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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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