All Star Market Timing

The JDV Market Timer - October 30, 2008

10/30/08 (Commentary for Thursday)  Today, 10/30, is a turning point day and we may be finishing the C-wave of an EW a-b-c correction on the daily chart from 10/10 - 3 days for wave A, 9 days for Wave B and 3 days for Wave C - the time symmetry is complete - we could see a move down tomorrow. We are also a Fib 21 days from 10/10 - we'll either see a big move up tomorrow to extend the C-wave or a hard decline to retest the recent lows - I favor the hard decline into next week scenario. I think that the HUI/XAU is leading the way down on the market retest into 11/3-11/4 - could be the lowest risk entry on the senior gold stocks. The Bollinger OEX PVI Indicator again recorded a low value of .53 - VERY COMPLACENT as are the standard put/call ratios. Every rally of more than 1 day since the summer has begun with a buy signal on this indicator ( > 2.00) - but we haven't come close to a buy signal since 10/10. The crash pattern of the XAU is setting up with similarities to October 1987 and Oct 1998- looking for a retest of the lows on 11/3-11/4.  Gold stocks like AEM, KGC and MFN have been excellent intra-day trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU appear to be leading the broad market down in a retest of the recent lows - looking for lows around 11/3. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - Today's large rally could have finished the C-wave of a large 4th wave correction that started on 10/10 - based on a 21 day Fibonacci time count from this low, we should get a turn down around 10/31 - there is also a turning point day on 10/30.
• Silver - Looking for silver to retest its lows next week. 
• Crude Oil - Crude oil pulled back today - could see more weakness into next week - could see $40 sooner than later.
• Bonds -  Could see one more rally attempt before really rolling over.  Bonds are the last great bubble to pop and should be close to the start of a mega-decline. 
• Dollar -The dollar could be in a 3rd of a 3rd wave up from the 3/17 lows.  In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro and Pound are getting crushed. 

Sentiment Highlights:

• The recent daily pattern of  the Bollinger OEX PVI Indicator:  53, .43, .45,.38, 48 is a sign of COMPLACENCY (> 2.00 is a buy)  - SELL RALLIES. OEX traders are trying to pick a low.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.08) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.12C) - believe this company is confirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.135C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICU.TO ($0.35C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Daily JDV Market Timer - October 29, 2008

10/29/08 (Commentary for Wednesday)  The market may be setting us up for a Trick or Treat as the SPX finished a potential Wave C of 4 rally from 10/10 and appeared to roll over at the end of trading - tomorrow is a turning point day and we may be turning down to either test recent lows on 11/3-11/4 or impulse even further down in a wave 5 of the crash wave that began last summer. On the daily chart the move down into 10/27-10/28 has the appearance of a B-wave test of the 10/10 lows with the explosive rally yesterday and today a Wave C of a large 4th wave pattern that started on 10/10 - this rally may have ended today and we could be starting the 5th and final wave of the crash wave from August and could make lower lows into Nov/Dec.  The Bollinger OEX PVI Indicator again recorded a low value of .43- VERY COMPLACENT. Every rally of more than 1 day since the summer has begun with a buy signal on this indicator ( > 2.00) - but we haven't come close to a buy signal since 10/10 - I'm not sure that the OEX traders are the smart money here. The crash pattern of the XAU is setting up with similarities to October 1987 and Oct 1998- should see another retest of the lows in gold into next week.  Gold stocks like AEM, KGC and MFN have been excellent intra-day trading vehicles and should be watched closely.  

