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Midweek Market 2 April 2020

Apr 2nd, 2020 No comments

Executive summary

The bear market continues to unfold.

This is a collapse that history will likely blame on the ‘death of currencies’ caused by a hundred years of malpractice by governments and central banks in creating ‘currency’ out of nothing. And this collapse is likely to be greater than any other collapse in history, and with greater consequences. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

All this is great for gold, but as the chaos and collapse escalates so too will gold collapse with everything else. The true gold bottom will be reached when confidence in the fake money system finally collapses. But there is a way to go yet. Because, guess what, in this environment of deepening gloom the US dollar is seen as a ‘safe haven’ and is rallying to new highs (rate cut and all). However, the fate of the dollar and US Treasuries are closely linked, and the excessive (and artificial) over valuation of the US bond market will eventually lead to the collapse of both.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2018 to a new high which could also exceed the previous high at the start of 2017. The very recent dollar indication of the start to a potential weakening phase will have to wait as, for a while yet, dollar value will correlate inversely with US equities. The current US equity correction up is very near completion which has the dollar very near to further strength. This dollar / equity dynamic may well soon change the structure of the above chart until more meaningful loss of confidence in the present international monetary system changes it back to long term dollar weakness.

This applies also to US Treasuries and therefore the US bond market, as interest rates and the dollar are closely linked. The excessive over valuation of the US bond market will lead eventually to the collapse of both the bond market and the dollar.

The dollar is starting to turn up as demand increases with equities close to the end of the current upward correction.

The dollar turns up after playing out the sell divergence, as dollar demand starts to increase with equities potentially starting to turn down. This is a pivotal moment.

The short term 3 month chart illustrates the dollar poised to breakout. It turns up and is supported by the 50-Day MA (red).

EuroDollar

The Eurodollar, as the virtual opposite of the US dollar index, turns down after advancing in playing out the buy divergence.

US Treasuries

The benchmark 10 year US Treasury yield continues down towards its previous low point, as US Treasuries rise toward their previous high point. We are now close to the pivotal point at which US interest rates will start rising and the bond market will start declining in tandem with the equity collapse and the inevitable onset of recession. Yield declines below the previous low point will obviously delay any such turning point.

Short term US Treasury yields bounce up off zero, such as the 3 month yield in quickly rising to 0.09%. This 3 month rate is usually the one that guides the US Fed into rate decisions, which means they probably cannot justify another rate cut at the moment whether equities start to drop again or not.

The US jobs report comes out tomorrow, and this time it may have a profound effect on yields!!!

Gold

The sell divergence is still active and therefore gold will still go lower after the recent rally. The next gold bull market will drive price many times higher, but only after further declines to new lows first. These lows will finally signal an end to the gold bear market in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the sell divergence is still active despite the snap-back rally. The gold price is actually starting to decline from the peak of snap-back rally and this should continue from here, probably driven by severe declines in the miners.

The 12 month chart illustrates the sell divergence and snap-back rally in more detail, with repeat declines now becoming evident after the snap-back rally.

Gold declines start to gather a little momentum, although reaching support at the confluence of 10-Day and 50-Day MAs. The bearish double top will assist declines, once activated.

South African Rand

The dollar peaks against the Rand at new lows, which continues to look fragile and volatile. This is likely to now become the new normal with a stronger dollar and especially also with very weak Rand fundamentals, such as rating agency downgrades.

HUI / Gold Ratio

The ratio is consolidating in partial recovery after the declines in the wake of the sell divergence, some way still below the 50-Day and 200-Day MAs. This indicates US miners (HUI) are tending to move in tandem with the gold price until more divergent breakaways occur in either.

HUI The Arca NYSE Gold Bugs Index

The HUI itself looks poised to drop significantly, as well as the other US miner indices. Penetrating down through the key support level at 185 will drop price down to test the March low at 142.50. That is significant, and it may be that the miners trigger significant falls in the metals.

GDX US Gold ETF

This same dynamic is event in the GDX, and penetrating down through the key support level at 23 will drop price down to test the March low at 16.

This pattern is also similarly reflected by the GDX Juniors and XAU (charts not shown), although somewhat different in the inverse Dust chart which is shown next.

Dust US Miners Bear Index

The buy divergence in the US Miners bear index (Dust) of last week has led to the start of higher prices. This is an indication of higher Dust prices which amplifies the potential for significantly lower prices in US miners, which in turn has the potential for reducing metal prices.

