Smart Investment - mexicomike.ca

[samxxli]

(Tried to post at around 4 pm, but I could not access the forum, so I postpone until I am available now.)

Thanks for the post by Proticker, it provided a link for wave counts of major wave I for HUI by Derek Blain. I had a similar count for major wave I for HUI that I may post at future opportunities.

The recovery rally from October 2008 low of 150 to December 2009 high of 519 for HUI should be counted as B rally of ABC wave II correction as the corresponding gold price was clearly corrective of 3 waves up. HUI is currently in C wave down. I don’t expect HUI to revisit wave A low of 150 as gold price is in running correction with strong B wave up. The current C wave down for gold price will stay at much higher level. But it is no surprise to me that the 5th wave down of C for HUI may bottom at 50% retracement of 335 or even at 62% retracement of 291.





It always bothered me that the advance from November to January for SPX (also TSX) could only be counted as 3 waves. I finally realized last week that the large consolidation from October to January should best be counted as triangular wave 4 consolidations as shown in the daily chart above.

The advance the beginning of last week was corrective with overlapping waves; it was part of ending diagonal wave v up. The bearish reversal candle last Thursday indicated the end of the ending diagonal and was confirmed by the lower low prices action last Friday.

The Hourly Chart showed the 5 waves up wave i (pink) of wave 5 since triangular wave 4 low. SPX is currently in wave ii down. Wave iii up, iv down and v up of 5 are waiting to unfold. I target wave a (green) up to top at 1250 to 1300 and to last well into May 2010 as shown in daily chart. The daily chart also show the form, magnitude and timing that I expect for large wave b (green) correction.

I outlined one scenario for wave ii (pink) down in hourly chart. Corrective patterns are complicated; it may also take on other form. I do expect the current wave ii down to drop to as low as 1140 to 1150.



Gold price gave the impression that the low of b wave down of 2 up was in after breaking out above 1100 last Friday. But the price has yet to be confirmed by silver and HUI. Both Silver and HUI seem to have another leg down before the lows are in.

The hourly chart above for HUI shows the wave counts for wave 2 up of wave C down. If HUI does move down in b down (blue) to new low, I will buy gold shares aggressively

If pm markets continue to move up impulsively, then the lows of b down of 2 are likely in for pm markets. Corrective waves are always hard to predict, they can go to either directions without warning.


Happy Trading,
Sam

[ProTicker]

Derek Blain seems to sugest something that I keep watching out for.

http://www.kitco.com/ind/Blain/mar262010.html

A 61.8% retracement would bring us close to an HUI index of 280. This would revisit last fall of 08's demise. 2 senarios play out. Either way we should see a sizable drop in PM's before the large wave 3 begins.
_________________
The world is littered with unsustainable debt. And global de-leveraging is still in the early stages.

[samxxli]

Some pundits call for new low below 1044 for gold price based on reversed head and shoulders pattern. I personally do not agree. Silver price and HUI hold up well, I don’t believe the current up cycle for USDX will be strong enough to bring them down below February lows.

Gold price may pullback further below major support of 1085, but I believe it will stop well above February low of 1044. The current down leg is b wave down of 3-3-5 abc flat as shown in the chart.


Sam

[samxxli]

Elliott wave is flexible by nature, that’s the reason we have first count, second count and third or more counts for a price pattern. Alternate counts are necessary as fundamental may change. The key is flexible and to be able to read the tape and update our counts of the pattern based on latest prices actions.

I expected large pullback for SPX and gold when USDX is on the way up to 82. USDX closed at 80.76 last Friday and is not far from target of 82, yet SPX and gold (especially silver and HUI) barely budged. The current weakness for SPX and gold seem to be corrections of uptrend since February lows. I changed the counts for SPX and gold.







I include hourly, daily and monthly charts for SPX such that we can have clear pictures for short and very long term counts.

SPX is in d rally of expanding triangle since January 200 high of 1553. Wave d rally seems tracing out abc Zigzag since March 2009 low of 666.79. SPX is currently in wave 5 up of wave a up of Zigzag d. The pullback from January high of 1150 to February low of 1044 was wave 4 down of a.

The hourly (60 min) chart shows SPX currently in lower degree wave iv down of 5 up. The pullback should stop above 1140 and finish by early next week. The last wave of v up of 5 should last until late April or even early May with target of 1250 to 1300 and that will conclude wave a up of Zigzag d..