The Daily JDV Market Timer - October 28, 2008

10/28/08 (Commentary for Tuesday)  Many cycle theorists and Gann Fan enthusiasts had penciled in Monday, 10/27, as a crash low or cycle low day and it appears we got some kind of low. However, on the daily chart the move down into 10/27-10/28 has the appearance of a B-wave test of the 10/10 lows with the explosive rally today a Wave C of a large 4th wave pattern that started on 10/10 - this rally could end soon and then the 5th and final wave of the crash wave from August could make lower lows into Nov/Dec. We didn't crash today and the overnight rallies tipped us off that a Reversal of some magnitude on the 10/27-10/28 time window was in the wind - the SPX actually took out Monday's low which kept us locked into our hedge puts - a great setup for a short-covering rally. The Bollinger OEX PVI agains recorded a low value of .38 - VERY COMPLACENT. Every rally of more than 1 day since the summer has begun with a buy signal on this indicator ( > 2.00) - but we haven't come close to a buy signal since 10/10. The crash pattern of the XAU is setting up with similarities to October 1987 and Oct 1998- should see a major low in gold this week or next - if today was the low - should get retest next week.  Gold stocks like AEM, KGC and MFN have been excellent intra-day trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU bounced with the broad market  - looking for a retest of the lows by next week. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - Today's large rally could be the C-wave of a large 4th wave correction that started on 10/10 - based on a 21 day Fibonacci time count from this low, we should get a turn down around 10/31 - there is also a turning point day on 10/30.
• Silver - Silver bounced with gold - look for a 5-wave rally on the 5 day 5 min followed by a 3-wave correction to argue for a bottom. 
• Crude Oil - Crude oil continues to get whacked as demand destruction sweeps the globe and a strong dollar punishes everything commodity - could see $40 sooner than later.
• Bonds - Bonds pulled back more than I expected - bond auction did not go well. Could see one more rally attempt before really rolling over.  Bonds are the last great bubble to pop and should be close to the start of a mega-decline. 
• Dollar -The dollar could be in a 3rd of a 3rd wave up from the 3/17 lows.  In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro and Pound are getting crushed. Russians are panic buying dollars with their rubles - the Russian "bubble economy" has crashed. 

Sentiment Highlights:

• The recent daily pattern of  the Bollinger OEX PVI Indicator:  .38, .41, .62,.41,.35,.40 is a sign of COMPLACENCY (> 2.00 is a buy)  - SELL RALLIES. OEX traders are trying to pick a low.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.08) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.12C) - believe this company is confirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.135C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICU.TO ($0.35C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Daily JDV Market Timer - October 27, 2008

10/27/08 (Commentary for Monday.)  Many cycle theorists had penciled in today, 10/27, as a crash low or cycle low day. We may have indeed completed a "stealth wave 5" today to finish the crash wave from last summer but the possibility of a CHAOTIC BREAK is still with us in my opinion and we have a turning point day on 10/30 coming up - could be an Interesting Trick or Treat week for the markets. The various indices (NYSE, NDX, RUT, etc) are taking out the 10/10 lows while my favorite sentiment indicator, the Bollinger OEX PVI indicator (.38) - continues to post VERY COMPLACENT and DANGEROUS levels - SPX=650 could slap us in the face sooner than later. STAY CAUTIOUS, STAY PATIENT and BE OPPORTUNISTIC when the End of the Financial World flashes in front of our eyes.  The crash pattern of the XAU is setting up with similarities to October 1987 and Oct 1998- should see a major low in gold this week or next - wait for the market plunge to finish before acting.  Gold stocks like AEM, KGC and MFN have been excellent intra-day trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU are breaking down into their late October lows as expected - PM stocks are leading the broad market down to its final date with destiny here. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - There is still Big Crash potential going into Halloween and that should be focused on - NO SENSE JUMPING THE GUN ON ANYTHING HERE. Energy and PM stocks should make the largest rebound after the market finishes its crash pattern by early November     
• Silver - Silver should bottom this week with gold. 
• Crude Oil - Crude oil continues to get whacked as demand destruction sweeps the globe and a strong dollar punishes everything commodity - could see $40 sooner than later.
• Bonds - Bonds pulled back in a corrective pattern the last two days  - could see final buying spike this week.   However, bonds are the last great bubble to pop and should be close to the start of a mega-decline. 
• Dollar -The dollar is ruling everything in the mass rush to cash - especially short dated US T-Bills. The EW 5-wave rally since 3/17 has intermediate-term significance for the dollar - it does add a deflationary tone to the markets. In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro and Pound are getting crushed. Russians are panic buying dollars with their rubles - the Russian "bubble economy" has crashed. 

