David Banister- www.MarketTrendForecast.com

It’s been several weeks since I’ve written about Gold and we have had a wild ride since the 1910-1920 highs in August.  When gold was trading at that lofty price I forecasted a major correction was nearing. We were shorting gold from $1862- $910 prior to the huge $208 drop that took place over just a a few days.  We covered our short at $1725 and then Gold rallied back to a double top at $1920 and then fell back to $1531.

That pullback to $1531 qualifies as a Fibonacci retracement of the 34 month rally from $681 to $1920, and would also qualify for a price low for a 4th major wave correction that I discussed in prior forecasts.  My initial targets for the Gold pullback were $1480-$1520 if the $1650 area was violated.  Most recently we have seen Gold run up to 1681 which is another Fibonacci resistance zone a few times and then back off to the low $1600’s.

With the recent push over $1681, we can now confirm the 4th wave is over at $1531 lows and that the 5th wave is likely in the very early stages, but beginning to build steam. I will say that we want to make sure the 1650-1680’s areas are defended by Gold on any pullbacks in order for this forecast to remain valid.  During this 5th wave up, eventually we should see the $2380 ranges in Gold, but it will not take place overnight.  In the next few months I am looking for Gold to attack the $1900 range, possibly even by year end, and then in 2012 attacking the $2000 plus ranges.

With all of the Macro events in Europe changing on an almost daily basis, the whipsaws in both the precious metals and equities markets are difficult to forecast and trade for most investors. However, Gold has been moving in defined Fibonacci and wave patterns for ten years now, and has about three years left in a 13 year bull cycle if I’m right.

Below is the updated weekly chart of Gold.  You can see prior low’s as they related to oversold indicators, and where we just came off the 1531 lows and its Fibonacci pivot along with the oversold indicators below.

Look for Gold to attack 1775 first, then 1800, 1840, then 1900 in the coming 6-10 weeks or so.

You can get 3-5 updates a week on Gold, SP500, and Silver by visiting www.MarketTrendForecast.com

David Banister- www.MarketTrendForecast.com

It’s been several weeks since I’ve written about Gold and we have had a wild ride since the 1910-1920 highs in August.  When gold was trading at that lofty price I forecasted a major correction was nearing. We were shorting gold from $1862- $910 prior to the huge $208 drop that took place over just a a few days.  We covered our short at $1725 and then Gold rallied back to a double top at $1920 and then fell back to $1531.

That pullback to $1531 qualifies as a Fibonacci retracement of the 34 month rally from $681 to $1920, and would also qualify for a price low for a 4th major wave correction that I discussed in prior forecasts.  My initial targets for the Gold pullback were $1480-$1520 if the $1650 area was violated.  Most recently we have seen Gold run up to 1681 which is another Fibonacci resistance zone a few times and then back off to the low $1600’s.

With the recent push over $1681, we can now confirm the 4th wave is over at $1531 lows and that the 5th wave is likely in the very early stages, but beginning to build steam. I will say that we want to make sure the 1650-1680’s areas are defended by Gold on any pullbacks in order for this forecast to remain valid.  During this 5th wave up, eventually we should see the $2380 ranges in Gold, but it will not take place overnight.  In the next few months I am looking for Gold to attack the $1900 range, possibly even by year end, and then in 2012 attacking the $2000 plus ranges.

With all of the Macro events in Europe changing on an almost daily basis, the whipsaws in both the precious metals and equities markets are difficult to forecast and trade for most investors. However, Gold has been moving in defined Fibonacci and wave patterns for ten years now, and has about three years left in a 13 year bull cycle if I’m right.

Below is the updated weekly chart of Gold.  You can see prior low’s as they related to oversold indicators, and where we just came off the 1531 lows and its Fibonacci pivot along with the oversold indicators below.

Look for Gold to attack 1775 first, then 1800, 1840, then 1900 in the coming 6-10 weeks or so.