Silver

Long term silver continues to trend lower, despite the recent rally which broke back up through the previous low point of Dec 2015 at $13.60. Despite this the chart has a negative bias and the trend continues down in a continued major non-confirmation with gold, as silver leads the price declines. As with gold, the next silver bull market will drive price many times higher, but only after further declines to yet lower lows first. These lows will finally signal an end to the precious metals bear market in a world of approaching monetary and political chaos.

The silver snap-back rally in the wake of buy divergence underperforms gold, and therefore should lead to continued lower prices. A key pivotal level remains the previous major low point at $13.60.

The 12 month chart produced an earlier sell divergence and this has produced an early end to the recent rally and a resumption in price declines which should continue.

The 3-month chart illustrates silver’s recent rally end with a minor selloff, as the bearish trend starts to gain small momentum.

The Silver miners chart mirrors that of US gold miners, and is poised to drop significantly. Penetration of the key support level at 22.90 will drop price down to test the March low at 16. This is significant, and may well be the trigger to activate a selloff in silver itself.

Gold : Silver Ratio

The gold / silver ratio closed higher at 113.80, as the ratio continues to build higher again in a chart that continues to present an upward bias. All this indicates a continued era with substantial silver underperformance which remains negative for metal prices.

General Equities
The bear market continues to unfold.

Using the Dow Jones Ind Ave as a proxy for general equities, one can see the potential completion of the first major leg down as well as the potential completion of the first major correction up. This is likely to continue in a series of down legs and up corrections, some stronger and some weaker, in a time frame which is likely to unfold over most of the next decade.

This is a collapse that history will likely blame on the ‘death of currencies’ caused by a hundred years of malpractice by governments and central banks in creating ‘currency’ out of nothing. And this collapse is likely to be greater than any other collapse in history, and with greater consequences. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

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Midweek Market 26 March 2020

Mar 29th, 2020 No comments

Executive summary

Extreme charts appear every day, with markets totally broken and dysfunctional beyond anything witnessed before. The speed and magnitude of collapse is unprecedented in history with 11 year’s worth of buyers under water in a matter of weeks, since the bottom of the global financial crisis in 2009. This is the fastest financial market collapse ever, even faster than the 2000 tech bubble crash and the 2008 global financial crisis. In less than a month, we have seen major indices fall 30%, and in sectors such as oil and travel by 80%. We are experiencing terrifying declines not seen since the 1929 stock market crash.

This is all happening in the deepening gloom of a global pandemic and just this week the US administration announced a coronavirus stimulus package of $6 trillion dollars. This takes US deficit spending above $8 trillion dollars, and it has not stopped there either, with more to come in future. That is all ‘fake’ currency, by the way, just printed from nothing. This is the basis of the gathering ‘death of currencies’ and the basic cause of the market collapse we are witnessing.

All this is great for gold, but as the chaos and collapse escalates so too will gold collapse with everything else. The true gold bottom will be reached when confidence in the fake money system finally collapses. But there is a way to go yet. Because, guess what, in this environment of deepening gloom the US dollar is seen as a ‘safe haven’ and is rallying to new highs (rate cut and all). However, the fate of the dollar and US Treasuries are closely linked, and the excessive (and artificial) over valuation of the US bond market will eventually lead to the collapse of both.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2018 to a new high which could also exceed the previous high at the start of 2017. The very recent dollar indication of the start to a potential weakening phase will have to wait as, for a while yet, dollar value will correlate inversely with US equities. The current reversal up in US equities has the dollar weakening slightly, and this relationship is likely to last until more meaningful loss of confidence in the present structure of the international monetary system.

This applies also to US Treasuries and therefore the US bond market as interest rates and the dollar are closely linked. The excessive over valuation of the US bond market will lead eventually to it’s collapse as well as dollar collapse.

The dollar turns down as demand reduces in the current equity reversal up. Also, the negative divergence stretching back nearly 2 years is still active and this will have an influence on reducing dollar value.

The drop in dollar value in the wake of sell divergence and equity strength is more evident in the shorter term 12 month and 3 month charts.

The dollar breaks down through the bear flag, but is still above the 10-Day MA with no confirmation of a top yet.

EuroDollar

The Eurodollar corrects up in the wake of the dollar correction down, and creates a buy divergence in the process. This should strengthen the Euro further and, by definition as the virtual opposite, weaken the dollar further.

