Oil N'Gold: Crude Oil Weekly Technical Outlook For Saturday Nov. 6th

Crude oil finally broken out of the consolidations from 84.43 and resumed the up trend to as high as 87.43. The close above 87.15 key resistance indicates that medium term rise is resuming. Initial bias remains on the upside this week and further rally should be seen to 100% projection of 64.23 to 82.97 from 70.76 at 89.50 next. On the downside, below 85.96 minor support will turn intraday bias neutral and bring retreat. But break of 79.25 support is needed to signal reversal. Otherwise, outlook will remain bullish.

In the bigger picture, the close above 87.15 key resistance indicates that whole medium term rebound from 33.2 has resumed. Such rise is treated as the second wave of the consolidation pattern that started at 147.27. Further should now be seen towards 50% retracement of 147.27 to 33.2 at 90.24 and possibly further to 61.8% retracement at 103.70. On the downside, break of 64.23 support is needed to confirm that crude oil has topped. Otherwise, we won't turn bearish.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

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Stock Market and Commodities Commentary For Friday Evening Nov. 5th

The S&P 500 index closed higher on Friday as it extends this fall's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the 62% retracement level of the 2007-2009 decline crossing at 1234.75 is the next upside target. Closes below the 20 day moving average crossing at 1182.06 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1224.20. Second resistance is the 62% retracement level of the 2007-2009 decline crossing at 1234.75. First support is the 10 day moving average crossing at 1191.86. Second support is the 20 day moving average crossing at 1182.06.

Crude oil closed higher on Friday as it extends the rally off August's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the aforementioned rally, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 82.93 would confirm that a short term top has been posted. First resistance is today's high crossing at 87.22. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support is the 10 day moving average crossing at 83.55. Second support is the 20 day moving average crossing at 82.93.

Natural gas closed higher on Friday as it consolidates some of Monday's decline. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. If December extends the rally off October's low, the reaction high crossing at 4.207 is the next upside target. First resistance is Monday's high crossing at 4.187. Second resistance is the reaction high crossing at 4.207. First support is last Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher on Friday and posted another new all time high as it extends this year's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices is possible near term. If December extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the reaction low crossing at 1315.60 would confirm that a short term top has been posted. First resistance is today's high crossing at 1398.70. First support is the 10 day moving average crossing at 1352.30. Second support is the reaction low crossing at 1315.60.

The U.S. Dollar closed higher due to short covering on Friday as it consolidates some of this year's decline. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. First resistance is last Wednesday's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is Wednesday's low crossing at 75.24. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.


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George Soros Raises InterOil Stake

Soros Fund Management just filed an amended 13G with the SEC regarding their position in InterOil (IOC). Per activity on October 25th, George Soros' hedge fund now shows an 11.9% ownership stake in IOC with 5,257,422 shares. This comes after we just disclosed that Soros boosted stakes in two other positions.

Of this total, 1,200,000 shares are represented by call options. Since the second quarter ended, Soros has increased their position size by 53.5%. Interestingly enough, InterOil just yesterday afternoon announced that they would offer convertible senior notes due 2015 and common shares to raise proceeds of up to $280 million.

InterOil has been somewhat of a controversial stock in the hedge fund world. While Soros has amassed a hefty long position, Whitney Tilson's hedge fund T2 Partners has been an ardent detractor of the company as they are short IOC. Soros has clearly been the winner on this play thus far and we'll have to see what happens in the future.

Courtesy of Google Finance


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Finding Opportunity in Marathon Oil

Stephanie Link explains why Marathon Oil's stock dropped after reporting a good quarter and how she advises.



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Phil Flynn: I Was Dreaming When I Wrote This

Forgive me if it goes astray, but when I woke up this mornin', could sworn it was judgment day. The sky was all purple, there were bulls running' everywhere. Trying' to run from the destruction, you know they didn't even care. 'Cuz they say the QE2 billion zeros printed party started, oops out of time! So tonight I'm gonna party like it's 1929. I was dreaming' when I wrote this, the markets ran so fast, but commodities are just a party, and parties weren't meant to last, there is danger all around us, my mind says prepare fly, but for now we must enjoy it and party like its 1929. Yeah, everybody's got a printing press and we could all die any day. But before I'll let that happen, I'll dance my life away. So tonight we gonna, we gonna (Tonight I'm gonna party like it's 1929) Say it 1 more time

Two trillion dollars printed. Oops out of time. No, no. So tonight we gonna, we gonna (Tonight I'm gonna party like it's 1929). Let's get this party started! The Fed is coming out so let’s get this party stared! Forget about the Fed taking away the punch bowl, let’s face it they are trying to get everybody drunk and wow what a party! Remember when the Fed thought that irrational exuberance was a bad thing? With QE2 they want to get us woozy and keep us feeling that way. Of course sometimes when you are drunk you kind of forget about the consequences of the hangover when you wake in the morning.