Sentiment Highlights:

• The recent daily pattern of  the Bollinger OEX PVI Indicator:  .38, .41, .62,.41,.35,.40 is a sign of COMPLACENCY (> 2.00 is a buy)  - SELL RALLIES. OEX traders are trying to pick a low.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.08) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.12C) - believe this company is confirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.135C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICI.TO ($0.35C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Weekly JDV Market Timer - October 26, 2008

10/26/08 (Commentary for Sunday evening) – ON CRASH WATCH - The 60-70 year Kondratieff Cycle or the 60-70 year oscillation in capitalistic markets appears to be about to bottom with a vengence in the next few years. Eventually the US and other free market economies will adjust and reorganize themselves but the path that they will take in the next few years is not clear except that the heavy hand of government appears to be with us for awhile. Like in the 1930s, the Constitution of the US could come under intense pressure in the next few years - remember FDR's attempt to pack the Supreme Court in the late 1930s to pursue his socialistic, New Deal agenda - we live in interesting times.

    Monday 10/27 and 10/28 appear to be cycle lows by many measures and the market has CRASH POTENTIAL going into tomorrow and Tuesday. We have seen three consecutive days of ZERO new 52 wk highs on the NYSE - remarkable and very oversold - this is a possible precursor to a market crash. The rally back from Friday morning's gap down looked corrective - we should see the start of another impulse wave down Monday morning. The very low values in recent Bollinger OEX PVI daily readings (.48, .62, .41, .35, .40) shows a complacency that is a needed ingredient for a crash - OEX traders spent the past five trading days trying TO PICK A BOTTOM - VERY BEARISH. Gold caught a bid on Friday despite the huge US dollar rally but US bonds pulled back. However, a crash on Monday will take no prisoners - so don't expect any. The PM complex is making a bottoming pattern similar to Oct 87 and Oct 98 so start following your favorite gold stocks for a huge rebound once the crash wave bottoms.   Taking out the 10/10 decisively puts us in a possible wave 3 down - the monthly charts should be our guide here and a final low to about SPX=650 is possible – whether we hit this target in the next few days or next year is the question that will be resolved in the next few days.

 

Stock Markets:  ON CRASH WATCH. Looking for a hard Wave 3 down on Monday or Tuesday.  The target low of SPX=650 could be seen in late October or early November or as late as early spring - the next few days should clue us in. We should then see a multi-month rally develop after the panic low is confirmed - years of bear market action lie ahead of us. We may be in an equivalent year of 1938 that ended a 50% selloff in the DJIA – this market is also kin to the 1973-74 selloff that seemed unrelenting in the fall of 1974.  From a Fibonacci point of view – we are 34 years from the 1974 waterfall decline and 21 years from the crash of 1987 – dangerous relatives.

PM Complex:  Gold appears to be heading down into important cycle lows in late October or early November. The September lows were TAKEN OUT in the HUI/XAU and telegraphed that the broad market would take out the 10/10 lows. We're seeing a bottoming pattern similar to 1987 and 1998 - but gold stocks should not be purchased until we see a massive capitulation by the broad market. .

 

THIS WEEK INCLUDES IMPORTANT TURNING POINT WINDOWS IN STOCKS – read new comments below in blue.

TURNING POINT WINDOWS:

·         Gold/Silver – We're close to major cycle lows for gold in late October - put in under the market bids for your favorite gold stocks (AUY, KGC, AEM ....) if the market crashes on Monday.

·         Stocks – ON CRASH ALERT. A Crash Wave is possible on Monday and Tuesday - its too late to sell - look for stocks to buy on massive plunge if we get one - I favor cheap gold stocks (AUY, HL) and cheap natural gas stocks (SNG) – lows of SPX=650 and DJIA=5000 are possible by early November.