US Treasuries

The benchmark 10 year US Treasury yield continues towards a fragile recovery, as the bond market continues to hold precarious elevated levels. This means the yield could move either way, but the major non-confirmation with collapsing US equities cannot last, despite continued massive manipulation from the US Fed, and therefore the increasing yield trend should move up to test resistance eventually.

Short term US Treasuries, such as the 3 month, are at zero yield. This means the note is at virtually extreme valuation as investors pay the highest price for no return. Unless US Treasuries go into negative yield, the only way value can move is down. In other words this is the safest way to invest your money at a cost in return for nothing. Crazy!!!

And remember, this is how the US Fed ‘prints’ money in the process of QE (quantitative easing), by buying US Treasuries with fake money which elevates the price of the note and therefore reduces the yield.

Gold

The sell divergence is still active and therefore gold will still go lower, despite the recent rally. The next gold bull market will drive price many times higher, but only after further declines to new lows first. These lows will finally signal an end to the gold bear market in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the sell divergence is still active despite the snap-back rally. On this basis prices should decline from here.

The 12 month chart illustrates the sell divergence and snap-back rally in more detail. Gold should still decline from these levels, although the key support levels need to be breached for the second time within a month.

The 3-month chart illustrates in more detail the breakout leading to the snap-back rally (black circle) and the rally topping out.

South African Rand

The Rand turns down from peak weakness against the dollar as it continues to look fragile and volatile. Much depends on dollar behaviour, and currently this indicates little change.

HUI / Gold Ratio

The ratio is consolidating in the partial recovery after the declines in the wake of the sell divergence, some way still below the 50-Day and 200-Day MAs. This indicates US miners (HUI) are tending to move in tandem with the gold price until more divergent breakaways occur in either.

GDX US Gold ETF

GDX has a stronger retracement than the Hui/Gold ratio and is back up to testing the confluence of the 50-Day and 200-Day MAs.

This pattern is also similarly reflected by the GDX Juniors and XAU (charts not shown), although somewhat different in the inverse Dust chart which is shown next.

Dust US Miners Bear Index

The US Miners bear index has created a buy divergence, dropping down below the recent region of activity. This is an indication of rising Dust prices which in turn indicates dropping prices in the US Miners such as HUI, GDX, XAU, and GDX Juniors.

Silver

Long term silver continues to trend lower, despite the recent rally which broke back up through the previous low point of Dec 2015 at $13.60, which was penetrated last week. Despite this the chart has a negative bias and the trend continues down in a continued major non-confirmation with gold, as silver leads the price declines. As with gold, the next silver bull market will drive price many times higher, but only after further declines to yet lower lows first. These lows will finally signal an end to the precious metals bear market in a world of approaching monetary and political chaos.

The silver snap-back rally penetrated back up above the Dec 2015 low point at $13.60 and in the process breached up through earlier support levels. But the silver rally underperformed gold’s rally, and prices should decline again from here. However, the price plummet earlier to $11.65 created a buy divergence which assisted the price increase to $14.87, and this may increase further first.

The sell divergence is still active despite the recovery rally which underperformed gold’s recovery rally. This should assist silver to decline further.

The 3-month chart illustrates silver’s rally after the selloff in more detail. The chart bias remains negative and silver looks poised to break yet much lower. This begs the question as to what level silver is likely to drop to once gold declines below the level of late 2015. Some have it at $7.00.

The Silver miners chart mirrors that of US gold miners, with a partial recovery after continued selloff in the wake of the sell divergence.

Gold : Silver Ratio

The gold / silver ratio corrected down after the spike to close lower at 109.82, but the chart continues to present an upward bias. All this indicates a continued era with substantial silver underperformance remains negative for metal prices.

General Equities
Extreme charts appear every day, with markets totally broken and dysfunctional beyond anything witnessed before. The speed and magnitude of collapse is unprecedented in history with 11 year’s worth of buyers under water in a matter of weeks, since the bottom of the global financial crisis in 2009. This is the fastest financial market collapse ever, even faster than the 2000 tech bubble crash and the 2008 global financial crisis. In less than a month, we have seen major indices fall 30%, and in sectors such as oil and travel by 80%. We are experiencing terrifying declines not seen since the 1929 stock market crash.

Using the Dow Jones Ind Ave as a proxy for general equities, one can see a strong reversal in progress measuring just short of 4000 points off the low. This may be the start of the first major correction or there may still be yet another new low first. Either way, the severe decline is getting close to a strong correction. But either way, the correction will be followed by yet other strong declines. This is just the beginning.

