David A Banister- www.MarketTrendForecast.com

The market has been in the process of a near 13 Fibonacci week corrective rally since the October 4^th 2011 lows at 1074 on the SP 500.  So far the highs reached on the initial rally of 218 points were in October at 1292.  That has remained the high water mark as we have consolidated over the last many weeks.  I expect the market to complete this counter-trend ABC bounce during the Dec 27^th-29^th window, followed by a good sized correction into Mid-January ahead of the earning season.

The patterns that I am seeing are based on crowd behavioral “Elliott Wave” analysis that I perform at my TMTF and ATP services, and this analysis now favors a 70% probability of a bearish decline beginning very shortly to the 1150’s area on the SP 500 index.  To wit, Investment Advisors in recent surveys have over 45% Bulls and only 30% bears with typical tops forming around 47-48% Bulls in surveys.  In addition, the rally has been on light volume and recent action seems to be forming a rising “bearish wedge” pattern at the same time.

Reversals in the market often come when few expect it whether they come near bottoms or tops.  My most recent forecasts called a bullish turn after Thanksgiving Day when most were bearish in the 1160’s on the SP 500 index.  We then rallied 109 points to a 1267 high, which we are re-testing now.  As we recently pulled back into the low 1200’s, I again said to watch for a major market turn on Dec 20^th. We then immediately rallied so far into the 1270 area from the 1203 lows.

Below is a chart I sent to my subscribers on Dec 24^th, having projected a continuing rally into the 27^th-29^th window of trade.  If you’d like to benefit from our market turn calls and crowd behavioral based pattern analysis on the SP 500 and Gold and Silver, check us out at www.MarketTrendForecast.com to sign up for our FREE FORECAST or GET 33% HOLIDAY DISCOUNT ON OUR PREMIUM GOLD AND SILVER FORECASTS.

The 99% and the 1%. We see it all over the news. There are protest movements in almost every major city focused on it. We all know that something is wrong, but almost no one can put their finger on the root cause. The reason is that the vast majority of people have no idea how banking works or where money comes from.

Did you know that only about 3% of money exists in physical form as coins or bills? The remaining 97% of money exists as numbers in bank computers representing various account balances. /> /> Most people believe that the balance on their bank statement is just a symbol representing how many physical dollars, contained in the bank’s vault, that belong to them. It isn’t. The fact is, the number on the statement is the money. Think about it – there is more than 30 times as much money on bank account statements as there exists physical currency. The number on your statement is the money.

Most people have a quaint notion that banking works something like this: Joe Customer goes down to the bank to deposit his hard earned money into a savings account, which pays him a return based on an interest rate. The bank then loans that money out at a higher interest rate and profits from the difference.

If that were the case, then how can the money be both loaned out by the bank and available for use by the customer at the same time?

The answer is it can’t. Somewhere along the line, the bank obtained more money than was originally deposited.

So where did the extra money come from? Well, remember that the number on the account statement is the money. So if you’re a bank, it’s pretty simple: Create an account and key in a number. Done. Instant new money.

Of course they can’t do this completely willy nilly. There are certain rules and procedures that must be followed. Namely that the new money in accounts must be loaned out and that there are limits as to how much money can be created versus how much was actually deposited.

But at the end of the day, for every new dollar deposited into a bank, almost 99 new dollars can be created out of thin air by the banking system. But here’s the best part: The bank earns interest on all of those dollars it just created! You and I must work for our dollars before they can earn us interest. No such requirement for a bank.

And it gets better. Let’s say there was some sort of collateral promised against a loan and the loan goes bad. The bank then gets ownership of real stuff (a house, a car, a boat, etc) even though the money it “loaned” was nothing more than a number keyed into an account.

That’s quite the business model. No need to actually produce anything when the government grants you the legal right to create new money. Bankers figured out long ago that working for a living was for the middle class.

And speaking of the middle class – and the rest of the 99% – I’m afraid the bad news doesn’t end there.

There’s a larger price to pay for all of this banker privilege beyond just having to work for a living. You’ve heard the expression “there is no free lunch”, well it’s true. When a bank creates new money, it reduces the purchasing power of all other money, including the money in your savings account and your paycheck.

The average person – who doesn’t know how banking works – observes this as the price of things going up. “Gee honey, the price of milk just went up again. It must be getting more expensive to produce milk.” Wrong. It’s actually getting cheaper to produce most things due to increases in productivity. It’s just that your money and your savings and your income are losing their value faster.

