David Banister: Is This Bull Market In Gold Over With Double Top?

A few weeks ago I penned a public article and private forecast for my subscribers calling for a major correction in Gold being due. 72 hours after my forecast, Gold had dropped a stunning $208 per ounce in 3 days catching most by surprise. Why did I forecast a top in Gold then? Why did Gold rally back to new highs recently? Is the Gold Bull Market now over? Let’s see if I can answer those questions with some level of logic below.

I had forecasted a major correction because Gold has had a run of 34 Fibonacci months from October 2008 to August of 2011 from $681 to $1910 per ounce spot price in US dollars. That type of pattern was formed with a clear 5 wave move, with obvious corrections along the way. The reason I was confident of a major correction was due to the confluences of the 34 months of time, the price relations to prior rallies and corrections, and the Fibonacci sequences coupled with the sentiment and cover stories on Gold in major publications. Gold should have entered into a multi-month correction that will consolidate that 34 month move, and the first shot across the bow was the $208 drop in 3 days.

Interestingly, that $208 drop over 3 days corrected 50% of the 8 week move from $1480 to $1910. As we can see markets move very very fast these days and can whipsaw even the best of traders. I told my subscribers to cover their short bets at $1724 spot, and since then we rallied to $1920 this week before topping again.

The reason Gold rallied back and touched the old highs and then some was due to the German Court pending decision regarding the constitutionality of backing the Eurozone countries with bailout funds. Today we had a positive decision by the court denying claims that the bailouts were unconstitutional. Had the German Court ruled the other way, we would have seen Gold spike to $2000 and the SP 500 and European Bourses tank hard. So if you were getting long Gold on this recent rally, you were taking on a lot of short term headline risk and I told my subscribers it was best to stand aside until we got the ruling.

Now that the ruling came out, Gold has topped at 1920 in what typically traders would call a “Double Top” pattern, but it’s more involved than that. 

In the work I do, we call it an “Irregular correction “ pattern, where the retracement of the $208 decline runs all the way back up and past where the decline began at $1910. These are very rare patterns and again, I believe exacerbated by the Eurozone issues as they hinged short term on the German decision. What we should see now is what I call a “C WAVE” to the downside, with targets typically at $1620 relative to the rally from $681 to $1910 over 34 months. A drop of $290 is only 15% from the highs and would fill in gaps in the Gold chart.

Will Gold drop that low? The fundamentals for Gold are screamingly bullish, but the entire world knows that and it may be priced in for a while. Gold should consolidate those topping highs for a while to let the fundamentals catch up the price action in Gold which ran ahead of them and then some. The Gold bull market should run for 13 Fibonacci years, and I have been bullish since November 2001. I understand the fundamentals are very strong for Gold, so please don’t miss-read my comments ore forecast. I use crowd behavior and psychology to help pinpoint major tops and bottoms, and right now we should have some more work to the downside to correct sentiment in Gold and then allow for the base building period before the next leg up towards the highs in 2014.

Over at my TMTF service, we called the top in Gold and shorted it and covered at $1724. We also recently forecasted the deep drop in the SP 500 from 1231 highs and warned our subscribers in advance. My methods use contrarian signals and behavioral patterns to warn of pivot highs and lows in advance. 

Consider checking out David Banisters site at Market Trend Forecast.Com and take advantage of a 33% discount or sign up for our occasional free updates.

David Banister: Is Gold on the Verge of Major Correction?

Just under two weeks ago I wrote about gold likely running to a final top with various levels ranging from 1862 to 1907 per ounce as likely. So far, we bottomed with a pivot at $1730 which I mentioned to my paying subscribers and we have run to as high as $1898 per ounce counting futures trading on August 22nd. What should we expect now as the most likely intermediate trading pattern for Gold?

Clearly, Gold is overbought on traditional technical measures such as RSI, MACD, and Moving Averages and more, so that is one warning flag. To wit, Gold historically pulls back pretty aggressively anytime it has run much above its 20 week EMA line. On a daily chart that stands at about $1730 per ounce, and on a weekly chart around $1580 per ounce. This week marks Fibonacci week #8 from the 1480 pivot lows of a wave 4 pattern I outlined for my subscribers as likely to turn gold higher to 1730 plus. In addition, we are 34 Fibonacci months into this 5 wave Bull Run from the October 2008 $681 lows.

I use Elliott Wave Theory combined with sentiment indicators and other measures to help determine major buy and sell pivots for Gold, and this methodology has been extremely accurate and successful for years. Right now I can count Gold as coming into a final 5th wave thrust to all time highs with sentiment running at huge extremes and technical patterns screamingly overbought. This action in Gold over the last many weeks reminds me of the final blow off top of the NASDAQ in 2000 as it ran from 4000 to 5000 in a few months and exhausted the buyers. This 5 wave pattern began 34 months ago and the final 5th wave usually drags as many taxi cab drivers onto the back of the Bull just in time to dump them off with a bag in their hand and no ride.

The bottom line is Gold is in a 13 year upwards cycle, and we are in about year 10 and it’s due for a likely pause in the uptrend, and certainly a correction of 10-15% would be normal in any massive bull cycle to kick all the bulls and latecomers off the back of the charging Bull. This pause should be a Primary wave 4 consolidation, where 2 and 4 are corrective and 1, 3, and 5 are bullish cycles.

Below is the latest chart on gold, not counting the overnight $1898 highs last night, but you can see that Gold is above the normal pivot high lines where we have seen major corrections over the past 34 month up cycle. A major parabolic blow off rise is of course possible, but hedging long positions and or considering shorting gold for the more aggressive players is advised:

Consider joining us at TMTF for forecasts and tradable pivot ideas on the SP500, Gold, and Silver with stunning accuracy. Check us out at Market Trend Forecast.com for a 33% discount coupon or to sign up for occasional updates.