You can get 3-5 updates a week on Gold, SP500, and Silver by visiting www.MarketTrendForecast.com

David Banister- www.MarketTrendForecast.com

It’s been several weeks since I’ve written about Gold and we have had a wild ride since the 1910-1920 highs in August.  When gold was trading at that lofty price I forecasted a major correction was nearing. We were shorting gold from $1862- $910 prior to the huge $208 drop that took place over just a a few days.  We covered our short at $1725 and then Gold rallied back to a double top at $1920 and then fell back to $1531.

That pullback to $1531 qualifies as a Fibonacci retracement of the 34 month rally from $681 to $1920, and would also qualify for a price low for a 4th major wave correction that I discussed in prior forecasts.  My initial targets for the Gold pullback were $1480-$1520 if the $1650 area was violated.  Most recently we have seen Gold run up to 1681 which is another Fibonacci resistance zone a few times and then back off to the low $1600’s.

With the recent push over $1681, we can now confirm the 4th wave is over at $1531 lows and that the 5th wave is likely in the very early stages, but beginning to build steam. I will say that we want to make sure the 1650-1680’s areas are defended by Gold on any pullbacks in order for this forecast to remain valid.  During this 5th wave up, eventually we should see the $2380 ranges in Gold, but it will not take place overnight.  In the next few months I am looking for Gold to attack the $1900 range, possibly even by year end, and then in 2012 attacking the $2000 plus ranges.

With all of the Macro events in Europe changing on an almost daily basis, the whipsaws in both the precious metals and equities markets are difficult to forecast and trade for most investors. However, Gold has been moving in defined Fibonacci and wave patterns for ten years now, and has about three years left in a 13 year bull cycle if I’m right.

Below is the updated weekly chart of Gold.  You can see prior low’s as they related to oversold indicators, and where we just came off the 1531 lows and its Fibonacci pivot along with the oversold indicators below.

Look for Gold to attack 1775 first, then 1800, 1840, then 1900 in the coming 6-10 weeks or so.

You can get 3-5 updates a week on Gold, SP500, and Silver by visiting www.MarketTrendForecast.com

In a recently released report, Gold: alternative investment, foundation asset, the World Gold Council makes a case for mainstream investors adding gold to their portfolios, whether those portfolios hold traditional or non-traditional investments, such as private equity, hedge funds, real estate and commodities.  The WGC’s work suggests that holding gold to as little as 3.3% to 7.5% of the portfolio enhances portfolio performance.

The report’s Executive Summary concludes with “. . . in general, portfolios which include gold tend to perform better (by increasing gains or reducing losses) that those that do not hold gold, during periods of financial uncertainty.  In other words, gold acts as a cost-effective form of protection that does not affect and sometimes benefits long-term expected returns, while reducing risk when it is needed most.”

While most gold bugs would scoff at holding only 3.3% to 7.5% of their assets in gold, it is important to know that the World Gold Council is about as mainstream as you can get and still advocate investing in gold.  The World Gold Council boasts (on its website) of being: The market development organization for the gold industry and the global voice of authority for gold.

Although funded primarily by the gold mining industry, the WGC advises governments, central banks, sovereign funds  and investment firms as to the benefits of holding gold bullion, and it does so with immense credibility.  When it comes to gold, the WGC provides the final answer to many questions.

The recommendation that portfolios hold only 3.3% to 7.5% in gold probably seems ridiculous to most readers of this blog, but the important thing to remember is that this gold bull market , now in its 11^th year, will not peak until gold becomes mainstream.  Gold will not be in a bubble and that bubble will not pop until Wall Street makes gold a mainstream investment, as it did dot-com stocks in 2000 and the housing industry in the mid-2000s.

When gold topped $1900, there was much talk about gold being in a bubble.  With the subsequent decline, many gold naysayers declared themselves vindicated.  Gold denigraters remain wrong.  Gold is a long way from a bubble.  That the World Gold Council has to urges Wall Street to invest as little as 3.3% in gold is evidence just how far away gold’s top is.

