The world of commodities are connected with zigzags which are just diagonal waves, than can overlap. The VIX is some of the worst diagonal wave structures you will see, with siver getting my second vote. I look for the rough outline first. This has the potential to be a corrective zigzag. It would be nice that next week the VIX will still close that gap below us, after which fear could strike the markets on an even bigger scale. SP500 options make up the VIX, so we can see the extreme violent swings options can produce.
Spikes to the downside can happen in a flash, and usally at the end of a run, so you got to be fast to catch any bottom in the VIX.
The US dollar had been running north but the hedgers, (commercials) have increased their bearish positions on the US dollar. Many COT reports have seen strong reversals of positions, so it’s not just the USD. Long term the US dollar is on a major bull market, but during any USD bull market correction will send the price of gold soaring. I was looking for 5 impulse type waves but the next low could very well dip into what used to be my wave 2 bottom, but now I have to work it as a diagonal wave 1 in Primary degree! Diagonal wave structures are very common in all commodities, which are just zigzags connected together. Small zigzags to very large zigzags is the rule not the exception, as we will find very few flats, except for zigzag corrections.
Flats are pretty rare in commodaties, so knowing how to count connecting zigzags is very important.
The 2008 low in the USD, was a 23 year low, from the massive 1985 US dollar peak. (British Pound bottomed the same year) That 1985 peak is a Cycle degree wave 3 peak with 2008 being the 4th wave in Cycle degree.
If the USD still implodes this year, then gold should soar. What will happen with crude oil remains to be seen, as the gold/oil ratio will not stay at 17:1!
It may be hard to understand that the US dollar is in a huge bull market, but that only concerns gold investors, it matters little to traders who can bet in either direction, up or down.
This big US dollar bullish phase is heading up to Supercycle degree wave “a” and may not arrive until 2041. The USD could arrive 3 years earlier as there is a 3 year difference between the USD and gold.
For years I counted the USD as a big bear market rally but it sure fought my wave counts every steep of the way.
In the last few weeks, many of the COT reports I watch, have shifted very quickly ,in gold, silver, Britsih Pound, US dollar, Canadian Dollar, and a few others as the hedgers or commercials pile on som long positions. XGD, the Canadian Gold stock index has a completely different pattern than most other related ETFs. I have closed off my GDX short positions this morning and have added a small 100 share long position as a test. There could be more downside to go, and I still have some PUTs and Calls out that can add a bit of extra insurance, in both directions.
It would be nice for GDX to stop before a new low gets hit, as these expanded type moves can do that.
I moved the “A” wave in Primary degree to the 2016 bottom, which is also a time leap of about 3 years. Just by changing “one” letter we “time travel” on paper 3 years into the future. The EWP is not about just flipping numbers and letters around like flipping hamburgers on a grill, but the entire wave counting world does exactly that.
The Gold/Gdx ratio is at a bit over 66:1 with about 84:1 being the extreme cheap side in my records. That 66:1 number should expand if GDX keeps dropping for the rest of Sept.
There could also be another mean spike to the downside, which is what usally happens just before it turns.