Adam Hewison: Do You See the Trees In a Forest, Or Do You Just See the Forest?

There is a saying that goes like this “can’t see the forest for the trees” is a reference to people who get so involved with the details of an issue that they lose sight of the big picture.

If your involved in the markets, it is easy to fall into the trap of just looking at the minute or hourly charts, rather than considering the market as a whole. When you can’t see the market for the minutia, it means that you are deeply involved in a situation, and you are perhaps focusing too much on the inner workings of the market, and not enough on the big trends.

With all of this talk of problems in Greece, defaults, contagion and a host of other problems in Europe, it is easy for traders to get distracted, and not see the forest for the trees.

The most important element in trading in my opinion, is the direction the major trend for that market. It doesn’t really matter what the news is, if the market is doing something else. As traders I believe we have to look at the forest in this case the big trends in the marketplace.

Let’s look at them now: S&P 500 index major trend down. Gold major trend up. Metals major trend down. Crude oil major trend down. Dollar index major trend up. CRB index major trend down.
So, there you have it, all the major trends in all the markets we are dealing with right now.

Everything else is just individual trees, that don’t mean a heck of a lot in the big picture.
It takes a tremendous amount of energy to move a market and change a major trend. This kind of energy normally does not happen in one or two days. As they say in statistics, one data point does not make a trend.

Let's take a look at our Trend Analysis and Trade Triangles for Gold......

Our last remaining positive Trade Triangle in spot gold is hanging on, but is under pressure from the other commodity markets. Last month, gold closed at $1823 an ounce and last week it closed at $1656 an ounce. Currently we are trading about $30 below last week’s close. We are expecting gold to regroup around current levels. We would prefer to let this market settle down as we do have a mixed picture at the moment.

The Chart Analysis Score for gold is now at -60, indicating a near term trading range. This range is pretty broad based with support at $1550 on the downside and resistance at $1750 on the upside. I think most traders would be better off just watching from the sidelines as the volatility continues to contract. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold futures closed down $1.40 an ounce at $1,617.00 today. Prices closed near mid range today. The market consolidated recent more volatile price action today. The market was supported by higher crude oil prices, but gains in gold were limited by higher U.S. stock indexes. Bears still have the slight overall near term technical advantage in gold. Serious near term technical damage has been inflicted recently.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70


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Gold & Silver on the Verge Of Another Drop

From Chris Vermeulen at The Gold and Oil Guy......

Over the past week precious metal investors have had a wakeup call from their big shiny nest eggs. Last week’s free fall in both gold and silver spot prices was enough to get investors into a panic. More on this in a minute though…

The fall was triggered by three key factors which caused the powerful move down. The first factor is based on pure technical analysis (price and volume patterns). Because the metals had such a strong run up this summer and prices had moved to far too fast, it is only natural so see price correct back to a normal price level. 

In general any investment that surges in one direction in a short period of time almost always falls back down shortly after. As I stated in my weekly report on August 31^st, “gold is forming a topping pattern and all investors should take profits or tighten protective stops (exit orders)”.Three days later gold popped to the new high completing the pattern and was quickly sold off which continues to unfolding as we speak from $1920 down to $1532 in only a couple weeks.

The second factor which I think had the most power behind the drop were the margin requirements changes. This new rule literally overnight caused traders and investors holding to much of the metals in their account to liquidate (sell) their positions without having any say in the matter. That is when the most damage was done to the price of gold and silver.

The key factor was the US Dollar which rocketed higher and adding a lot of pressure to the metals. I also covered this in my Aug 31^st report in detail. Overall, past few years we have seen both gold and silver move in opposite direction of the dollar. I don’t expect that to change much going forward. Back in August the US Dollar was coiling (building power) and it was only a matter of time before it would explode to the up side and rallied. This high probability move in the dollar was what triggered me to exit our long gold positions shortly after. I expected the dollar rally to last a month or more and that means we would see a lot of pressure on equities and metals going forward.

Now keep in mind, if Greece or other countries continue to get worse then we could see the dollar and gold move higher together as they are seen as the safe haven at this time. But with the nature of the two I am anticipating a rising dollar and sideways trading range for gold.

Ok, so back to precious metals investor sentiment…

Last Friday and all of this week I have been getting emails from traders and friends saying they are going to sell their gold and silver because they are concerned metals will continue to fall and because many of them are now losing money after chasing prices higher through the summer. The good news is that one of my best indicators for helping to time market tops and bottoms is to just read my emails and answer the phone. 

