Bob Lang: Markets, the Fed, and Metals

From Bob Lang at Big Trends ETF Tradr.......

Market Noise is Deafening
When we don't know what to do or where to go, we ask someone. The obvious path is not so any longer and we need direction. Well, in the markets we're now at that critical juncture. Much like the 'advice' that was given in fall 2008, bargains of a lifetime, 'you have to be in this market', long term it makes sense, etc, only to have markets fall another 50% into the spring of 2009. Was that advice we needed to follow? Today, the word on the 'street is 'how far this rally can go, and should I stay or get on the sidelines'. Naturally, market sages will tell you to stay the course if you're invested, they want you all in at all times. Yet with all the noise and distractions around can we afford to make the one decision that could lead to a setback? The LESS we listen to media accounts, hurray the Dow hit 11,000 again, let's have a party, the better off we'll be. It'll be all over the place now and louder than ever! This type of 'workplace noise' can be hazardous, a news story the other evening stated that those prone to noise at work are more likely to have a stroke, heart attack or high blood pressure. Let the market tell you WHEN to should exit, remain or re-enter.

What's All this Fed Talk About?
We've heard quite a bit lately about this Fed game called QE2. To be sure, they are playing upon our positive expectations at the end of the game. The hope is that this program will help spur some economic activity, inflation and move people back to work. But, what is QE2, and did what did QE1 accomplish? Simply put, QE is quantitative easing, implemented when the Fed has no more additional room to cut short-term rates to stimulate the economy. Basically, cutting borrowing rates has failed to control the money supply. By definition, QE is upping the supply of money by increasing excess reserves of the banking system, expanding their balance sheet. By purchasing government assets and other bonds in the open market they give banks excess reserves required to create new money. Hopefully the banks will use this extra money to lend out to borrowers, thereby stimulating activity. Many argue this is the wrong approach, creating dollars. To be certain, QE measures have had mixed results and there is not a direct correlation to creating new jobs, which seems to be the big issue of today. Back in early 2009 the Fed implemented the first round of QE and while it improved growth a bit, the desired effect and length lagged badly. In fact, the economy recently fell into a 'soft patch', enough warning for the Fed to jump to the fore with their new easing plan. Is that a pattern we'll see develop over time?

Metals are sure Precious!
New highs again for gold, new multiyear highs for silver. Haven't seen such a blistering move on a commodity since crude oil went parabolic in 2008. Do we know the reasons for this parabolic rise, or do we 'think' we know the reasons. By all accounts it seems everyone is talking about the metals these days. Heck, there are four new gold shops that popped up in my town over the last several months, and on every other street corner is a guy holding a sign that says 'will buy your gold'. The fever pitch is reaching that of the miner 49ers over 160 yrs ago! Can it last? Sure, any bubble move can keep going until every last one gets in and then POP! I'm not calling for this, but certainly the reasons for buying gold are consistent with past bubbles, oil, housing, tech, and biotech. Oh, I've participated, silver has been my choice, but if you fail to acknowledge what is happening around you then you'll get taken in by the hype. We choose to listen to what and whom we want that makes us feel good (read up top again about the noise factor). Being in a bubble and profiting is ok, in fact it's great as an options player, but knowing your exit is most important. Enjoy the ride while it lasts!

Check out Bob Lang's calls and articles at Big Trends.Com


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Oil N' Gold: Gold Weekly Technical Outlook Oct. 9th

Gold rose to another record high of 1366 last week before turning sideway. A short term top is possibly formed and some consolidations would be seen initially this week below 1366 level. Though, strong support should be seen at 38.2% retracement of 1155.6 to 1366 at 1285.6 to contain downside and bring up trend resumption. Break of 1366 will target 161.8% projection of 1084.8 to 1266.5 from 1155.6 at 1449.6 next.

In the bigger picture, rise from 1155.6 is treated as the fifth wave of the five wave sequence from 1044.5, which should also be fifth wave of the rally from 681 (2008 low). Recent acceleration suggests that current rally would probably extend further to 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 before completion. Though, we're aware of long term projection target of 100% projection of 253 to 1033.9 from 681 at 1462 and we'd anticipate strong resistance from there to bring medium term correction finally.

