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.