It Looks Like Gold’s Cyclical 34 Month Run is About to Run Out

David Banister of  The Market Trend Forecast just updated his previous gold forecast which was spot on (no pun intended).....Now he has a new forecast for what to expect next which I'm sure all of our readers will find interesting......

Gold hit $1805 tonight in trading, a Fibonacci Fractal figure I gave out a few weeks ago as a possible top. We are close to a near term high in Gold and Investors should be trimming back positions on this run. Back as recently as $1600 an ounce I forecasted a run to $1805 for Gold using fractal and wave analysis and behavioral patterns, now that we hit that figure it’s time to update the cycle and where we are.

Here is the Chart I did at 1599 gold on July 22nd:

I have been a Gold Bull since November 2001, having conducted seminars for public employees on investing back then and advising gold mutual funds and gold stocks very early. I have talked in the past about a 13 fibonacci year Gold Bull cycle that will end around 2014, so there are still three years left in my opinion. However, gold does have peaks and valleys and has moved in very clear Wave and Fibonacci fractal patterns for years.

Given the history of how I have forecasted Gold, I am going to share my short term and moderately long term views on where we are in the up cycle which I expect to last 13 fibonacci years to 2014. Right now it is my opinion that we are completing a MAJOR WAVE 3 up in Gold from the 2001 lows from $300 an ounce. We have had a 34 fibonacci month rally since the October 2008 lows of $681 per ounce. Every Taxi driver, CNBC guest or analyst, and 200 Radio and TV commercials a day are blaring to buy Gold. This is how intermediate tops form.

The rough wave count is below:
Wave 1- 300 to 1030
Wave 2- 1030 to 681 (October 2008 lows)
Wave 3- 618- 1805 currently, 34 Fibonacci month cycle. *Likely high is 1862-1900*
Wave 4- Due up next… a multi month consolidation.

It is my opinion that at the top of a Major wave 3 in Gold, that everyone should be univerally bullish, that gold radio and TV commercials would be all over the place, and that everyone on CNBC would be talking about and recommending Gold.

Sound familiar?

So the likely conclusion to this massive parabolic blow off top of Wave 3 is nigh. Most recently I upped my estimates to as high as $1900 per ounce with $1805 already here as of tonight, which was one of my figures by the way many weeks ago. Gold should under normal circumstances top between 1862 and 1900 per ounce fairly soon should the 1805 level not hold as a high. At that level we will be dramatically overbought. 

We are already running 15.7% above the 20 week moving average line which historically is about as high as Gold will get before correcting hard and consolidating. A final lift to the 1862-1900 ranges should lead to a fairly good sized correction to the downside designed to kick all the late comer Taxi Cab driving buyers off the bull’s back. With that said, at $1805 I would be trimming my position and or hedging my long positions aggressively.

Watch for a Maximum Gold top at 1862 -1900 per ounce and keep in mind 1805 is being hit tonight and that is a qualifying fibonacci fractal top as well. Investors should be trimming back positions and looking to re-deploy back into Gold at better prices. We could get a huge blow off top over 1900, but it would be very very rare if it happens.

If you’d like to stay ahead of the peaks and valleys in Gold, Silver, and the SP 500 (Recently called a tradable bottom at 1101), then check out Market Trend Forecast for a 33% 48 hour coupon or sign up for the occasional but infrequent free updates.

Gold and the QE3 Ship – Are Both About to Sail?

From Gold ETF Trader contributor David Banister at Market Trend Forecast.....

Back in Mid-May of this year we had a big rally in the Dollar and Gold was correcting hard. There was a bit of Dollar Bull hysteria at the time which I felt was quite unfounded. I wrote an article entitled, “The Dollar Bull Monkey Dance Will Soon End Badly, QE3 Next?” You see, the collective herd psychology at that time, just a short ten weeks ago, was that Gold would drop hard at the end of QE2, and The Dollar would of course rally as high as 82, maybe more against the weighted index.

The dollar has dropped hard since mid-May as I expected and Gold has continued to rally as well. I had forecasted $1627 for Gold back when we were under $1,500 and last Friday we closed at $1627 on the nose! During the mid May time, most disagreed with my QE3 forecast, and probably still do but I think the ships is soon leaving port. This could blast Gold up to a target of $1805 on the high end and certainly into the low 1700’s to the $1730 per ounce range.

Gold has had a powerful 5 wave rally (Elliott Wave Theory) since the October 2008 lows of $681 per ounce, and certainly one could argue that a correction would make sense fairly soon. However, the fundamentals for Gold are only getting stronger as we have inflation climbing at an 8-9% real rate and interest rates continuing to drop. This is creating a “negative” real interest rate environment amidst a continuing weaker US dollar. Hence it is hard fundamentally to argue against Gold at this time, creating difficulty in forecasting the intermediate highs and lows.

With that said, assuming QE3 or some form takes place soon then my $1805 target is quite likely to be hit before we can look for any meaningful correction in the precious metal complex. With the ISM manufacturing index turning down sharply as reported this morning and other economic indicators and GDP report rolling over, a QE3 ship horn is likely to sound soon. Below is my latest chart dated July 22nd with Gold at $1599 at the time, outlining the likely interim moves in Gold using my crowd behavioral methodology that I employ at my forecasting service.

The combination of crowd behavior and fundamental analysis often delivers stunningly accurate forecasts in advance on the SP 500, Gold and Silver at TMTF. Consider signing up for our regular updates and use our 72 hour coupon code at Market Trend Forecast

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Crowd Behavior Moves Gold, Silver and SP 500…Not The News!

From our partner David Banister at Market Trend Forecast.....

