Precious Metals Update

 With all the bullish sentiment prevalent towards Gold and Silver and linear extrapolations out there. It appears to this analyst that both metals are topping out and continuing the bear market that began coincident with the peak in the rate of U.S. inflation in January 1980. Gold moving above the 2011 high was not expected, but it appears to be double topping with that high and staging a dramatic downward reversal into a continuation of the secular bear market that should, if my thesis is correct, draw prices below the 2001 lows at $256.60 and Silver Below the 2001 lows of $4.03. 

Potential Important Timing Symmetry

The Stock Market as measured by the Dow Jones Industrial Average has rallied over 37% from the    lows of Primary Wave 4 in March. Elliott Wave Analysis suggests the rally from the March 23 low at 18,591.93 should take the market to new all-time highs above the February 2020 high. The current rally should represent at a minimum, the first intermediate wave up of that Primary wave 5, and possibly only the first minor wave of Intermediate wave (1) of the final stages of a centuries long Grand Supercycle bull market. The above notwithstanding, on an intermediate term basis the stock market has completed 5 waves up and is thus due a 3 wave correction.

Potential timing for the low of the imminent corrective wave 2 may be demonstrated from the time symmetry of the cycle degree wave lows of 4/28/1942, and 12/6/1974. A total of 11,911 days elapsed between those two significant lows. The low of the upcoming correction will not be of similar degree as the cycle degree wave lows of 1942 and 1974, but more similar to that of 12/4/1987, a Primary degree wave low. The timing symmetry that is being illustrated does not precisely match wave degree lows, as the upcoming low is only of intermediate or even minor degree, but nevertheless this potential time symmetry is worth pointing out. Should the market recognize such timing, a low would be implied on 7/14/2020. 11,911 Days from 10/19/1987, the absolute closing low of the crash of 1987, is 5/29/2020, too soon to indicate a low. 11,911 days from 12/4/1987, the orthodox low of Primary Wave 4 of Cycle Wave III, is 7/14/2020. It is possible the market could recognize both sets of symmetry, where 5/29/2020 marks the high of wave 1, and 7/14/2020 marks the low of wave 2. The market will dictate the correct answer.

Stock Market Registers Primary Wave 4 Low

The Stock Market Appears to have just registered the Primary Wave 4 low. Below I present an alternate count that illustrates an Extension for Cycle Wave V from December 6, 1974 low of 577.60. 

Supporting evidence for this count emanates from the fact that a channel encapsulates the important peaks of waves 1 and 3, and the lows of waves 2 and 4. This count is presented on an arithmetic scale, which is consistent with the calculations for price targets conducted on an arithmetic basis. While it is still favored that Primary Wave 4 is correcting the Primary Wave 3 advance from October 4, 2011 to February 12, 2020, this alternate count should be entertained. In any case, it appears the stock market has registered a major low, and new all-time highs should be achieved. On a closing basis, Primary Wave 5 would be equal in length to Primary Wave 1 at 33,519.42. Currently it appears this target will be achieved in 2022. The final wave of the bull market would throw over the upper channel line, before reversing into a true bear market. In 2020 there is widespread panic and fear, and it is quite obvious to the public why the stock market is declining and the world appears headed into a depression: The Coronavirus. This is indicative of a panic stock market crash, not a bonafide bear market. It is simply not how long term tops are achieved. In 1929, the bear market begun with a crash, but it was denied by many observers far and wide. Such is not the case in 2020. Most are afraid for what the future holds. Elliott Wave Analysis suggests a bullish outcome for the intermediate term. 

 The final bull market top, and for some time following, during the initial leg of the bear market, there will be denial by many that a bear market has begun, and there will be optimistic justifications for a continuation of the bull market. Until such time as the market does register it's final high, at the present time, the stock market appears to be in an extraordinary bullish position. 

Taking an Elliott Wave Step Back

The stock market appears to be at or near the low of Primary Wave 4. It was foretasted on these pages in November 2019 that a sharp correction would occur for Primary Wave 4. That has now occurred, fulfilling the forecast, albeit later than projected. Nevertheless, the market is now in oversold territory and, it would appear, amidst all the calls in the mainstream media for the end of the bull market that began on this very day 11 years ago, set up to once again fool the majority of traders and reverse to the upside in Primary Wave 5, the final wave of the bull market. Even amidst all the fear over the Coronavirus of an imminent stock market decline and recession, the technicals are painting a different picture, as is to be expected at a low. It is the opinion of this analyst that capitulation has taken hold and a bullish reversal will commence shortly. Currently, the bull market should still be on track to end in 2022, but updates will be provided on these pages to track developments as they occur should the market dictate otherwise. 

Of particular note should be a pattern that, should this count be correct, have remained consistent in this bull market. Primary Wave 2 traced out a Zigzag, and Primary Wave 4 traced out a Zigzag as well. Intermediate wave (2) traced out an expanded flat, and Intermediate wave (4) did so, too. Should this pattern of lack of alternation by corrections of like degree hold, the market should be tracing out a zigzag for Primary wave 4, of which wave (C) appears to be terminating. The next move should be a thrust to new all-time highs in Primary wave 5, to last many months. Fear is dominant currently in the stock market. Undoubtedly by it's terminus this sentiment will be lopsided, and most investors will be bullish and projecting exponential growth in the stock market. That will indeed be a sign the bull market is in it's final stages and a bear market reversal is due.   

