Gold Price Cycle And US Stock Market Update

Sunday, November 18, 2018

gold analysis

Last week's action saw Gold forming its low in Tuesday's session, here doing so with the tag of the 1196.60 figure. From there, a sharp rally was seen into Friday, with the metal pushing up to a high of 1226.00 - before backing slightly off the same to end the week.

Gold - Short-Term

For the shorter-term, as mentioned last weekend both the 34 and 72-day cycles were deemed to have topped at the 1246 (December, 2018 contract) swing high, seen back in late-October. With that, the overall assumption is that the combination of these waves are heading south into the late-November to early-December timeframe, with the potential for a drop to the 1170-1180's or lower before bottoming. Here again is our 34-day cycle, in chart format:

gold continuous contract daily chart

In terms of patterns, if the current downward phasing of the 34 and 72-day cycles is able to remain above the 1167 swing low (from back in August), then the next upward phase of these waves could still see a try at the 1260's - before topping the larger 154-day cycle:

Stepping back, however, the mid-term upward phase is expected to end up as an eventual countertrend affair, holding well below the 1390's - which is the prior top for the 154 and 310-day cycles. If correct, the 1167 swing low should be taken out on the next correction phase of the 154-day wave.

With all of the above said and noted, the downward phasing of the 34 and 72-day cycles is still deemed to be in force, until proven otherwise by a reversal back above the 1246.00 swing top. If correct, then the most recent upward phase - coming as a result of the smallest-tracked cycle, the 10-day component - is favored to end up as countertrend, to be followed by lower lows into late-November or early-December, then to bottom the 34 and 72-day waves for a rally into the next 154-day cycle top.

US Stock Market

From the comments made in past articles, the downward phase of the 180 and 360-day cycles was favored to play out into the Autumn of this year, with the 200 and 360-day moving averages acting as the expected price magnets. For the very short-term, the action following the late-October bottom has inferred the upward phase of the smaller 45 and 90-day cycles to be in force, which suggests additional strength into later this month - though a move expected to end up as countertrend.

The 45 and 90-Day Cycles

As noted above, the 45-day cycle (next page) is seen as 14 days and is currently regarded as bullish, with the larger 90-day cycle also seen as 14 days along is labeled as bullish.

As noted in recent weeks, the 45-day cycle was deemed to have bottomed at the late- October low of 2603.54 SPX CASH, with the larger 90-day wave later confirmed to have done the same. With that, the upward phase of these two waves is currently favored to remain in force into later this month, then to put in what is expected to be a countertrend top.

In terms of price, with the 35-day moving average hit at the 2815 swing top, the minimum expectation was met with the smaller 45-day component. Having said that, if the phasing of the larger 90-day cycle is indeed in force, then the probabilities will favor a rally on back to test the 70-day moving average in the coming weeks.

Going further with the above, resistance to the entire 45 and 90-day cycle upward phase looks to be at or near the 2860's on the SPX, which is the prior downside ‘reversal point’ for the larger 180 and 360-day waves. As noted above, the patterns tend to favor a countertrend rally with the 45 and 90-day cycles.

Mid-Term Stocks

For the mid-term picture, the last peak for the 180-day cycle (chart, above) was registered back in late-September, doing so at the 2940.91 SPX CASH figure. From there, the reversal below the 2863.00 figure confirmed the downward phase of this cycle - as well as the larger 360-day wave - to be back in force. In terms of price, the expectation was for a drop back to the 200 and then 360-day moving averages, each of which were hit in the weeks to follow.

In terms of time, the original assumption called for a low with the 180 and 360-day waves into early-Autumn, which the late-October low is obviously at or into. Having said that, due to momentum considerations with the larger 360-day wave, I am favoring the trough for the 180 and 360-day cycles to still be out there, made from a lower level than 2603.54 on the SPX. The ideal window for this new low would be the December or January timeframe.

Stepping back, the key is whether the 2645.00 SPX CASH figure (on a monthly close) will be able to contain the correction phase of the 180 and 360-day cycles. That is, as long as this key level holds on a monthly closing basis, then the probabilities are above-average that the next upward phase of these waves will take the SPX back to new all-time highs into the Spring of 2019 or later, before peaking the larger four-year wave for a larger-degree decline into late-2019 and/or early-2020.

Jim Curry

The Gold Wave Trader


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Jim Curry is the editor and publisher of The Gold Wave Trader and Market Turns advisories - each of which specializes in the use of cyclic and statistical analysis to time the Gold and U.S. stock markets. He is also the author of several trading-related e-books, and can be reached at the URL above.