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.

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.

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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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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Where Now for Gold and Silver?

Well, that was fun wasn’t it gang? A huge drop in silver from $49.75 to the $32 ranges after 8 months of rallying from 19 to near 50. A 150% gain in Silver in eight Fibonacci months, sounds like a pretty overbought situation. Gold in the same time frame lagged badly, but all of that was predicted by me late last August due to the consolidating “B wave” in Silver that was preceding what I felt would be a “massive rally” in the metal. Quite simply I said, investors will view silver as “cheap” relative to Gold and they will buy it instead of gold. 

I realize that makes no logical sense, but since when are the herd behaviors ever logical?

What everyone wants to know still is what is next for both Gold and Silver in their bull markets? When dealing with human behavioral patterns, it’s as much art as science, so I do my best to ferret out the coming pivot highs and lows, and here is where I am at right now.

Gold should work higher in a current “5th wave up” from the $1462 pivot lows to a bogey target of $1627, and once that is hit or close investors should be enjoying rallies in the Gold and Silver stocks but looking to trim back positions aggressively assuming I’m right. Where that forecast could go wrong is if we close much below $1440 on spot gold before attacking and piercing through the old $1577 highs. 

As this final thrust up completes, not too many people will be on board because they all just got spooked out of the market with the silver crash. I expect a bunch to come in near the end and they may get smoked as Gold peaks out and reverses hard into a stronger correction than what we just saw. My subscribers will be informed at every pivot along the way as to the best action to take.

Silver will have the potential now to rally back up to the $38.70-$41.50 ranges if I’m right about the Gold forecast. We had an interesting retracement in Silver that was between two Fibonacci pivots of 61.8% and 78.6%. Often in my forecasting career, I have seen retracements that end up around 71% of the prior major wave pattern up and therefore they throw off many Fibonacci watchers who are looking for that lower or higher level to make their entries. This is partially why I think Silver has bottomed out in price, but traders are hesitant to make a bold move here.

Silver and Gold have another three Fibonacci years left in a 13 Fibonacci year bull market cycle, so other than some intermediate term tops and bottoms and chopping action, I am looking for much higher prices by the year 2014 in both metals.

Below is my outlook for Gold intermediately:

If you would like to be informed 3-5 times per week on SP 500, Gold, and Silver intermediate direction and price movements in advance… take a look at Market Trend Forecast.Com today for a 24 hour 33% off coupon, and/or sign up for our occasional free updates.

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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.

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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:

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How Much Violence is to Much Violence For Crude Oil Prices?

World oil markets took prices higher overnight as pro Mubarak demonstrators took the streets of Egypt Thursday bringing a new level of violence and adding to the tension. But the added tension does not appear to get the attention of Suez Canal operators or customers as the canal maintains it's normal 50 ships a day average. 49 on Thursday and even 56 one day this week. Traders in the U.S. still seem to be more concerned with gasoline inventories being at an 18 year high in this country.

Maybe the news should be focused on the natural gas trade at this point. Record cold temps in my region, the desert southwestern U.S., have us experiencing natural gas shortages. A wake up call for those calling for wide spread use of natural gas as a vehicle fuel. We have a lot to do in the form of getting infrastructure in place before we can even begin to make that move. Is Washington listening? Gold may be the trade of the day as gold miner stocks continue to under perform. Gold stocks underperformed the price of gold this week and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold. And it looks like Fridays employment data will be front and center for gold and the markets today.

But we are ready and here is our numbers for the last day of trading this week......

Crude oil was slightly higher overnight as it extends this week's trading range. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If March renews the rally off last Friday's low, January's high crossing at 93.46 is the next upside target. Closes below the 10 day moving average crossing at 89.14 would temper the near term friendly outlook. First resistance is Monday's high crossing at 92.84. Second resistance is January's high crossing at 93.46. First support is the 20 day moving average crossing at 90.20. Second support is the 10 day moving average crossing at 89.14. Crude oil pivot point for Friday morning is 90.86.