How many times have you scratched your trading head wondering why gold or silver were either rallying hard or dropping hard on seemingly bearish or bullish news? How about the general stock market represented by the SP500 Index? Has it ever rallied when the headlines were horrible or tanked when the news seemed good? Well, welcome to crowd behavioral dynamics and investing!

At my TMTF service, I use Elliott Wave Theory combined with a few other indicators like sentiment gauges and Fibonacci relationships to forecast the coming bottom and top pivots in Gold, Silver, and the SP 500 indexes in advance. In doing so, I often ignore the day’s headlines completely and rarely if ever use them to forecast the next movements in the precious metals or broad stock markets.

Let me give some examples of why you should learn to ignore economic indicators, headlines, and talking heads on CNBC and elsewhere and focus on crowd behavioral patterns. Learning to scale in long when everyone is getting bearish and taking profits when everyone is universally bullish is much easier if you follow Elliott Wave Theory, and apply that theory correctly. If the matter between your ears is unabashedly biased, it will not work… 

One must be objective and open minded to change to survive these volatile markets.

Recently with Gold, we had a major drop from $1557 to $1482 over brief window of time. When I last wrote about Gold several weeks ago publicly, I presented a bullish and a bearish case. I had said Gold must close over $1551, otherwise it may have a truncated top and correct hard. Sure enough, a few days later Gold hit $1557 intra-day and could not get over $1551 on that close. Within days it collapsed and dropped below $1500. How did I know this in advance? Crowd Behavioral Patterns are repeated throughout the markets over and over again and again. Here is the original chart I sent out many weeks ago showing the possible drop:

Gold did end up dropping to the 20 week Exponential moving average at $1480 range, and as it did I noticed a clear “ABC” weekly pattern. Now this is an Elliott Wave pattern that can warn you of an imminent bottom in Gold in this case. In late June, after this major correction I wrote up another chart and showed a potential bottom coming in Gold around 1480, and then on July 5th I confirmed the Bull views on Gold were coming back into play, which you can see with the June 29th chart I did below for my TMTF subscribers:

We were able to adjust our views from short term bearish to moving back to bullish and still catch the big swing in Gold. The precious metal rallied from $1480 ranges to $1610 recently, and now is likely to go through a minor correction to $1568 or so. All of this is the crowd’s action together pushing positions into overbought stages of hysteria, and back to oversold stages of pessimism…I simply track those patterns and try to forecast the next move ahead of the crowd running in or out.

Another sample is Silver as it collapsed from $49 down to $32-$33 per ounce not long ago. After the dust settled I sent out a chart and told my TMTF subs we would likely seeSilver trade in the $34-$41 range for quite a while, before mounting another attack back towards $50. Right now I see Silver soon running to $45-$47 per ounce once it takes a breath. Below is the original early June silver chart I sent to my TMTF subscribers: We had an ABC strong rally which we forecast at TMTF in late August 2010 ahead of time, and once those rallies are over it takes quite a while to work off the sentiment.

Silver has indeed consolidated as forecast for about 7 weeks now between 34-41, having recently hit $40.80 and backed off. I expect Silver to break out over this range soon and attack $60 by year end as possible, but certainly $46-$50 by the fall. Last Wednesday I finally went bullish again based on crowd patterns and told my subs to go long at $37 as you can see below in the chart sent out then with a target of $46 likely coming. The herd of investors had formed yet another ABC weekly pattern, and it was time to go long.

Finally we look at the SP 500 which I forecast on a regular basis as well using Elliott Wave Theory and other indicators. This past week or so we saw a huge drop in the SP 500 and broader markets supposedly on Italy concerns and Eurozone issues. Although I am well aware of these issues, they are used to explain what just happened in the stock market, but not forecast it. Late last week I sent out the chart below to my subscribers and said as long as 1294/95 pivot holds, I remain very bullish on the markets. The SP 500 hit 1295 and has since rallied 31 points in a few days catching everyone off guard. That is Crowd Behavior 101 if I ever saw it!

The bottom line is understanding that the precious metals and broader markets tend to move based on major swings in sentiment from optimistic to pessimistic. The collective psyche of the herd is the most important because we can have periods of very bad news where the market will continue to rally, and also periods of seemingly great news when the market is dropping. The perception of the news of the day and how the crowd decides to react is more important than the news itself! If you’d like to try the TMTF service and take advantage of a coupon as well, go to Market Trend Forecast and check us out. You can also sign up for an occasional but somewhat infrequent free reports.

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Chris Vermeulens Stocks & Commodity Technical Trading Outlook For Summer 2011

Do you have a plan for trading summer 2011? Are you sticking to the usual "sell in May and go away"? Today Chris Vermeulen of The Gold and Oil Guy.Com gives us plan for trading the summer of 2011......

The coming summer should be exciting for traders! While summer trading generally tends to be slow, this one could be different. A large number of other professional traders I talk with are all feeling the tension building in the market. We all think some big movements are just around the corner and the big question is which way are things going to move?

Depending on your trading style you may be viewing the recent market action as the beginning stages of a bear market (major sell off). A bear market is not necessarily impossible as the U.S. Economy is showing the beginning signs of weakness. The fact that stocks have moved lower for almost 6 weeks straight is a recent reminder that we may not be out of the woods just yet. The recent price action and negative sentiment has been harsh enough to make 99% of traders bearish.

In contrast, some traders may be seeing this market as an oversold dip preparing for a bounce/rally in the bull market which we have been in since 2009. Some traders may see this as a buying opportunity because you are a contrarian. Most contrarians generally want to do the opposite of the masses (herd) who are merely trading purely out of emotional sentiment.