During market tops, generally the final month when prices are soaring to new highs every day/week is when everyone contacts me and says they just bought gold or are about to buy more gold cause it’s such a great investment. Once I start getting 2-5 of these messages a day alarms start going off in my head. This works the same with market bottoms. So with everyone now in a panic and selling their positions I feel we are darn close to one if we did not see it already.

Let’s take a look at the charts......

Silver Spot / Futures Price Chart

As you can see on the hard right edge silver is forming a very similar pattern which happened this past spring. I would like to note that this type of pattern is typical with extreme market selloffs as to how they generally bottom. I am anticipating silver trades in this range for a couple months and that we could see lower prices in the near term. But my upside target for silver in the coming few months is the $35-$36 level.

Gold Spot / Futures Price Chart

Gold is doing much the same as silver but I have noticed that when gold falls hard the second dip generally does not make a new low as often. If we do get a new low, all the better for buying on the dip but overall I feel gold should trade sideways for a couple months. My upside target for gold is the $1750-$1775 area.

US Dollar Index Price Chart

The Dollar index is looking ripe for another bounce and possibly another rally to new highs in the coming week. If this happens then we should see the SP500 short position (SDS) which we took Tuesday afternoon (Sept 27^th) to continue rocketing another 5-8% in our favour again.

Mid-Week Trading Conclusion:

In short, I feel the US dollar is going to continue higher and that will put the most pressure on stocks, oil and silver. Depending how things evolve overseas gold could hold up and possibly rise with the dollar.

So far subscribers have pocketed over 40% gains this month using ETFs on the SP500, Dollar and Oil and are holding another winning trade in the SDS etf taking partial profits today. 

If you would like learn more about etf trading and receive my daily pre-market videos, intraday updates and detailed trade alerts which even the most novice trader can follow then join my free trading education newsletter and my premium trading service at The Gold and Oil Guy and take your emotions out of your trading!

Positive "Monthly" Triangle Keeping Gold Bulls Hopes Alive

For the better part of this week, gold has been trying to stabilize the big loss that it suffered in the month of September. What can keep hope alive for the Bulls in gold is the fact that our monthly Trade Triangle is in a positive position. We would prefer to let this market settle down as we do have a mixed picture at the moment.

Our Chart Analysis Score for gold is -60 indicating a near term trading range. This range is pretty broad based with support at $1550 on the downside and resistance at $1750 on the upside. I think most traders would be better off watching from the sidelines as the volatility continues to contract. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Wednesday and below the 25% retracement level of the 2008-2011 rally crossing at 1631.30. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 1782.20 would confirm that a short term low has been posted.

If December extends this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. First resistance is the 10 day moving average crossing at 1722.80. Second resistance is the 20 day moving average crossing at 1782.20. First support is Monday's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70


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Will Rhind: Investors Grip Gold, Prices Stabilize

Will Rhind, head of U.S. Operations for ETF Securities, says that gold prices are finding their footing after a volatile week of trading headed into the end of the third quarter.



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Oil N' Gold: Gold Daily Technical Outlook For Wednesday Sept 28th

The staff at Oil N' Gold has been sticking to their long term Fibonacci numbers and it has served them well. What are they saying this morning......

Intraday bias in gold remains neutral and for the moment and more consolidative trading could be seen above 1535 in near term. On the upside note that break of 1705.4 double top neckline is needed to indicate near term trend reversal. Otherwise, fall from 1923.7 is still expected to continue. Below 1535 will target 1500 psychological level next. Though, break of 1705.4 will argue that fall from 1923.7 might be over and will bring stronger rise towards this high.

In the bigger picture, current development indicates that gold has made a medium term top at 1923.7, ahead of long term projection level of 161.8% projection of 253 to 1033.9 from 681 at 1945.6 and 2000 psychological level. While the fall from 1923.7 is steep and deep, gold is still holding inside long term rising channel from 681 and above 55 weeks EMA at 1508.1. Hence, we're not too bearish in gold yet. Strong support is anticipated at 1478.3/1577.4 support zone to contained downside, at least initially, and bring rebound. However, note that sustained break of 1478.3 will strongly suggest that the long term up trend has already reversed.


Posted courtesy of Oil N' Gold.Com

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Are The Gold Bears Already Exhausted?

The only Trade Triangle that remains in a positive position for gold is the longer term monthly Trade Triangle. Both our intermediate and short term Triangles are negative and have been at much higher levels.