Stocks hit two year high the highest level since Lehman brothers went belly up. Gold hit a record high! Oil is at the highest level since April! Silver soars! Beans trying for the teens! Forget about tomorrow, live for today and just keep drinking and don’t worry about the consequences. Just as long as we don’t have to wake up. Hyper Inflation! Forget about it! Struggling consumers racked with unemployment and food and energy bills! Who cares! How about deflation in......Read the entire article.



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Bloomberg:Crude Oil Trades Near Two Year High, RSI Signals Reversal

Crude oil traded near its highest level in two years in New York as the dollar headed for a weekly decline against most major counterparts after the Federal Reserve’s decision to purchase more debt to boost the U.S. economy.

Crude’s 6.6 percent rally this week, driven by the dollar’s decline, may be about to end, according to a technical indicator used by traders. The U.S. currency has fallen versus all but one of its 16 most traded peers since the Fed said Nov. 3 it will buy about $75 billion of Treasuries every month through June.

“Underlying demand in the industrialized world is still not enough to justify these price levels,” said Eugen Weinberg, head of commodity research at Commerzbank AG. “But market sentiment is so strong that if the weakness of the dollar persists I couldn’t rule out higher prices.”

Oil for December delivery traded at $86.83 a barrel, up 34 cents, in electronic trading on the New York Mercantile Exchange at 12:51 p.m. London time. The contract earlier rose to $87.22, the highest price since Oct. 9, 2008. Brent crude for December settlement rose 16 cents to $88.16 after advancing to $88.80 a barrel on the ICE Futures Europe exchange in London.

Futures advanced after a U.S. government report showed payrolls rose more than forecast in October. Payrolls climbed 151,000, exceeding the median estimate of economists surveyed by Bloomberg News and following a revised 41,000 drop the prior month that was smaller than initially estimated, Labor Department figures showed today in Washington. The jobless rate held at 9.6 percent, in line with forecasts. Crude oil's relative strength index......Read the entire article.


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Crude Oil Technical Outlook For Friday Morning Nov. 5th

Crude oil was lower due to profit taking overnight as it consolidates some of this week's rally. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If December extends this week's rally, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 82.91 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 87.22
Second resistance is the 75% retracement level of May's decline crossing at 88.07

Crude oil pivot point for Friday morning is 86.08

First support is the 10 day moving average crossing at 82.96
Second support is the 20 day moving average crossing at 82.72


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Commodity Corner: Crude Oil Soars as Dollar Tumbles

Crude oil climbed to a six month high Thursday as the dollar fell on news of the Fed's latest economic stimulus effort. Crude for December delivery added $1.80 Thursday, settling at $86.49 a barrel on the New York Mercantile Exchange (NYMEX). The Federal Reserve's decision to buy an additional $600 billion in bonds contributed to the dollar plummeting to a nine month low against the euro. The dollar has been weakening since late August in anticipation of additional quantitative easing. As more money is printed the value of the dollar weakens, leading to cheaper commodities for foreign currency holders. The greenback fell to $1.42 against the euro Thursday, the lowest since Jan. 20.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) bumped its global oil consumption estimates by 800,000 barrels a day for 2014. OPEC's 5.1 percent, or 89.9 million barrels a day, increase signifies a continuing recovery. Crude futures traded from $84.92 to $86.83 Thursday. Natural gas prices settled up 2 cents Thursday at $3.86 per thousand cubic feet on the NYMEX. Although the U.S. Energy Information Administration reported 67 billion cubic feet in gas inventories for the week ended Oct. 29, analysts predict traders buying gas futures ahead of cooler temperatures. Gas consumption increases in periods of extreme temperatures.

The intraday range for natural gas was $3.74 to $3.90. Gasoline prices also finished higher Thursday, settling 4.15 cents higher at $2.18 a gallon. December gasoline peaked at $2.18 after bottoming out at $2.14.

Courtesy of Rigzone.Com

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Sharon Epperson: Where is Crude Oil and Gold Headed on Friday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil and gold are likely headed tomorrow.