I myself have mixed thoughts on the market at this point in time. I’m not a big picture (long trend forecasting) kind of guy but my trading partner David Banister is great at it. Rather I am a shorter term trader catching extreme sentiment shifts in the market with trades lasting 3-60 days in length. So looking forward 2-5 days I feel as though stocks and commodities are going to bottom and start to head higher for a 2-6% bounce. At that point we need to regroup and analyze how the market got there… Was the buying coming from the herd, institutions, or was it just a short covering rally? Additionally, where are the key resistance levels and did we break through any?

During extreme sentiment shifts in the market we tend to see investments fall out of sync with each other for a few days. I feel the attention will be on stocks and we get a bounce this week. I am expecting commodities to trade relatively flat during the same time period.

OK let’s take a quick look at the charts…

Dollar Index 4 Hour Candles
I feel as though the US Dollar is trying to bottom. It is very possible that we test the May low at which point I would expect another strong bounce and possible multi-month rally. So if the dollar drops to the May lows then we should see higher stocks and commodities, but once the dollar firms up and heads higher it will be game over for risk assets.

Crude Oil Chart – Daily
Oil took a swan dive in early May and has yet to show any signs of moving higher. Actually crude oil is looking more and more bearish as time goes by.

Silver 4 Hour Chart
Silver has formed much of the same pattern that oil has. On a technical basis its pointing to sharply lower prices still. The fact that silver bullion went from an investment to a speculative trading instrument within the past 8 months makes me think it could test the $25 area. The one thing to remember here is that silver is still overall in a bull market. This is a 50/50 guess in my opinion as it nears the apex of this pennant pattern.

Gold 4 Hour Chart
Gold has held up much better than other metals and commodities and I feel that is because it’s still seen at the REAL safe haven. But reviewing the chart Im starting to see bearish price action beginning to take place.

SP500 Futures – 10 Minute Chart Going Back 8 Days
Last week the SP500 continued to show signs of weakness. Any bounce in the market was on light volume and that is because the sellers took a break and let all the small traders buy the market back up. But once the market moved up enough then sellers jumped back in and unloaded their shares.

Last Thursday I sent out an update to members pointing out that lower prices were to be expected. I came to this conclusion because of many data points. Looking at the chart you can see sellers are clearly in control. The SP500 bounces high enough that it reached a key resistance levels going back 5 days. Also the 200 period moving average was at that level. To top that off my sentiment reading for the herd mentality was at a point which sellers like to start dumping their shares again.

Weekly Market Trading Conclusion:
In short, I am getting more bullish for a bounce as the market falls. But once we are into day 3 or 4 of a bounce we must be ready to take profits and/or look for a possible short setup.

Get Chris' free weekly reports at The Gold and Oil Guy.Com

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Learn Why Gold is About to Fall

David Banister has been a Gold Bull since November 2001 based on Elliott Wave patterns and currency concerns as well. Since that period nearly ten years ago, he has followed and forecasted the patterns in gold and has been amazed at the clearly definable trends both for large moves to the upside as well as corrective patterns. Here is what David is saying he sees happening to gold.......

Most recently we had the last pivot bottom in January at 1310 areas, which I labeled as a “Wave 4 bottom” with regards to the most recent 5 wave pattern to the upside. In the longer term view, Gold has been in a long uptrend since the October 2008 crash lows of $681 an ounce, and I have it now in the final 5th wave up of a larger degree 5 wave move since that time. Nearly 32 months of general uptrend with the occasional corrective pattern to the downside to kick the bulls off.

The issue now though, is that 5th waves in a final 5th wave pattern are very difficult to predict and they can extend and run higher than usual, or they can “truncate”, which means they are shortened much more than usual. In the near term, gold investors want to see Gold break out over $1551 in order to avoid what looks like a potential “truncated” top in Gold at that level. What happens is the Bulls run out of gas, and the final 5th wave up gets tired and stops short of the normal destination, catching both bulls and bears off guard at the same time.

Below is a graphic of what this would look like in the current Gold Bull Market with the recent top at 1577 as wave 3, and the 1551 area as a truncated wave 5 top:

I recently wrote about this for my paying subscribers at TMTF in order to make sure they are “prepared like a Boy Scout” for a possible large correction. The other view I have had for a while is that we would surpass the 1577 highs and run up to a minimum of 1627 for the top of this 5th wave, with potential to run another $40-$70 higher in a throw over top pattern. The bottom line though is you need to be prepared for a coming top in Gold, which will be followed by a multi-month correction that most will not see coming. As it stands now, I can’t find too many Bears on Gold anywhere on the planet…and that is typical of 5 wave tops.

If you would like to be kept abreast of intermediate Gold pattern forecasts, (As well as SP 500 and Silver) take a look at Market Trend Forecast.com today and get a 33% coupon discount to subscribe good for 24 hours. Or, you can sign up for the occasional free reports as well.

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Understanding Where we are in the Silver Bull Market

Last August David Banister told his subscribers to prepare for a monster rally in Silver. What else does Banister have to say?

From guest analyst David Banister........

At the time of my forecast silver was $18.73 per ounce. I drew up a chart and predicted a huge rally to $29 an ounce, and we ended up at $31 or so just a few months later. This was entirely a crowd behavioral move that I foresaw in advance, based on patterns that R.N. Elliott developed in the 1920’s and 1930’s. My theory was besides the crowd pattern (a 20 month odd Triangle consolidation), that investor’s would begin to view Silver as “Poor man’s Gold” and buy it. Literally, the idea is as simple as investors will simply think that “Gold is too expensive, but silver is cheap”. That is the explosion power that is behind this move from $19 to $50 an ounce since late August 2010.

