• Of great long-term significance, gold successfully broke out of a 19 month long base when it had a weekly close at $1048.  Gold now has expected major support between $1033.90 and $978.  Only a weekly close below $970 - which is not expected - would indicate a failed breakout. 

• We keep our long term investment position in gold at all times, but the odds absolutely did not favor maintaining our long trading position when gold was stretched about as far above its 10 week moving average as it normally ever gets back in late November / early December.  After correcting from the December 3rd high at $1226, gold bottomed at $1045 - within one percent of our ideal target range.  Silver almost precisely hit the level at which a bottom was most likely to form.

• 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.  Notably, silver, crude oil, and the CRB Commodity Index were also in equally rare and compelling setups.  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, crude oil, and most commodities."  Crude oil and several other commodities have faltered after having a good rally, but 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 projects a move up to near $1300 (or higher).  Our target is $1480-$1700 before the next major correction.

• We have been heavily long gold futures since February, we have a long position in GDXJ (junior gold miners), and we are short S&P futures against those long positions.

• U.S. and World equity markets are presumably still in multi-year downtrends.  The S&P validly broke the 300 day (65 week) moving average.  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, and the S&P has now pulled back a fair amount after coming within less than 1 percent of 1230).  We believe a second phase down is likely to begin this year, though it could turn out to be no more than a major correction as long as there is no weekly close below S&P 940.  Likely support areas for the S&P are seen at 1050, 1000-920, and 800-760. A weekly close below 760 would argue for 666 being the next target.  Nearest major resistance for the S&P is the 1230-1300 range, and significant resistance is also expected around 1130-1150.

• 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.  Crude oil is presently bouncing between the two long term moving averages (43 and 65 week) and is down near the critical lower channel line (refer to the crude oil charter later on in the analysis).  Should oil have a weekly close below that channel line, a further drop down to test the $40 level could be coming up. This would likely coincide with a massive drop in world stock markets.

• The $CRB Index broke major resistance at the 284-285 level (the 1983 and 1984 major highs and 2007 significant low) 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.  Failed breaks of important levels usually lead to significant moves in the direction opposite of the original breakout. With the weekly closes below the 65 week moving average, the uptrend from 2009 appears to be over. A drop to 235-230 or lower (possibly even sub-200) will remain the most likely outcome unless a weekly close back above both long term moving averages (43 and 65 week) takes place.

• For a long time, we expected major support for the U.S. Dollar Index around 74, and the dollar turned up almost precisely from that crucial level.  For months, we have stated that  "A top could be seen anywhere up to approximately 82, and only a weekly close near 83 or better would make us expect a potentially much larger, longer-lasting rally to unfold."  When a break and close above 83 did take place, we stated that the odds favored the dollar rally extending to substantially higher levels, with approximately 87.5 - 90 being the next likely target.  Should there be a weekly close above 91, the next target range would be 97 - 103.  The nearest significant support is around 80 (82 - 78).

• Long-term U.S. Treasury Bongs have critical support between 114 and 112.  If 112 breaks on a weekly close, significantly lower prices (and higher interest rates) are likely on the way for the next several years.  Given the amount of borrowing the Federal Government is planning to do over the next several years, odds appear to strongly favor the scenario of a major breakdown in bond prices this year (with a corresponding rise in interest rates).

• Follow Normann Financial for clear and concise chart and market analysis, as well as updates on whether the Federal Reserve and the other central banks of the world are failing or succeeding in destroying the purchasing power of the U.S. Dollar, Euro, and other fiat currencies through inflation.  The charts provide far better information than government officials or Wall Street.

We have been looking forward to the launch of the new Van Eck ETF (Exchange Traded Fund) tracking the Market Vectors Junior Goldminers Index for quite a long time:

http://www.4asset-management.net/en/Research/MV/MV/MVGDXJ.html  and  http://www.vaneck.com/index.cfm?cat=3192&cGroup=ETF&tkr=GDXJ

The ticker is GDXJ, and it began trading in November 2009.  We expect GDXJ to vastly outperform GDX in the long run.