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Commodity, Currency, Gold, and Equity Market Analysis by Dr. Christian
Normann |
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Please visit the
About Normann Financial
page for important information about risk management and position
sizing. We provide analysis in good faith and to the
best of our ability, but all information on this
website is provided solely for educational purposes and does not
constitute investment advice. Learning to
operate successfully in the financial markets is not easy - it
takes a substantial amount of time, effort, and discipline.
Your trading and investment decisions are
exclusively your own
responsibility. Proper risk management is crucial.
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World Market Analysis Based on Closing
Prices, Friday February 4th 2011 - Nearly Everything Looks Set to
Continue Higher
Introductory Summary:
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Of great significance, gold successfully broke out
of a 19 month long base when it had a weekly close at $1048 in
October 2009. Gold is therefore likely to have major support between
approximately $1050 and $980 (the top of the base normally forms
a solid floor after a genuine breakout). Our target area
is $1700-$1800 for the uptrend that began at $1045 (which was
the first and perhaps only test we will see of the $1050-$980 zone). We then
expect a significant correction of approximately 15 to 30 percent
that most likely will bottom at $1250 or higher. We expect the
secular uptrend in gold that began in 2001 to continue until around
2015 (possibly longer).
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We keep our long term investment position in gold at all
times, and repurchased our trading position at $1325 during
the recent minor (so
far at least) correction. We suspect the
correction ended at $1309, but it could carry down to around
$1285 without damaging the larger uptrend from $1045.
Our targets for the trading positions are
$1700-1800 for gold and $35-38 for silver before the next major correction as long as
there is no weekly close below $1250.
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We
also have long positions in crude oil futures, TSLA, FXI,
INP,
and several precious metal, industrial metal, and rare earth mining companies.
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U.S.,
European, and many other
equity markets around the world are presumably still in secular
bear markets (most since year 2000). However, the S&P
validly broke the 300 day (65 week) moving average back in August
2009, indicating something more than a corrective rally was likely
to be underway. The S&P has now broken through 1230,
indicating it is likely headed to at least the 1300-1330 area and
potentially even a retest of the old highs around 1500-1600.
Likely support areas for the S&P are seen at 1230-1170, 1130, 1050,
1000-920, 800-760, and approximately 666.
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U.S.,
European, and many other
equity markets around the world are presumably still in
secular bear markets (most since year 2000). However, the
S&P validly broke the 300 day (65 week) moving average back in
August 2009, indicating something more than a corrective rally was
likely to be underway.
Corrective moves tend to most often top out after retracing between
50 and 62 percent of the previous move; when this does not happen,
it usually means that approximately the entire prior move is likely
to be retraced. The 62 percent retracement is about 1230, and the
S&P has broken this level, indicating it likely is headed for a
retest of the old highs around 1500-1600. Likely support area
for the S&P is 1240-1130, an area that should hold during the next
correction (unless we are going into another bear market).
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Since
crude oil
bottomed near $80, we have been
looking for a move to at least around $100.
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When the $CRB
Index broke out from a head and shoulders bottom with a neckline at
280, we stated that the $CRB likely was embarking on another
significant leg higher over the next several months. This is what
happened, and the index is now attempting to break above the 1980
high of about 337. Support is around 320 followed by 300 and
285-280.
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The U.S. Dollar Index broke the 82-78 support range
and is likely to fall to test final support between 73 and 70.7.
We previously stated that we would short the dollar on any bounce toward 80-82
- which we got - and the position is working out well so far. Only a
weekly close above 82 would abort the larger downtrend.
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Long-term
U.S. Treasury Bonds broke below major support around 122, indicating that the
recent uptrend has ended, but it will take a close
below 112 to say with high confidence that the secular
uptrend from 1980 is over. Also check out our long
term chart of the 30 year bond yield, making attempt number twelve
at breaking its corresponding downtrend.
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Detailed Analysis of Individual Charts:
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On February 12th 2010, we stated that gold was
positioned in a rare setup that normally only comes along once
or twice every 15-20 months. We also said that: "Though there is no guarantee that any one trade will be
successful, the odds now greatly favor a strong move up for
gold, silver..." Gold has since made new highs
priced in all major currencies. We do not
expect to see gold back near $1045
again any time soon (quite possibly never). On
April 30th 2010, gold broke out from a cup and handle
formation that projected a likely move up to near $1300,
and gold has already exceeded that level.
Our target is
$1700-$1800 before the next major correction as long as
there is no weekly close below $1250.
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The Gold / Dow Jones Industrial Average ratio
remains in its steady long term bull market.
Gold has risen over 400 percent against
the Dow Jones Industrial Average since year 2000, which is the same as
saying that the Dow currently is down over 80 percent when measured in gold - the true
hard currency - and that is after the rally in the stock market from March
2009! |
U.S.,
European, and many other
equity markets around the world are presumably still in
secular bear markets (most since year 2000). However, the
S&P validly broke the 300 day (65 week) moving average back in
August 2009, indicating something more than a corrective rally was
likely to be underway.
Corrective moves tend to most often top out after retracing between
50 and 62 percent of the previous move; when this does not happen,
it usually means that approximately the entire prior move is likely
to be retraced. The 62 percent retracement is about 1230, and the
S&P has broken this level, indicating it likely is headed for a
retest of the old highs around 1500-1600.
Likely support area for the S&P is 1240-1130, an area that should
hold during the next correction (unless we are going into another
bear market).
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| Always remember
that proper risk management is essential - without it, you can be
entirely correct regarding the main trend, yet you would still be likely
(nearly certain in fact) to sooner or later blow up your
account. |
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Normann
Financial - Commodity, Currency / Forex, Gold, and Equity Stock
Market Analysis by Dr. Christian Normann Trading Investing
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