Below is the original chart I sent to my subscribers outlining this triangle pattern and the likely move:

After Silver ran hard and fast, it left a lot of talking heads on CNBC and everywhere else scratching their heads and wondering what just happened. If you learn and understand the basics of Elliott Wave Theory, you can begin to foresee what is about to happen and stop scratching your head all the time. Watching the analysts on CNBC is like watching the Monday morning quarterbacks following an NFL Sunday. After that massive silver run from $18 to $31, it was time for a correction and I called for $25 to $26.50 as likely in a normal pessimistic crowd wave 2 pattern down. Once that completed, I sent my subscribers the chart below outlining another Bull wave to $39-$45 per ounce:

Silver then eventually ran to $45 per ounce in April of 2011 and had a brief spike to near $50 to test the all time highs just in the past week or so. The action has been wild since then, because after a wave pattern from $18 to $31, then back to $26, then up to $47… the crowd will begin to turn mildly pessimistic in a current “wave 4 “ correction pattern. This is when you will begin to hear excuses for Silver dropping, including believe it or not blamed on the death of Osama Bin Laden. In truth, whatever happens near term to explain the current correction in Silver is simply Monday morning quarterbacking. Using the current days headlines to explain the action that I already know is coming. Other excuses are the change in margin requirements on silver contracts and the squaring of positions at end of month etc.

I expect Silver to correct to the 40 to $42.75 areas based on my Fibonacci work and Elliott Wave views, and after this 4th wave consolidation we will see a surge to as high as $60 per ounce. Any pullbacks in Silver should be bought here and same with the Silver stocks post haste. Below is my latest chart forecast on Silver:

If you would like to stop scratching your head, get more comfortable where the markets are heading in both Gold , Silver, SP 500 etc in advance, then take a look at Market Trend Forecast.Com , and take advantage of a 24 hour coupon special to subscribe, or just sign up for the occasional but not always timely free updates. Our subscribers learn and earn!

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Can David Banister's "State of the Markets" Prediction Hold Up?

We have been watching David Banister closer then ever this winter. Banister has kept our interest by repeatedly being ahead of the street on so many trades. His easy to understand explanations of his use of the Elliott Wave theory combined with his calls on the indexes and commodities has made our readers a lot of money. So what is Banister saying this week? He just sent over this article and it's a good one.....

I have been forecasting a Mid January top in the SP 500 (Us Markets) for multiple weeks now well in advance. My work had looked for 1285 as a minimal upside rally from the 1173 4th wave lows. The range was 1285-1315, we have been to 1296 but that pretty much should have capped off the rally. Here are some further thoughts:

Copper, Gold, Silver- All topping and rolling over for now. A few weeks ago I began to go bearish on Gold (And with it of course Silver), and the Elliott Wave patterns became very muddy and unclear. This was a warning signal. Also, the inability of Gold to pierce through the 1425-30 highs for a 3rd attempt indicated a triple top failure which I eluded to in an Email bulletin a few weeks back. The Gold, Copper, Silver topping and rollover movements are warning signals to be more cautious. Gold should work down to 1270-1280 eventually, and Silver to 25-26.50 ranges likely.

Small Cap Index- The TZA ETF I suggested on TMTF recently had a huge 2 day reversal rally on Thursday and Friday of this trading week. TZA Closed just over 16 and I see it moving to 19-20. We are long also in my ATP advisory service for insurance and gains potential. The Russell 2000 is rolling over first, which makes sense because the sentiment and strong economic rebound from the summer lows has peaked out. Small Caps are likely to correct the hardest in this wave pattern down, and so we shorted them instead of shorting the large caps or SP 500. To wit, this week the small caps dropped 3.5% and the SP 500 only 0.8%.

IBD 100 - The Investors Business Daily top 100 fell 5.4% this week collectively. A quick scan of the charts on those 100 reveals a lot of topping and weakness patterns to me. These would be considered leader small cap and mid cap growth stocks, and suggests further evidence of continuing correction in the markets.

Elliott Wave theory is scoffed at by many investors because they have been led to believe that Robert Prechter is apparently the only person on earth who has a license to use them. I’ll reserve my comments on his abilities, but you can gather that I tend to often disagree with his views and leave it at that. EWT works extremely well in the right hands, and that is why I launched TMTF last year, to share my views and my methods. This has allowed me to confirm summer bottoms at 1040 this year based on the movement from 1120 to 1040 (Which we also forecast). This allowed me to call a top on November 5th at 1225 after going just over my 1220 predictions made weeks in advance. This allowed me to call a bottom 4th wave at 1173-75 and a resulting rally to 1285 in advance. Not to mention April 2010 and January 2010 tops within days. Still think EWT is bunk? Try ignoring those who are biased and trade their biases. I dont trade Gold, Silver, or the SP 500 futures or indexes… that allows me to remain 100% objective and not force wave counts into my personal opinions.

EWT is not perfect, but nor is any forecasting methodology or technical analysis strategy. They all have their flaws. However, I try to blend in a few elements to back up my EW forecasts, so as to eliminate too many mistakes. Sentiment readings for one, and Fibonacci sequences for another.

Bottom line: I continue to be cautious on the markets and believe the SP 500 will drop to 1170-1180 on the LOW END, with 1210-1229 possible as the shallower end of a correction. The Russell 2000 will take the hardest hit, and probably has another 8-9% downside left before a bottom pivot. We remain long TZA to short that index at 3x multiple over at my ATP service. I have not shorted the SP 500 or large Caps on purpose, because I think the best place to short is small caps. I continue to recommend high cash positions for now (Im about 40%) so that you have money to buy into an oversold wave 2 bottom in the markets when it occurs. Gold will continue to correct with a bounce at 1310-1320 areas likely. I see it getting to 1270-1280 though as most likely.

Large Caps are likely to outperform small caps in 2011, as the bulk of the economic trough and rebound have now occurred and been priced in. Gold may struggle for several months but has a shot at hitting $1500-$1515 by years end, but one month at a time. That said, selective stock picking will always have the ability to trounce the index averages, and that is what I do over at Active Trading Partners.com.