This market has seen massive liquidation and profit taking in the past few weeks. We expect gold will regroup at or around current levels. We do not anticipate this market going straight up from here. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold futures closed up 57.80 an ounce at $1,652.60 today. Prices closed near mid range today. Gold was supported on bargain hunting buying and on bullish "outside markets" a weaker U.S. dollar index and sharply higher crude oil prices. Prices Monday hit a fresh 2 1/2 month low of $1,535.00, but have made a very strong, quick rebound from that spike low to suggest the bears became exhausted at the lower price level and that a near term market low is in now in place.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70



Here is a preview of our MarketClub Trade Triangle Chart Analysis and Smart Scan technology

Anthony Neglia: Gold Will Hit $2,000 by 2012

Anthony Neglia, president of Tower Trading, says he is staying on the sidelines as options expiration shakes the gold market, but thinks gold prices could rise to $2,000 in the fourth quarter.

J.W. Jones: Understanding The Key Support Levels For Gold

Gold bulls and inquiring minds are perplexed by last week’s mayhem in the precious metals markets. In addition to gold and silver, copper prices also went into free fall last week which is an ominous sign for the broader economy in general. We live in interesting times as geopolitical uncertainty, social acrimony, and financial collapse shape the world around us.

The situation in Europe continues to worsen and central banks and wealthy individuals are trying to find safe havens to protect their wealth. Most gold bugs believed that gold and silver would be the answer, but in this environment that hypothesis did not play out. In addition, the Federal Reserve came out with operation twist which market participants despised. Since the 3rd round of Quantitative Easing was not announced, risk assets such as the S&P 500, gold, and silver sold off sharply.

Many gold investors believed that gold is a “safety” trade. I would agree with them if the objective is to remain “safe” from ever rising inflation. In a “run for the exits” sell off caused by deflationary pressure and debt destruction, gold will generally show relative strength versus equities. However, I would remind readers that during the deflationary period back in 2008, gold held up far better than the S&P 500, but prices were volatile.

The gold futures chart from 2008 is shown below:

As can be seen from the chart above, gold futures were volatile throughout 2008 with the March high point representing a 19.83% gain for the year. The low point for gold futures in 2008 was in October and represented a loss of 21.07%. The total return for gold futures in 2008 was 1.94%. Clearly gold futures showed volatility throughout 2008, but gold clearly outperformed the S&P 500 during the same period of time.

The S&P 500 was lower by 37% in 2008, thus gold was clearly the safer asset during 2008 in terms of return. However, one asset class was safer still and had considerably less volatility . . . the U.S. Dollar. In 2008, the U.S. Dollar index futures closed the year with gains around 8.44% with far less volatility than gold or the S&P 500. I am pointing this out to readers because a similar situation is unfolding presently.

Moving forward to the present, the U.S. Dollar Index futures have put on an impressive rally that started back on August 30, 2011. Since August 30th, the Dollar Index futures are trading higher by around 7%. As it turns out, on August 31st I entered a long call ratio spread using the UUP ETF with members of my service and we were able to lock in a gain of around 30% recently.

The daily chart of the U.S. Dollar Index futures is shown below:

All of the calls for hyperinflation in 2011 and a massive crisis in the U.S. Dollar are not coming to fruition. In fact, the opposite is occurring as deflationary pressures are helping force the U.S. Dollar higher. I would point out that the majority of economists and analysts were all predicting hyperinflation for several years and so far they have been wrong. Gold nor any other asset can rally forever, but long term investors must understand that even during a raging bull market corrections and pullbacks are commonplace and healthy.

I want to point out that I sent out multiple articles warning about the possibility that gold prices could sell off or correct dramatically. In every instance, my email inbox was littered with hate mail and vitriolic remarks from gold bugs. Back on August 29th, I wrote the following in my article, What Could Lie Ahead for the S&P 500 and Gold:

“There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff.”

The daily chart of gold is shown below:

“While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.”

As it turns out, the head and shoulders pattern did not play out as I had hypothesized but a double top did emerge which ultimately produced similar price action. The extreme nature of the recent sell off backs up my analysis in that gold prices had gone parabolic and we needed to see regression back to the mean in terms of price.

We are seeing that process unfold now, but as I stated in the article above the completion of this sell off is going to offer an attractive entry point for long term gold investors. While I have routinely discussed pullbacks and corrections regarding gold, I continue to be a longer term bull.

Gold has sold off sharply in the past week, but the following chart illustrates some key support levels for the yellow metal:

While gold and silver sold off sharply, the S&P 500 was also under extreme pressure. My most recent article written on September 21 prior to the Federal Reserve announcement illustrated two outcomes based on what rhetoric came from the meeting. Unfortunately for equity investors my downside prognosis is holding sway. The follow is an excerpt from my article entitled The S&P 500 & the Dollar Ahead of the Fed Statement:

“The flip side of that argument would see the S&P 500 jamming into recent resistance around the 1,230 price level. If prices rolled over and momentum picked up, a test of the recent August lows would likely transpire and could produce a breakdown and a lower low.

