ at the H&S neckline which both support Rand strength.

HUI / Gold Ratio

There is HUI/gold retracement up after the bear flag breakout, which could also be a potential ‘goodbye kiss’. But the more powerful signal is a sell divergence (red circles) which is likely to send the ratio lower. This could mean that miners will lead gold to lower prices.

GDX US miners ETF

The GDX is drifting sideways however with no sell divergence. Price of this US miner ETF is supported by the 50-Day MA (red) with no indication of a break to lower prices.

GDX Junior Gold ETF

The GDX Juniors are more bearish however and they too have a sell divergence with a potential break to lower prices into support. There is also the potential for a bear flag break to lower levels.

XAU Gold and Silver Philadelphia Index

The XAU chart is also more bearish with a sell divergence and potential bear flag break.

Dust US Miners Bear Index

The inverse Dust chart also indicates a buy divergence which should lead to higher prices. This means lower metals and miners prices, being an inverse bear index.

Silver

The silver charts generally are more mundane with no divergence. The strong bear market rally has not made a new high and therefore has a non-confirmation with gold, which is typical of a trend change and generally lower prices ahead. This could indicate that the top is in, but silver could also make a late charge to a new high. Irrespective, the next silver bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver fails to make a new high and could next test support which starts at about $17.80.

The 12 month chart illustrates the reversal gathering momentum.

The main driver of decline potential is the ominous Shooting Star candle and the lower prices gathering momentum with first support at $17.80.

The US silver miners have made a new high and therefore have a non-confirmation with silver itself. This chart also has a sell divergence which should promote lower prices. It seems in the case of silver, it may well be the miners that drive metal prices lower.

As with gold, silver Cots data has the identical structure indicating lower silver prices ahead.

Gold : Silver Ratio

The gold / silver ratio closed slightly higher at 86.39 as the drift in a rising wedge continues to rise slowly, which is negative for metal prices, and vice versa. Gold continues to outperform silver marginally as the ratio creeps up, and this looks likely to continue further.

General Equities

The Dow Jones continues to edge higher to moderately ever higher new highs, in developing a major topping pattern which is leading towards eventual final collapse. There is also a clear sell divergence which should perhaps now trigger some sort of change in breaking the mould of higher highs and higher lows.

Elliott Wave analysis of the Dow indicates completion of the various wave counts ending in a top 5 of numerous degrees which presumes the final top or very close to the final top. This top is also to be the start of a serious decline that could extend into most of the next decade.

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Midweek Market 9 Jan 2020

Jan 9th, 2020 No comments

Executive summary

The debt trap which the US Government is in will be exposed as US Treasury Bond yields continue to rise, as forecast. Markets are not aware of this yet, but the dollar- based monetary system is spinning out of control. This will all unfold and be revealed as the credit cycle reaches its inevitable crisis stage, which the world is now entering.

Monetary inflation is still camouflaged. As governments have to increasingly fund themselves through QE, central banks will be forced to inflate even more so to pay for deficits significantly greater than currently forecast. Markets will eventually stop believing government inflation pronouncements after which the interest cost of government funding will increase exponentially as all fiat currencies then lose purchasing power at an accelerating rate.

In a world where all fiat currencies will face enormous challenges such as servicing exponentially increasing debt, using yardsticks such as trade weighted indices will be misleading. The best gauges of value stated in fiat currencies will be commodities, particularly gold and silver.

In spite of this, US stock markets continue to eke out moderately higher new highs as it evolves towards the eventual systemic collapse which has been developing in earnest for about 50 years now, as the longest bull market in history (since 2009) winds down towards its climactic end. Modern Monetary Theory has created the ‘Everything bubble’ in all asset classes as global debt rises exponentially with interest rates at historic lows in order to service debt with an ever increasing abundance of fiat money that continues to lose all its value when measured against gold.

The Dow Jones continues to edge higher to moderately ever higher new highs, in developing a major topping pattern which is leading towards final collapse.

US Treasury yields have started to increase and world bond markets are resuming the long term collapse which started in mid-2016. The US$ is in long term decline although currently enjoying a temporary rally as the Euro, UK pound, and other majors, start a strengthening cycle.

Gold is in a strong bear market rally which has made a new 7 year high, not matched by silver or major US miners in a number of non-confirmations typical at trend changes. There are a number of factors indicating that the top is in and that the decline has resumed. The next gold bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although the decline is now just visible in this long term chart. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ as equity and bond markets decline.