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Stock Market and Commodities Commentary For Thursday Evening Nov. 4th

The S&P 500 index closed sharply higher on Thursday and above April's high crossing at 1203.00. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the rally off August's low, the 62% retracement level of the 2007-2009 decline crossing at 1234.75 is the next upside target. Closes below the 20 day moving average crossing at 1178.68 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1215.50. Second resistance is the 62% retracement level of the 2007-2009 decline crossing at 1234.75. First support is the 10 day moving average crossing at 1187.12. Second support is the 2 day moving average crossing at 1178.68.

Crude oil closed higher on Thursday as it extends the rally off August's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If December extends the aforementioned rally, the 75% retracement level of May's decline crossing at 88.07 is the next upside target. Closes below the 20 day moving average crossing at 82.76 would confirm that a short term top has been posted. First resistance is today's high crossing at 86.74. Second resistance is the 75% retracement level of May's decline crossing at 88.07. First support is the 10 day moving average crossing at 83.04. Second support is the 20 day moving average crossing at 82.76.

Natural gas closed higher on Thursday as it consolidates some of Monday's decline. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. If December renews this year's decline, weekly support crossing at 3.390 is the next downside target. If December extends last week's rally, the reaction high crossing at 4.207 is the next upside target. First resistance is Monday's high crossing at 4.187. Second resistance is the reaction high crossing at 4.207. First support is last Monday's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold soared sharply higher on Thursday and the high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that sideways to higher prices is possible near term. If December extends the rally off last week's low, October's high crossing at 1388.10 is the next upside target. If December renews the decline off October's high, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. First resistance is today's high crossing at 1384.80. Second resistance is October's high crossing at 1388.10. First support is the reaction low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed lower on Thursday as it extends the decline off this year's high. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If December renews the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. First resistance is last Wednesday's high crossing at 78.51. Second resistance is the reaction high crossing at 78.61. First support is Wednesday's low crossing at 75.24. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.


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Why 2011 May Be the Year of the Oil Comeback

From David Sterman at Street Authority.....

Like every investor, I try to read voraciously to get an edge. I'm always on the lookout for investment angles that haven't gotten much press but could eventually turn into a market moving event. So my ears perked up last week when I saw that hedge fund traders have recently been aggressively buying energy futures, betting that we'll soon see oil move up to $100 a barrel. In subsequent days, it's become easier to see the signs of $100 oil popping up on people's radars.

For example, on Monday, Saudi oil minister Ali Naimi suggested that oil prices could move up to $90 without hurting global economic growth, up from a previous perceived ceiling of $80. That's led some to speculate that OPEC will try to maintain production at current levels, even as signs are emerging that oil demand has begun to pick up.

Economic growth in emerging markets like Brazil and China remains robust, which led to a 1.4 million barrel jump in the third quarter, according to the International Energy Agency (IEA) and a 980,000 barrel uptick in Western Europe and the United States. Any further uptick in global demand could push oil demand back up to, or above, supply levels.

Analysts at Merrill Lynch see $100 oil by early 2011 for a more prosaic reason: They believe that the U.S. Federal Reserve's plan for quantitative easing (QE2) will weaken the dollar and raise the price of commodities, particularly gold, silver and oil. [Read: "How The Fed Will Affect Your Portfolio This Week"] The recent move in the dollar is a possible harbinger of things to come, according to Merrill: "We believe that oil is only starting to reflect a weak U.S. dollar against G10, leaving room for oil price rises as emerging market currencies strengthen against the U.S. dollar."

Read the entire article > "Why 2011 May Be the Year of the Oil Comeback"



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Phil Flynn: Inflation Is Good For You

As expected the Fed pumped more money into the economy and seemed to do just enough to exceed market expectations. The Fed said that they would maintain its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer term Treasury securities by the end of the second quarter of 2011. They will do this to the tune of about $75 billion per month. While the estimates of what the Fed would do were all over the board, the average was for the Fed to do $500 billion. The Federal Reserve was very aware of market expectations and aware that the market had priced that 500 billion with the massive move that we saw in commodities and to a lesser extent stocks.

It was clear that the Fed wanted to exceed the expectations so we would not sell the fact and take away some of the inflationary expectations they had built into this market. That's right. Inflation is not the worst thing in the world. At least that's what Ben Bernanke says and he is making it clear that worries about his policies creating inflation are over blown. He says that QE1 did not spark inflation and he does not expect that QE2 will either. In an op-ed with the Washington Post he tries to explain why he did what he did.