·         Crude Oil – The oil market gave OPEC a "so what" salute on the news of a production cut - this market won't bottom until the stock market makes some kind of low. The 14 month stochastics still looks toppy – a move to $40 is possible. Watch the hedge fund darlings like CHK, DVN, XOM and COP for the largest bounce after the market bottoms the crash wave in late October or early November. 

·         Grains - Corn and soybeans are still falling in a EW 3rd wave down in sync with looming world-wide economic weakness which should curtail demand - SELL RALLIES. I believe that the Grain Complex has made a Multi-Year Peak this year - like most commodities.

·         Bonds – Another spike up on a crash on Monday may be worth shorting  – bonds are the next bubble to pop.  Buy the TBT fund on pullbacks. 

·         Currencies -  The US Dollar soared on Friday due to panic de-leveraging and a flight to relative safety. The huge credit contraction and financial deleveraging continues amidst government efforts to reflate.  The dollar is getting a bid as long commodity/short USD trades get unwound.    

TURNING POINT DAYS:

The next turning point day is 10/30 – but major cycle lows are due on 10/27 & 10/28 - several markets are due to make lows by the end of the October.

The Daily JDV Market TImer - October 23, 2008

10/23/08 (Commentary for Thursday)  Traders are hailing today's late rebound on high volume with the start of a successful retest of the 10/10 lows - however, the COMPLACENT Bollinger OEX PVI indicator (.62) argues for more decline. We could have seen the start of  "wave e" of a EW 4th wave triangle late today and the market has some indicators diverging bullishly against the 10/10 lows - however, I'm still expecting the LARGEST CRASH in the history of free markets and looking for lower lows into next week and maybe the first week of November - SELL RALLIES.  The premium on CEF dropped to 4.1% - less than the 9/11 levels of 5.1% and silver is bullishly diverging against gold off the 10/17 lows - these  are signs that the PM complex is near a low. The crash pattern of the XAU is setting up with similarities to October 1987 and Oct 1998- should see a major low in gold next week or by the wish week of November - a rebound rally of greater than 50% should then begin and last until late November - that is if there are any gold bulls left standing.  Gold stocks like AEM, KGC and MFN have been excellent intraday trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU are breaking down into their late October lows as expected- gold easily broke through its lows of 9/11. HOWEVER, A BOTTOMING PATTERN SIMILAR TO OCT 1987 and Ot 1998 is beginning to form - however, don't look for the XAU to bottom until the broad market does in late October and early November. Looking for cycle lows in gold and the PM complex at the end of the month - the XAU break of 80 argues that we are in a large "wave 2" retracement of the entire gold stock bull market of the last seven years  - leveraged bets at the bottom of the crash wave in November should favor gold and energy issues. Got stopped out of  Nov AEM 30 calls near the open today. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - There is still Big Crash potential going into early November and that should be focused on - we may have started a "wave e" of an EW 4th wave triangle on the SPX - but COMPLACENT sentiment indicate lower lows going into the end of the month.  Energy and PM stocks should make the largest rebound after the market finishes its crash pattern in early November     
• Silver - Silver is bullishly diverging against gold off its 10/17 lows - a sign that the PM complex is approaching a major low soon. 
• Crude Oil - Crude oil continues to get whacked as demand destruction sweeps the globe and a strong dollar punishes everything commodity.
• Bonds - Bonds should be strong through late October as stocks take another dive into month end - people overseas are buying dollars to buy bonds.   However, bonds are the last great bubble to pop and should be close to the start of a mega-decline. 
• Dollar -The EW 5-wave rally since 3/17 has intermediate-term significance for the dollar - it does add a deflationary tone to the markets. In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro and Pound are getting crushed. Russians are panic buying dollars with their rubles - the Russian "bubble economy" has crashed. 