Having penetrated down through the rising wedge and 50-Wema (red), the dollar is in a rally which is testing 50-Wema on the upside. However, negative divergence and the chart structure suggests that further weakness is likely to test the support zone soon.

The daily 12 month chart illustrates the bearish dome structure together with a number of H&S necklines which, once activated, will accelerate dollar declines. The rally is approaching strong resistance at the 50- and 200-Day moving averages.

The short term 3 month daily chart provides a closer view of the dollar rally in a mini-break up to test resistance at the MAs.

EuroDollar

The Eurodollar as the inverse of the dollar is now testing 50-Dema on the downside. However, there is strong support from the bullish inverted dome pattern which is likely to propel the Euro up by the depth of the dome. Once this activates 200-Dema will be penetrated which will provide strong support thereafter.

A long term 10 year view of the Euro Dollar highlights the breakout of the reducing wedge which should propel the currency up by the height of the wedge, which is substantial.

US Treasuries

The US Treasury countertrend rally completion is all but confirmed as the breakouts continue to hold. Breaching the key breakout level at 1.94% yield will confirm the trend which looks set to occur soon. Higher yields do now appear to lie ahead and this provides the structure upon which the US Treasury market will be said to be resuming its long term collapse which started in mid-2016. This will in time expose the US Government debt trap and hasten the spiral towards the collapse of the monetary system as we know it.

Gold

Gold is in a strong bear market rally which has made a new 7 year high, not matched by silver or major US miners in a number of non-confirmations typical at trend changes. There are a number of factors indicating that the top is in and that the decline has resumed. The next gold bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. This battle will be fought in a world of approaching monetary and political chaos.

Gold has a breakout to a new high within the rising channel. Price is well ahead of all the moving averages and the support zones. There are no resistance zones and support starts at $1450.

Gold has multiple breakouts to a new high, but the start of the decline is in the form of an ominous-looking reversal pattern.

The 3-month chart illustrates the peak and the ominous Shooting Star reversal candle. The first support level is down at $1521, and all well ahead of all moving averages.

Gold volatility has increased, but in a non-confirmation with the pattern of the gold increase to a new high.

South African Rand

The Rand breakout to strength is still active, but is correcting to weakness as the dollar rallies. The chart structure is still positive with more Rand strength as the dollar rally turns to weakness.

HUI / Gold Ratio

The bear flag breakout signals lower ratio prices as US miners are outperformed by gold itself. The 50-day moving average has been penetrated on the downside which should assist in propelling the ratio to further weakness. This could mean that miners will lead gold to lower prices.

GDX US miners ETF

The GDX chart is less bullish than the HUI/Gold chart and has not achieved a new high in creating non-confirmation with gold. This is bearish which will be confirmed if the bear flag proves to be real.

GDX Junior Gold ETF

The GDX Juniors are more bullish in making a new high, with no non-confirmation with gold. It also could have a bear flag in the making which could be bearish.

XAU Gold and Silver Philadelphia Index

The XAU chart is also more bullish and could also have a bear flag in the making.

Dust US Miners Bear Index

The inverse Dust chart also indicates a new low within a declining channel with strong resistance above. This indicates a continued strong gold price.

Silver

Silver is in a strong bear market rally but has not made a new high and therefore has a non-confirmation with gold, which is typical of a trend change. This could indicate that the top is in, but silver could also make a late charge to a new high. Irrespective, the next silver bull market will drive price to many times higher than the 2011 high but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver fails to make a new high and could next test support which starts at about $17.80.

The Silver rally includes multiple breakouts but not to a new high. This non-confirmation could lead to declines with the key support level down at $16.55.

The main driver of decline potential is the ominous Shooting Star candle with first support at $17.80.

The US silver miners have made a new high and therefore have a non-confirmation with silver itself. This is an additional driver of decline potential, and the miner chart also illustrates the potential bear flag which could be an additional driver of decline potential. Key support is at $30.00.

Gold : Silver Ratio

The gold / silver ratio closed slightly higher at 85.88 as the drift in a rising wedge continues to rise slowly, which is negative for metal prices, and vice versa. Gold continues to outperform silver marginally as the ratio creeps up, and this looks likely to continue further.

General Equities

The Dow Jones continues to edge higher to moderately ever higher new highs, in developing a major topping pattern which is leading towards eventual final collapse.

In accordance with Elliott Wave Theory the Dow has been building a bull market since the Lehman collapse in 2009 that has been impulsive in a number of 5 wave advances of varying degrees, interspersed with corrective abc waves. This has evolved in its structure to what is now believed to be its final 5th wave, or certainly very close to the final top. This top is also to be the start of a serious decline that could extend into most of the next decade.