Cycles call for upward bias until late July following by larger cycle down. Therefore (see daily chart) if b (green) down of Zigzag d is abc (light orange) flat. Wave a down (orange) will be shallow and b up may recover all a pullback following by a large c (orange) down lasting well into fall 2010.



The unexpected large advance for gold price last Monday and Tuesday put my original count of triple Zigzag in question. The resilient prices actions for silver and HUI seem to confirm that the lows were in. I now believe gold price is in wave 2 up of c down of major wave II.

Wave C down of running correction for gold can take on many different forms but wave C down has 5 legs of 1,2,3,4,and 5. I now opt for the pattern that wave 1,2,3 and 4 are overlap waves in lateral sideway consolidation following by a strong but temporary break of wave 5 in a down move to conclude C wave down as shown in the chart above. This also conforms to a large c wave down for SPX.

As shown in the chart, it seems there is more weakness beginning of next week to finish mid-way triangular consolidation and then follow by another leg up to as high as 1220. I look for favorable setups to go long for gold shares aggressively.

If markets breakdown major support of 1085 for gold and 1140 for SPX with force, then we must prepare for more downside ahead.


Happy Trading,
Sam

[gabrielebo]

hi sam, great analysis. i always thought that to be able to transmit a knowledge amount, let s say, of 10 one should build a medium (i.e. charts) clear 100, and for that the picture in his mind should be a 1000 bright.
so thanks for my 10 and congrats for your 1000!

in the meanwhile im still closely looking to goldstocks/gold divergence (from my previous post, here on mar2nd) using a kind of a "roadmap" to better closely follow the development.

now a positive div' is already under way (ratio is rising) but not so evident yet, and i try to guess where the next gold bottom will be according to that.
we are very close to the first useful level for gold to make a div' relevant bottom. of course this doesnt mean it cannot go down deeper (your count).
please have a look to my starting post (below the picture) and my yesterday update.

just my two cents, but hope this could be helpful to the audience, in some way
regards


_________________
gabrielebo
http://goldoilnatgas.blogspot.com

[samxxli]

Most of the E wavers belong to 1929 style crash camp targeting 1000 Dow. They are in complete disarray now as their wave 2 up count since February low has been invalidated, Most indices have taken out January highs to new all times highs. Yet they are determined as ever for ultimate 1000 Dow target. They now call for slightly more upside before nasty plunge destine to start. A practice they have repeated again and again since May 2009.

I call for B rallies of ABC corrections for commodities and emerging markets (TSX, SSEC, oil, copper etc) and D rallies of expanding triangle ABCDE corrections for general markets (SPX, Dow Index, Dow Transport, etc) since March 2009 lows. Markets are currently in mid- way corrections of the B or D rallies that may last many more months.

B rallies for 3-3-5 flat ABC corrections recover 62% to 132% of A pullback. D rallies in expanding ABCDE triangle will advance to new highs; therefore I also expect B rallies for commodities and emerging markets to recover all A pullback.

B and D rallies have 3 waves abc of lower degree. The markets have been in uninterrupted uptrend since March 2009 lows and are due for lengthy months long b correction of sideways consolidations to build up strong base for powerful c advance.

Even though the decline for SPX from January high of 1150 to February low of 1044 was only 9.2% and subsequent rally is exceptional strong. I have various reasons to believe that b down correction has started since January high. (a) Copper has declined by 20% from January high to qualify it for high degree b correction. (b) The decline from January high had accompanied by increasing volume while the advance from February low has accompanied by decreasing volume. (c) There were many unfilled gaps during the run from February low that need to be filled. (d) Bearish negative divergences have shown in daily and hourly charts. (e) SPX and TSX are on last wave of 5th wave up. All indications show upside is limited and large pullback may resume soon continuing the consolidation since January high.



SPX surprised me with their resilient price actions. But in reality, the length of a (blue) is 68 and if c is equal to a, then the target for c (blue) is 1154 which is close to last Friday’s high.

There are two scenarios. The pink lines show SPX has peaked and SPX is on c wave (green) down. The red horizontal line shows the level below to confirm trend has reversed to down.

The grey lines show 5 of c (blue) is still in play, SPX is currently in lower degree wave ii down, wave iii up, iv down and v up are waiting to unfold. The green horizontal line shows the level up to confirm renew rally in play.



Gold price was moving as expected last week. It underperformed USDX. Gold price is moving down inside well defined down channel. All indications show markets will be down and USDX will be up medium term Therefore gold price will also be under pressure medium term.