He says that, “The Federal Reserve's objectives, its dual mandate set by Congress, are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense......Read the entire article.


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The Market Continues The FOMC March Upward

With the election over and congress divided, it may be difficult for the president to get much done. None of this will take affect until the near year but traders are asking the big question… Will the government work together as a team or will it be a stalemate?

Today’s whipsaw action after the FOMC statement shook things up as it always does. We saw gold, silver, the dollar, SP500 and bond prices go haywire. It took about 30 minutes for the market to digest this news in that time a lot of people lost money because of the wide price swings. Trading around news, I find, is a net losing trade over the long run and I advise never to do it. Rather wait for a trend to form and trade any low risk setups that come your way.

I truly believe that the market has already priced in most news and events which unfold, and that news tends to agree with the overall trend of the market. Of course there will be short term blips on the charts from the news, but they tend to be minor setbacks in the underlying market trend. That being said, the trend is our friend, and while so many are trying to pick a top in the equities market it makes me cringe because they are fighting the trend and the Fed.

Successful trading is done by trading the trend, and during choppy times you may get roughed up a bit and need to alter your strategy for shorter term momentum play, but overall you gotta’ stick with the trend until proven wrong. Once the trend reverses and confirms, only then can you start shorting the market.

Last week we took another long position near the lows on the SP500 as it dipped down to key support with the market internals confirming our entry. This low risk setup gets us into a market at an extreme, meaning we are in the money usually within hours of entry and the market tends to keep well above our entry point until its ready for another surge higher or a break down.

I agree with those of you who think the market is WAY over bought and due for a strong pullback, and I find myself squirming in my chair when I take another long position way up here in the lofty SP500 prices. But over the years I have found that if it’s hard to pull the trigger, then it should be a good trade if all the trading rules have been met, and if it’s a clear chart setup (meaning an easy looking trade) you better watch out!

This chart shows two charts, one of the 10 minute intraday chart covering 6 trading sessions.




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Crude Oil Daily Technical Outlook For Thursday Morning Nov. 4th

Crude oil was higher overnight and trading above October's high thereby renewing the rally off August's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If December extends this week's rally, the reaction high crossing at 86.52 is the next upside target. Closes below the 20 day moving average crossing at 82.72 are needed to confirm that a short term top has been posted.

First resistance is the overnight high crossing at 86.05
Second resistance is the reaction high crossing at 86.52

Crude oil pivot point for Thursday morning is 84.54

First support is the 10 day moving average crossing at 82.96
Second support is the 20 day moving average crossing at 82.72


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Crude Oil Rises a Fourth Day After Fed Move Weakens Dollar

Crude oil climbed for a fourth day in New York, the longest rising streak since September, as the dollar traded near a nine month low against the euro after the Federal Reserve said it will expand stimulus to spur the economy. Crude rose above $85 a barrel to trade near the highest in six months amid speculation of a recovery in the U.S., the world’s largest oil consuming nation. The Fed yesterday said it will buy an additional $600 billion of Treasuries through June. U.S. gasoline stockpiles fell last week to the lowest in almost a year, according to an Energy Department report.

“The Fed is pumping money into the economy and the money doesn’t have that many places to go, interest rates are almost zero,” said John Vautrain, senior vice president at U.S. energy consultants Purvin & Gertz Inc. in Singapore. “That’s pumping up the value of commodities.” Crude for December delivery rose as much as 60 cents, or 0.7 percent, to $85.29 a barrel in electronic trading on the New York Mercantile Exchange. It was at $85.28 at 10:46 a.m. Singapore time. Yesterday, the contract reached $85.36, the highest intraday price since May 4. Prices are in the longest rally since a four day run through Sept. 27. Futures have gained 7.5 percent this year.

The dollar yesterday touched $1.4179 against the 16 nation euro, the lowest since Jan. 26, and was at $1.4132 today. A decline in the U.S. currency bolsters the investment appeal of commodities as a hedge against inflation......Read the entire article.


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Commodity Corner: Crude Oil Passes $85 Mark

December crude oil surged past $85.00 Wednesday, thanks in part to an expected move by the Federal Reserve that should have a bullish effect on oil. Oil settled 79 cents higher to end the day at $84.69 a barrel after peaking at $85.36 and bottoming out at $83.57. The Fed on Wednesday afternoon announced a decision to buy $600 billion in government debt by mid-2011.