Stay tuned!

If you would like to benefit from learning more about my methods, which have been historically accurate, please check us out at Active Trading Partner.com where you can sign up for free occasional reports.

David Bansiter


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David Bannister: Gold Remains Bearish, SP 500 Appears to Be Topping

Well, our time line for the crude oil pull back is upon us this week. Right or wrong we all fully backed by safe stops being in place. And David Banister appears to be making the same call in gold and the SP 500. His most recent forecasts for the SP 500 and Gold have been calling for interim peaks in both around Mid-January. Gold, he told his subscribers a few weeks ago, was definitely topping and likely to drop now to $1270-$1280 per ounce before resuming the Bull Market advance. The SP 500 he had forecasted a 1285-1315 topping area since the 1175 pivot lows on that index, and we are very close as well in that regard.

Gold has been in a 9 plus year bull market since 2001 and has another 3 years plus left on this Bull run. However, pauses must occur along the way and this should be a 4th wave corrective Elliott pattern if his views are right. This is taking the form of a 3-3-5 correction from the $1430 top. We are in the final 5 waves down now, and it’s about to get ugly near term so strap on your seat belts. His chart forecast is below and if he is right, there will be excellent opportunities to pick up some good Juniors and also the precious metals themselves around that $1270-$1280 area. Following this correction, we could have a run to about $1515 per ounce, and he expects this entire pattern to take 6 months to a year to play out from the $1430 top to the $1270 ish bottoms, and back to $1515.

The SP 500 is completing the final 5th wave movement from the 1010 Jul 1st lows this past summer. This is only the first full wave pattern movement of a big 5 wave leg up from July 1st. What this means in English is we have a near term top likely in the 1285-1315 areas, followed by a wave 2 correction to around the 1175-1180 areas. Sentiment right now is running at major extremes last seen at interim peaks in January of 2010 and April of 2010 where he had also forecasted tops within days of the peaks. Banister is looking for the SP 500 to end up around 1600 on the index after this coming wave 2 correction, but he reminds us to take it one pivot and step at a time. Below is his forecast chartwise:

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What Patterns are Telling Us That Gold is Going Up?

David Banister has been keeping us on top of gold lately with his expert use of Fibonacci and Elliot Wave patterns he has been shareing with us. This gold bull market has been moving in very reliable Elliott Wave and Fibonacci patterns for many years now, but once in awhile the waters get a little murky for sure. Recently we have seen a fair amount of volatility near year end as position squaring and year end machinations take hold. With that said, it does appear that Gold should be poised to power higher near term, and I’m looking for a completion to a 5 wave rally that began from about $1,040 per ounce in February of this year.

Over the past several weeks, I see a clear Fibonacci trading day relationship on Gold’s swings from pivot highs to pivot lows. 8 days of correction, 13 days of rally, 8 days of correction is the recent pattern over the past 5 weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:

Based on the recent patterns, I believe we completed a minor wave 3 from the February bottom at $1424 a little over 5 weeks ago, and had a shallow period of 8 days to complete a wave 4 to $1,330. Now, we are in the final 5th wave up pattern to complete an entire 5 wave move from February of 2010. In the near term then, I’m expecting a pretty strong rally from this recent $1365 area to at least $1,480 per ounce, and eventually a good shot at completing the structure at $1525 ranges. Short term, we should begin a wave 3 up here, followed by a 4th wave correction, and then a final and terminal 5th wave. Below is a multi- month weekly chart view of where I see us heading and where we’ve been.

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Is Gold Headed For a Major Correction?

David Banister of Market Trends.Com has been hitting gold spot on. And we are lucky enough to get another guest post from him. Let's see what David is thinking about the possibility that gold will head to 1480-1525 before a major correction......

Gold has been consolidating other than a spike to an intermediate wave 3 top of $1424, for about 7 weeks or so now. It’s typical to see Fibonacci periods of time as part of consolidations whether it be an individual stock or a precious metal in this case. Gold was overbought at the $1425 pivot highs a few weeks ago, and that terminated what I label a “wave 3″ pattern. This led us into a 4th wave corrective pattern which we remain in now. My worst case pivot low is expected at $1,321 and so far we have seen $1,331 an ounce and then an ensuing bounce to $1370 ranges.

In the intermediate term then, I’m looking for further consolidation likely for another week or so followed by a breakout over $1425 leading to my objectives of $1480-$1525 to complete the entire rally from the $1040 lows in February of this year. Many are starting to get bearish on Gold and Silver up here, and to me that is bullish and indicative of “4th wave mentality”. In a 4th wave, there is growing bearish sentiment, but not so much as to topple the bull structure.

To wit, last week in my ATP service I recommended a brand new Core Position in a Gold,Silver stock and it rallied as much as 40% intra-week at it’s highs. We are in a super bull market for Gold stocks as I outlined in August of 2009, and we have another four years left to go. I’m seeing alot of amazing chart patterns in the Junior space that are in relentless climbs. Owning the the explorers that are finding the Gold is how best to take advantage of the remaining four years. At ATP, we are exposed to Rare Earths, Silver, Gold, and Oil and Gas related plays in our Core Positions. Make sure you own hard assets and precious metals resources one way or another. My silver forecast in late August was basically predicated on the small investor swarming into the Silver market to buy up coins, look for that to continue and Silver to be over $30 in the not too distant future.

Below is my updated Gold forecast using a weekly chart, remember to Keep it Simple!

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How Long and How High for Gold, and How to Play It

From David Banister at Market Trend Forecast.Com......