Sentiment Highlights:

• The recent daily pattern of  the Bollinger OEX PVI Indicator:  .62,.41,.35,.40 is a sign of COMPACENCY (> 2.00 is a buy) going into the Mc Hugh PHI date on 10/24 - SELL RALLIES. OEX traders are trying to pick a low.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.08) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.12C) - believe this company is comfirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.135C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICI.TO ($0.35C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Daily JDV Market Timer - October 22, 2008

10/22/08 (Commentary for Wednesday)  The largest crash in the history of free markets continued today as the "5 trillion dollar patch" on the 1000 trillion dollar derivative pyramid sprung a leak. While there is still a chance that  "wave e" of a EW 4th wave triangle will give us a rally tomorrow before the real move down begins in earnest, the Nasdaq gave us a second distribution day in a row and is not wasting any time heading south. The HUI/XAU declined by 16% as the margin clerks earned their pay - on the monthly chart the HUI/XAU looks like it's undergoing a stiff wave 2 correction of the entire bull market since Fall 2000.  The SECOND DISTRIBUTION DAY IN A ROW for the Nasdaq, the renewed crash in the PM stocks and the third straight low reading on the Bollinger OEX PVI Indicator (.41,.35,.40) ARE ALL SCREAMING - SELL RALLIES HERE. The XAU crashed through support at 80 that has held for several years - the PM complex is being pulled down into important cycle lows in late October.  Gold stocks like AEM, KGC and MFN have been excellent intraday trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU are breaking down into their late October lows as expected- gold easily broke through its lows of 9/11. Looking for cycle lows in gold and the PM complex at the end of the month - the XAU break of 80 argues that we are in a large "wave 2" retracement of the entire gold stock bull market of the last seven years  - leveraged bets at the bottom of the crash wave in November should favor gold and energy issues. Bought Nov AEM 30 calls at the end of the day. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - There is still Big Crash potential going into early November and that should be focused on - the SECOND DISTRIBUTION DAY in a row on the Nasdaq today and the crash in the HUI/XAU imply a breakdown in the broad market. Energy and PM stocks should make the largest rebound after the market finishes its crash pattern in early November     
• Silver - Silver got pulled down with the commodity route today. 
• Crude Oil - Oil was crushed again today - may not get a bounce until the crash wave bottoms in November -  and if that isn't enough, the intermediate chart looks dismal. 
• Bonds - Bonds should be strong through late October as stocks take another dive - people overseas are buying dollars to buy bonds.   However, bonds are the last great bubble to pop and should be close to the start of a mega-decline. 
• Dollar -The EW 5-wave rally since 3/17 has intermediate-term significance for the dollar - it does add a deflationary tone to the markets. In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro and Pound are getting crushed. 

Sentiment Highlights:

• The recent pattern of  Bollinger OEX PVI Indicators  .41,.35,.40 is a sign of complacency (> 2.00 is a buy) going into the Mc Hugh PHI date on 10/24 - SELL RALLIES. OEX traders are trying to pick a lows.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.08) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.12C) - believe this company is comfirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.135C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICI.TO ($0.35C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Daily JDV Market Timer - October 21, 2008

10/21/08 (Commentary for Tuesday)  Markets are de-leveraging at  a frenetic pace as "cheap and easy" credit which underpinned the tech bubble, the real estate bubble, rampant CEO salaries, rampant sport salaries, and stock prices becomes a hallmark of a bygone era. The SPX turned down late in the day without taking out Friday's highs - the NEGATIVE VOLUME REVERSAL in the Nasdaq, the Breakdown in PM stocks and the very low reading on the Bollinger OEX PVI Indicator (.35) ARE ALL SCREAMING - SELL RALLIES HERE. The EW rally pattern on the SPX from 10/17 could be a wave 4 - that's better than a "wave 2" but the next big decline is close at hand in any case. PM stocks, a leading indicator of this rapidly de-leveraging market, has started their next leg down under 80 - still looking for one more decline in gold and the PM stocks going into late October. Gold stocks like AEM, KGC and MFN have been excellent intraday trading vehicles and should be watched closely.  