Computers and electronics are an interesting case. They get cheaper every year because the gains in manufacturing productivity are so great, that even bankers can’t devalue the money that fast. But this is the normal action of prices in a sound money system. Sound money retains its purchasing power, and almost all manufactured goods cost less to produce every year. If our monetary and banking systems weren’t based on fraud, a person would never need to get a single raise or increase in pay to see their standard of living rise every single year. Please take a minute and contrast that with your experience in our current system.

That 3-10% price inflation we see is how much purchasing power our incomes lose every year. To say it another way, our standard of living falls 3-10% every year after year after year. It wasn’t that long ago that a middle class family in America could comfortably get by on a single income. It is now often necessary for a household to have two full time incomes just so it can struggle by..

So how did the 99% become the 99%? It’s because that is exactly what our monetary and banking systems are designed to do. It is an institutionalized system of wealth transfer that acts slowly over time. Like the boiling frog, most don’t realize what has happened until they’ve been cooked.

Perhaps at some point you’ve stumbled across the famous quote by Henry Ford:

“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Now you know what he was referring to.

The past few months have been tough for those holding precious metals stocks, PM futures contracts or physical bullion. With silver is trading down 41%, precious metals stocks down 30% and gold 15%. It has people scratching their head.

The question everyone keeps asking is when can I buy gold and silver?

Unfortunately that is not a simple answer. With what is unfolding across the pond and the bullish outlook for the US Dollar index the next move is a coin toss. That being said, I do feel a large move brewing in the market place so I am preparing for fireworks in the first quarter of 2012.

If you step back and look at the weekly trend charts of the dollar index and the SP500 index you will see the strength in the dollar along with a possible top in equities forming. What these charts are telling is that in the next 3 months we should know if stocks and commodities are going to start another multi-month rally or roll over and start a bear market sell off.

With the holiday season nearing, hedge fund managers sitting on the sidelines just waiting for their year end performance bonuses, I cannot see any large sell off start until January. Sell offs in the market require strong volume and the second half of December is not a time of heavy trading volume.

This leaves us with a light volume holiday season, major issues overseas and no big money players willing to cause waves.

So let’s take a quick look at the charts as to where the line in the sand it for the dollar index, gold and silver.

Dollar Index Daily Chart

This week we have seen a strong shift of money out of risk on assets (Bonds) and into risk off (Stocks). This shift is happening before the dollar has broken down indicating the dollar may be topping and could be an early warning of higher stocks prices going into year end. Also note that light volume market conditions also favour higher prices.

Gold Price Daily Chart

Gold could still head lower but at this point it is holding a key support level. If we see the dollar breakdown below its green support trendline then I expect gold to have a firm bounce to the $1675 – $1700.

Silver Price Daily Chart

Silver continues to hold a key support level. If the dollar breaks down the silver should bounce to the $31.50 – $32 area. But if the dollar continues to rally then silver and gold may drop sharply.

Mid-Week Trend Conclusion:

In short, I think the best thing to do is enjoy the holiday season with family and friends. Trading right now is not that great and with the market giving mixed signals. I am keeping my eyes on the market in case it flashes a low risk setup and I will keep you informed if we get one.

I am still bearish on gold and silver longer term but the next week or so its likely we see higher prices.

Be aware that Monday is a holiday and once January arrives the market could go crazy again. If you want all my swing trades that I personally do be sure to join my alert service www.TheGoldAndOilGuy.com

Happy Holidays to you and your loved ones!

Cheers, /> Chris Vermeulen

For market insights many investors focus on the “historical/backward” looking news but fail to realize other exceptionally powerful forces that are also at work; such as “Seasonal Trends”.  We believe there is some validity to paying attention to the News events that can impact ones investments; however seasonal factors may provide a simpler and more reliable market insight.

To keep things simple we will first display a few charts and then discuss what they may be indicating:

When we look at the red line in the above chart we can see that the price of silver usually performs strongly from about November to April.  Around this time of year we typically see the price of silver pushing higher and higher with relatively small corrections.

In this gold chart we can see a similar result to silver.  In the typically strong month of November we are seeing gold price performance that is “weak” instead of “strong”.   This summer (not shown in the chart above) when one would expect the price of gold to correct, it remained very strong and it really didn’t have any kind of a “pull back” until September. 

