Elliott Wave 5.0 "Reboot"

Sunday, March 6, 2016

XAU Gold Stock Index Review: Complete Bull Market Retracement!



The XAU has already achieved complete bull market retracement. From a wave perspective, this means that the big bad gold stock bull market was a fake or a big bear market rally. EWI warned us of this a long time ago and the clues were ingrained in the wave patterns right from year 1 of the start of that so called bull market. 

The patterns of  jerky and overlapping wave structures is the big clue, as there were little to no clean impulse wave action all the way up. "C" wave bull market. At the time it was happening, I did not have the full confidence in saying that something can completely retrace, as you would be called one of those crazy wave counters. It also does not give you the confidence to commit to a trade position if you know it can crash again at any time. 

 Any rally that forces the players to reverse is worth getting in for, but recognizing a big bear market rally is extremely important to understand and see before the herd does.  Sometimes we can never see this until just days or weeks before it happens, as then it is the time when most of the wave count reviewing should be done.  Just before strong turnings are also the times when the wave counts are their clearest.  Of course they are not clear if we are in some mythical wave count, in sympathy with the herd.  

The BGMI has not quite retraced its bull market, and the HUI is still some distance away with doing so.  The XAU has had one wild ride up which must correct or return to its bear market trend one more time. If it did make one more trip to a new low, it would be rather short in length. I have never heard of indices, producing inverse stock splits so the XAU could go deeper if it wants to. 
Gold may keep heading north, but gold stocks could die early as they did this many times before.