• Gold -  Gold and the HUI/XAU are breaking down into their late October lows as expected- gold should retest its 9/11 lows. Looking for cycle lows in gold and the PM complex at the end of the month - a break of XAU=80 could lead to an explosive rally if the broad market bottoms simultaneously in late October or early November - leveraged bets at the bottom of the crash wave in November should favor gold and energy issues. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - There is still Big Crash potential going into early November and that should be focused on - the NEGATIVE VOLUME REVERSAL on the Nasdaq today and the breakdown in the HUI/XAU imply a breakdown in the broad market. Energy and PM stocks should make the largest rebound after the market finishes its crash pattern in early November     
• Silver - Silver continues to outperform gold. The relative strength showed by silver vs gold is positive for the metals complex after cycle lows are reached in late October. 
• Crude Oil - Oil was crushed again today - may not get a bounce until the crash wave bottoms in November -  however, the intermediate chart looks dismal. 
• Bonds - Bonds should hold up through late October as stocks take another dive.   However, bonds are the last great bubble to pop and should be at e start of a mega-decline. 
• Dollar -The EW 5-wave rally since 3/17 has intermediate-term significance for the dollar - it does add a deflationary tone to the markets. In the short-term, the dollar keeps sub-dividing up as the world de-leverages - the Euro is getting bashed. 

Sentiment Highlights:

• The recent back-to-back Bollinger OEX PVI Indicators  .35,.40 is a sign of complacency (> 2.00 is a buy) going into the Mc Hugh PHI date on 10/24 - SELL RALLIES.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.089) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.16C) - believe this company is comfirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.14C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICI.TO ($0.33C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.36) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Daily JDV Market Timer - October 20, 2008

10/20/08 (Commentary for Monday)  The rally from Thursday continued and the "wedge-like" formation on the intraday chart morphed into something slightly more bullish by the end of the day. Taking out Friday's highs will make the 5 day 5 min chart look more short-term bullish still, however, all eyes should remain on the BIG PICTURE - this market has crash potential between now and early November. The Bollinger OEX PVI indicator dropped to a very complacent 0.40 as option traders aggressively bought index calls when the TED spread (3 month Libor/ 3 month US T-bill) declined below 3.0 indicating loosening credit conditions between banks. The SPX should turn down tomorrow if the bearish case is still in force.  PM stocks had a great rally day as the XAU continued its rally from the test of the 80 level last Thursday - still looking for one more decline in gold and the PM stocks going into late October. Gold stocks like AEM, KGC and MFN have been excellent intraday trading vehicles and should be watched closely.  

• Gold -  The HUI/XAU had a big rally as the price action in gold remained subdued. Looking for cycle lows in gold and the PM complex at the end of the month - a break of XAU=80 could lead to an explosive rally if the broad market bottoms in late October or early November. Watch favorites GG, AUY, KGC, AEM and MFN for day-trade setups.  
• Stocks - Looking for the SPX to resume its decline tomorrow or at least by the Mc Hugh Phi date on 10/24 - there is still Big Crash potential going into early November and that should be focused on. Energy and PM stocks should make the largest rebound after the market finishes its crash pattern in early November     
• Silver - Silver and silver stocks were stand out performers today. The relative strength showed by silver vs gold is positive for the metals complex in the near term. 
• Crude Oil - Oil had a nice bounce today and oil stocks had good pops - but the intermediate-term chart looks very bearish . 
• Bonds - The bonds had a nice rally today as the TED spread receded - don't be fooled.   Look for setups to short bonds - the next big bubble to pop. 
• Dollar -The EW 5-wave rally since 3/17 has intermediate-term significance for the dollar - it does add a deflationary tone to the markets. In the short-term, the dollar keeps sub-dividing up as the world de-leverages. 

Sentiment Highlights:

• The Bollinger OEX PVI Indicator Monday (0.40) is a sign of complacency going into the Mc Hugh PHI date on 10/14 - SELL RALLIES.