When looking at recent price action, the S&P 500 Index has put in a series of higher lows which is a bullish signal, however the S&P 500 has a long road ahead to break out above the 2011 highs. If the S&P 500 carves out a lower high on the S&P 500 Index at 1,230, 1,250, or even 1,280 and subsequently takes out the August lows then the secular bear will be back. The weekly chart of the S&P 500 Index ($SPX) shown below illustrates key support levels:

For now I am just going to sit in cash and wait for Mr. Market to provide me with some better clues. The trading range is pretty wide going from around 1,100 to 1,280.”

My downside scenario played out last week, but I will be watching closely to see if the S&P 500 can push below the August lows. If the August lows are taken out, we could see support come in around the 1,085 price level. If that level breaks down then the 1,008 – 1,040 price range will be in play.

The daily chart of the S&P 500 Index is shown below with the key support levels illustrated:

In closing, last week was wild in terms of price action and volatility was nearly palpable. I am anticipating some additional volatility this coming week. Gold prices could bounce as price is sitting right at the key 50 period moving average. If gold works through the 50 period moving average additional downside will be likely.

Similar to gold, if the S&P 500 is able to push through the August lows additional sellers will step in as stops will be triggered on a breach of the S&P 1,100 price level. News flow and headline risk coming out of Europe will continue to impact price action. I would also point out to members that there is a standing chance that the U.S. government could shut down as budget issues continue to manifest within the confines of the U.S. Congress.

Risk remains extremely high.

Review my track record and join now at  Options Trading Signals.com  and receive a 66% off coupon which expires tomorrow.

Adam Hewison: All Eyes Continue To Focus On Europe

Here we are on the first day of the last week of September, with the end of Q3 approaching on Friday. Are the equity markets building a base to go higher? Or is this just a pause before we start heading back down?

All eyes continue to be focused on the European problem, especially Greece. We still believe Greece will default on their debt. And we still think that the politicians are looking for an easy way out of this economic malaise, unwilling to accept the consequences of their actions.

Last week we saw all the markets under pressure. For the last couple of days we’ve seen some minor support coming to the equity markets. And just today we have seen support come into the metals markets at much lower levels than most folks anticipated.

Unlike silver, the gold market is higher for the year and also has a positive Trade Triangle still intact. This basically indicates that the long term trend for gold remains positive. This market is seeing massive liquidation and profit taking and we expect it will regroup at or around current levels. We do not anticipate this market going straight up from here. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Monday and below the 25% retracement level of the 2008-2011 rally crossing at 1631.30. A short covering rally tempered early session losses and the mid range close sets the stage for a steady opening on Tuesday.

Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this month's decline, the 38% retracement level of the 2008-2011 rally crossing at 1476.20 is the next downside target. Closes above the 20 day moving average crossing at 1801.10 would signal that a short term low has been posted.

First resistance is the 10 day moving average crossing at 1764.30. Second resistance is the 20 day moving average crossing at 1801.20. First support is today's low crossing at 1535.00. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1476.20.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70


Has gold found support here? Read "Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity"

Chris Vermeulen: Gold & Silver Pullback as Forecasted ..... Now for the Big Opportunity

A few weeks ago I wrote about how gold was starting to top and that everyone should expect a very sharp drop to the low $1600 area. How I came to this conclusion was though the use of inter-market analysis combining price patterns, gold futures volume, the dollar index and market sentiment. This allowed me to understand what the majority of other traders/investors were thinking and feeling. By knowing each of these market variables and crowd behavior I can accurately see into the future a few days with a high probability of success and most importantly with low downside risk.

Click Here to view part-1 on how I properly forecasted that gold would fall sharply in August "Dollar’s On the Verge of a Relief Rally...... Look Out!"

At the time when I forecasted gold to reach the low $1600 area gold was still building the top pattern so I could not say how long a recovering would likely take nor did I know exactly when to re-enter a long position. But now that we have seen how gold arrived at my target price I can form a new forecast.

Spot Gold Price Forecast – Daily Chart:

The gold chart below clearly shows rising volatility along with my topping pattern of three surges to new highs. It was August 31st when I warned subscribers and my followers that gold was about to top and that everyone should be taking profits or at least tightening their stops to lock in gains. Only three days later gold topped and it has not stopped falling since.