The complete WGC report can be found here.  You will have to register to gain access, which involves only supplying a user name and email address.  Do not worry about spam when giving your email address to the WGC.  You will receive few emails, usually when the WGC releases a new report.

Over past fifteen years or so, I have watched the Large Commercials (LCs), as they are known to futures markets traders, change their positions in gold and silver with uncanny accuracy.  The LCs have not always been on the right side of the markets, but they have been right often enough to profit handsomely from their positions.  Critics of LC positioning call it manipulating, and there are good arguments that they are right.

One of the best analysts of the LCs’ positions is Gene Arensberg, who publishes Got Gold Report.  From the latest Got Gold Report:

In the five reporting weeks just since September 6, as the price of gold fell as much as nearly $350 at one point, before snapping back up to settle a net $213.19 or 11.4% lower (as measured on Tuesdays, from $1,874.87 to $1,661.68) the combined commercial traders have covered or offset an eye-opening 59,236 contracts or 26% of their collective net short positioning.  Indeed last week’s COT report (Oct 4), showing 164,751 contracts of LCNS was the lowest net short stand by the commercial traders since the post 2008-crash positioning of April, 2009.

We find it enormously interesting and instructive that in the 10-weeks since August 2, as the price of gold launched from the $1,650s up to the $1,900s, then careened lower in panic and liquidation to as low as the $1,530s and has now returned almost exactly to where it was in August – actually slightly higher than then – as gold apparently pulled a blow-off top, the largest, best funded and presumably the best informed traders the CFTC classes as commercial have very, very strongly reduced their collective net short positioning for gold futures. (From 287,634 contracts net short August 2 to 168,478 lots on Tuesday, Oct 11. A reduction of a whopping 119,156 contracts or 41%!)

In case it isn’t just as obvious to readers as it is to us, let us state it differently. Since August 2 the price of gold, with all its gyrations up and down, is nearly net flat, but the collective bets by commercial traders that gold will fall in price are now much smaller than then. If we can assign a confidence level to the commercial traders by their positioning in gold futures on the COMEX, we would have to say that as of this past Tuesday they are a lot less confident that the price of gold will fall looking ahead.

As I read gold price chart and analyze the action, I see a period of consolidation.  My analysis, of course, is not unique.  Other better analysts see the same consolidation.  Still, I am encouraged to see Gene Arensberg’s analysis of the LCs’ positioning in gold.

Arensberg’s work can be found at www.gotgoldreport.com.  He also reviews the LCs’ position in silver.  Subscription options are explained on the site.

For silver investors, this will be of interest: Special GGR Excerpt – Silver COT Most Bullish in Eight Years.

In May of 2010, immediately following the flash crash many investors started to become bearish (nervous) regarding their position in gold and equities. Once the general public became aware that the stock market could fall 10% in a matter of minutes, investors became very cautious. Suddenly protecting their capital and current positions was at the forefront of their investment process.

A couple days later the market recovered most of its value, but it became clear that investors were going to sell their long positions if the market showed signs of weakness. It was this fear which pulled the market back down to the May lows and beyond over the next couple months which caused investors to panic and sell the majority of their positions. It is this strong wave of panic selling that triggers gold and stock prices to form intermediate bottoms. Emotional retail traders always seem to buy near the top and sell at the bottom which leads to further pain.

Now, fast forward to today…

This past August we saw another selloff similar to the “Flash Crash” in May of 2010. (I warned followers that gold was on the edge of topping and that stocks would take some time for form a base and bottom – Click Here To Read) Over the past couple months gold, silver, and stocks have been trying to bottom but have yet to do so. /> Just a couple weeks ago we saw gold, silver, and equities make new multi-month lows. This has created a very negative outlook among investors which I highlighted in red on the chart below. Since the panic selling low was formed just recently we have seen money pile back into gold and stocks (more so stocks).

