A Technical Update on the Mini Crash in GOLD

If you follow one trader for gold trades make it COT staffer David Banister. Today David shows us what he sees "in the waves"......

Let’s make one thing clear; nobody I know including myself predicted that Gold would drop from 1690 to 1625 inside of 48 hours this week. That was not in the charts and so I won’t even pretend I was going to see that train coming through the tunnel.

With that said, let’s try to let the dust settle but take a look objectively at some possibilities.

1. We all know that some FOMC minutes released did in fact cause some major downside in GOLD based on potential for eventual end to QE in the US down the road. It did cause stops to trigger, probably some margin calls, and then more stops creating a mini crash of near 4% on the Metal.

2. The ABC pattern appeared to be completed at 1634 last week, especially when we rallied over 1681 pivot. A brief dip to 1625 spot took place this morning early, and we now trade again around the 1631 pivot.

What are the technical options?

Well if we stick with traditional Elliott Wave Theory, we can see a potential 3-3-5 pattern still unfolding and wave 5 of C is now in play. 3-3-5 patterns have 3 waves down, 3 up, then 5 down to complete the entire ABC Structure.

To confirm this, we will want to see GOLD bottom here fairly soon in wave 5 of C.

Below is the updated chart of GLD ETF showing you this pattern. It’s the best I can do right now. I will keep you updated as things unfold. To be sure, I count this as cycle year 13 in the Gold bull market and I had Gold peaking in June of 2013 at 2280-2400 ranges per ounce, but we will have to see now if that is still valid or not based on whether this C wave can hold and reverse hard soon.



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Why the 1470-1474 area on the SP 500 is extremely important for Bulls

The SP 500 has been in a potential 5 wave rally going all the way back to October 2011 lows of 1074. This type of 5 wave rally is common in a Bull Market, but must be watched closely as it could also signal another large correction just around the corner from current 1464 levels on the SP 500 Index. Once you complete a 5 wave bullish pattern, there is commonly a 3 wave corrective decline, therefore determining where those key pivot points are is crucial for market watchers.

If we take a look at the length of the 5 waves in the Rising Wedge pattern from the October 2011 lows of 1074 below, and compare them with other waves 2-5, we can see several fibonacci fractal relationships amongst all of them. This is one of the clues I look for when trying to analyze pivot points and knowing at least what I should be watching for further clues.

In most cases, wave 3 is commonly the largest of a 5 wave structure, but that does not preclude wave 1 from being the largest in the series. To wit, recall the nasty decline into October 2011 that spurred the next big market advance of about 350 points off the bottom. When you have a significant decline preceeding the early stages of a 5 wave advance, often the first wave in the pattern is in fact the largest, which may be the case here.

Let’s take a look at a possible 5 wave count just so we know what to be aware of :

Wave 1: That 350 point advance was a possible wave 1 off the 1074 lows of Oct 2011.

Wave 2: managed to retrace 155 points of that advance into June 2012, a common wave 2.

Wave 3: rallied to the 1474 pivot, which was a 207 point rally. 207 points is about 61% fibonacci relationship to wave 1′s 350 point advance, again another clue.

Wave 4: dropped as we know from 1474-1344, or 130 points. 130 points is also about 61% of Wave 3′s prior advance on the downside.

Wave 5: Theoretically this wave 5 is now from 1343, and if we took 61% of wave 3 advance and add it to 1343, we come up with about 1470.

1470 would then be a double top in the market, stop wave 5 in its tracks… and be followed by a large correction.

So with the above in mind, we advise watching 1470-74 with keen interest as the market will want to take this area out with authority to continue the intermediate bull run. If not, we could be in for some downside trouble…

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The Fiscal Pop-N-Drop for Equities – Look Out

Today’s gap higher in stocks has many investors feeling really good about but will this rally last?

My to the point answer is “Yes” but there will be some bumps and navigating positions along the way.

Looking at the charts below you will notice how stocks are trading up over 4% in two trading sessions and several indicators and technical resistance levels are now being tested. Naturally when several resistance levels across multiple time frames, cycles and indicators we must be open to the idea that stocks could pause or pullback for a few days before continuing higher.

Here is a quick snapshot of charts we follow closely to help determine short term overbought and oversold market conditions.....Click here to check out the charts for "The Fiscal Pop-N-Drop for Equities – Look Out"


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Copper ETFs and Copper Stocks About To Move Big

With 2012 now behind us it’s time to start looking for some new long term investments which have big potential gains in the new year. Copper is one metal that has caught my eye.

The long term monthly chart of the copper ETF JJC shows a potential cup and handle pattern accompanied with bullish volume characteristics. Last year copper traded sideways in a narrowing range. This type of price action tends to bore traders and investors forcing them to look elsewhere for new to trades. The saying is “If the market doesn’t shake you out, it will wait you out”

You can see on the monthly chart that the interest in this commodity diminished. You can tell because of the sideways movement and declining volume. I like to focus on investments which are out of favor but are showing signs of another big trend starting. getting on the train before it leaves the station can make for a fun ride.

Just click here to take a look at the charts, analysis and our best copper stock setup


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2013 Forecast – Tis The Season To Drink & Own Coffee

It's always time for coffee, but today staffer Chris Vermeulen shares his coffee trade with us.....


Coffee prices have fallen more than 50% since 2010 which can be seen through the coffee exchange traded fund symbol: JO. This investment seeks to replicate the returns that are potentially available through an unleveraged investment in coffee futures contracts as well as the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.



Weekly, Hourly and Seasonal chart of JO Coffee Exchange Traded Fund

The top weekly chart shows my price targets for 2013 while the lower hourly chart shows strong on balance volume meaning big money is slowly building a long position in coffee. The small white chart is the seasonal chart of coffee futures showing prices historically rise from January–March, then a correction followed by another rally in to May.