On August 8th gold had a large opening gap to the upside. This means the price opened the next day much higher from where it closed the previous session. It’s important to note that gaps especially for gold almost always get filled within a couple months. Seeing this gave me a solid reason to think that gold should pullback to this level during the next big correction in price.

Also during the month of August gold had to pullbacks only to continue to make the third and final high. This told me that when the top is put in place was a very high probability that we see the price of gold drop below both of Augusts’ lows and that would trigger stop orders sending the market sharply lower.

Now that we are seeing the stops being flushed out of the market it means the majority of speculative traders have exited their positions. So speculative traders who caused the large surge in gold to take place are now out. Once all the speculative traders have exited which should take place in the coming weeks or two we can expect some type of bounce or rally. I will keep a close eye on the intraday charts for subscribers as we near a potentially major trade setup.

Where are we in this gold bull market?

Well I feel gold is more fairly priced between $1632- $1660 area. Currently gold is trading at $1660 but if things play out like I have seen in the past we just may get one more dip this week to the $1600 area before gold truly puts in a bottom. Because gold went from a new high all the way down to Friday’s panic selling washout instead of a controlled ABC correction I feel a bottom will be more of a one day event. This type of bottom carries more risk and is more difficult to time and trade. So scaling in with a small position at this level and adding on a drop to $1630 then $1600 could prove to be the safest way into a gold position.

Forward looking I see gold bottoming over the next week or two then a nice relief rally to the $1775 area. Depending on how gold arrives there will alter my next gold forecast so let’s wait and see how things unfold.

Spot Silver Price Forecast – Weekly Chart:

Silver I call the "un-Safe" haven because to me it’s not a safe haven in the way everyone’s believes it be. I hear and see everyone including friends and family selling all their stocks and putting their money into silver. To me buying large amounts of silver with your retirement money is just ridiculous. I m sure my statement here will trigger an inbox of silver perma bulls (silver bugs) to send me hate mail but that’s fine as my assistant filters my emails so I don’t have to keep being reminded how rude some humans can be over an simple opinion........

Investments that can lose 25% in value within 2 days or lose 40% of it’s value in 5 months should not be traded nor invested in with large portions of anyone’s life savings, especially if you are over the age of 50 and have not proven to be a constantly profitable trader. No one can stomach losing that much of their nest egg.

That being said I do feel silver is in a similar situation as gold. I do feel a bottom is near. Silver has formed an ABC correction and the price and volume patterns seem to be in line with a typical bottoming pattern. After Friday’s massive selloff I feel silver may slide a little lower yet before putting in a bottom.

One thing to keep in mind with silver is that it is very thinly traded; there are a lot of speculative traders involved which push and pull the price to extreme levels on a regular basis. So if the broad stock market continues to sell off sharply then I expect silver to follow suit.

Pre-Week Precious Metals Trend Analysis Trading Conclusion:

The price action we have seen this year for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012 or it could be a large unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market check out TGAOG at The Gold and Oil Guy.com

Many Traders Taken By Surprise By The Huge Drop in Commodities and Gold

The gold market came under massive liquidation and profit taking today and flashed a sell signal at $1762.49. This was the first signal we have had on our weekly Trade Triangle since July 13th when we had a buy signal at $1557.86. This trade resulted in a profit in excess of $200 an ounce. Only our long term Trade Triangle is positive on this market at the moment. Should the gold market close at current levels around 1733, it will confirm a double top indicating a move potentially down to lower levels.

The 50% Fibonacci retracement comes in at $1697 and the 61.8% retracement comes in at $1645. We are measuring from the lows that were seen in early July, to the highs that were seen in early September. This market looks to be on the defensive for the balance of the week into next week. Only long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Thursday as it extended this month's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target.

Closes above the 20 day moving average crossing at 1816.20 would signal that a short-term low has been posted. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is the 20 day moving average crossing at 1816.20. Second resistance is this month's high crossing at 1920.70. First support is today's low crossing at 1723.20. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70

Recent articles.....

Gold Continues to Correct as Forecast in a 4th Wave Pattern

Recent Market Trends Remain in Place ..... Get Positioned!

David Banister: Gold Continues to Correct as Forecast in a 4th Wave Pattern

I got a bit of hate email over the last few weeks from the Gold Bugs who thought I didn’t know what I was talking about when I forecasted a multi-month consolidation and correction in Gold was imminent. I’ve written ad nauseum about crowd behavioral patterns as they related to both stock markets and precious metals. 

