Gold Thoughts by da bear

Gold Thoughts
A Report by da bear

Personally, the past few days for gold have been sluggish. A draw down to $1,350 one day then a bounce. Gold has worked its way around the $1,360ish level for a few days but no real
conviction either way...

The dollar refuses to go down, so perhaps some of the bullishness in gold is dissipating.

looks like micro-term support is at $1,350 with short term support at $1,330 and intermediate term support at $1,306ish (the recent low) and quite possibly $1,250-$1,270.
Below that are more cyclical low support levels at $1,050 and $1,150 with probably secular support at around $850 an ounce.

here is a good gold article with some good charts: http://www.kitco.com/ind/Wagner/feb092011.html

I have posted circulated this, posting it here a few days ago... I like his elliott wave count, but I think that his wave V is wrong. It should probably end at the top of the channel (as waves I and III did). That would make the $1,600-plus area a good ending point for wave V and the entirety of wave 'C' of B. if wave 'C' equals 1.62 times wave 'A' then a possible target high would be $1,953. I am now believing that the rise from 1999/2000 to March 2008 was wave 'A' of a VERY large B wave rally off the January 1980 highs. Wave 'B' involved the rather steep sell-off into November 2008. The rally since has been noted by fits and starts in the price movement and general bullishness by investors and giddy buying by gold bugs.

We could again see a spring top. If not, then Martin Armstrong's call for a June low for gold may turn out to be an inverted signal (meaning a June TOP). From whatever high is reached then a wave C will be a "crash-like" scenario with target lows equaling around 1.62 times the CYCLE Wave A decline from $850 to $250. Earlier I calculated that if $1,953 is the high then $981 would be the low.


As gold was getting pummeled a few weeks ago I started to call for a short-term rally. Gold was then trading at $1,321 or so... gold then got down to $1,306 a couple of days later but has risen since then. My target for a short-term rally high was $1,375 and today's intraday high was $1,369.90 -- decently close to my target.

Now let's see which way gold goes... if it can break through overhead resistance then a final rally is ahead. A push above the previous high of $1,430 or so should be a victory for the gold bugs.
On the other hand, a break below the lower trend line from that article would prove troublesome for bulls. That lower trend line is just above $1,300 but it is rising fast. Should approach the $1,350-$1,360 area soon.

Any further rally in gold then should be confirmed by silver. Using the same metrics as I did for gold, a wave 'C' rally could go as high as $36 or so for silver.

The resignation of Hosni Mubarak means that "gold as the fear play" is on hold somewhat. Dollar bearishness is also on hold meaning that the precious metals need to rise on their own merits.

I am following GDXJ (the ETF to play the gold junior mining sector) and it has been taken apart the past few days). It has broken down but it still off the recent lows.

There is a good article on NICKELS that should be noted.
Here is a link: http://www.survivalblog.com/2011/02/the_nitty_gritty_on_nickels.html

Nickels and Fiat Metals in general could turn out to be the way to play 2011.

Nickels offer the best value, but pennies are really really heavy. So if you can't break the backs of your global banksters at least you can break the backs of your local bank tellers. lol


Stocks: Previously, I have stated that the DJIA could rally as high as 12,500. It appears that this is still the case, but it is probably too late to be the hero...
Paul Tudor Jones has been rumored to have called the top. George Ure picked up on it, and he mentions that it is close to Robin Landry's target high.

here is the link about Mr. Jones: http://www.businessinsider.com/rumor-ptj-is-calling-a-top-2011-2

From an Elliott Wave perspective, the best count so far (agreeing with EWI) is that the rally of the March 2009 lows is a MAJOR WAVE 2 which has consisted of a 3 wave counter-trend rally with the wave 'b' decline consisting of the FLASH CRASH. Or, if I was correct earlier, then the FLASH CRASH was a wave 4 with the 997 intrad-day decline being a wave iii of c of that downtrend.

Ok, wow. I just printed out a big charts chart of the DJIA. It appears that a full five waves are in if you count the Flash Crash correction as part of the wave 4. The bounce off 10,000 then was the start of wave 5. what you want to do then is count the high just before 11,000 as wave 3 high, then the initial dip as wave a of 4, a slightly higher wave b, and the flash crash as the wave 3 of 'c' down.
Originally, I counted the Flash Crash as the wave 3 (correctly). I also posited that the rest of the correction would be consist of wave 'd' and 'e' after that wave 'c'. On yelnick I posted, somewhat tongue in cheek that a wave 'g' was possible in which stocks rallied and where gold would hit new highs. guess that is another alternate count.

But yeah, I can see where Paul Tudor Jones is coming from.

here is a link to a big charts chart of the DJIA. you can do your own wave count off the low.

link: http://bigcharts.marketwatch.com/print/print.asp?frames=0&symb=djia&time=12&freq=2&country=us&style=320&default=true&backurl=%2Fadvchart%2Fframes%2Fmain.asp&prms=qcd&sid=1643

So, based on Elliott Wave analysis (which Paul Tudor Jones uses) the DJIA should be topping out.

For the rest of the bear market in stocks the long-anticipated wave 3 of 3 of 3 down that Prechter has been talking about should be here.
A great outline of the potential of wave 3 down would be to use the chart in At The Crest of the Tidal Wave (by Prechter) as a key. Figure 5-7 shows a great alternate count for the Grand Super Cycle Bear Market. Ironically, not only is at an alternate count, it is the most alternate of alternate counts in that book. He states that the chance of this happening is virtually nil.

Figure 5-7 basically turns this bear market into a bigger version of 1987.


This is also supposedly a time frame for a turn date. It appears that Paul Tudor Jones is right and the stock market is topping out.




da bear

Fiat Metals: Change changes everything.