Gold to Resume Bear Market

With all the focus on the Coronavirus and today the sharp drop in equities, few are realizing the selling opportunity in Gold. Those who are watching Gold view it as a crisis hedge, which the market does perceive to be the case at times Regardless of any preconceived correlations. Evidence appears to suggest Gold is about to Resume it's bear market that began in 1980.

Most who are long term bearish on Gold assert the bear market began in September 2011 at $1,923.70. However, it is my observation that Gold in fact was not rising in a bull market from 2001-2011, but a three-wave, counter-trend bear market rally. In Elliott Wave Terms, a b-wave. If I am correct about that, wave c should consist of 5 waves, of which the first and second waves have just completed. Next should be the third wave down, which at a 1.618 relationship would take Gold to $270 per ounce. As hard as that is to believe, my Elliott Wave Analysis suggests that as a target for the next wave of the bear market, which could take a number of years. Wave 4 would then partially retrace the third wave decline, to be followed by a final fifth wave down to complete wave c and the bear market in totality.

Quick Stock Market Update

The Bull Market is in its tenth year, and still appears to be on track to match or exceed the longest bull market on record, from October 1987-January/March 2000. This would portend a final top in 2022. However, developments will be monitored closely should the market top sooner. In the interim, the market appears to have reached important resistance as evidenced by a trendline dating back to 1987. 

In the intermediate-term, the market has likely peaked or will with one more minor new high in Primary wave 3, with a sharp correction due for Primary wave 4, to be follow with one final wave up to end the Cycle Wave V bull market and likely mark a peak that will not be seen again for decades. More detailed analysis to follow soon.

 

The Bull Market Continues

It's been 8 months since the January high in equities. With the historically slow summer season over, the market is now trading at all-time highs, ending the corrective period that has persisted virtually all year. While the high in January may have appeared to mark a blow-off top and end to the bull market than began in March 2009, it was stated here that probabilities suggested a long-term top was not approaching. The initial move down was sharp and swift, in line with the forecast given in January. While the timing of the correction was correct, the degree of a top that the market registered was larger than expected, and therefore a minor alteration to the Elliott Wave Count is necessary. It appears the January high marked Minor Wave 1 of Intermediate wave (5). The DOW has caught up with the other major indexes and has made a new all-time high, and Minor wave 3 appears to be in force. Minor waves 3, 4 and 5 still need to complete before the bull market ends. Because Minor Wave 2 was drawn out in time and took a sideways form, Minor wave 4 is expected to be simple, sharp and short in duration before Minor wave 5 commences to end the bull market. Currently, expectations are that minor wave 4 will occur in 2020. If our timing is on track, Minor wave 5 should then take the market to new all-time highs once again until 2022. After that, the biggest bear market in 300 years will commence.

While at first glance of the major indexes it may seem that price action since January through May was a classic fourth wave triangle, upon closer examination of the Dow Jones Industrial Average, the benchmark index for long-term U.S. investor sentiment, made a new low in Late March on a closing basis, and early April on an intraday basis.

 As per Ellliott Wave Principle, in a corrective wave that takes the form of a contracting triangle, "Wave C never moves beyond the end of wave A, wave D never moves beyond the end of wave B, and wave E never moves beyond the end of wave C (EWP, p. 90)." In this case, wave C moves beyond the end of wave A. Therefore, a triangle can be ruled out. Instead, it is far more likely that the Minor wave 2 correction took the form of a triple zigzag, with a truncated low in May for the third and final zigzag in the sequence. While this may not appear the correct way to label the correction, truncated ends to corrections do occur. Additionally, the move from early to mid April is not impulsive, suggesting it is still a part of an ongoing correction. The third zig-zag, labeled wave Z, then takes the market down in the form of three wave into early May to end  the Minor wave 2 correction. As per EWP, "Sometimes a pattern's end differs from the associated price extreme...in Figure 1-47, the end of wave Y is the orthodox bottom of the bear market even though the price low occurs at the end of wave W (EWP, p.55)." The Dow was the only major index that did not trade higher than their respective February peak for wave X. An argument could be made for wave X ending in March rather than February for this reason. However, wave Y has a proper form of 3 waves when the rally in early March is counted as wave (b) of Y, and the Dow is benchmark index for the U.S. Stock Market, so this labeling appears to be acceptable. 

Now that the Dow Jones Industrial Average has made a new all-time high, greatly increasing the probability that the Minor wave 2 correction is over, we can make some projections for Minor wave 3. Currently, the expectation is that Minor wave 3 will not be as robust as Minor wave 1. Looking forward, Minor wave 5 should be even weaker in both participation, price advance and slope than Minor wave 3. Minor wave 5 will be tracked in real-time as it unfolds, but for now, Minor wave 3 appears to be impulsing. Minuette wave (i) progressed in a simple 5 waves into a May high of 25,086. Minuette wave (ii) then took the form of an expanded flat into late June, terminating at 23,997. Minuette wave (iii) is projected to travel 2.618 times the length of wave (i), yielding a target of 28,068 before Minuette wave (iv) unfolds. Minuette wave (v) should then carry the market to new highs once again to end Minute wave i of Minor wave 3. In the near-term, taking 1.618 times the length of Subminnuette wave i yields a target of for Subminuette wave iii of 27,538.