Coffee prices are still in a down trend but it looks as though the end is near and if played properly it could provide up to 100% return on your capital in 2013.



Coffee Futures Monthly Long Term Chart

This chart gives you a bird’s eye view on where coffee prices are trading in the big picture scheme of things.



JO Coffee ETF VS. SBUX Starbucks Share Price:

Lower coffee bean prices has helped lift share prices of coffee companies like Starbucks: SBUX, Coffee Holdings Co.: JVA, Coffee Roasters Inc.: GMCR, and PEET’s Coffee: PEET. But cheap coffee may not be around that much longer and the lower earnings for coffee brewers may be closer than most may think.



2013 Caffeine Conclusion:

In short, I have been watching coffee prices for a bottoming pattern for months and I now feel it is getting really close to a bottom and it could be a great trade and investment in the new year. As for companies like Starbucks it will likely not have much of an affect on the bottom line until the second half of the year though it is something to keep an eye on during earning seasons.

If you want my trading and investing ideas each week along with trade alerts for ideas like this then join my newsletter today at The Gold & Oil Guy.com

Chris Vermeulen

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The New Era of Oil Renaissance....Where Nuclear Failed and Crude Oil Succeeded

 From our friends at EconMatters......

In a continuation of our series on the state of the oil industry we look at some of the other ramifications of what we are labeling the Oil Renaissance in the US, and around the world for that matter. This phrase was first proposed regarding the potential Nuclear turnaround here in the US, where companies like NRG Energy, Toshiba and many more players all along the supply chain were positioning themselves for the Nuclear Renaissance of cheap, and abundant Nuclear energy for the next 50 years.

Well, the natural disaster in Japan changed that movement in the span of a week of just untenable radioactivity readings coming out of Japan. An already uphill battle for changing public sentiment towards the dangers of nuclear energy became an impractical fight from an investment standpoint that relied upon large DOE loan guarantees to attract private investment.

It is ironic, but all these companies spent a lot of time and effort from lobbying to developing strategic partnerships with each other, and in the end, most of that 7 year effort had to be written off by firms. It really shows how firms have to get the industry right; Oil was so much the smarter play. Higher margins, better technology, much easier safety hurdles, and even the environmental fight is much more manageable.

Not to mention the number of jobs created is far more with an Oil Renaissance as opposed to a Nuclear Renaissance, even with a complete buildup of the entire nuclear supply chain. Nuclear projects are just not scalable like oil projects are from a numbers standpoint due to the regulation, lead times for components, inspection, build times, and many more constraints.

No DOE Loan Guarantees: The Free Market at Work

We are going to have a Renaissance in this country, it just happened under everyone`s nose. The free market of high oil prices for the last 10 years made it happen all on its own without government subsidies, and part of the reason that things are going to get real tough for the alternative energy folks over the next 5 years as those government subsidies wind down. They will not make sense from an economic standpoint once oil prices come down considerably, and from a budgetary perspective we can no longer afford this propping up industries that cannot sustain themselves on their own merit in the free market. A 16 trillion dollar debt and climbing means the environmentalists will now be facing an uphill fight on Capitol Hill to have their cause funded by the American taxpayer.

Click here to read the entire EconMatters article "The New Era of Oil Renaissance, Where Nuclear Failed, Crude Oil Succeeded"


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SeaDrill [SDRL] Financial Calendar for 2013

Don't put that calendar away....Seadrill Limited [SDRL] plans to release its financial statements on the following dates in 2013:

February 28, 2013 - Preliminary fourth quarter and financial year 2012 results

May 31, 2013 - First quarter 2013 results

August 30, 2013 - Second quarter 2013 results

November 29, 2013 - Third quarter 2013 results

Please be advised that the dates are subject to change.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

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Now Available....CME Groups 2013 Product Expiration Calendar

OK fellow commodity traders, it's time to start getting ready for 2013. Make sure you bookmark this page, there is no excuse to ever miss a single energy product expiration day.


Just click here to get the CME Groups 2013 Product Expiration Calendar





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Musings: E&P Spending Survey Gives Cheer Not Lumps Of Coal

The annual exploration and production spending outlook survey conducted by Barclays oilfield service stock research team was unveiled a couple of weeks ago.

According to the analysts, global oil and gas companies plan on boosting their E&P spending by 7 percent to a record $644 billion in 2013. That's the good news. The bad news is that almost all the growth in spending will be outside of North America, where the spending outlook is projected to be flat with 2012.

The analytical team at Barclays has been conducting these spending surveys for many years, and the results are anxiously awaited by the industry to see the thinking of managements about future oil and gas prices, commodity demand and where and how much the oil and gas companies figure they can, and should, spend to find, develop and produce hydrocarbons.

The capital spending increase for 2013 would mark the fourth consecutive year of growth, although the amount of the annual increases has varied noticeably. The Barclays' analysts believe, as well as energy company managements, the industry is in the early stage of an extended demand cycle, which will be driven by growth in developing economies.......Read the entire Musings article.


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EIA: U.S. could become the world’s top liquid fuels producer, but how much does it matter?

Significant increases in U.S. production of crude oil and other liquid fuels and the outlook for further growth have focused attention on the possibility that the United States could soon surpass Saudi Arabia to become the leading global producer.

A higher level of U.S. oil production could significantly boost the U.S. economy, and could also reduce global oil prices through its effect on the global crude oil and product market balances. However, regardless of any future crossing of U.S. and Saudi production paths, the timing of which would depend on which particular accounting convention is applied, Saudi Arabia will continue to play a unique and vital role in world oil markets.



Read the entire EIA article

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