1/31/10 (Commentary for Sunday) The volume spike on Friday's decline gave us a whiff of short-term capitulation - the SPX and NDX gave us a clear 5-wave decline into the Full Moon Timing Window - expecting a reversal by Monday. A gap down opening on Monday should be bought for a spirited corrective bounce. Gold stock sentiment last week was at 26 wk lows on whispernumber.com - it must be truly crushed after Friday's late capitulation. The reduction of the speculative long element in the Comex COTs is sufficient to give us a strong trading rally here. The "bubble talk" thrown at gold in the last few days also adds to the element of a short-term sentiment extreme. Bonds are topping for the short term but could have a run into the spring. The Dollar Index has finished a 5-wave advance on the daily chart from the early December lows - looking for a corrective reversal to start this week.
Long Term on Stocks- The market started a correction in the New Noon/Solar Eclipse timing window - the correction could run into late March/early April. A 3-wave corrective bounce this week could solidify the picture that a major top was made on 1/20. A wedgy, low volume advance from July that ended with euphoric sentiment indicators was reversed with a high volume decline after spectacular earnings were released by several stock market leaders - this argues that an important top was made.
Long Term on PMs- Gold stated an intermediate correction on 12/3. Gold took out the $1075 low so we are only looking for a B-wave test of the $1227 high into mid-February's seasonal high before a reversal into a late March low.
- Stock - The SPX and NDX gave us a 5-wave decline into Friday and the Full Moon Timing Window. A gap down opening on Monday should be bought for a spirited corrective bounce. The McClellan Oscillator is at very low levels (-275) and argues for a big bounce.
- Gold - Gold gave us a weekly low the day after the 55-day Fibonacci step out from the 12/3 high but kept getting pulled down by the Full Moon Timing Window on Saturday. Monday is a 21 day step out from the 1/11 high and with the passing of the Full Moon, we should see a sharp reversal up on Monday. We need to focus on the juniors here - the GDXJ is a good vehicle. Other favorites include VIT.V, ICI.TO, SVM and CMIN.OB. The CDNX ( a proxy for Canadian junior miners) could DOUBLE by April 2010.
- Silver – Silver has been thrashed since the 1/11 corrective high - looking for a reversal up on Monday.
- Crude Oil – Crude oil is testing an important up channel line after a steep decline from early January - looking for a reversal back up on Monday.
- Bonds- Bonds are at short-term resistance - corrective pull backs this week should be bought.
- Dollar- The Dollar Index has finished a 5-wave advance on the daily chart from early Decmber - looking for a reversal down on Monday.
- Grains- The grain markets are setting up for a substantial rally this week - a dollar reversal will be a key catalyst.
The New Moon/Solar Eclipse on Friday, 1/15 has generated an important top. The Full Moon Timing window this weekend should give world markets a short-term bottom here. We need to make some impulsive rallies Monday to confirm a low.
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