Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Metals Correction Almost Completed

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by Avi Gilburt, ElliottWaveTrader.net

First published Sat Oct 8 for members of ElliottWaveTrader.net:  I am going to begin this update with a very simple proposition:  get your shopping list in gear, as the time to buy is upon us.

Last weekend, I noted the following:

As far as the actual charts are concerned, I still see nothing that suggests this correction has run its course. Yet, every time the market provides even the slightest rally, many in the market begin getting overly bullish.  Yet, many of the sentiment readings I have been seeing in the metals are dropping to levels approaching that which can propel us into the heart of the 3rd wave higher.  But, I still think there is room lower in those sentiment readings before a final bottom is struck.

As far as immediate support levels to watch, last week’s low in GDX and silver are quite important to the continuation of the b-wave triangle.  But, ultimately, the line in the sand for me resides at 123.75 in GLD, 25.35 in GDX, and 18.60 in silver.  A break below these levels provide us with a high probability signal that we are within our final drop to complete this correction in the metals complex.  But, as long as we remain over those levels, we may continue to see whipsaw before those final lows are struck in the coming weeks.

The market resoundingly broke all those levels as we have been expecting, and dropped in the heart of a 3rd wave in the c-wave down this past week. And, when the market completes the heart of a 3rd wave in a c-wave down, it tells us that what remains in this correction are only 4th and 5th micro waves.  That is what we view as a bottoming process, wherein the market develops the positive divergences we need to see at lower lows to set us up for the next rally phase.  But, it also represents the point in time when most begin to really turn bearish the complex, and begin to believe that we will break below the January 2016 lows.  Bearish sentiment will likely be extreme, and that is further confirmation of the bottoming process we want to see.

This now has me turning to my 144-minute silver chart.  This chart has been the best bottoming indicator in the complex.  We have caught every smaller degree and larger degree bottom in the market using this chart.  What we are looking for is the completion of a 3rd wave down, and the start of the positive divergence set ups as the market strikes lower price levels.  For now, this chart suggests we “should” see at least one more lower low before this correction has run its course.  And, I believe that the next lower low on a positive divergent bottom is a strong buy signal for our next major rally phase that we are expecting.  But, as a caveat, I do have to note that Friday’s slightly lower low was made on a positive divergence, but the pattern to the downside just does not look complete.

Now, onto the bigger degree charts.  There is a change I have decided to make in the larger degree silver and gold charts.  I have decided to align those counts with the one in the GDX.  That means I have modified the counts to align as i-ii set ups in wave (1) of a much larger degree 3rd wave in the complex.  And, in silver, it means I am counting the rally off the lows as a leading diagonal.  While this does not really change our upside expectations into 2017 (as long as we hold support), it just slightly changes the wave degree I have designated to the current chart action.
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Will the 5th Wave in S&P500 Happen?

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Today we sold off into the 4pm EST close at 2175ES (E-mini S&P500 Futures) as we had into Fed minutes for tomorrow Wednesday at 2pm. That’s the first time in a while where we ended the day at the lows.

Is that a bearish sign? And what happens next?

Well, if what happened today is a 4th wave, then it’s possible to have an a-b-c 5th wave up according to the red line.

081616-sp500-line

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Textbook Set Up in the Metals Complex

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by Avi Gilburt, ElliottWaveTrader.net

First published Sat Aug 6 for members of ElliottWaveTrader.net:  Last weekend, I prepared you for the potential set up for the 3rd wave to much higher levels in the metals complex.  More specifically, I provided you with a map as to how the 3rd wave set up would look on the GDX, should the market comply by filling in our 8 minute chart as outlined:

As long as we do not break below that support, and ideally remain over the 1.00 extension at 29.87, then I will be looking to complete 5 waves up off the recent low, which I would classify as wave (i) of wave 3 of iii.  That suggests that after a corrective wave (ii) pullback is seen, and we then break out over the top of wave (i), the market is well on its way into the heart of its 3rd wave, and targeting the 39-41 region next.

And, over the last week, the market has complied in almost textbook fashion.  In fact, once we completed 5 waves up into the top of our wave (i) target region, I sent out an Alert with a target box for a wave (ii).  On Friday, the market dropped right to the top of our target box.

While the micro count in the c-wave does not look quite complete, it would seem that the market could still see lower before this c-wave bottoms. But, as long as the GDX remains over 29, I am viewing this chart as being on the cusp of the heart of a 3rd wave break out, which is pointing to 39-41, and quite quickly.

Now, for those who will read my words and consider leveraging up to the hilt in an irresponsible manner, I want to interject reasons one should still maintain your standard risk management practices.  Set ups such as these are estimated to be about 70% probability.  That still means there is a 30% probability that it could fail.  One of the reasons this set up could fail is because all retracements in the GDX chart have been VERY shallow.  This forces an analyst such as myself to make certain educated assumptions about where 2nd waves in the structure are located (since they are otherwise deeper retracements), which can have an effect upon the overall wave count if even one of those assumptions is wrong.

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USD/CAD Key Support Approaches

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Two weeks ago I wrote that the USD/CAD would likely see more downside in the weeks ahead. At the time of that writing the pair was trading at 1.3517 some 350 pips over the low that we saw last week at 1.3166. We are now approaching an area of key support that should be key in helping to give us clues as to where we are heading in this pair over the next several months. The question at hand is whether the January top was, in fact, a major multi-year top in this pair or whether we will yet see higher levels before we can consider this multi-year top in place.

Looking at the daily chart, we notice a few different things from a technical and Elliott Wave perspective that are giving us signals we may be closing in on at least a temporary bottom. The first is that we have what we can consider a completed (or very close to completed) abc corrective pattern into the current levels. While on the smaller degree timeframes this corrective pattern would look slightly better with one more low, we do technically have enough waves in place at the current levels to consider this move off of the January highs as a fully completed ABC.

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