This article was published for the benefit of subscribers on
April 30th, 2013
AMEX Gold BUGS Index
The daily chart of the Gold Miner's Bullish Percent Index is shown below,
with the HUI denoted in green. The ratio has managed to rise to 6.67, accompanied
by a small bounce in the HUI. Full stochastics 1, 2 and 3 are shown below in
order of descent, with the %K above the %D in all three instances. Although
there is somewhat of a bounce, trends suggest that one more leg down is pending...
Figure 1
The daily chart of the HUI is shown below, with all three lower Bollinger
bands curling down, suggestive that a bottom was put in place two weeks ago.
Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K
above the %D in 1 and beneath the %D in 2 and 3. The %K in stochastic 3 has
flat lined for the past 5 months, suggestive the HUI could remain in an oversold
state for some time.
Figure 2
The weekly chart of the HUI is shown below, with upper 34 and 55 MA Bollinger
bands still rising, suggestive that further sideways to downward price action
is likely. Full stochastics 1, 2 and 3 are shown below in order of descent,
with the %K marginally above the %D in 1 and beneath the %D in 2 and 3. Based
upon all technical trends of the weekly chart, the HUI still remains under
pressure, with a close above 300 required to indicate short-term strength.
Figure 3
The monthly chart of the HUI is shown below, with wave [C] still thought to
be forming at present. Breakdown from the arcs indicated a break of trend,
with no long-term resolution expected until at least the end of 2014...the
corrective phase could extend longer, a the degree of the correction was raised
up one level. The lower 21 MA Bollinger band is beneath the 34 MA Bollinger
band by a spread of 28 points, indicating that an oversold condition continues
to develop. Full stochastics 1, 2 and 3 are shown below in order of descent,
with the %K beneath the %D in all three instances. Based upon positioning of
the %K in stochastic 2, there is no indication of the corrective phase of wave
b (underway since 2008) ending anytime soon. If the price of gold did not rise
sharply with bank funds in Cyprus frozen, or with gold shortages developing,
then the looming deflation may be far sharper than we may all expect.
Figure 4
The mid-term Elliott Wave count of the HUI is shown below, with wave [C] thought
to be forming at present. Wave [C] down has been underway since September 2011
and there is no indication that a bottom has yet been put in place. If a price
close above 300 does not happen within the next 3 weeks, then a continuation
of the downward trend is likely.
Figure 5
The long-term Elliott Wave count of the HUI is shown below, with wave [C]
still underway. When wave b completes sometime between late 2014 and late 2015
(huge window of time), there will be one final leg up in wave c...this is when
the HUI crosses 1000. The commodity trade over the past year should have had
gold and oil rise to levels previously discussed, but intervention has capped
and reversed the trade. Continue to watch the daily chart over the next 2-3
weeks and watch for how the pattern plays out...a move above 300 would confirm
more upside but we have to reach that level.
Figure 6
S&P 500 Index
The daily chart of the CBOE Options Equity Put/Call Ratio Index is shown below,
with the S&P 500 Index. The ration has declined back to 0.58 after a peaking
at 0.85, suggestive that further sideways to upward price action is likely.
For this chart and this chart only, the %K above the %D is a sign of weakness,
while a move beneath is a sign of strength. The %K has bucked this trend over
the course of the past 3 months, with the %K presently curling down. In order
to confirm a top, the put/call ratio should decline to 0.48 or lower.
Figure 7
The daily chart of the S&P 500 Index is shown below, with upper Bollinger
bands in close proximity to the current price, suggestive that further upside
is likely. Lower 21 and 34 MA Bollinger bands appear to be curling down, suggestive
that further upside is likely. Full stochastics 1, 2 and 3 are shown below
in order of descent, with the %K above the %D in 1 and beneath the %D in 2
and 3. The %K rising above the %D indicates at least another 2 weeks of sideways
to upward price action before any sort of a top is put in place.
Figure 8
The weekly chart of the S&P 500 Index is shown below, with Bollinger bands
continuing to rise above the current price, suggestive that a top is looming.
The lower 55 MA Bollinger band is still declining, but when it curls up, it
will indicate a top has been put in place. Full stochastics 1, 2 and 3 are
shown below in order of descent, with the %K beneath the %D in 1 and above
the %D in 2 and 3. Although there is no indication that a top has been put
in place yet on the weekly chart, expect at least another 2-4 weeks of sideways
to upward price action before any sort of a top was put in place.
Figure 9
The monthly chart of the S&P 500 Index is shown below, with upper 21 and
34 MA Bollinger bands in close proximity to the current price, suggestive that
further sideways to upward price action is likely. The lower 55 MA Bollinger
band is still declining and must curl up to confirm a top...based upon this,
expect sideways price action for another 2-3 months before any sort of sharp
declines occur. Full stochastics 1, 2 and 3 are shown below in order of descent,
with the %K above the %D in all three instances. When the %K in stochastics
1 and 2 fall beneath the %D, a top will be confirmed but until then, expect
further sideways to upward price action.
Figure 10
The mid-term Elliott Wave count of the S&P 500 Index is shown below, with
wave C thought to be forming at present. I have not labelled beneath Minor
Degree yet, because of around 3-4 different labelling schemes. With a close
yesterday near the early April high, a move to 1650 in the S&P 500 Index
should be printed before the end of May.
Figure 11
The long-term Elliott Wave count of the S&P 500 Index is shown below,
with the thought pattern forming denoted in green. Once the move up is done,
it will complete wave [B] and result in wave [C] declining in an impulsive
move to complete wave c as a flat (3-3-5) or merely become a corrective wave
[C] of a triangle not likely to complete until 2020. Under either scenario,
the expected low is between 800-850 around late 2014.
Figure 12
The Contracting Fibonacci Spiral cycle that I discovered nearly two years
ago has an extended top due at or before May 21st, 2013. There is a possibility
that a top could extend for another 2-3 months from now, but based upon this
cycle's history, it is important to note the defined time post. For further
reference, refer to the April 2013 issue of Technical Analysis of Stocks and
Commodities magazine.
Analysis of the HUI and S&P 500 Indices are published once per week, along
with the US Dollar Index and 3 currencies, gold and 3 related ratios, oil,
natural gas and the AMEX Oil Index. On a rotational basis, analysis of the
TSX, Euro 350 iShares and the 10 Year US Treasury Index and various Exchange
Traded Funds are published. There are also numerous Health Care Companies we
follow, as well as precious metal stocks. By comparing various markets (Inter-market
analysis), trends within the economy can be found that otherwise may not be
evident.