Natural gas was steady to slightly higher overnight as it consolidates below key resistance marked by the 20 day moving average crossing at 4.463. Stochastics and the RSI are oversold but are neutral hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 4.463 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. First resistance is the 20 day moving average crossing at 4.463. Second resistance is the reaction high crossing at 4.601. First support is last Friday's low crossing at 4.252. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Friday morning is 4.386.

Gold was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI are bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 1354.45 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is the 20 day moving average crossing at 1354.45. Second resistance is the reaction high crossing at 1394.70. First support is last Friday's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Friday morning is 1345.00.


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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:

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.

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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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A Stunning Silver Forecast Comes True, What Next?

From guest analyst David A. Banister at The Market Trend Forecast.com.....

In latter August I penned a forecast for my subscribers to TMTF on Silver, and below is a brief excerpt from August 31st:

I believe Silver is about to stage a pretty large advance based loosely on the Elliott Wave pattern I see unfolding after a 9 odd month consolidation. (Obviously, there are also fundamental fiat currency/debt events worldwide that give it the underlying bull chart pattern). Since the average person can’t run out and buy an ounce of Gold for $1,240 tomorrow, as the unfolding of the fiat crises continues to enter the public psyche, you will see a strong populace movement into buying silver, silver coins, etc. To wit, many silver stocks are moving up strongly of late, signally an imminent breakout of this precious and industrial metal.

The triangle pattern has taken nearly 9 months so far, and a move over $19.50 could start a multi-month run targeting $26-$29 per ounce for starters before a broad pullback.

I bring this up now, some 11 weeks later because Silver did in fact rally up from around $19 per ounce to $29 per ounce, and this was forecast well in advance using my crowd behavioral methodology and pattern recognition. The explosion in price I predicted happened much faster than even I expected, but does show the power of the crowds as they take hold of a new trend or a perceived trend and run with it. Part of the theory to be long silver also had to do with it being “poor man’s Gold”, which I indicated in my forecast. This is also crowd psychology in it’s finest form. People perceive Gold to be “too expensive”, but they can buy silver for only $29 an ounce. To wit, most investors do not really understand the difference between a stock that has 2 billion shares outstanding and one that has 20 million shares outstanding, they only care about price. They often think if a stock is $2 it’s “cheaper” than the stock at $100, little do they realize that a $2 stock that goes to $1 is a 50% loss, but they perceive that as a small risk due to the price. With Silver, you have the mom and pops running out and buying it because it’s “cheaper” than Gold.

Now that Silver has run to $29, my target, and then dropped back, what should expect next? Well, we are in that “broad pullback” I mentioned back in late August that would occur once $29 was hit. Technically speaking and looking at typical crowd behavior, I am expecting consolidation to continue for awhile under $29 per ounce. I call this recent pattern an A B C rally, and once the C wave ends at $29 in this case, forecasting the next move is extremely difficult and can be exasperating. The C wave ran from $19 to $29, and at the tops of those moves everyone is bullish and breathless. Figuring out how the crowd behaves after those patterns is similar to pulling a rabbit out of a hat. With that said, I would expect a 38-50% retracement of the $10 move to about $24 an ounce worst case, and then we should re-attack the $29 highs and likely move into the $32-$34 per ounce range within the next 60 days or so. Silver will continue to out-perform Gold for the foreseeable future as well if I’m right. It appears by my chart below that we already had our initial corrective low, and now we will consolidate and break out.

Consider subscribing to our free reports today by going to Market Trend Forecast.Com, and there you can take advantage of a one time coupon as well. I cover the SP 500, Gold, and Silver on a regular basis.

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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.

Subscribers to David Banister's website get weekly updates and regular intra-week commentary as needed, please consider subscribing.

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

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

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

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

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

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

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

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

Dave Banister- The Market Trend Forecast.com


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

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Trends for Stocks & Commodities: Gold, Oil and Indexes

Stocks and metals have been on a steady rise this week. The US Dollar drifting lower has helped to add fuel to the oversold bounce in equities and metals we are seeing.

Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.

If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.



Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.



Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.



US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.



Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.

All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.

Just click here if you would like to receive these free trading reports from The Gold and Oil Guy Chris Vermeulen at The Gold and Oil Guy .Com

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