Junior Mining Companies - these are companies that I own - a stop loss would have taken me out quite a while ago at much higher prices:

• SRLM ($0.078) - this company is in trouble - it suspended production today (9/15) at the Sunshine mine and is unable to obtain financing. This company failed its due diligence from Minco Silver and the merger has been scuttled. SRLM is having trouble raising capital and servicing its debts.  
• GCR.V ($0.155C) - believe this company is comfirming a major Kambalda-style Ni/Cu + PGM discovery at its Langmuir project in Ontario - could be the discovery of the decade and a potential $B market cap.
• VIT.V ($0.145C) - new management - great properties in Nevada - good drilling results in Jan 07 - great drilling results released 12/11 & 4/10 to confirm Cove McCoy find.
• ICI.TO ($0.345C) - huge discovery in China - open pit mine an option - NEW DRILLING RESULTS AT DEPTH AND ALONG STRIKE announced on 10808! NEW SHAREHOLDER RIGHTS PLAN VALIDATES value.
• SNG (1.37) - this profitable Canadian natural gas company just announced what appears to be a SECOND major gas discovery off the coast of Trinidad - this company is a good long term hold in a rising natural gas market.

The Weekly JDV Market Timer - October 19, 2008

10/19/08 (Commentary for Sunday evening) – Intense volatility should be with us for awhile. Thursday’s low was a B-wave test of the 10/10 lows – we recorded a 5-wave advance off that low into late Friday – that could be it for the C-wave rally – we need to be on guard Monday for an acceleration down.  Still believe that the super-negative EW pattern is a possibility between now and early November. The weakness in PM stocks implies a lot more down for the broad market. The Bollinger OEX PVI indicator looked complacent on Friday (.82 << 2.00) and the sentiment polls showed excess optimism in my opinion. The bond market is ratcheting down here and appears to have started a long-term bear market. The monthly charts should be our guide here and a final low to about SPX=650 is possible – the question is will we get it later this fall or in the spring.

Stock Markets:  Looking for some selling Monday if the C-wave rally from Thursday completed Friday.  The target low of SPX=650 could be seen in late October or early November or as late as early spring. Should then see a multi-month rally develop after the panic low is confirmed - years of bear market action lie ahead of us. We may be in an equivalent year of 1938 that ended a 50% selloff in the DJIA – this market is also kin to the 1973-74 selloff that seemed unrelenting in the fall of 1974.  From a Fibonacci point of view – we are 34 years from the 1974 waterfall decline and 21 years from the crash of 1987 – dangerous relatives

PM Complex:  Gold appears to be heading down into important cycle lows in late October or early November. The September lows should be tested and the XAU could test long-term support at 80. The huge growth of the Federal Reserve balance sheet has highly inflationary immediate-term overtones if that money gets lent into the real economy. Looking for the 9/11 lows to be retested by the end of October.

 

THIS WEEK INCLUDES IMPORTANT TURNING POINT WINDOWS IN STOCKS – read new comments below in blue.

TURNING POINT WINDOWS:

·         Gold/Silver – Looking for a retest of the 9/11 lows as we enter the  last half of October – important cycle lows ahead.

·         Stocks – Early weakness is possible if the C-wave completed on Friday – lows of SPX=650 and DJIA=5000 are possible by early November.

·         Crude Oil – Oil’s chart pattern on the 5 day 5 min looks negative. The 14 month stochastics still looks toppy – a move to $40 is possible. Watch the hedge fund darlings like CHK, DVN, XOM and COP for the largest bounce after the market bottoms the crash wave in early November. 

·         Grains - Corn and soybeans are falling in a EW 3rd wave down in sync with looming world-wide economic weakness which should curtail demand - SELL RALLIES. I believe that the Grain Complex has made a Multi-Year Peak this year - like most commodities.

·         Bonds – Look for setups to Sell Bonds – a bounce tomorrow should be sold – bonds are the next bubble to pop.  Buy the TBT fund on pullbacks. 

·         Currencies - The Dollar rally to higher highs last week has left a EW 5-wave advance on the the daily charts from the 3/17 lows - the huge credit contraction and financial deleveraging continues amidst government efforts to reflate.  The dollar is getting a bid as long commodity/short USD trades get unwound – could see more strength as the PM complex declines into end-of-month lows.    

TURNING POINT DAYS:

The next turning point day is 10/30 – several markets are due to make lows by the end of the month.