Commodity, Currency, Gold, and Equity Market Analysis by Dr. Christian Normann   When gold reached our short-term target of about $1200, we closed our gold and silver futures trading positions.  We reentered our positions when gold entered our target range of $1115 to $1080.  However, given recent action, a deeper correction to between $1034 and $978 looks likely, and we closed our long gold and GDXJ trading positions when gold broke $1120. We also closed most of our long stock positions when the S&P 500 index broke 1120, and are now only long JIN.TO and AUN.V while short GME, IYR (real estate trusts), S&P futures contracts, and industrial metals (via a long position in BOM). Crude oil broke major resistance at $78 - $80 ($79.86 was the significant high set in 2006) during the first week of 2010, but turned around and cleanly broke back below the same level a mere two weeks later.  Failed breaks of important levels usually lead to significant moves in the direction opposite of the original breakout.  In other words, it is now likely that oil will see a significant correction (or more), and we could be in for a plunge similar to that in 2008 - 2009.  Only a break above $85 would reliably reconfirm the larger uptrend. U.S. and World equity markets are presumably still in multi-year downtrends.  The S&P temporarily broke above the 2007 to present downtrend line before plunging to close well below it again just two weeks later.  The S&P recovered 53 percent of the 2007-2008 decline (the halfway point is S&P 1120), and corrective moves tend to most often top out after retracing between 50 and 62 percent of the previous move (62 percent would be about 1230).  We believe a second phase down likely has begun, though it could turn out to be no more than a major correction as long as there is no weekly close below 940. We've long expected major support for the U.S. Dollar Index around 74, and the dollar turned up almost precisely from that crucial level.  Our likely target has been the 77.69-82.07 area, and the dollar is now pushing up against the bottom of that range.  Only a weekly close near 83 or better would make us expect a much larger, longer-lasting rally to unfold.                Last Updated:  January 29th 2010 - no update for week ending February 5th, but little has changed from the prior week.                 For Detailed Analysis, Click Here

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