Regular readers of my articles on Gold over the past few years know that I have a theory on this Gold Bull market. In summary, it’s that we are in a 13 Fibonacci year uptrend that started in 2001, and now we are in the final 4 years of that uptrend. It is in this last 5 year window that I theorized started in August of 2009 that investors really get involved. As the crowd comes in, prices push higher and higher, and then more and more investors come in and so forth.

The very recent rally has pushed us up to about $1,420 per ounce, on the way to my projected $1480-$1520 pivot highs on this leg from the $1040 area in February of this year. Subscribers to my TMTF newsletter have learned about Elliott Wave Theory and how to properly apply it to benefit from both the ups and the downs in various parts of the markets, as well as commodities and precious metals. If I am correct, we are in the 3rd wave up of 5 total waves from the August 2009 $900 per ounce levels. The first leg went from $900 to $1225, the second leg was corrective to $1,040, and now this 3rd wave should complete at around 150% of the 1st wave’s amplitude. In English, the probabilities are for Gold to continue higher to about $1527 per ounce, possibly a tad higher if the typical Elliott Wave patterns take hold, and also assuming again that I am correct in my read of those patterns.

One of the better ways to play this next 4 years of upside with intervening corrections is to look at prospect generator companies. These are Gold, Silver, and Copper explorers that do the early field work in identifying prospects for drilling. They then farm out these projects to willing partners and retain equity stakes and /or percentiles of the project itself. This reduces their need for capital while retaining nice upside for shareholders, and diversifying. When you are a tad long in this current wave pattern’s tooth, this is way to stay onboard, but not go overboard. I have personal ownership positions in a few of these types of companies, and my subscribers are aware of the few that we really prefer. Should one of the projects not pan out, you are not placing your entire shareholder bet on one drill project, and yet if they hit on a few, the upside can be substantial.

In the meantime, below is a chart pattern of where I see this rally peaking out and where I forecasted recent pivots. As we approach these levels, ($1480-$1525), it may be a good idea to pull back on some of your positions whether it be the metal itself or individual stocks.

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The Gold and SP 500 Bull Markets Continue to Leave Investors Behind

From David A. Banister at Market Trend Forecast.Com.....

In my recent forecast updates for my subscribers and also in my free articles online, I have expounded on the virtues of Elliott Wave Theory, which I use as my linchpin for my short and long term views. To wit, back in August 2009 I made it clear that we would enter a five year period of a massive move up in both Gold and Gold Stocks. Gold was $900 an ounce at the time, and is now at $1360 an ounce. I made that forecast based on human behavioral patterns that go back centuries.

Crowds love to all act like a swarm of bees flying together. Everyone hates stocks or sectors when they are down, and the crowd loves them when they are up or going up. Investors like to chase stocks and sectors when they are up high and running near parabolic, but they don’t like to buy large dips or consolidations ahead of moves. Once you learn that Elliott Wave patterns and a few other indicators sprinkled in can give you a heads up on when the crowd is about to jump in, you can basically front run the crowds.

I digress and go back to the Gold Bull Market. The reason I knew in August of 2009 that from $900 Gold we would enter a five year “massive” Bull Run is due to crowd patterns. To refresh, I see Gold as being in a Fibonacci 13 year cycle up that started in 2001. The first five years not too many investors participate in the Bull Run because the prior 20 did nothing. By the time everyone realized in 2006 that Gold mutual funds had compounded 30% a year for five years, it was too late to jump in.

Of course, that is when everyone started buying Gold mutual funds and stocks. The problem is the first move was over, and we had 3 Fibonacci years of chop with no net gains. The crowd gives up around the summer of 2009, and that is when I forecasted a huge five year move to come. So far Gold is up over 50% in 13 months and Gold Stocks are up well north of that. The junior stocks started expanding in volume and price months ago, and that should have been yet another wake up call to investors.

Near term in Gold I’m looking for this current power Elliott wave to land around $1485-$1492 before a strong correction, and the recent pivot at $1312 was yet another short term bottom which will be followed by the last leg up since the $1155 lows this summer. Investors are now waking up and buying Gold and Gold stocks, and this is part of the recognition period during the last 5 years of the 13 year cycle when more and more participants get involved. This is why this Gold Bull is just warming up and by the time it peaks out, it will be like 1999 in Tech stocks. The demand overseas for gold and obviously in China is likely to continue for many years to come, don’t be fooled by the various wave dips in sentiment.

The SP 500 on the other hand is very similar since the March 2009 lows. The Bears have continued to focus on Jobs reports and other ephemeral data and not the big picture. My opinion is the great bear cycle ended in March 2009 at 666 on the SP 500, at least for a several year cycle up. When we hit 666 it was an exact 61.8% Fibonacci re-tracement of the 1974 SP 500 lows to the 2000 SP 500 highs. It took about 8-9 years to correct that 26 year move, and the pattern fits with a “wave 2” pessimistic Elliott Wave bottom. That is why the move since 666 has been stunning, because nobody sees it coming. The correction we had this summer I forecast in mid-April and ended on July 1st at 1010 on the SP 500.

At the level of 1010, we had a 38% Fibonacci re-tracement of the March 09 to April 2010 13 Fibonacci month rally, and a 38% re-tracement of the 2007 highs to 2009 lows. Those types of patterns are not random and in fact are big clues to get long the market. The problem is those patterns are hidden amongst the noise of the markets, CNBC, and all of that useless data. Currently we are in a 3rd Elliott wave up which began at the 1040 SP 500 pivot, and my forecast since has been for 1205-1220 before a corrective 4th wave down. Before it’s all over, the SP 500 may well test the 2007 highs on this new cycle up from March 2009.

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Hot Markets and Commodities, Yet the Small Investor Continues to Miss The Run!

From guest analyst David Banister at Market Trend Forecast.Com.....