US dollar index has been in consolidation since early February and is still above lower uptrend line. The consolidation can be counted as triangle abcde. PROC (China) will likely raise rate next week which may sink stocks prices and fuel the run for US dollars. The growing hawkish tone from US Fed will also support another leg up for USDX.



Happy Trading,
Sam

[samxxli]

I will be short as I tie up with other business today. I am presenting the charts on short term counts for SPX and gold and intermediate counts for USDX. The charts are self-explanatory.











Happy Trading,
Sam

[samxxli]

Hi Gabrielebo,

I was busy trading during the trading hours last couple of days.

I still firmly standby by my long term counts for gold, USDX and other markets that I posted on Oct 24 2010. USDX is on first leg up of 5 waves contracting triangle since December low at around 74. I revised short term counts for first leg up for USDX and I will post a chart on USDX this Sunday.

I opt for the blue 5 waves pattern in your USDX chart. On the surface the pattern looks like an impulsive advance, but actually it is corrective. The whole pattern is Triple Zigzags and should be labeled as WXYXZ (not 12345). WYZ are the three zigzags, the two X waves are corrective waves separating the zigzags. You have to go to lower time frames of 1 or 2 hours to identify the zigzags of WY. Triple zigzags can actually be counted as large (W) (X) (Y). I think the third zigzag Y up for USDX is unfolding now.

If gold price has topped, it can also be counted as triple zigzag decline since December high of 1226.

An abc corrective pattern doesn’t usually have a large b waves, a good example can be found for wave A decline of the weekly chart for $SSEC that I posted on Feb 21, 2010.


Regards,
Sam

[gabrielebo]

[samxxli]

Hi Gabrielebo,

You made good point and I agree. IMO the current waves up are X waves up for both gold and SPX, they may have more upside, but gold price should cap at resistance of 1155 to 1160. A new round of strength in USD may start as early as Thursday or early next week the latest, resulting in protracted pullback (Y waves) to new lows for both SPX and gold.


Sam

[gabrielebo]

hey sam,
i ve just added another point of view in my blog that seems support your preferred count, and without conflict with mine neither.
it s based on divergence (the picture is not mine and comes from a precious chartist in public stockchart list, find the link in the post) and tells that since a bullish divergence between gold and goldstocks is not in place yet, the time for an important minimum is still to come.

comments are welcome, as always


_________________
gabrielebo
http://goldoilnatgas.blogspot.com

[samxxli]

The markets (commodities and stocks markets) are in decent shape. The prices actions proved more resilient than I expected, we got strong move up from February lows. My target low for gold price at 970 to 1005 and 15% drop from highs for TSX and SPX may prove to be aggressive; they may bottom at higher levels.

The decline from January high for SPX has been corrective of 3 ways (see my counts, same for gold price). Prices actions have been choppy and sluggish; the decline is a correction within entrenched uptrends since March 2009 low. The prevailing uptrend move will resume once the correction is over.

http://www.reuters.com/article.....IL20090514
Even Prechter has changed the tone of his crashing to new low call he made last month (January), he now allows for a new high for SPX before starting another plunge to new low and eventually to 200 for SPX. He has repeated the same pattern again and again and again since he called the top in May 2009. We were lucky if we didn’t lose big by following his calls to go short and we surely missed the life time opportunities to make money by going long.

I regularly follow other blogs of different views (including Prechter and Neely), I don’t usually agree but I surly learn a lot. I always come out with unique view/call of my own which I share with good intentions in my blog. I hope you all will approach my blog as a good source of reference and reference only and trade with your own discretion and risk tolerance.

I still expect near term decline to new lows for gold and SPX, and they will be the first leg down of more complex triangle (for gold) or flat (for SPX). The whole corrective patterns may last a few more months.

The c waves to follow for commodities and general markets since March lows will be very profitable and we must be prepared to take on these rare life time opportunities. Wave c usually equal to wave a proportionally in an abc Zigzag, base on this assumption, crude oil can be calculated to move up to 140, copper to all times high, SSEC increase by more than 100%, Nasdaq composite ($COMP) increase by 100% to 4000 plus. I expect TSX to top to marginally new high at around 15500 and Dow index at around 14500. The charts patterns for the markets predict continued world economy recovery for next 2 to 3 years. Again they are my personal opinion only, and I may be wrong. I monitor closely the markets for unexpected plunge to invalidate my counts.