Just a couple weeks ago we saw gold, silver, and equities make new multi-month lows. This has created a very negative outlook among investors which I highlighted in red on the chart below. Since the panic selling low was formed just recently we have seen money pile back into gold and stocks (more so stocks).

This strong bounce or rally which ever you would like to call it may be the beginning stages of a major bull leg higher which could last several months. Before that could happen, I am anticipating a market pullback which is highlighted with red arrows on the chart below.

Chart of SP500, Gold and Dollar Index Looking Back 18 Months

Reasons for gold and stocks to pullback:

• Stocks are overbought and generally retracements of 50% or 61% are common following large rallies.

• The dollar index looks ready to bounce which typically means lower gold and stock prices.

• Gold continues to hold a bearish chart pattern pointing to lower prices still.

Weekly Trend Trading Ideas

A few weeks ago I warned my followers that stocks and gold are forming a bottom and that we should be on the lookout for further confirmation signs. I also mentioned that I was not trying to pick a bottom, rather that I was looking to go long once the odds were more in my favor.

This is a potentially very large opportunity unfolding and there will be several different ways to play this. However, right now I continue to wait for more confirming indicators and for more time to pass before getting subscribers and my own money involved.

From August until now (October 17) the SP500 is down -6.3% and gold is down -8.1%. Subscribers of my newsletter have pocketed over 35% in total gains using my simple low risk ETF trading alerts.

I can email you my bi-weekly reports and videos by joining my free newsletter here: www.GoldAndOilGuy.com

Chris Vermeulen

Last week, the History Channel’s series Decoded, took on the question of whether Fort Knox actually contains any gold.  It is available on Youtube in three parts, in case you missed it.  Admittedly I had pretty low expectations for the mainstream media’s treatment of the topic.  Of course the question is never answered, but by the time it was over I was reasonably impressed at to how well they managed to communicate the crux of the issue at hand.  Namely that our entire economic and financial systems are kept afloat by nothing more than confidence that the dollar will hold some future value. Confidence that would likely be shattered if it were revealed that the United States was not the largest holder of gold in the world.

It was interesting to watch the progression of reactions by the hosts as they gradually came to understand the precarious nature of our current situation.  What initially began as quirky bemusement in reaction to claims of gold market rigging by GATA’s Chris Powell, eventually transform into a round table discussion in which they voice genuine fear and concern over the implications of the missing gold.

It’s good to see the topic being presented to the public, because the problem, and solution, are easily grasped by even the most casual observer.  If the gold exists then show us.  What could be simpler?  The fact that there exists a clandestine body of control that steadfastly refuses any oversight, begs the question:  What are they hiding?

A lot of eyes were watching the Slovakian Parliament around the closing bell today as they voted on the European Financial Stability Fund (EFSF). The first vote failed to pass the pending legislation, but members of the opposition party have indicated that they will vote for the bill in a second scheduled vote.

The S&P 500 E-Mini futures contract has not sold off sharply on the news, but the trap door risk for equity traders is that the second vote comes up short and the legislation fails unexpectedly. The marketplace is expecting the second vote to pass without issue and if a different scenario plays out selling pressure could become extreme potentially. With earnings season now upon us, there is plenty of headline risk to go around and this Slovakian situation just adds more complexity to the news flow.

We have seen the S&P 500 Index rally more than 10% in five trading sessions which could potentially mean we have more downside work to accomplish before probing higher. The flip side of that argument is that prices continue to rally and push towards key resistance levels overhead. At this point in time, I do not have an edge for a directional trade so I am sitting on the sidelines presently. I do have a few time decay based trades in place, but they do not have a directional bias so my book is flat here.