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Midweek Market 19 Dec 2019

Dec 19th, 2019 No comments

Executive summary

The Dow Jones Industrial Average continues to hover just above 28 000 as it evolves towards the eventual systemic collapse which has been developing in earnest for about 50 years now, as the longest bull market in history (since 2009) winds down towards its climactic end. Modern Monetary Theory has created the ‘Everything bubble’ in all asset classes as global debt rises exponentially with interest rates at historic lows in order to service debt with an ever increasing abundance of fiat money that continues to lose all its value when measured against gold. At the same time we bear witness to natural market forces as they compete against the false force of central bank actions that continue to inflate the ‘Everything Bubble’ that takes the world to the edge of the abyss.


In accordance with Elliott Wave Theory the Dow has been traversing through a 2 year expanding triangle that was forecast to decline soon by 20%-22% to be followed by a strong reversal to a new high in 2020 before finally starting the final collapse, estimated to be worse that the collapse in 1929. However, due to constant market manipulation, the Dow continues to edge higher to moderately ever higher new highs, which has now invalidated the original expanding triangle matrix and the 20% decline and strong reversal into 2020. The decline now, with or without any moderately higher new highs first, is the final collapse.

US Treasury yields have started to increase and world bond markets are resuming the long term collapse which started in mid-2016. We are therefore witness to the titanic forces of central banks’ need for cutting rates and the market force for increasing yield.

The US$ decline is starting to gain momentum as it resumes its multi-month weakening phase which eventually will develop into a multi-year weakening phase, with added momentum from the stronger Euro in the light of the UK elections and imminent BREXIT. 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 although currently in a mild rally. It will also derive added downside momentum from BREXIT with its linked reduction in uncertainty. The whole precious metals complex is set to decline further after earlier key breaks below trigger levels.

US Dollar

The US$ is in long term decline but has been in a rally since 2008, although the decline is now just visible in this long term chart. 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, although there will no doubt be substantial partial strengthening in search for ‘safe haven’ as equity and bond markets decline.

The dollar has penetrated down through support from the 50-week moving average (red), which is likely to provide impetus for further declines to test the support zone (red) lower down. The ever-present negative divergence adds further force to the downside.

The daily 12 month chart illustrates the resumption of dollar decline penetrating the H&S, although invalidated for now by the correction up to test resistance at the 200-day moving average (green). The prominent bearish dome adds a strong propellant for further declines to accelerate into support.

The short term 3 month daily chart provides a closer view of the dollar decline as it gains momentum, below all the moving averages.

EuroDollar

The Eurodollar as the inverse of the dollar index is looking increasingly bullish after breaking up through the 50-Day moving average (red). Penetration through the declining channel and 200-Dema (green) is a powerful propellant for further gains (dollar weakness).

US Treasuries

The US Treasury countertrend rally completion is all but complete as the breakouts continue to hold. Breaching the key breakout level at 1.94% yield will confirm the trend which looks set to occur soon. Higher yields do now appear to lie ahead and this provides the structure upon which the US Treasury market will be said to be resuming its long term collapse which started in mid-2016. Central banks continue to nevertheless manipulate interest rates and we are therefore witness to the titanic forces of central banks’ need for cutting rates and the market force for increasing yield.

Gold

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

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

The $Gold decline has stalled with the current tiny rally in the tail, but the decline process is set to resume with strong support lower down in the region of the 50-week moving average (red) between $1383 and about $1420. Major support below starts at $1380.

Gold is still in mini-rally, but is set to drop further soon. Price is consolidating at resistance provided by the 50-day moving average (red), but the chart structure itself and that of the dollar suggests it is now set to resume further declines soon. Breaching the near term levels of $1484 up and $1445 down will determine the gold’s next direction. If down, strong support can be expected at the 200-day moving average (green) at the confluence of the lower diagonal trendline.

The 3-month chart illustrates the rally weakening and the probability of resuming declines towards the key levels at $1463 and $1447.

Gold volatility continues declining after the mini-spike, and investor interest continues to wane.

South African Rand

The Rand breaks out to strength through 2 breakouts as the H&S activates the large topping pattern. This is therefore likely to continue, especially with the support of dollar weakness (as forecast).

HUI / Gold Ratio

The H&S breakout is holding as the gold rally holds. This is tenuous though and over-enthusiasm in the US miners compared with gold could prove costly if gold resumes decline as forecast.

