Gold has completed a long-term trough & is Ready to Soar! SPX reversing into a bounce Gold & SPX inversely correlated, with

Transcription

1 Saturday, Nov 14, 2015 (revised Nov 15) Gold has completed a long-term trough & is Ready to Soar! SPX reversing into a bounce Gold & SPX inversely correlated, with a lag Figure #1 Spot Gold 2-hour In the Gold Daily chart above, you see gold has completed the (a)-(b) transition to begin an upside move. Preceded by two, most Bullish Diag IIs (Diagonal triangles type 2) its indicate the beginningg of a long, energetic upside. Gold is a low risk/high reward trade. You can buy gold heree with abandon! We covered shorts last week and have open orders to buy long at Page 1 of 7

2 Bear Market Rallies vs. Real Bullish moves Most will call gold Bullish, yet it s really in a Bear Market Rally. What s the difference you ask? Aren t all long upsides Bullish? Absolutely not, the difference lies in a 3-wave structure consistent with corrections, as opposed the 5-waves impulses required of Bullish moves. When the 5-waves impulses turn bearish, watch out below, it s always the final Bear Market, killer wave. As see below in the long stock chart in Figure #2, regardless of direction, all B waves are false moves, which are nearly always retraced entirely. At higher magnitudes, Bear Market Rallies are certainly worth trading. At higher magnitudes, Bear Market Rallies can be far more profitable than lower degree bull markets. Take for example the (B) wave spanning 1918 and 1929, known as the Roaring Twenties. Its sub-divisions are a 3- wave A-B-C. Likewise, the (B) wave in stocks ended 2014, in now gearing up magnitude for the final plunge. Figure #2 The New-Wave Elliott Channel - US Equities since 1900 Page 2 of 7

3 Basic Elliott For those without previous knowledge of Elliott, impulse waves are denoted with numbers, while corrections are annotated with letters. Bear Markets are higher magnitude wave 2 & 4 corrections, labeled in shades of blue and green from the perspective of the one larger trend Bull Market. Thus, Supercyle Wave four is denoted as Supercyle (IV), while its (A)- (B)-(C) sub-divisions are shown in shades of red. What s more the market is a fractal, meaning that the whole is echoed in its parts and sub-parts, while remains the same, no matter how much it is magnified or shrunk down. Figure #3 Gold s historical inverse correlation to the S&P - since 1970 In figure #3 Gold in red is overlain with the S&P in blue. Althoughh the two are usually inversely related, at major turning points, such as in 2007, 2000, 1980, 1976 & 1974, Gold s upside reversal from the trough, lagged the peak in stocks. That lag is now over. In Figure #4 you find the current S&P in 30-minute intervals, showing the 5-waves impulses leading to a Bearish decline to wave 1. Despite the impending bounce, into wave 2, once the wave turns bearish like this, in the Final Bear Market Wave, it s culmination is ALWAYS a free-fall. In the S& &P 30-min interval chart in Figure #5 you see the Diag II has become highly repetitive - each repetition confirms and compounds the bloodbath s violence ahead. Page 3 of 7

4 In the S&P, magnitude gearing-up in Bearish mode Five impulse waves down, and 3-wave, upside corrections are confirmatory of a Bear Market culmination. This chart in Figure #4 highlights incrementing Bearish magnitude, which initially geared up in the Bear Market Rally, being swiftly recalled over the span of weeks, rather than years. Figure #4 SPX 30-min intervals to highlight bearish impulses Figure #5 SPX 2-hour perspective Page 4 of 7

5 Five Wave Sub-divisions incrementing magnitude Most alarming, are the 5-wave sub-divisions, most often associated with Bull Markets in effect, the Bull Market turned on its head for the final killer plummet. Crashes comparable to Supercyle (II) wave (C), spanning 1929 and 1932 are intrinsic to such bearish, Supercyle impulses. Meanwhile, the most bearish of all price patterns, the Diag II, is huge versus is reciprocal Bullish Diag II ( ) in the Big Picture Figure #2, despite the distortion intrinsic to the log chart, which minimizes the near versus the past. However, the arithmetic scale seen in Figure #6, the same Diag II shows an entirely different perspective, the effects of Fed manipulation. Figure #6 Relative Dimensions of Bullish & Bearish Diag IIs Magnitude transcends after the fourth wave The chart above further demonstrates magnitude gearing. Minor waves i-iv culminate as intermediate wave (i), and intermediate waves (i)-(iv) culminate in Primary wave 1, in Page 5 of 7

6 both cases, an a-b magnitude transition after the 4 th wave, transmutes magnitude to the next higher degree wave 1, at twice the previous magnitude. From Cycle Degree to Supercycle the gearing is 4x. Meanwhile, upside corrections remain stunted as mere pauses, so the highly awaited bounce to get out never comes! This is the anatomy of a Crash. What makes capital destruction inevitable is the higher, culminating magnitude. Much like a free-falling object in Newtonian Mechanics, the dive accelerates at velocity squared. Buy & Hold is out of the question The Big Picture in Gold vs. the S&P reversing, gold about to Fly, and the S&P s bearish wave structure, wrap up a high degree of certainty regarding a protracted Bear Market in stocks, and a robust Bear Market Rally in Gold, resembling (B) waves ended 1929 and 2014 in stocks, as seen in Figure #3. Bottom Falls out of the Market A clearer sign of impending Free-Fall does not exist. If you are still long, it s about time to rethink your asset allocation into Cash & Gold. The upside is relatively small, the downside is a black hole and will likely to occur in a flash. Unlike Bull Markets, Bear Market are wildly volatile Buy& Hold is out of the question. As an alternative, Shorts, Inverse ETFs, the Euro and commodities, including gold can be optimally swing traded for returns far beyond those available in any Bull Market, but they require expert command of New Wave Elliott - that s what we do best as demonstrated in our continuous #1 Timer Digest Ranking for 22 months. Eduardo Mirahyes Page 6 of 7

7 Page 7 of 7