The S&P 500 is a tough buy after a 10% rally in such a short period of time, but the strength and momentum are tough to short. The buyers seem to be higher and the sellers appear to be lower which complicates a potential entry even further. Presently there appears to be two possible scenarios:

Bullish Scenario

The daily chart of the S&P 500 Index is shown below with key overhead resistance levels illustrated on the chart and the potential price action in coming days:

Bearish Scenario

The daily chart of the S&P 500 Index is shown below with key support levels and the potential price action if price works lower:    

Overall, I do not have a real edge on the S&P 500 at this point. A pullback makes some sense here, but defined risk metrics and a trading plan must be used to reduce risk. Regardless of the price direction traders are considering, this is a situation where proper position sizing and stop orders can allow a trader to take on a defined risk that he/she is comfortable with.

This market has been tough to trade for several weeks. The price action has been choppy and volatility levels have been elevated since the early part of August. This type of market environment chops up a lot of traders and it sucks bulls and bears into the price action late in the game opening the door for potentially devastating losses if risk is not properly defined. My Trading partner Chris Vermeulen pocketed over 38% gain during these choppy times using bull and bear ETFs with is subscribers.

As an option trader familiar with a variety of spreads, recently I have been utilizing the elevated volatility levels to sell option premium and use the passage of time as a primary profit engine for my open positions. Currently I have 3 open positions which are all taking advantage of the passage of time as a profit engine.

Back on 9/26 I entered a $DIA Iron Condor Spread to take advantage of heightened volatility and capitalize on time decay leading up to the October monthly option expiration. On 10/06 I was able to close the $DIA position to lock in 15% based on maximum risk. Even though price action was excessively volatile during the past several weeks, my $DIA trade was never a major concern in terms of price action. No adjustments were necessary and members and I pocketed some relatively quick money watching the days pass by.

Gold Analysis

The recent price action in gold has been equally as tough to trade as the S&P 500 Index. After rallying sharply into early September, gold prices plummeted and price action has been consolidating ever since. Similar to the price action in the S&P 500, gold prices have just chopped around for several weeks. Gold is currently trading in a bear flag formation which if triggered could result in additional downside.

In the short-term more downside is always possible, but in the longer-term I think higher prices are probable for both gold and silver as this money printing binge will one day end and inflationary pressures may present themselves at that time. The weekly chart of gold futures is shown below:

As can be seen above, gold has traded in a long term rising channel for over a year. Back in August and September gold prices broke out to the upside of the rising channel and went parabolic. In the beginning of September, gold prices sold off sharply back down into the previous rising channel. As it stands right now, gold prices remain near the upper resistance level of that channel and have not tested the lower support line since February. 

If gold prices do begin to rollover in the days and weeks ahead, a logical entry point would be a test of the lower channel. The price level I would be watching for would be around $1,500 an ounce. If we get to that area, I would not be shocked to see an overthrow of that support level and a test of the 1,480 price level before reversing to the upside.

The other side of this story is that the U.S. Dollar Index falls out of favor again and its price gets crushed. If the U.S. Dollar gets hammered lower, it would make sense that U.S. domestic equities would rally along with other risk assets such as gold, silver, and oil. Right now I do not have a clear short term bias, but in the intermediate to longer term cycles I remain quite bullish. If the gold price does work back down to that support level, I will be looking to get long. Another possible long entry would present itself on a breakout to the upside back out of the upward sloping channel.

Gold is quite volatile and is impacted by a litany of outside forces such as foreign currency and the U.S. Dollar. For right now the short term bias could be to the downside, but when this period of malaise in the yellow metal ends the next bullish phase of this move higher is going to be quite strong.

As I have said many times, sometimes the best trade is no trade at all. Right now I do not have an edge in either the S&P 500 or gold so I am just going to sit and watch price action patiently while looking for high probability, low risk setups to emerge.

Subscribers of OTS have pocketed more than 150% return in the past two months. If you’d like to stay ahead of the market using My Low Risk Option Strategies and Trades check out OTS at: www.optionstradingsignals.com/profitable-options-solutions.php and take advantage of our free occasional trade ideas and our free options trading strategy book.

JW Jones

This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.

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.

Read rest of article here… /> http://bit.ly/mPG8Ln

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.

Read rest of article here… /> http://bit.ly/mPG8Ln