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.

David Banister: The Dollar Bull Monkey Dance Will End Badly, with a QE3 party?

Interesting to watch all of the Silver and Gold Bears running out into the streets from their caves beating their chests due to the silver shellacking we just saw. Getting jiggy with the US Dollar rally is all the rage right now, and stomping on the precious metals Bulls is the hot sport. The only problem is calling for a crash after a crash is kind of like picking the winner of the NCAA tournament at your office the day after the tournament ends. It’s rare to get a crash on top of a crash, and trying to predict any crash is a fool’s game anyways.

The reality is the US can’t even keep their continually rising debt ceiling in check let alone run a normal break even budget. The constant calls for the end of Q2 are kind of funny, because in one form or another, we will see a Q3…....call it what you will. Getting on board now with being bearish on silver or gold and bullish on the US dollar is probably going to be short lived near term. 

One of the confirmations I look for at bottoms is not just with my Elliott Wave patterns or charts, it’s headlines, forecasters, and erstwhile market seers are going the same direction and high fiving each other. When everyone stops trying to call the top in Gold and Silver, then we will probably have a major top in 3 years or so, but not yet.

The dollar should bounce a bit higher yet between 76.20-77 ranges on this chart below then resume the decline......Giving the Bin Laden news credit for the Dollar rally is a bit silly to say the least; it was overdue no matter what the news of the day was.

The bottom line is that Silver was likely to top in the $45-$47 per ounce range after a huge rally from $26.50 whether or not the COMEX raised equity requirements. I had forecasted a run to the $45 highs way back in the mid 26’s for my subscribers. I had mentioned that as we approach those highs, predicting the next “D wave” correction would be very difficult indeed. Certainly the COMEX raising equity requirements made that D wave that much more difficult to assess. The fact that they did it four times in one week certainly sped up the correction and caused an “overthrow bottom”.

Now if we can step back and take a deep breath, we can see that Silver roughly retraced a Fibonacci 61% of the rally from 26.xx to $49.xx and this is typical of a major wave correction in sentiment and price. Gold has so far retraced 61% of its prior 3rd wave up, and that does happen as well. Investors and forecasters simply like to use the day’s headlines to explain the action, so they can feel justified with what just occurred.

I believe that the headlines don’t much matter during rallies or corrections. Instead what matters is typical crowd behavioral patterns and trying to outline pivot highs and lows as best as I can for my paying subscribers. With Gold’s recent bottom at 1462 being a likely “A Wave” of an A B C correction, we then saw a “B wave” rally as I forecasted would occur to “About $1520 or so”, and then a C wave so far to a higher low than $1462. I thought the pullback from the $1520 area would bottom at a higher level than $1462 and so far that is still the case. I am looking for Gold to rally past $1577 and complete a large 5 wave rally from October of 2008 at $1627 or higher. At that time, or close to that time, you will then be wise to take a fair amount of cash off the table.

Indeed, we have had a stellar rally in Gold and Silver from the October 2008 lows and there will be eventually longer periods of consolidations and corrective wave patterns to work that off. However, my theory has been that we are in a 13 year bull cycle for the metals and this is like 1997 in the Tech stocks, still a few good years left and probably one of those 1999 years is still in front of us for the better gold/silver junior exploration companies. 

Certainly after rallying from $681 in October of 2008 to the $1577 recent highs of April, we are getting a little long in the tooth on this multi-wave pattern to the upside. This next top at $1627 or higher will be followed by a multi-month corrective pattern, and I’ll keep my subscribers on top of the coming moves as best as possible. Consider joining us now and save 33% off the annual subscription covering Silver, Gold, and the SP 500 with a 24 hour limited offer at Market Trend Forecast.com and or sign up for occasional weekly reports.

Share

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


Share

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:

If you would like to benefit from learning more about Elliott Wave based forecasting using David Banisters methods, which have been historically accurate, please check him out at Market Trend Forecast.com There is a coupon available if you’d like to subscribe or you can sign up for free occasional reports.

Share

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.

Just Click Here if you’d like to stay updated on a more frequent basis, you can subscribe to David Banister's weekly reports at Market Trend Forecast.Com


Share

Crude Oil: Is A Breakthrough or Breakdown Coming?

Over the last three months, crude oil prices have acted like a dog with a shock collar around its neck. One minute it's barreling up a hill at warp speed straight for the mailman at the top of the driveway. And then...... ZAP! It's jolted by an invisible electric fence and sent scampering right back down to the place it started. Talking numbers: the market has been range bound between $75 and $65 per barrel.

Which begs the question: Who controls the collar? According to the mainstream experts, oil prices are in a classic holding cell created when two opposing fundamentals reached a standstill. Here, the following October 9 Wall Street Journal explains: "Crude Torn... the market is unsure whether oil is a commodity that should be influenced by supply and demand, or whether it's an asset class that is determined by equities and currencies."

If the former, then energy prices should turn down: U.S. distillates stocks are at a 23 year high, while 2009 demand figures show a CONTRACTION of 1.7 million barrels a day. If the latter, energy should rise alongside a rallying stock market and falling U.S. dollar. Problem is, there's no way of knowing which "IF" applies until AFTER prices break out in a meaningful trend. And even then, the fundamental lines are a blur.....read the entire article and charts.