Elliott Wave analysis has it that the final top at 5 in various degrees is in, and that markets have started a major systemic collapse which is now in progress. The Dow has completed the strong wave (3) down and may be close to completing wave (4) up to start the final wave down to (5). This will complete the first 5 wave impulse leg down, to be followed by the first 3 wave corrective leg up, before the second 5 wave impulse leg down begins.

Conditions have been deteriorating in the financial and monetary system for some time now, having implications for global markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

This is a long term chart of the Dow illustrating the Global Financial Crisis bottom in 2009 followed by the build up to the final top of the market at (5), and the first leg down being the 10 000 point collapse in less than a month wiping out 3 years of gains. The major systemic collapse is now underway, and certain top Elliott Wave practitioners have it that the Dow will collapse during most of the next decade from the top at 29500 down to regions between 6000 and 1000 points.

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Midweek Market 19 March 2020

Mar 19th, 2020 No comments

Executive summary

Markets are declining with unprecedented volatility. US equity futures went ‘limit down’ first thing Monday morning, and then again first thing Wednesday morning as limit triggers activated to stop all trading after declines quickly exceeded 5%. All trading was halted again on Wednesday afternoon as equities plummeted further. This was largely attributable to the US Fed cutting the rate by a full 1% on Sunday to launch yet another co-ordinated global initiative to pump vast quantities of fiat money into the system. Government and central bank levels of panic are becoming less shrouded as the countdown towards the end of the current international monetary system begins to gain momentum. And there will still be much more ‘money printing’ and interest rate manipulation as momentum increases.

The Coronavirus is attributed as the cause, but it is really only the catalyst. The root cause lies much deeper: Central bank interventions have propped up assets to record levels by almost any measure, for so long now. At the same time they have ‘hollowed’ out real economies with artificially low interest rates leading to massive capital misallocations. What we have now is a huge and distorted fake system based on fake money which is beginning to implode. Add to this the fact we are at the end of the credit cycle with the beginnings of tariff war.

All this is great for gold, but as the chaos and collapse escalates so too will gold collapse with everything else. The true gold bottom will be reached when confidence in the fake money system finally collapses. But there is a way to go yet. Because, guess what, in this environment of deepening gloom the US dollar is seen as a ‘safe haven’ and is rallying to new highs (rate cut and all). However, the fate of the dollar and US Treasuries are closely linked, and the excessive (and artificial) over valuation of the US bond market will eventually lead to the collapse of both.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2018 to a new high which could also exceed the previous high at the end of 2016. The very recent dollar indication of the start to a potential weakening phase has been eclipsed by the US equity collapse which has dramatically increased dollar demand. This has in fact changed the whole support / resistance structure of the dollar chart which now looks set to rally further.

However, the fate of the dollar and US Treasuries are closely linked, and the excessive over valuation of the US bond market will lead eventually to the collapse of both.

The dollar spikes higher as demand increases in collapsing markets, which at this stage trumps the bearish influence of negative divergence stretching back nearly 2 years. Other competing currencies such as the Euro, Yen and Aussie dollar are correspondingly weaker at the moment.

The dollar powers up in multiple breakouts, by 7.5% in a matter of 7 trading days: Probably as remarkable as the collapse in US equities. This creates a sell divergence which will have the effect of reducing dollar value going forward.

The dollar powers up to a new high in response to the demands of collapsing global equity markets. But the close link with excessively over valued US bonds and the newly created sell divergence detailed on the 12 month chart will eventually reduce dollar value. This will be evident in the newly formed bear flag.

EuroDollar

The Eurodollar corrects down in the wake of dollar strength, rapidly and powerfully as the dollar strengthened. Unlike the dollar, the Eurodollar has not created a buy divergence.

US Treasuries

The benchmark 10 year US Treasury yield continues to correct up as the note starts to turn down from excessively high level values. The major non-confirmation with collapsing US equities cannot last, despite continued massive manipulation from the US Fed, and therefore the increasing yield trend should continue and move up to test resistance quite quickly.

Gold

Gold declines in the wake of the sell divergence and this indicates an end to the bear market rally which is likely to unfold into yet lower prices ahead. The next gold bull market will drive price many times higher, but only after further declines to new lows first. These lows will finally signal an end to the gold bear market in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the initial decline from the sell divergence which is soon to test the 1st support zone below $1448. Timing still depends on the relationship with dollar movement and the collapsing markets, and whether trends continue or whether reversals are imminent.