GDX US miners ETF

The GDX chart is less bullish than the HUI/Gold chart and is moving sideways towards the triangle apex as the gold rally holds. This too therefore presents severe reversal potential once gold breaks down as forecast.

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

Silver

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

Silver is declining, despite rallies, before testing the support zone at $16.55 down to $15.70. Silver is still supported by the 200-week moving average (green) which it needs to breach decisively if it is eventually to test $15.70.

Silver continues to breach to lower levels but strong support resides at the confluence of the 200-Day moving average (green) and 2 important diagonal trendlines just above $16.55. Breakout levels are $17.40 on the upside and $16.55 on the downside, and penetration through one will void any potential penetration through the other.

The 3-month daily chart illustrates in more detail the negative bias of the chart, as well as decline potential as the mini-rally peters out.
Pic Silver miners

The US silver miner breakout through the expanding triangle and H&S pattern is being sustained as the silver rally holds. This counter is even more acutely miner over-enthusiastic and will prove costly as silver itself continues to weaken, as forecast.

Gold : Silver Ratio

The gold / silver ratio closed slightly lower at 86.73 as the drift in a rising wedge continues to rise slowly, which is negative for metal prices, and vice versa. Gold continues to outperform silver marginally as the ratio creeps up, and this looks likely to continue further.

General Equities

In hovering just above 28 000 the Dow Jones ekes out yet another moderately higher new high in closing down at 28 239. Key breaks below 27 800 and 27 325 will provide confirmation of a top and the start of a declining phase.

In accordance with Elliott Wave Theory the Dow has been traversing through a 2 year expanding triangle that was forecast to decline soon by 20%-22% to be followed by a strong reversal to a new high in 2020 before finally starting the final collapse, estimated to be worse that the collapse in 1929. However, due to constant market manipulation, the Dow continues to edge higher to moderately ever higher new highs, which has now invalidated the original expanding triangle matrix and the 20% decline and strong reversal into 2020. The decline now, with or without any moderately higher new highs first, is the final collapse.

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Midweek Market 5 Dec 2019

Dec 6th, 2019 No comments

Executive summary

Markets were disrupted this week by Donald Trump’s comments on perhaps delaying a Chinese trade deal until after the US presidential elections in Nov 2020. This caused US equities to decline from peaks by about 3% as well as boosting the bond markets slightly. It also boosted gold by about 2%. Conventional wisdom suggests if this in fact happens then it is nearly certain the US will be in recession by then with Trump’s re-election potential somewhat diminished. He probably knows this and therefore it is all most likely just practicing his negotiating skills with the equal likelihood of more corrective comments from him in due course. It would appear equities, bonds, and gold are retracing earlier moves accordingly.

Technically however, equities are due to decline anyway, as are bonds and gold. So, market tops are likely to be confirmed in the foreseeable future whether or not US equities again achieve new highs or not. Asset bubbles are quite real and threatening and world markets continue to be accompanied by sound structural and numerous sentiment and momentum indicators signalling rally ends with the next bear phase imminent.

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

The US$ has now completed a retracement rally and is set to resume its multi-month weakening phase which eventually will develop into a multi-year weakening phase. Gold is in a period of moving with the dollar (as opposed to the more normal against) and is also in a multi-month weakening phase albeit with its recent 2% rally, and the whole precious metals complex is set to decline further after earlier key breaks below trigger levels.

US Dollar

The US$ is in long term decline but has been in a rally since 2008. The dollar retreat down from resistance has stalled, although it now has resumed its decline which cannot be seen of this long term chart yet. 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 start of a decline down to the bottom trendline of the rising wedge as it approaches the 50-week moving average (red). This is an area (circle) of increased support and penetration down will provide impetus for further declines to test the support zone (red). Negative divergence remains evident and this will provide much energy to achieve the declines.

The daily 12 month chart illustrates the resumption of dollar declines, down to the 200-day moving average (green) at the diagonal trendline (Circle). Penetration of this area is a strong propellant for further declines into support.

The short term 3 month daily chart provides a closer view of the breakout to weakness through the bear flag (circle). Despite the bullish end candle further declines are now likely. Also note the break in the MACD to propel further declines.

Japanese Yen

The Yen strengthens as the dollar / Yen currency pair weakens down to the bottom of the bear flag, with a potential breakout pending (circle). There is also some negative divergence evident to assist in further dollar weakness / Yen strength.
The traditional link between Yen strength and gold strength is not evident at the moment with gold and the dollar moving together as opposed to the more normal against.