In the long term picture, rise from 681 is treated as resumption of the long term up trend from 1999 low of 253. The anticipated correction didn't happen and gold will now likely climb further to 100% projection of 253 to 1033.9 from 681 at 1462 before making a top.

Comex Gold Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts.


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Stock Market Leaders Are Now Lagging?

Wednesday’s session closed mixed on the day. The DOW posted a third of a percent gain while the tech sector closed down almost nine tenths of a percent. While technology stocks have been leading the market higher in the recent months, today they took the back seat while the DOW took control. Take a look at the intraday chart of the SPY price action compared to the tech sector. It’s clear the tech stocks where not in favor today. Some tech stocks that really took a beating today were FFIV, NTAP, APKT and AKAM. On another note, we are entering earning season and I am wondering if we are going to see a “Sell the New” type of thing again.

The broad market is experiencing a 36 day down cycle which has played a very dominant roll in the market this year. It topped out 9 days ago so we should expect sideways chop or some selling over the next 9 trading session. Because the market is trending up, pullbacks should be shallow.

The market continues to grind its way higher on relatively light volume. I have been waiting several weeks now for the volume to come back into the market but its just not happening. The majority of shares being traded are from banks, funds and day traders as the average investor’s not taking part because of the uncertainty looming. The lack of volume (commitment) to the market from the masses is making the market internals swing from one extreme to another on virtually weekly basis making it more difficult to take advantage of short term extreme sentiment levels.

The current market environment has traders shifting gears to more of a momentum trading strategy to take advantage of trends and this is what I am going to start implementing again as the market expands.

Market Conclusion:
In short, the equities market is in an up trend but looks to be overbought. Also with the downward cycle I don’t think the market will expand here and take off. Rather it will most likely chop around and burn off time until some earnings are released and the cycle bottoms. Unless we get a really sharp reversal down which we have yet to see on the SP500 or DOW, nibbling on small long positions or staying in cash is what I am doing right now.

As for gold, silver, the dollar and oil… Well the dollar continues to lose value on a daily basis which in turn is boosting metals along with crude oil. All four of those investments are over extended but they are trending and not really looking like they want to reverse just yet.

Chris Vermeulen
The Gold And Oil Guy.com

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The 5 year Massive Bull Run in Gold and Gold Stocks Continues

From Dave Banister at The Market Trend Forecast.com.....

Last August I penned an article predicting a massive five year bull run in gold and gold stocks. I outlined my reasoning and compared this 13 year period from 2001 to 2014 to the tech stock bull from 1986-1999. .

In February of this year, I again wrote an article for Kitco.com explaining the 13 year Gold Bull still had a lot more room to run. At the time Gold had pulled back to 1040-1070 windows and I mentioned that “smart money would be accumulating” and we should look for $1300-$1325 as the objective. That brings up forward to October of 2010, with Gold running to $1350 as recently as this morning.

We have a huge rally because we are in the 2nd year of this final 5 year run I predicted, and this is when the general investing public becomes “aware” of the bull market. They miss the first five years from 2001-2006, and then while we consolidate for three years from 2006-2009 they fall asleep. It is not until Gold breaks all time highs that people wake up and start buying. This is typical in a super bull cycle, the behavioral patterns are always the same with the herd. I based my forecast on herd mentality, whether bullish or bearish.

I am now looking for Gold to continue to run during this trampling into the asset from the herds of investors to about $1480-$1520 on this leg before we have a strong correction. That figure is not taken out of the thin air, it’s an Elliott Wave based pattern that I recognize and forecast in advance. Subscribers to my website are exposed to my outside the box forecasts on the SP 500 and Gold all the time. Usually it starts with them not believing, and later they wonder how I arrived at the predictions. To wit, on August 30th I predicted a huge breakout in Silver to $26-$29 per ounce when it was at $18.75 per ounce. This was purely based on the Elliott Wave pattern and the lack of awareness by the investing public at the time of the Silver bull. It is also “poor man’s Gold”, and as simple as that sounds, it is what drives the herd of investors to invest. Look for Silver to continue higher to those target zones before correcting.