Here we see the US Dollar illustrating unusual price strength instead of typical seasonal weakness.  Because precious metals and other markets are “priced” in US dollars, when the US dollar heads up, the” price” of the asset it is measuring tends to fall.

So what does all of this mean?  To be clear we are extremely bullish on the price of silver and gold in the big picture.  We believe that both silver and gold will eventually advance into a full fledged bubble market that will surpass most investor’s wildest dreams.  However, in the short term unusual market action is usually a “warning sign” more than it is a “green light” to load up on new positions.  Although we believe seasonal trends are a very powerful force and the metals may very well be higher in February than they are here in November, the unusual price action does raise the caution flags that perhaps something a little different is brewing this year.  It has been a long time since silver, gold and commodities in general have had a very meaningful correction.  There are a lot of warning signs in the markets these days and at this time it may make sense to proceed with caution.

Ultimately we expect to make our largest profits from the huge macro moves in the markets.  At investmentscore.com we try to identify long term macro trends such as the current silver bull market, identify intermediate term entry points and watch for our ultimate exit point.  We not only want to identify and profit from the coming bubble market, we also want to keep our profits for the next low risk opportunity.  To read more free commentaries or to sign up for our free or paid newsletter please visit us a www.investmentscore.com.

Experienced traders recognize that volume typically dries up going into the holiday season. Light volume and the holiday seasonality generally push equity prices higher. The discussion of whether Santa Claus comes to Wall Street has arrived in earnest.

I do not envy Santa as he has the most arduous task of determining if Wall Street was naughty or nice. I suppose it depends on whether he reviews recent performance, or if past performance comes into play. Clearly coal will likely be found in a few stockings soon enough. If I were John Corzine, I would not expect to get a lump coal, but something far worse potentially.

In all seriousness, the bullishness has gotten pervasive in the media and economic data points such as unemployment and consumer credit have improved according to the government. One way to gauge investor sentiment is to look at the weekly advisor sentiment numbers courtesy of Bloomberg and Investor’s Intelligence.

According to this week’s advisor sentiment numbers, advisors who are bullish advanced to 47.4% from 44.2% last week. Bearish advisors dropped to 29.5% from 30.5% from the previous week. The 29.5% bearish data point matches a level that has not been seen in nearly 4 months. Bullishness has clearly become the leading expectation in the marketplace.

Only one asset has the opportunity to be “The Grinch” and ruin Christmas on Wall Street. If the U.S. Dollar rallies sharply, risk assets are certain to get hammered lower. In addition to the bullish tenor of market participants, most market pundits and gold bugs believe strongly that the U.S. Dollar is doomed fated for lower prices.

When I look at the long term momentum of a stock or commodity contract I will look at a monthly chart and plot the 12 month moving average against the price action. While it seems simple, equity and futures positions adhere to the 12 month moving average quite closely in many cases. The analysis is very simple as prices above the 12 month moving average equate to bullishness and prices below the moving average predict lower prices. The monthly chart of the Dollar Index futures is shown below:

As can be seen above, the Dollar Index futures are showing strength currently. The 12 month moving average is starting to flatten out which is also a bullish indicator. When looking at the daily time frame we can see that price action is trading inside a wedge pattern and is bouncing higher off of support:

An additional catalyst that could push the U.S. Dollar higher is the economic tragedy that is Europe. European political leaders need to come up with a series of strong solutions that will stabilize their economic crisis otherwise the Euro will weaken further. A weakening or potentially crashing Euro will push buyers back into the U.S. Dollar. This would in turn place downward pressure on equities and commodities.

S&P 500

On Thursday the S&P 500 flushed over 2% lower by the close as the European Central Bank disappointed investors with an expected 0.25% rate cut and no new bond purchase announcements. The bulls will tell you that the Thursday the week prior to monthly option expiration usually is volatile and price direction is generally in the opposite direction of the primary trend. We will find out next week whether that axiom holds true. The daily chart of the S&P 500 is shown below:

The strength of Thursday’s move is not going to easily be reversed. The European leaders need to shock the market with tangible decisions and launch a major offensive against their growing fiscal issues. If European leaders disappoint investors, the reaction to the news could be a violent selloff that leaves bulls flatfooted next week.

Those who are leaning long in size should consider that their trading capital is being leveraged on the hope that European leaders can come to a groundbreaking agreement. I will be in cash watching the price action in the S&P 500. However, once the dust settles and others have done the heavy lifting, I will likely get involved with a directional trade. Until then, I am just going to ponder if I were Santa, would Wall Street get a present or a lump of coal?