It should not come as a surprise that Gold is continuing to drop after a 34 Fibonacci month rally from $681 to $1910 per ounce. That rally came in five clear Elliott Waves and ended with a parabolic race to the top. I consistently warned my subscribers and readers of my articles about not being caught holding the bag and to take defensive measures.

My most recent update was to simply try to figure out whether the continuing correction in Gold would take the form of an ABC pattern or an ABCDE Triangle Pattern. It is becoming more clear that the official pattern is ABC. In English it means that the first leg down from 1910 to 1702 was the “A” Wave, the rally back up to 1920 was the “B” wave. 

The C wave is continuing underway and one of my longstanding targets is $1643, which is a Fibonacci fractal relationship to the prior lows and highs, and also conveniently fills in a “Gap” in the Gold chart in the 1650’s.

During these 4th wave consolidation periods, it reduces sentiment back down to normal levels and lets the economics of the move in Gold catch up with the price action that was extended. The first area to watch is the retest of $1702 spot pricing for a C wave low, but the evidence is for a further drop to $1643 before I would get too interested in trying to game Gold to the upside.

Here is the chart I sent out 9 days ago with Gold at $1837 forecasting a possible C wave continuing lower:

I’ve stayed away from either shorting Gold or going long gold while I watch and confirm the 4th wave pattern. It’s simply the smart way to go knowing that upside will be difficult to obtain and downside risks are high. It does now appear that I am eliminating the Triangle pattern and sticking with the ABC Correction with the C wave still working its way lower. If $1702 breaks, then you should expect to see 1620-1643 as next pivot low ranges.

If you’d like to stay ahead of the SP 500, Silver, and Gold trends, check out TMTF at Market Trend Forecast.Com and take advantage of our free occasional reports or a 33% 48 hour coupon to sign up for 5-7 updates a week.

Chris Vermeulen: Recent Market Trends Remain in Place ..... Get Positioned!

What a trading session Wednesday was with the FOMC meeting and the FED coming out leaving the Fed Funds Rate unchanged at 0.25% and saying the economy is looking weak and will not likely to get better any time soon. This wave of negative news triggered a selling spree across the board in stocks, metals, and oil. On the flip side all that money being pulled out of those investments was being dumped into bonds and the dollar currency.

So the question everyone is asking is why almost every asset class sold off after the Federal Reserve’s statement today? The next question is how do we position ourselves to profit?

Understanding how the market moves is not a simple task, if it was that easy everyone would be pulling money out of the market on a daily or monthly basis. With that being said, moves can be anticipated if enough indicators are pointing to the same outcome.

Gold, SP500 and Oil 10 Minute Charts Showing Todays 2:15 FED News
Over the past few weeks we have been seeing stocks, oil, and gold turn bearish with similar price and volume action. Having three major investment vehicles hinting towards a move in the same direction as each other increases the odds for that move to occur. With the Fed coming out with negative news and no quantitative easing on tap, a rally in the dollar was triggered because inflation (printing of money) is not in the picture for some time still.

Bonds and Dollar Index 10 Minute Charts Showing Today’s 2:15 FED News

Now if we look at the safe havens we can see the positive side to today’s news.

Bonds have been trading higher for some time and the key in trading is to trade with the trend. Though it’s easier said than done… In this morning’s pre-market analysis I talked about bond prices and how they are looking toppy but we need one more large surge higher before I will consider looking for a short trade setup. Today’s news sent bonds surging higher which I feel will happen for a few more days. Once the momentum stalls out of bonds, then I may be looking to short bonds using the TBT inverse bond fund.

The fact that there is no quantitative easing planned is bullish for the dollar. Stepping back a few weeks we have seen the dollar index rally very strongly. The move up was an impulse wave meaning a trend reversal from the multi-month down trend. Knowing that the dollar had shifted from a down trend to a strong uptrend prior to the Fed’s announcement today was our tip off to being long the dollar several days ago at a much lower price level.

Mid-Week Market Trend Conclusion:
In short, I feel the intermediate trend (5-20 days) remains firmly down for stocks and crude oil. Silver is more of a wild card because it is more of an industrial metal/speculative investment and it can move at times with gold or down with stocks.......

Looking at gold. I am bullish on gold long term but at this time I remain neutral until I see how the next couple trading sessions play out.

Bonds I remain neutral because they have moved a long way without any substantial pause or pullback and I feel one really positive headline news item could send bonds sharply lower.

The dollar index shifted from a strong down trend to a very strong up trend last month and I feel we could see another substantial rally unfold. I have an 80.00 – 81.00 price target on the dollar index at this time.