Many investors who are briefly exposed to Elliott Wave Theory assume that a certain well known forecaster must be the only person in the world who uses it. Since he is wrong more often than he is right, people toss out Elliott Waves as mad science. That is a mistake and why I continually write articles for Kitco using my Elliott Wave methods to forecast SP 500 and Gold moves in advance. Look for Gold and Gold stocks to continue powering higher than people can imagine over the next four years, and pick up some darts and throw them at some juniors while you’re at it.

You can check out our forecast service at www Market Trend Forecast.com, consider subscribing ahead of our rate increase as well. Best to you and your trading!

Dave Banister- The Market Trend Forecast.com


The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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The Ultimate Price Target For Gold

Recently we posted a video that projected some amazing levels for gold. Given the strong upward trend in gold and the price action on Tuesday the 5th of October, it is worthwhile looking at this video again. Today's new short video will certainly give you some more interesting price targets for gold that are based on sound trading principles. We hope you enjoy the video, and as always we would love to have your feedback so please leave a comment. The video is free to watch and there are no registration requirements.

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Should You Buy Gold on The Dips?

Phil Streible, senior market strategist at Lind-Waldock, reveals his gold trading strategy as prices wait for Friday's nonfarm payroll report.



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Is Gold The Best Hedge Against Tail Risk, When Uber-Wealthy Bank Clients Buy Up Tons Of Physical Gold?

A question that has become very prevalent recently is whether in a world denominated in fiat ponzi equivalents, in which central banker intervention is hell bent on devaluing this very system, whether gold (with a recent Sharpe ratio most portfolio managers can only dream of) is not currently the best hedge against tail risks. Conveniently, the World Gold Council has just released a paper, and, for those with a shorter attention span, a video clip, which provides an affirmative answer to that question.

From the WGC: "In the analysis the WGC shows that during the period between October 2007 and March 2009, the height of the global financial meltdown, an investor with a portfolio of US$10 million experienced an additional US$500,000 financial loss simply by not maintaining a position in gold. The study used a composition similar to a benchmark portfolio, which included an 8.5% allocation to gold, to show that total losses incurred during the period reduced by 5% relative to an equivalent portfolio without gold."

But before we get into the WGC paper's findings, we would like to point out a special report by Reuters which confirms what all the "goldbugs" have known all along: "The world's wealthiest people have responded to economic worries by buying bars of gold, sometimes by the ton, and moving assets out of the financial system, bankers catering to the very rich said on Monday... A banker said, "We had a clear example of a couple buying over a ton of gold ... and carrying it to another place."

Guess why JPMorgan is doing all it can to preserve as much physical gold within its system before it all runs out, and all those demands for physical delivery skyrocket.....Read the entire article.


Don't miss....Doji Bar Concern - Weekly Market Outlook

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Jim Rogers: Gold Could Exceed $2,000

Jim Rogers, long known as "The Commodities King," tells CNBC gold could cross $2,000 an ounce in the next five to 10 years.



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Gold Stocks, SP500 & the U.S. Dollar – What’s Next?

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

Investors around the globe are concerned with the economic outlook, not only with the United States but with virtually every country. This has caused not only investors but banks and countries to start buying gold & silver in order to be protected incase of a currency melt down in the coming years.

While the majority is concerned about the eroding economy, we have seen the opposite in the financial market. Gold and equities have risen… That being said the volume in the market remains light simply because the average investor is no longer putting money into the market for long term growth. Instead individuals are now focusing on saving and paying down debt.

That being said we all know light volume market conditions allow Wall Street powerhouses to bid the market up. Not to mention with quantitative easing taking place I’m sure that has also helped the market of late. While we don’t know for sure that QE is taking place as we speak, the sharp drop in the dollar and strong move up in gold are pricing this into the market.

Let’s take a look at some charts....