Get these weekly reports and trade ideas free here: www.Optionnacci.com

JW Jones

David A Banister- www.MarketTrendForecast.com

Back in August with Gold running to parabolic wave 3 sentiment induced highs, I warned of a major top and multi-month correction. We all know that the fundamentals for the shiny metal are stronger than ever, but you must keep in mind that the market prices all that in well l in advance. Coupled with excessively bullish sentiment that was capped off by a USA Today cover with Gold on it, it was easy to see a major sentiment correction and therefore price decline was at hand.

If we fast forward a few months from my then blasphemous call for a top and multi month consolidation, we can see that Gold has lost favor with the taxi driving crowd and the shoe shine group both. What has in fact happened is we have had what I call a 4^th wave triangle pattern, which works to consolidate prior gains. Triangle simple let the economics of the underlying security or commodity catch up with the prior bullish price action. In this case, Gold was in a powerful wave 3 stage advance from the October 2008 $681 lows and over a 34 Fibonacci month period of time. When everyone on the stage was convinced this act would continue, it was time for the curtains to draw.

The 4^th wave so far has been characterized by a typical pullback in terms of price and also time. The drop to the $1530’s is a normal 31% Fibonacci retracement of the entire 34 month advance. In addition, the pattern that has clearly emerged lines up as a typical 4^th wave triangle pattern, which has 5 total waves within. Waves 1, 3, and 5 are down and 2 and 4 are up. We are currently finishing wave 4 to the upside from the low $1600’s and likely to see a wave 5 near term to the downside. As long as Gold holds above $1681 levels, I expect we will see a breakout north of $1775 to confirm that wave 5 up in Gold has begun.

Targets for the 5^th and final wave of this suspected 13 year cycle of Gold begin at $2360 and then we will update from there. Below is the chart I sent to my paying subscribers last Thursday and we can see that this pattern is still playing out. Aggressive investors would be wise to get long the metal on this final pullback, with a stop below 1680 to be conservative.

If you would like to have forecasts for price and pivot points in advance on the SP 500, Gold, and Silver that keep you on the right side of the markets, check us out at www.MarketTrendForecast.com

Wednesday, six of the world’s largest central banks, led by the Fed, averted a meltdown of the Eurozone’s banking system by agreeing to print more money.  One has to wonder: if solving such dire financial crises is as easy as creating still more fiat money, how did some of Europe’s major banks get in financial trouble in the first place?

The banks got in trouble primarily by buying the bonds of weak members of the Eurozone.  The banks relied more on the borrowers being sovereign states than their creditworthiness.     

Just how bad is the financial crisis in the eurozone?  Consider the following:

According to the Financial Times, so far this year European banks have been able to sell only two-thirds of the bonds needed to refinance (rollover) existing debt.  They were able to sell only $413 billion of $654 billion needed.

Compounding problems for European banks are the impending Basel III reforms, which will impose tough liquidity and capital requirements on banks.  To comply, Morgan Stanley estimates that European banks will have to dispose of as much as $3.3 billion worth of assets over the next few years.  No one seems to know who will be the buyers.  The European Central Bank that so far has not been a buyer of eurozone toxic waste.

Japanese troubled investment bank Nomura cut its exposure to European sovereign debt by 75 per cent in the past two months, from $3.55 billion to $884 billion.  Nomura slashed its exposure to Italy by 84 percent, from $2.8 billion to $467 million.  The credit rating agency Moody’s recently put the bank on notice that its rating could be lowered to one notch above junk, which shows that flames of this  financial contagion are not restricted to Europe.  And, they are reaching the United States.

According to the Institute of International Finance, US financial institutions have $767 billion worth of exposure through bonds, credit derivatives and other guarantees to private and public sector borrowers in the eurozone’s weakest economies.

When the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) acronym appeared on the scene, France and Germany were the stable members of the European Union and seemed likely to be the EU’s saviors.  Now, France’s financial integrity is in question as the interest rates the market has put on French bonds are at levels seen only a few months ago for the weaker eurozone members.

If that’s not bad enough, November 23 witnessed one of the least successful German debt sales since the launch of the single currency.  Six billion euros in 10-year bonds were priced at 2 percent, but commercial banks bought only 61 percent of the issue, which meant that the Bundesbank (Germany’s central bank) had to pick up 39 percent (3.644 billion) of the issue.  An analyst at Monument Securities in London called it “a complete and utter disaster.”