The 12 month chart illustrates the price declines delivered by the sell divergence and the key support levels breached.

The 3-month chart illustrates in more detail the price declines in multiple breakouts through key support levels.

South African Rand

The Rand peaks to weakness, once again, and continues to look fragile and volatile as the dollar strengthens. Much depends on the dollar, and currently this indicates little change.

HUI / Gold Ratio

The ratio collapses further in the wake of the sell divergence, although with a partial recovery after the collapse. This indicates US miners (HUI) are declining faster than gold on balance, but are recovering partially while gold declines further. This is also evident in the other US miner vehicles (following chart).

The HUI, XAU, and GDX are all recovering partially in charts with decidedly negative bias, indicating further declines ahead.

Silver

Silver plunges massively to new lows below the previous major low point at the end of 2015. The long term silver trend continues down in a continued major non-confirmation with gold, as silver leads the price declines. As with gold, the next silver bull market will drive price many times higher, but only after further declines to yet lower lows first. These lows will finally signal an end to the precious metals bear market in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold continues to be the reason the Gold / Silver ratio continues to increase, in silver’s price declines exceeding gold’s declines. Silver is now declining severely, to levels lower than the previous major lows at the end of 2015, which gold is still far from doing.

There is a massive silver selloff in the wake of the sell divergence which decimated support in multi-breakdowns.

The 3-month chart illustrates the selloff in more detail, which resumed in a massive drop of 30% in the week. The chart bias is negative and silver looks poised to break yet much lower which begs the question as to what level silver is likely to drop to once gold declines below the level of late 2015.

The Silver miners chart mirrors that of US gold miners, with a partial recovery after continued selloff in the wake of the sell divergence. Silver miners are not copying silver itself in that there is hardly any partial recovery in the silver price. If silver miners are leading silver then it indicates that the metal is due a similar partial recovery.

Gold : Silver Ratio

The gold / silver ratio spiked 30% to over 130 last week and closed substantially higher than last week at 125.54. All this indicates a new era with substantial silver underperformance. Much depends on reversals and what silver will do until gold also declines to levels below Dec 2015. For now the ratio continues to edge up, which is negative for metal prices, and this looks likely to continue.

General Equities

Markets are declining with unprecedented volatility. US equity futures went ‘limit down’ first thing Monday morning, and then again first thing Wednesday morning as limit triggers activated to stop all trading after declines quickly exceeded 5%. All trading was halted again on Wednesday afternoon as equities plummeted further. This was largely attributable to the US Fed cutting the rate by a full 1% on Sunday to launch yet another co-ordinated global initiative to pump vast quantities of fiat money into the system. Government and central bank levels of panic is becoming less shrouded as the countdown towards the end of the current international monetary system begins to gain momentum. And there will still be much more ‘money printing’ and interest rate manipulation as momentum increases.

The massive selloff in US equities continues with the Dow Jones down about 10 000 points in less than a month. It could be that the first major correction will be soon, but the systemic collapse is likely to continue for much of the next decade.

Elliott Wave analysis has it that the final top at 5 in various degrees is in, and that markets have started a major systemic collapse which is now in progress. The Dow is in the powerful wave (3) down in a 5 wave impulse move that could be finishing. This means it will be followed by wave (4) up and the final wave (5) down to complete the first major leg down.

This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

The Dow chart above is long term illustrating the Global Financial Crisis bottom in 2009 followed by the build up to the final top of the market at (5), and the first leg down being the 10 000 point collapse since in less than a month wiping out 3 years of gains. The major systemic collapse is now underway, and certain top Elliott Wave practitioners have it that the Dow will collapse during most of the next decade from the top at 29500 down to regions between 6000 and 1000 points.

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Midweek Market 12 March 2020

Mar 12th, 2020 No comments

Executive summary

US equities are collapsing at the start of a major systemic collapse which is likely to now unfold into a series of declining patterns over the next decade. This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing.

US Treasuries are at new historic highs with yields at new historic lows. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

The dollar is beginning to roll over and a break below key levels has confirmed a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

Gold and silver is set to decline with intensified sell divergences becoming active, especially in US miners which appear to be leading the breakdowns. Once this all unfolds into 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.

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 a new weakening phase has started, which is just visible on this long term chart (black circle).