All investors can recall the horror during the five months from October 2008 through early March of 2009 as day after day the markets continued to make new lows. That type of catastrophic drop leaves many psychological scars and probably spooked millions of investors out of the stock market for good. To wit, since the March 2009 lows and throughout this new Bull Market Cycle, Investors are pulling money out of equity funds in droves and piling into Bonds. This is the fight or flight mentality taking hold of the herd, and as they continue to disbelieve in the new bull cycle in stocks, the market continues to power higher.

I’ve long been a believer in Elliott Wave Theory, which was developed in the 1930’s by R.N. Elliott. He was a man decades ahead of his time, and to this day his work remains revolutionary in tracking and forecasting market and commodity trends and cycles. This theory forms the basis of my work for market forecasting and trading and investing. While the crowd continues to wait for the next crash, the Elliott wave patterns I’ve been outlining have continued to foretell a bullish move possibly of historic proportions. Taking advantage of this type of move means you need to tune out the noise from CNBC, all of the jobs data, and the negative mantra. Everyone knows that stocks climb a wall of worry, but you have to have a method to let you know to stay long and where best to invest during a super cycle Elliott Bull Wave pattern as we are in now.

My theory back in late February 2009 was that the market was about to bottom and nobody knew it. I wrote an article on 321Gold.com at the time to outline my reasoning and had a chart showing 1200 on the SP 500 as a likely target. At the time the SP 500 was trading around 720 and had not yet completed it’s drop to 666, but was within a few weeks. Interestingly to me anyways, at 666 the SP 500 bottomed and not randomly at all! That 666 figure was an exact 61.8% Fibonacci re-tracement of the 1974 lows to the 2000 highs Bull Cycle. Often crowds act in patterned behaviors that are formed around Fibonacci mathematics. Typical re-tracements are 38%, 50%, 61.8%, or even 78.6%. Combining Elliott Wave patterns with Fibonacci sequences allows me to confirm or help firm up a forecast. That drop over five Fibonacci months completed a multi year cycle from the 2000 highs to the 2009 lows, and it did so right at a clear Fibonacci pivot point. This is why I believe the next many years will be very bullish for stocks, and most investors will not be on board.

Those Fibonacci and Elliott Wave patterns gave me the heads up to start turning bullish, coupled with the sentiment readings which were equally as bearish as the October 2002 bottoms. In addition, there was way too much discussion about deflation. The rubber band in essence was stretched so far to one side on the sentiment gauges and deflation talk, that it would only take a slight shift towards inflation to move stocks much higher.

Fast forward to October 2010, and we now see the ravages of inflation becoming very apparent some 18 odd months later. Gold is at $1350 per ounce, Silver is at $24, the SP 500 is heading back to 1200, Corn, Sugar, Coffee, Copper are all at huge highs. What investor’s don’t understand is stocks are one of your best asset classes in the earlier periods of an inflationary shift, what I would call an inflationary period of prosperity worldwide. Elliott Wave patterns most recently that I outlined on my market forecast service alerted my subscribers to prepare for a massive bull run once the 1094 area on the SP 500 was crossed to the upside.

Given the understanding that inflation would become the new trend, we took multiple positions in Gold stocks and Rare Earth metals stocks ahead of the curve. Some of our recent picks included Hudson Resources at 63 cents in August, now trading at $1.30. Others include BORN at $8, a Chinese Corn based producer of Alcohol that ran to $19 within 7 weeks. We were investing in Rare Earth stocks almost 12 months ago, including REE at $1.80, and it’s now trading over $13.00 a share! Even up to the present time, my ATP service has been positioning our subscribers into Tasman Metals at $1.54, now $2.28 and Quest Rare minerals at $4.10 now $5.50. These moves are happening in stunningly quick periods of time, so being positioned ahead of those moves is crucial.

Gold and Gold stocks have obviously had a very strong move to the upside. Back in August of 2009 I forecasted a massive five year advance in Gold and Gold stocks. This again was entirely based on Elliott Wave patterns I recognized and crowd behavior. Investors will recall the 13 year bull market in tech stocks that started in 1986 when Microsoft went public, and ended in 1999 when AOL was sold to Time Warner for 150 billion. Well, the first five years of the Tech Bull nobody participated except the early investors. Intel and Dell also went public, along with EMC and others. By the time 1991 rolled around, investors kind of woke up and start buying. The problem was they were late, missing the first five years. At that point Tech stocks bucked and kicked up and down with no net gains for three years. Investors gave up again in 1994, and then we began a torrid 5 year rally to 1999. It was not until the last 12 months of that rally that everyone piled in, herd behavior in it’s finest form. Well, we are seeing the same patterns now in the precious metals areas of the market. The final 5 years started in August of 2009, kind of like 1994 in tech stocks. The first 5 years were 2001-2006 where Gold funds returned 30% compounded per year, by the time everyone got on board the funds did nothing for then next three years. Everyone gave up and lost interest, and that was the August 2009 buy signal.

Bringing us full circle, investors continue to shy away from this stock bull market following the five month crash of nearly two years ago. This is exactly the psychology present in an early stage bull market. Going forward from here, I look for the SP 500 to hit 1220 at the top of an Elliott Wave three from the 1040 lows in the summer. That will be followed by a correction pattern and then we will resume the advance to new highs on this bull market stretch from March of 2009. Gold should work it’s way up to $1480-1520 if I’m right on it’s bull move from the $1155 lows this June. Below we have a chart of the SP 500 on a long term basis, and it is currently in the third wave up from the 1010 lows on July 1st. This wave pattern is powerful and should run to at least 1220 intermediately. In time, this multi-year bull market could power to all-time highs and really upset the Bears.

Inflation is taking hold around the world, and stocks are one of your best asset classes to participate. You can follow along by registering for free weekly updates at Market Trend Forecast.Com.




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