HUI – Gold Stock Index
This long term monthly chart of the HUI index provides valuable trading signals for both gold stocks and gold bullion. As you can see below this index is trading at a key resistance level after forming a bullish 3 year Cup & Handle pattern. The next 1-2 months for the precious metals sector will be interesting as it tries to break above key resistance. I would really like to see the HUI:GLD ratio break to the upside to confirm if the breakout occurs.

SPY – Daily Long Term Trend
The broad market looks to be forming a short term topping wedge. If this is to occurI expect it to take several weeks to play out. Looking at the chart if we use Fibonacci retracements along with trend line support we can get a feel for where this pullback should correct to.

That being said the broad market breadth and internals seem to be holding up indicating higher prices over the long run. While the short term price action is overbought and I expect a pullback to form, my analysis is pointing to higher prices as we go into year end.

UUP – US Dollar Daily Price Action
Although the majority of investors have a bearish outlook on the economy, we have seen a large price appreciation in equities and precious metals. This is largely due to the fact that the US dollar is quickly getting devalued. Simply put, as the dollar drops, it helps boost commodities and stock prices.

While a rising stock market is great to see, at some point the dollar will become so cheap that it will start to have a very negative affect on the US economy, commodities and stocks. Being from Canada it has always been more expensive to take holidays in the United States, and I remember paying $1.50-$1.70 for every $1 green back. But now the dollar is almost at par making holidays very affordable. The big question/concern is when will they ease off on the printing? At the rate which they are printing the greenback will be at par with peso… well not that extreme but you get the point Eh!

Weekend Market Conclusion:
As we all know the market has a way of making sure the majority of traders miss major turning points. The saying is, “If the market doesn’t shake you out, it will wear you out” and it seems we are getting the later…

The never ending grind higher in precious metals has not had any big shakeouts, rather its wearing out any short positions before rolling over to take a breather. As for the stock market, we are getting much of the same thing as the market grinds higher day after wearing out the shorts before rolling over.

That being said, there is more at work here than just regular market movements. With the light volume in the market we know there is price manipulation and QE (quantitative Easing) which is helping to boost prices and exaggerate market movements.

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Let the volatility and volume return!
Chris Vermeulen



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Is it Really Time to Get on The Gold Band Wagon? Try this ETF Instead

Retail investors are flooding into gold. And it's no surprise with Gold (GLD) reaching all time highs again this week more investors are putting cash into anything precious metal related but I am here to caution you on doing so. There are far better opportunities than gold right now and chasing this trend is not the formula for generating short term growth. We have traded GLD call options 8 times this year (7 profitable) in the ETF TRADR portfolio but now it’s time to step away. Of course, what type of ‘tradr’ would I be if I failed to offer a better alternative.

First off, it would be very difficult to find a long term chart more strong and persistent than the Gold chart, it’s nothing short of amazing (and at the same time scary for the future of the dollar). That said, even as Gold has made new highs in recent days there is a better place to focus your trading capital. The semiconductor industry has lifted off in recent days and I expect it to continue. Here’s the performance chart between the headline making Gold (GLD) rally and the Semiconductor ETF (SMH).

So what’s making the semis perform so well? It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead. It was just three weeks ago when Intel (INTC) slashed their outlook sending the stock down nearly 4%. Others like Cisco have also expressed concern with speak of “unusual uncertainty” in the global economy that could impact sales.

If these headlines weren’t enough many analysts also believe Apple’s iPad is hurting sales of the Semiconductor Industry because the chip is Apple branded and made by Samsung who is not a major Semiconductor. The major players are not benefiting from this particular increase in chip demand. Bottom line, here’s what is making semiconductors (SMH) move.

If you want real time ETF and ETF Option recommendations start here by signing up for our Freemium TRADR .

In a classic contrarian move Semiconductors shifted in to high gear directly after the industry leader (INTC) lowered their outlook. SMH has one of the strongest ETFs trends in September and I believe it will continue. Let’s take a look at the SMH charts to see the how the ETF is trading. We’ll take a look at the following:
Current Trend Analysis (how strong is this trend and how much further can it go) Resistance and Support Levels. How to Enter with a Lower Risk Profile.

Just click here to watch the video.



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