The dollar is rolling over as it breaks down through the rising wedge pattern, to confirm the new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is finally beginning to power the dollar lower. This is also confirmed by strength in other competing currencies such as the Euro and Aussie dollar.

Having broken down to new lows the dollar is now correcting up at the start of the weakening phase, to well under the 200-Day MA (green)

The expected dollar correction up is in process, although still well below both the 50-Day and 200-Day MAs. The US Fed may well follow up last week’s rate cut with yet another this month in an attempt to stall the equity collapse, as the short term US Treasury 2- and 3 – month yields are still dropping. This will reduce dollar value further, especially as the ECB held rates this morning.

EuroDollar

The Eurodollar is at the start of a strengthening phase, which is further supported by the ECB holding rates this morning. However, a correction down is in progress at the moment although still ahead of the 200-Day MA (green).

The long term 10 year chart indicates a breakout from the reducing wedge (black circle) which should assist further strength to test resistance.

US Treasuries

The benchmark 10 year US Treasury yield plummet to an all-time low has been arrested with a sharp reversal to a yield of 0.82%. This remains a major non-confirmation with collapsing US equities, and once the reversal gains momentum it should move up to test resistance quite quickly. Final corrections to rectify the situation should be quite severe.

Gold

The sell divergence in the long term chart has intensified with the recent gold rally, and this will still lead to lower prices. The gold bear market rally is all but complete and is likely to unfold into lower prices ahead, 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 gold rally in a very late stage, as the power of the sell divergence intensifies. The gold rally is likely to end soon and could be finally driven by a collapse in US miners as the major cause.

The 12 month chart illustrates the price drift sideways since the top and sell divergence, in a pattern that could now signal the final top: More evident in the 3 month chart and certainly in the US miners’ charts.

The 3-month chart illustrates in more detail the price declines starting slowly after the sell divergence. This may be the top of the rally but price is still well above the MAs.

Gold cots data continues to develop a strong bearish case for gold declines ahead. This is based graphically on the massive dilation (red circle) between red and green, and technically represented by Large Speculators (green) holding increased large long positions and Large Commercials (red) holding increased large short positions. This indicates the gold price will decline, based on the historical fact that Large Speculators are usually incorrect and Large Commercials are usually correct.

South African Rand

The Rand peaks to weakness and continues to look fragile and volatile as the dollar starts to correct to strength. Volatility is likely to increase further unless the dollar trend to weakness actually adds strength to the Rand.

HUI / Gold Ratio

The ratio collapses in the wake of the sell divergence. This indicates US miners are declining faster than gold and could be the main driver behind further gold declines. All US gold miner vehicles are in sync with this, as indicated on the next chart.

The HUI, XAU, and GDX are all breaking down lower than previous lows, as opposed to the metals which are not. They are leading the charge lower and could well be followed by the metals soon.

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, as silver leads the price declines. 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 to down. But silver is actually poised to decline severely, more obvious in the shorter term charts.

The silver selloff resumes in the wake of the sell divergence, and a potential break though support is likely soon.

The 3-month chart illustrates the selloff in more detail, with penetration down through the 200-Day MA again. The chart bias is negative and silver looks poised to break lower soon.

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

The Silver miners chart mirrors that of the US gold miners, except even more pronounced. The strong selloff in the wake of the sell divergence looks poised to drop further soon, even much further.

Gold : Silver Ratio

The gold / silver ratio spiked to over 100 last week and has dithered up and down since. But it nevertheless still closed higher than last week, as gold continues to outperform silver. The ratio continues to edge up, which is negative for metal prices, and this looks likely to continue.

General Equities

The Dow Jones declined strongly since confirming the final top at 5 in multiple degrees, in confirming the start of a major systemic collapse which is likely to now unfold into a series of declining patterns over the next decade. In Elliott Wave analysis the first and current impulse wave down has completed a (1) (2) with the next longest and strongest wave (3) down to follow, before completing the (4) up and final (5) down.

This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

US Treasuries are at new historic highs with yields at new historic lows. The US Fed did in fact cut the rate by 50 basis points early last week and will probably cut the rate again later this month, as short term US Treasury yields are dropping. The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies.

This of course is how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

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Midweek Market 5 March 2020

Mar 5th, 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. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

The US Fed did in fact cut the rate by 50 basis points early in the week and will certainly do what it can to prevent a further collapse. The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies. This of course will be how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

The dollar is beginning to roll over and a break below key levels will confirm a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

The recent gold rally and integrated sell divergence continues for now. This is likely to propel prices lower in due course as the gold bear market continues, but it may or may not also involve a yet higher gold price first. Once this all unfolds into 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.