Consider joining me at The Gold and Oil Guy for ETF trade ideas on the SP500, crude oil, gold, and silver with great accuracy. Check it out at The Gold and Oil Guy.com

Adam Hewison: Lloyds of London Pulls Deposits From Banks on Debt Crisis

As traders, we are bombarded with news. Some of it is useful, but a lot of it is just fluff to fill up airspace time. One piece that caught my eye this morning, which I haven’t seen reported in the main media, concerns the venerable Lloyds of London insurance company. This company was founded in 1688 in a London coffeehouse and has gone through wars, boom and bust cycles, every money mania known to man and has always managed to survive. The article claimed that Lloyds of London is taking their cash out of the European banks this morning. From Businessweek Magazine "Lloyds of London Pulls Deposits From Banks on Debt Crisis"

Quite frankly this is shocking, but not surprising given Lloyds’ survival instincts. Lloyds of London is one of the most conservative companies, run by some of the smartest people on the planet. Perhaps it’s an early warning sign about what could potentially happen in Europe. It is something to think about.

Gold Market Commentary
The gold market continues to bounce along with support coming in to the spot market at $1760 an ounce. We want to pay close attention to the gold market this week, as we feel it is very close to a cyclic low. Here are the reasons why (1) we are at the lower range of the Donchian trading channel (2) the market is oversold, with a possible bullish divergence on the Williams % R indicator (3) the MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days.

We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Wednesday as it consolidates below the 20 day moving average. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is this month's high crossing at 1920.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55

Tim Harvey: Bullish Case for Gold

Tim Harvey, Senior VP at ETF Securities, says experts were very bullish at the LBMA conference this week and that prices will move higher no matter what the Federal Reserve does.




Chris Vermeulen's Free Trading Analysis & Signals Newsletter

Gold Post Inside Day, Remains Below 20 Day Moving Average

We want to pay close attention to the gold market this week, as we feel it is very close to a low. We are at the lower range of the Donchian trading channel. This market is also oversold, with a possible bullish divergence on the Williams % R indicator. The MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days.

We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

December gold posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is this month's high crossing at 1920.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 65


How To Trade Market Sentiment

Chavez Decrees Nationalization of Gold Industry

Venezuelan President Hugo Chavez ordered the nationalization of the gold industry and gave companies 90 days to form joint ventures with the state as he seeks to boost control over the nation’s metals producers.

The government will hold at least 55 percent of any joint ventures, according to a decree in today’s Official Gazette. The decree sets a royalty rate of 10 percent to 13 percent and says that all Venezuelan gold production will be sold to the state.

Chavez first announced the nationalization of the industry and plans to repatriate Venezuela’s foreign gold reserves on Aug. 17. Petroleos de Venezuela SA, the state oil company, is forming joint ventures with both state and publicly traded companies to operate mines including Las Cristinas, which Chavez confiscated from Canada’s Crystallex International Corp.

Read the entire Bloomberg News article.

Gold and Silver Market Commentary For Monday Evening Sept. 19th

The gold bulls have to be disappointed with today’s market action even though the longer term trend for gold remains positive. We still believe that the $1,750 area is important support for spot gold. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side.

The Williams % R is once again in an oversold condition. The $1,840 level is resistance for gold at the moment. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate money management stops in place.

December gold closed lower on Monday as it consolidates below the 20 day moving average. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target. If December renews this year's rally into uncharted territory, upside target are hard to project. First resistance is this month's high crossing at 1920.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55

The spot silver market is currently in an oversold condition. Our intermediate weekly Trade Triangle turned negative today at $39.29, indicating that intermediate term traders should be on the sidelines at the moment. With spot silver in an oversold condition and at the lower range of the Donchian trading channel, we expect to see some support coming into this market.

Cyclically, we are close to a low cycle and would not be surprised to see a market bounce in the next several days. We want to continue to monitor this market over the next few days looking for an area to add to long positions. Long term traders should maintain long positions in this market with appropriate stops. Intermediate term traders should now be on the sidelines waiting for either a buy, or sell signal based on our Trade Triangle technology.

December silver closed lower on Monday as it extended last week's breakout below the July-August uptrend line crossing near 40.864. The mid range close set the stage for a steady to lower opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If December extends this month's decline, the reaction low crossing at 38.810 is the next downside target.

Closes above the 20 day moving average crossing at 41.238 would temper the near term bearish outlook. First resistance is the 20 day moving average crossing at 41.238. Second resistance is this month's high crossing at 43.500. First support is the reaction low crossing at 38.810. Second support is August's low crossing at 37.055.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 70


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Phil Streible: Obama Versus Gold

Phil Streible, analyst with MF Global, explains the correlation between President Obama's poll numbers and the price of gold.

