Elliott Wave Analysis
Active Trading Partners, LLC
The Technical Traders, ltd
Back on January 15th we wrote an article and also a elliott wave forecast for both the public and our subscribers showing a likely top at a maximum of 1868 on the SP 500. We said that Elliott Wave Major 3 of Primary Wave 3 would top no higher than that level. In fact, we can go back to September 4th 2013 and we projected a Major 3 high as 1822-1829. Turns out we were only about 1% off 4 months in advance of projecting that high, and once again we are on track here with Major 4 commencing from Major 3 highs.
Below is the Major 3 chart we sent out on September 12th in public articles and private reports
We simply use Fibonacci analysis of wave patterns which are based on human behavioural tendencies that go back centuries. Elliott Wave Theory is often hard to put into practice, so sometimes it gets a bad name. However, a bad steak at a restaurant doesnt mean you never have steak again right? The practitioner must hone his or her skills over time and work to improve accuracy.
Our view is pretty simple in that the Major wave 3 was 583 points going from 1267 to 1850, the double top.
Below is the chart we did on January 15th in advance of this top:
We now know in hindsight that we topped out at 1850. So what we want to do is simply take the 583 point rally of 1267 to 1850 (major 2 lows to Major 3 highs) and compute a retracement. We use 23.6%, 31.2%, and 38% Fibonacci figures to come up with estimates. Those come in at 1713 on the shallow end of a correction (wave 4) and 1628 on the lower end. (See chart below)
Now, assuming we are on track once this Major 3 completes we will see a Major wave 5 of Primary wave 3 taking us to all-time highs. This will then complete Primary wave 3 of this 5 primary wave bull cycle and then larger Primary wave 4 corrections will ensue from those highs. We will know we are wrong in our degrees of wave counts if we pierce the 1628 level on the downside. That would indicate Primary 3 topped out 1850 and we are in Primary 4, which is not our current view.
David A Banister- www.MarketTrendForecast.com
We have been writing about the bottoming process of the Gold Bear Cycle (Elliott Wave Theory) since December
4th 2013, and our most recent article on December 26th reiterated that the best time to accumulate the Gold/Silver stocks was in the December and January window. Specifically this is what we wrote:
These types of indicators are coming to a pivot point where Gold is testing the summer 1181 lows at the same time, we see bottoming 5th wave patterns combining with public sentiment, bullish percent indexes, and 5 year lows in Gold stocks. This is how bottom in Bear cycles form and you are witnessing the makings of a huge bottom between now and early February 2014 if we are right.
The time to buy Gold and Gold stocks is now during the next 4-5 weeks just as we were recommending stocks in late February 2009 with public articles that nobody paid attention to. This is the time to start accumulating quality gold miner and also the precious metals themselves as the bear cycle winds down and the spring comes back to Gold and Silver in 2014.
Since that article a few of our favorite stocks rallied 40-50% in just 3 weeks or so from the December timeframe of our article. A recent pullback is pretty normal as we set up for Gold to take out the 1271 spot pricing area and run to the mid 1300s over the next several weeks. By that time, you will be kicking yourself for not being long either the metals themselves or the higher beta stock plays.
A few suggestions that we have already written about we will reiterate here again. Aggressive investors can look at UGLD ETF, which is a 3x long Gold product that will give you upside leverage as Gold moves into elliott wave 3 up. Other more aggressive plays we already recommend a lot lower include GLDX, JNUG, NUGT and others. Picking individual stocks can be even better and we have recommended a few to our subscribers that are already doing very well.
What will trigger this next rally up is sentiment shifts to favor Gold and Silver over currency alternatives. The precious metals move on sentiment, much more so than interest rates or GDP reports or anything else in our opinion. Sentiment remains neutral to bearish as evidenced by the larger brokerage houses running around in January telling everyone to sell Gold, so we see that as a buy signal on top of our other indicators.
We expect the mid 1500s by sometime this summer, but by then your opportunity will be long in the rearview mirror. Join us for frequent updates at www.MarketTrendForecast.com
David A. Banister- www.MarketTrendForecast.com
Our Last major Elliott Wave Analysis of Gold came in early September when Gold had touched the 1434 area, and in that analysis we called for a re-test of 1271-1285 levels. This was based on our Elliott Wave Analysis of the patterns involved since the 1923 spot highs in the fall of 2011. Our clients of course were updated on a regular basis since that public analysis and we have been looking for clues to a bottom in this Gold bear cycle from the 2011 highs.
Most recently, we noted that we are seeing patterns commiserate with what Elliott wave theory calls a truncated 5th wave pattern. All Bear cycles have 5 full waves to the downside from the highs, and we have been in wave 5 since the 1434 highs. The key then is determining how low that wave 5 will take you in Gold, and planning your investments and timing around that forecast.
To qualify for a truncated 5th wave, you have to have a very strong preceding 3rd wave to the downside. In this case, we had that as Gold dropped from just over 1800 per ounce to 1181 into late June 2013. As we approached the 1181 areas, we also put out a public forecast saying that Gold has indeed bottomed and should rally strong to the upside. Recently, Gold hit a bottom at 1211 spot pricing last week and that is when we began to consider a truncated 5th wave pattern.
We sent our clients about a week ago regarding this possible Elliott wave theory bottom:
If we fast forward a week later, we had Gold running up to 1261 which was the pivot resistance line we told our subscribers to watch for. We hit it on the nose and backed off to 1224 yesterday. We now expect that
if GOLD holds the 1211 area, that we will again rally back up and over 1261 and then head to the 1313 resistance zone. We would like to see Gold get over 1313 and if so our targets are in the 1560 ranges for Gold in the first half of 2014.
Aggressive investors should be accumulating quality small cap gold producing and exploration, or Gold itself depending on your preference during these last few weeks of December as our Elliott Wave Analysis is signaling a bottom is near. We would again watch 1211 as a key level to hold for this possible truncated wave 5 to work out.
Join us at www.MarketTrendForecast.com for regular Gold & SP 500 Elliott Wave Analysis updates.
The SP 500 staged an improbable come back on Friday November 8th from the 1747 lows of Thursday.
As it turns out, an examination of the shorter term waves can call the low at 1747 an ABC wave 4 bottom, and now wave 5 up to complete Major wave 3 seems under-way. Our Elliott Wave analysis continues on track, but a few short term adjustments are in order.
We had Elliott Wave targets of 1768-1829 for weeks now in that wide range. At 1829 we have symmetry with a 562 point rally from 1267 Major 2 lows, and that 562 is virtually identical to the 666-1221 wave structure off the bull market cycle lows in March 2009. That rally was 555 points, so at 1822 in fact we would have
a nice neat 555 point Major 3 rally of Primary 3 to equal the initial leg up of Primary 1
Key support is 1747, the 20 day moving average, below that and we have a truncated 5th wave of Major 3 and we head lower….
So lets look at 1778 resistance again (704 point rally off the 1074 Primary 2 lows and equal to 704 point Primary 1 rally)
And then 1822 as next up in line.
1778 resistance, 1747 key support, 1822 next top target.