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 a new weakening phase appears to have started.

The dollar is beginning to roll over and a break below the rising wedge will confirm a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

The dollar has dropped by 2.5% in a matter of weeks as it starts a weakening phase, assisted also by the US Fed cutting the rate by 50 basis points on Monday. But it is now probably due a correction up having also punched down through the confluence of the 200-Day and 50-Day MAs.

The dollar is now well into the weakening phase and has penetrated both the 50-Day and 200-Day MAs. The slight upward move since could be a ‘kiss goodbye’ (black circle), but a correction up should probably be expected soon.

EuroDollar

The Eurodollar has a breakout from the bull flag in a rally quickly gaining momentum with more than 3% increase since the bottom. It penetrated the 200-day MA and has since corrected back to a potential ‘kiss goodbye’. This provides strong confirmation of continued dollar weakness and a top in the dollar chart, as the near inverse of the dollar index.

US Treasuries

The benchmark 10 year US Treasury yield plummets to an all-time low, extending the yield declines of last week. The collapse in US equities prompted a surge in ‘flight to safety’ funds moving into bonds as the US bond market reaches yet another all-time high, following on from the previous week. In reaching ever-higher new highs the US bond market creates a major non-confirmation with US equities in decline. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

Gold

The recent gold rally and integrated sell divergence continues for now. This is likely to propel prices lower in due course as the gold bear market continues, but it may or may not also involve a yet higher gold price first. Once this all unfolds into 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 still active sell divergence which is the prime driver of price declines. But for now the trend remains up in the rising channel formation, with a final top still to be confirmed.

The 12 month chart illustrates the price drift sideways since the top and sell divergence, in a pattern that could still go up or down. The natural chart bias suggests up and the sell divergence and technical generally suggests down.

The 3-month chart illustrates in more detail the price dispersion since the top in moving sideways including the recent rally. This may be the top of the rally but price is still well ahead of the MAs.

Gold volatility spiked during the recent gold rally but has started to drop in its wake, illustrated by the red dots in reducing levels. This suggests investor eagerness is probably waning again.

Gold cots data continues to develop a strong bearish case for gold declines ahead. This is based graphically on the massive dilation (red circle) between red and green, and technically represented by Large Speculators (green) holding increased large long positions and Large Commercials (red) holding increased large short positions. This indicates the gold price will decline, based on the historical fact that Large Speculators are usually incorrect and Large Commercials are usually correct.

South African Rand

The Rand strengthened from the chart peak and could strengthen further as the dollar continues to weaken. This will be accentuated by breaking down from the bear flag, but will be corrupted if the dollar corrects to strength first.

HUI / Gold Ratio

The ratio continues its decline profile in the wake of the sell divergence, despite the rally in the tail from the recent low point. This indicates US miners are declining faster than gold is declining, and any further gold price decline will accentuate miner declines. Obviously, vice versa applies with a gold price increase.

GDX US miners ETF

GDX declined abruptly from the sell divergence including a breakdown from the bear flag. But this was invalidated by an equally abrupt increase to regain half the decline. The chart structure is still within the power of the sell divergence but in a chart that is more bullish.

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 to down with no obvious direction evident (as it is in the shorter term charts).

There is a silver selloff from the new sell divergence and double top with multiple breakdowns that have been partially invalidated by a price bounce.

The 3-month chart illustrates the selloff in more detail. Multiple breakdowns (black circles) through key support levels have been partially invalidated. The selloff however illustrates silver weakness against gold which is reflected in the much changed Gold / Silver ratio this week.

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

The Silver miners chart mirrors that of silver nearly exactly, with a double top, sell divergence, price selloff, multi-breakdowns and invalidation. It illustrates the accentuated damage to miners from price movement in the metal.

Gold : Silver Ratio

The gold / silver ratio spiked to over 100 this week to close well up at 95.27, 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 17% in all before the start of the current correction. A likely region for the declines to resume could be at a Fibonacci retracement of about 61.8% (black circle), and declines below the break level of 25700 (red) will confirm completion of the countertrend rally.

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. The US Fed did in fact cut the rate by 50 basis points early in the week and will certainly do what it can to prevent a further collapse.

The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies. This of course will be how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

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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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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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