I still think EURO index is vulnerable to near term low of 1.32, therefore I expect near term decline to new low for SPX as shown in pink colored lines of my preferred count. If this scenario unfolded, then I will go to the long side of the markets aggressively after I see the low is in. I have to take into account that SPC may start c wave up of the Zigzag.

It is always very difficult to predict choppy prices actions. The grey lines show the alternate count for high b wave (green) before reversing down.



The pink colored lines show my preferred count. If this scenario unfolded, I will buy aggressively gold shares at the low. The grey lines show my alternate count; this is the scenario that Gabrielebo predicted.



The chart above showed the rationale that I took profit and sold my HGD.TO positions.



Happy Trading,
Sam

[ProTicker]

http://howestreet.com/articles.....e_id=12596

Preparing for a large market drop- Feb 24th
February 25th, 2010

I view the recent market move to the upside as “Corrective” and not a new bull leg. This means there is another wave coming down, and I’ve been alerting my paying subscribers as to how to prepare themselves to profit from it. The market rallied for about 10 months and peaked one day after my Jan 18th market article indicating all requirements for a top had been in. We saw a huge drop in January and into early February for a few weeks. A ten month bull run is not corrected in 2-3 weeks of pullback. I continue to look for the SP 500 to drop to the 910-965 ranges over the next several months before a valid A B C corrective pullback would be in place. This is a minority view as of this writing from what I can read. The VIX has dropped way down again, and the bears in the surveys are still only running at 26% or so.

The patterns indicate to me that sentiment is about to peak out here short term and the market is due to begin turning down on Thursday Feb 25th according to my methods, and pick up steam next week. Below is just one of many charts I send my subscribers, and this one is on the Nasdaq 100 index as of a few days ago.

Prepare for the move.

Dave Banister

ProTicker here,
This is typical of those that have fair to good track records of market technical calls. I personally see reasons simular to other market bear periods like 1974/75 and 1929/3o/31.

We should have a very hard retracement and may not recover from that for a long time. I am preparing for such and view it as a great time like fall08 and March09 time to buy if such occurs.

If correct , this will be the last great bargun time to buy gold/silver stocks on the cheap, like Impact Silver. I loaded up on Impact in Dec. 08 between .27 and 34 cents. Sold out of 2/3's of my Impact a month ago. trading Hecla Mining primarily. Hecla I am trading with only 1/2 of my available funds for trading.Having been much more cautious than last time.

May fall of 08 be an "OE" Operating experience , as we say in the nuclear industry. Giving that I am expecting a very cautious down market starting a phase 2 down.

Cheers to all, we are fore armed because of fore warmed.
_________________
The world is littered with unsustainable debt. And global de-leveraging is still in the early stages.

[samxxli]

Hi Steelpiston,

If you follow me long enough, then you should know I downplay fundamental. I believe markets have priced in and discounted all known fundamental reasons. I focus mainly on price patterns and do wave counts using Elliott waves and other T.A. tools to predict future moves.

If the markets are on the way down to new lows, they should happen next few months with down force rivaling severity from Aug 2008 to Oct 2008. (3 of P3 as Prechter claimed). I am open mind, I certainly took into account of this possibility, and I advised my friends with limited trading experience who neither short nor buy bear ETF to stay on the sideline with cash until at least summer. I personally trade in both directions of the markets and follow very strict disciplined rules. As a matter of fact, I am currently on the short side of the markets.

On the other hand if markets stay on rangebound, sideway and choppy prices actions with limited setbacks next few months just as I expected, then you bet I’ll go to long side of the markets aggressively after I see the lows are in and I will advise my friends to do the same. To me it’s simple; b rallies in a 3-3-5 flat abc correction will recover most and sometimes even all of wave a pullback. Since wave a pullback was extraordinary large, the gains for b rallies will be enormous and they provide rare life times opportunity to go long. TSX posted largest gain in 2009 for last 10 years even though it was a bear market rally.

I stand by my counts, but I want to emphasize that they are my personal opinions only. I may be wrong.



Regards,
Sam

[steelpiston71]

Sam, your knowledge on these cycles in amazing. Having said that, I can't see a single scenario that gets the Dow back to all-time highs 2 yrs from now. Like, ZERO. I actually think Dow 4000 is more probable first.

Cycles aside, Alt-A resets are going to pickup between now into 2011, States are going to become increasingly bankrupt, interest rates will continue to put pressure on any growth, Europe has a lot of problems to sift thru AFTER whatever happens with Greece, and China is actually looking like a good short play for years to come.