The central bank's action, commonly called "QE2" to reflect the Fed's second attempt to stimulate the economy by printing more money through a policy of "quantitative easing," is meant to induce businesses and consumers to borrow more from lenders. Because more money will be in circulation, it should also devalue the dollar. Consequently, oil and other commodities priced in dollars are expected to become a better buy for those holding other currencies.

Also supporting oil was a weekly U.S. Department of Energy report observing that the country's gasoline stocks fell again last week. December gasoline futures consequently rose three cents to settle at $2.14 a gallon. According to the Energy Information Administration, U.S. gasoline inventories remain relatively high; however, they have declined sharply and continuously for five of the past six weeks.

EIA attributes the decline to reduced imports from Europe and Canada as well as higher than average domestic refinery outages in September and October. Gasoline traded from $2.11 to $2.15 Wednesday. Natural gas for December delivery slipped three cents to end the day at $3.84 per thousand cubic feet. During Wednesday's trading, natural gas traded within a range from $3.79 to $3.90.


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Matt Nesto: Where is Crude Oil and Gold Headed on Thursday?

CNBC's Matt Nesto discusses the day's activity in the commodities markets, and looks at where oil and gold are likely headed tomorrow.



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Traders View QE News as Neutral to Bullish for Stocks

The U.S. stock indexes closed higher again today. Stock traders viewed the QE news as neutral to bullish for stocks, and mostly had the news factored into prices. The indexes are at or near for the move and multi month highs. The stock index bulls have the solid overall near term technical advantage as price uptrends are in place on the daily bar charts. Traders are now anxiously awaiting Friday morning's U.S. jobs report. Trading action in the stock indexes could become more volatile late this week.

Crude oil closed up $1.16 at $85.06 a barrel today. Prices closed nearer the session high today and hit a fresh six month high today. Prices also produced a bullish upside "breakout" from the recent sideways trading range. The bulls have gained fresh upside momentum.

Natural gas closed down 3.0 cents at $3.84 today. Prices closed near mid range today. The bears still have the solid overall near term technical advantage. However, technical odds are increasing that a market low is in place.

Gold futures closed down $16.90 at $1,340.00 today. Profit taking pressure and position evening ahead of the FOMC "QE" statement Wednesday afternoon was featured. The gold market did recover half of its losses in after hours trading following the QE announcement, which had a package that was at the high end of what the market expected. A weaker U.S. dollar index after the QE announcement also helped to lift gold up from lower price levels.

The U.S. dollar index closed down 38 points at 76.51 today. Prices closed near mid range today and did not a fresh contract and multi month low. The QE package announced by the Fed today was a bit larger than expected, which was dollar bearish. However, prices did close well off the daily low. Dollar index bears have the firm overall near term technical advantage and gained some fresh downside momentum today.


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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.

Today he is offering a 2 day only 12 months for the price of 6 months special in celebration of the US mid-term elections today. Enter “1246month” in the coupon field upon joining. You can also sign up for our free reports at Market Trend Forecast.Com


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Phil Flynn: Crude Oil After QE 2

People are finally starting to get it. And that is that the Federal Reserve policy moves markets and that quantitative easing drives up the price of oil. Most had never heard the term "quantitative easing" when the Fed made their move to print money the first time in March, 2009. The Fed made this move to try to save the economy from what they thought was leading us to a deflationary depression. For those of you who still need enlightening, quantitative easing is basically the monetary policy of last resort. When even zero percent interest rates fail to generate economic activity, the central banks flood the banks with excess cash reserves by buying back paper debt the banks hold with freshly printed money.

The hope is therefore, that these banks will in turn lend that freshly printed money to businesses and you and I, who in turn will expand and spend, thereby, hopefully, hire people and create more jobs. It also hopes to take away that deflationary mood by devaluing the U.S. dollar making commodities more expensive. Quantitative easing by the Fed is the greatest economic story of modern times. Back in 2009 when I tried to explain this concept, many looked at me as if I was from outer space. QE was a mystery to them and all they could figure was it was those evil oil and commodity speculators that were driving up prices. Prominent oil bulls went as far as saying the value of the dollar had nothing to do with the value of crude.

They seemed to believe that the sudden surge oil was due to the world hitting its peak ability to get oil that was running out. Others railed against speculators saying they caused the run up in prices yet failed to mention the dollar or the financial crisis when they spewed their diatribe to anyone who would listen, even Congress. Now of course the world is more familiar with the inflationary impact of quantitative easing. In fact if they were not, well they got a crash course after the last Fed meeting......Read the entire article.


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