Tony Hall: Gold, Platinum and Brent Oil Will Lead Gains in Commodities

Gold, platinum and Brent oil will lead gains in commodities as investors seek to protect their assets and shortages emerge, according to Tony Hall, the hedge fund manager who earned 33 percent for his clients this year.

Gold may climb 21 percent to a record $2,200 an ounce by the end of 2011, platinum may gain 10 percent and Brent could rise 25 percent to $140 a barrel in six months, said the London based chief investment officer of Duet Commodities Fund Ltd., which manages more than $100 million of assets. Its eight month gain compares with a mean return of 0.6 percent across commodity hedge funds tracked by HedgeFund.net and beat larger rivals such as Clive Capital LLP and Fortress Commodities Offshore Fund Ltd.

“The fear of recession, the fear of worse economic numbers is weighing on commodities and stopping gains from fundamentals from coming through,” said Hall, 31, who spars as a heavyweight boxer. “We still believe in the gold story. If you believe the world is in trouble or in further economic growth disruption, then gold is a good safe haven. If you believe that the world is going to come out okay, then it’s a good inflation hedge.”

At a time when the MSCI All Country World Index of global equities declined 10 percent this year, the Standard & Poor’s GSCI measure of 24 commodities advanced 2.7 percent, led by silver, gold and energy.

Investors held about $431 billion in raw materials by July, an almost fivefold gain in six years, Barclays Capital says. As equity holders contend with losses of $8.5 trillion since May, speculators made their biggest wagers on higher commodity prices in almost three months in the week to Sept. 6 as they anticipated that even weaker economic growth will mean shortages. Read the entire Bloomberg article.

Gold Starts The Week With a Sharp Decline

Gold was higher due to short covering in overnight trading but has made a sharp pull back, below 1,800 as trading in the U.S. got under way. Stochastics and the RSI remain bearish hinting that a short term top might be in or is near. The operative word here is....short term. See our post September 14th.

Marc Ground, commodities strategist at Standard Bank, says "The resumption of a decline in gold speculative longs...indicates the increased caution with which participants are approaching the gold market".

If December extends this month's decline, the reaction low crossing at 1705.40 is the next downside target. Closes above last Wednesday's high crossing at 1848.20 would temper the near term bearish outlook.

First resistance is last Wednesday's high crossing at 1848.20. Second resistance is this month's high crossing at 1923.70. First support is last Friday's low crossing at 1765.40. Second support is the reaction low crossing at 1705.40. Golds pivot point for Monday morning is 1801.70.

Dennis Gartman on CNBC "Don’t Follow Larry Fink into Gold Miners"

On Wednesday, chatter on the floor had everything to do about how to trade gold [GCCV1  1825.80   11.10  (+0.61%) ] after Blackrock’s Larry Fink made bullish comments about the miners.

At the Delivering Alpha conference, presented by CNBC and Institutional Investor, Fink essentially said the miners are way undervalued relative to the current price of gold.

Here’s the quote:

“Gold stocks are priced at $800-oz, they haven’t moved. Gold stocks are unchanged and we’ve seen a dramatic rally in gold.”

He went on to say, “You can buy a gold mine right now through private equity and sell forward gold futures and you’ll lock in a massive profit.”

That suggests Fink expects the miners to play a game of catch up.

However, if you’re a retail investor, strategic investor Dennis Gartman has some very succinct advice. “I would not do this trade ,” he tell us.

”If you want to play gold do it long the GLD [GLD 176.03   1.63  (+0.93%) ] or with the gold futures contracts. That’s the clean bet. That’s the pure bet,” Gartman explains.

Although Gartman appreciates the strategy behind Fink’s trade, he adds “The problem with owning the gold mining companies is that you’re exposed to all kinds of risk. You could come in one morning and find one of your mines had gone under water or collapsed.”

In other words, you may think you’re making an implied bet on gold but you're vulnerable to exogenous catalysts.

Trader Joe Terranova doesn't like the play either. "All year the miners [GDX 64.11  1.31  (+2.09%)]  haven't been even close to keeping pace with the gains in physical gold," he says. "Why would they play catch up?"

Now - if you’re saying to yourself I don't care – no risk no reward – then read on. When asked about his favorite names in the space Fink suggested  Kinross[KGC  17.43   0.42  (+2.47%)] , Newcrest [NCMGY  39.41  0.65  (+1.68%)]  andBarrick Gold [ABX  53.58   0.71  (+1.34%)]  .