US Treasuries

The US Treasury countertrend rally completion is getting closer to confirmation as the earlier breakouts continue to hold. Key achievement levels are 1.9% and 1.94% yield, as the sequence of higher highs and higher lows continues to build and provide support. Higher yields do now appear to lie ahead and this provides the structure upon which the US Treasury market will be said to be resuming its long term collapse which started in mid-2016. The whole process has been interrupted by central bank QE and artificially depressing interest rates.

Gold

Long term gold continues to decline slowly after key levels were breached on the downside, despite the tiny 2% gold rally. Gold is forecast to decline further in the next period.

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

The weekly 5 year chart indicates the $Gold decline has stalled with the 2% rally in the tail. But the decline process is set to resume with strong support in the region of the 50-week moving average (red) between $1383 and about $1420. Major support below starts at $1380.

The gold rally has penetrated up through the 50-day moving average (red) towards the top diagonal trendline, but is set to resume further declines. Near term key levels are $1524 on the upside and $1445 on the downside. Penetration of $1445 will void any threat of gold moving higher. Strong support is expected at the 200-day moving average (green) at the confluence of the lower diagonal trendline.

Break down through the bear flag will end the gold rally and resume the weakening trend, with key levels at $1447 – $1450 on the downside and $1520 on the upside.

Gold volatility has a mini-spike up to coincide the gold rally which indicates a small increase in investor interest. However the chart has a negative bias with further testing of support in the next phase.

South African Rand

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

HUI / Gold Ratio

There is definite investor over-enthusiasm in the US miners compared with gold, and this is evident in the chart with a clear positive bias compared to gold itself. The miners are outperforming the metals, and this could prove costly if gold resumes decline as forecast. There is a clear breakout in the ratio (circle) as gold rallied. This therefore presents severe reversal potential once gold breaks down.

GDX US miners ETF

The GDX chart is less bullish than the HUI/Gold chart but also has a clear breakout (circle). This too therefore presents severe reversal potential once gold breaks down

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

Silver

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

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

Price bounced off the 200-day moving average (green) to energise the rally, but has already declined at the end of the rally down to the diagonal trendline (circle). Key levels are $17.45 on the upside and $16.62 on the downside. Penetration through one will void any potential penetration through the other.

The 3-month daily chart illustrates in more detail the negative bias of the chart, and the late drop in price at the end of the bear flag. Break down through the bear flag will end the silver rally and resume the weakening trend, with key levels indicated on the chart.

US silver miners are volatile, with bullish 2 weeks ago, bearish last week, and now bullish once more. There is a breakout through the top diagonal to coincide the (weak) silver rally. This counter is even more acutely miner over-enthusiastic and will prove costly as silver itself continues to weaken, as forecast.

Gold : Silver Ratio

Silver has begun to underperform gold which is bearish for the whole precious metals complex, this is evident in the chart closing higher this week at 87.50 by more than 2%. The continued sideways drift towards the triangle apex has now broken up in a breakout which adds slightly to the upward drift of the chart, pointing towards yet higher levels.

General Equities
US equities declined from peaks by about 3% this week, although clawing back some 40% of that drop as this written. Technically, equities are liable to decline seriously soon whether or not they again achieve new highs or not. So, maybe this is the start of a serious decline but it still needs to be confirmed. Because asset bubbles are quite real and threatening and world markets continue to be accompanied by sound structural and numerous sentiment and momentum indicators signalling rally ends with the next bear phase imminent.

The Dow Jones Ind Ave breaks down below the previous low followed by a retracement back above the previous low. More time is therefore required before a confirmed top can be claimed. But whether this is a top or whether another new high follows is almost irrelevant as equities are now due serious declines.

The following chart is a reminder of one long term Elliott Wave analysis of the Dow Jones from the Global Financial Crisis in 2008 to 2021, indicating actual at D (where we are now) to E (very soon), and further out to (5) at a possible new high.

We are now likely to witness the Dow declining from D to E (probably 20%-22% decline) followed by an increase to a new high at (5) (at or just after the re-election of Donald Trump in Nov 2020) followed by the start of a systemic crisis and market collapse. This collapse is the culmination of all the global central banks activities over the last 50 years in modern monetary theory (MMT) resulting in hyper-stagflation and currency value destruction, which will take the Dow Jones from 28 000 to 1 000 (worse than the 1929 crash that led to the great depression).

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