If the “euro experiment” fails, in the short run the US dollar will gain.  However, Europe is the US’s major trading partner, and in the long run a weaken European economy would be disastrous for the US economy.  And, don’t forget the $767 billion worth of exposure that US financial institutions have to borrowers in the Eurozone’s weakest economies.  If Europe suffers a depression because of problems in the eurozone or the euro fails utterly, the negative impact on the US economy will be huge.

Now, though, the world’s central banks are cranking up their printing presses, and fiat currencies will flow in abundance.  Mainstream investors seem to agree that more fiat money is the answer.  The day of the announcement, the Dow Jones Industrials tacked on 490 points, the Industrials best one-day gain in 2-1/2 years, and the German DAX leaped five percent.  Logically, the prices of US banks stocks roared higher.  Not much talked about was that the price of gold climbed double digits in many markets.

The mainstream investment world readily accepts that “just one more papering” will give the troubled members of the eurozone time to get their houses in order.  “We’ll see,” said the Zen Master.

Indeed, this is just a “papering over” of the problems because the real problems are systemic in Europe.  The Europeans are far down the road to total socialism.  There is a belief, held by too many Europeans, that the government is there to take care of them.  Those people have failed to recognize that it has been they who have been taking care of the governments, their agencies and all the bureaucrats.  For the eurozone’s problems to be solved, there will have a cultural change, a repudiation of a lifestyle engrained there.

The central banks may have averted an impending meltdown, but the move didn’t solve the problems facing the eurozone, which is that Europeans have wholeheartedly embraced socialism.  Changing that attitude will be much more difficult than convincing six central banks to print more money.

I think you will admit that we are in the middle of one major crazy financial mess.  The part that makes things really crazy is that it’s not just in the United States anymore but rather serious global problem which if not handled properly could change the way we live our lives going forward or possibly even spark some type of war, hopefully things don’t get that crazy… But I do know one thing. Fear is the most powerful force on the planet and people do some crazy things when they are backed into a corner.

Anyways, on a more positive tone… today China decided to help provide more liquidity for the financial system along with the central banks. This news triggered a monster rally in overnight trading making the market gap up sharply at the opening bell. This news did hit the US dollar index hard sending it sharply lower but the question remains “Will today’s news be a one week hiccup in the market?” If Euroland starts printing money it will likely send the dollar higher and stocks lower for 6- 12 months.

Just today I was joking with Kerry Lutz of the Financial Survivor Network about how each country should just give each other country a second chance. Wipe the dept clean and start over knowing this time around exactly how each country truly operates at a financial level allowing everyone to avoid a repeat of this BS. Some countries will get off way better than others because they would get so much dept wiped clean but isn’t it better than years of problems and possibly wars over food, gold, guns, oil and Canadian water? – EH

You can read the rest of the article here… 

http://bit.ly/uEhO8b

The title to an AP article on yahoo.com’s finance page tells it all: World’s central banks act to ease market strains, Central banks take action to provide cheaper dollar liquidity to financial system.   Read the article if you want, but title really does tell it all.

This is not a novel “solution” to the world’s financial ills.  When push comes to shove, politicians typically take the easy way out.   Here is a gold-eagle.com article on this issue, which I wrote in June 2003: Fears of Deflation Guarantee Inflation.

Thus far in 2011 the overall stock market movement has been much different from what we had in 2010. This year we have seen nothing but sideways to lower prices with wild price swings on a day to day basis. There just has not been any really solid trends to take advantage of this year. Instead we had to actively trade the oversold dips and sell into the overbought rallies to just pull money out of the market on a monthly basis. Last year we saw 3 major rallies that lasted several months making it easy for anyone who bought into the trend to make money if managed properly.

Looking forward to 2012 it looks as though we are going to see some major changes unfold globally that will change the way we do things live our lives. Unfortunately its a very negative outlook but I do have hope that something will be done to perserve are somewhat normal lifestyles. I’m not one to talk doom and gloom, there are enough of those guys out there already so lets stick with the charts and focus on what is unfolding now in the present and how to take advantage of it…

Read the rest of article here…

http://www.thegoldandoilguy.com/articles/is-this-december-similar-to-2007-2008-for-gold-stocks/