Today's price action in the equity indices forebodes ill winds for the US economy moving ahead. We had a complete technical breakdown with the market closing below the previous year's lows which technically is something deeper than a mere correction. Perhaps an emergency rate cute or a series of cuts done in close proximity will resurrect the bull's hopes but frankly, at this moment, that appears all that they have going for them hope! I am enclosing some charts of the equity indices along with two of major bond insurers, both of which have chart patterns that resemble that of a bankrupt entity rather than a viable company.
1 1 15 E-MINI S&P Continuous (1,8., 1,424., 1,339.75, 1,339.75, -68.) Emini S&P Continuous Weekly Chart 1 1 15 14 13 14 13 13 13 12 11 1 The close below the March 7 low bodes ill for the broad US equity markets as it appears a long term double top is now in place 12 11 1 9 9 25 15 5-5 - -15 25 15 5-5 - -15 1 2 3 4 5 6 7 8
1 Dow Jones Industrial Average Weekly Dollar Denominated 1 13 13 13 13 1 1 1 1 1 The Dow does not look quite as bad as the S&P as it remains above the March 7 low but just barely. 1 9 9 1998 1999 1 2 3 4 5 6 7 8
Following are two of the leading bond insurers... Warning the pictures that follow may be quite disturbing! 8 75 MBIA - Daily MBIA ORD (.5, 11., 7.63, 9.2, -4.) 8 75 7 7 65 65 55 55 45 45 35 35 3 3 25 25 15 15 5 5 Sep Oct Nov Dec 6 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 7 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 8
95 AMBAC FINL GRP ORD (8.3, 8.5, 4., 6.2, -6.) Ambac Financial Group Daily 95 9 9 85 85 8 8 75 75 7 7 65 65 55 55 45 45 35 35 3 3 25 25 15 15 5 5 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 7 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 8
38.5 38. 37.5 37. 36.5 36. 35.5 35. 34.5 34. 33.5 33. 32.5 32. 31.5 31. 3.5 3. 29.5 29. 28.5 28. 27.5 27. 26.5 26. 25.5 25. 24.5 24. 23.5 23. 22.5 22. 21.5 21..5. 19.5 19. 18.5 18. 17.5 17. 16.5 16. 15.5 15. 14.5 14. 13.5 13. Financials Financial (29.2928, 29.6938, 27.6, 27.9366, -1.189) Financial sector at a HUGE crossroads! 1999 1 2 3 4 5 6 7 8 38.5 38. 37.5 37. 36.5 36. 35.5 35. 34.5 34. 33.5 33. 32.5 32. 31.5 31. 3.5 3. 29.5 29. 28.5 28. 27.5 27. 26.5 26. 25.5 25. 24.5 24. 23.5 23. 22.5 22. 21.5 21..5. 19.5 19. 18.5 18. 17.5 17. 16.5 16. 15.5 15. 14.5 14. 13.5 13.
7 3 - - -3 7 3 - - -3 This slower-moving, long term indicator has flattened out indicating a pause in the uptrend. It will take a move back above to turn it back up again. February 8 Comex Gold 29 5 12 5 12 February March 19 26 2 April 16 23 3 7 May 14 21 29 4 11 June 18 25 2 9 July 16 23 3 6 13 August 27 4 17 24 1 8 15 September October 22 29 5 12 19 November 26 3 17 December 24 31 8 14 21 28 F
85 8 RSI 3 day moving average Relative Strength Index (62.6116) 85 8 75 75 7 7 65 65 55 55 45 45 35 February 8 Comex Gold 3 7 May 14 21 29 4 June 11 18 25 2 9 July OZ GOLD COMPOSITE Feb 8 (878., 891., 875.,., -1.) 16 23 3 6 August 13 27 4 17 September 24 1 8 October 15 22 29 5 12 November 19 26 3 17 24 31 7 December 8 14 21 28 F 35
4.5 4.5 4. 4. 3.5 3.5 3. 3. 2.5 2.5 2. 2. 1.5 1.5 1. 1..5.5.. -.5 -.5-1. -1.5 indicator continues in a bullish mode but is flattening out at a very high level. Again, it is indicating a pause in the uptrend -1. -1.5 29 5 12 5 12 February March February 6 Comex Gold 19 26 2 April 16 23 3 7 May OZ GOLD COMPOSITE Feb 8 (878., 891., 875.,., -1.) 14 21 29 4 11 June 18 25 2 9 July 16 23 3 6 13 August 27 4 17 24 1 8 15 September October 22 29 5 12 19 November 26 3 17 December 24 31 8 14 21 28 F
9 63 6 6 59 58 OZ GOLD COMPOSITE Feb 8 (2.Pt Kagi) (878., 891., 875.,., -1.) February 8 Comex Gold 2 Point Kagi 6 25 M 12 23 J 15 22 J 17 A 8 16 24 S 19 O 12 N D 12 7 19 F 12 M 15 A 17 M 8 15 22 25 J 12 22 J 11 18 A 7 S O 8 15 N 15 D 6 13 8 16 22 25 3 9 63 6 6 59 58
Ichimoku Kinko Hyo (., 886.9, 852.,., 89.425, 794.1) February 8 Comex Gold Ichimoku Kinko (Cloud Chart) The closing price is now below the Tenkan-Sen which indicates a pause in the market. Support lies near the Kijun-Sen line which comes in at the 855 level Closing Price Tenkan- Sen Kijun-Sen February 8 Comex Gold 29 5 12 5 12 February March 19 26 2 April 16 23 3 7 May 14 21 29 4 11 June 18 25 2 9 July 16 23 3 6 13 August 27 4 17 24 1 8 15 September October 22 29 5 12 19 November 26 3 17 December 24 31 8 14 21 28 F
.9.8.7.6.5.4.3.2.1..9.8.7.6.5.4.3.2.1. February 8 Comex Gold When the indicator above is moving in an upwards direction the market is trending. the indicator can move up while the market is moving lower. As long as this indicator moves up, the market is trending, regardless of whether it is an uptrend or a downtrend. Looking at the above it can be seen that gold is trending upward but the indicator is not rising at as steep an angle as it has been previously and appears to be attempting to turn down. Subsequent price actio from this point forward will give us a better idea of what this indicator will do. 3 7 May 14 21 29 4 June 11 18 25 2 9 July 16 23 3 6 August 13 27 4 17 September 24 1 8 October 15 22 29 5 12 November 19 26 3 17 24 31 7 December 8 14 21 28 F
3 - - -3 This indicator has generated a technical sell signal. 3 - - -3 February 8 Comex Gold 29 5 12 5 12 February March 19 26 2 April 16 23 3 7 May 14 21 29 4 11 June 18 25 2 9 July 16 23 3 6 13 August 27 4 17 24 1 8 15 September October 22 29 5 12 19 November 26 3 17 December 24 31 8 14 21 28 F
STREETTRACKS (GLD) GOLD HOLDINGS we will want to see the recent reduction in bullion holdings come to an end. Holdings peaked three days ago at 652.56 tons! They dropped to 629.83 tons today. That is pretty hefty. Once this stabilizes gold prices will begin moving back up 5 4 3 3 2 1 TONS OF GOLD 11/18/4 1/18/5 3/18/5 5/18/5 7/18/5 9/18/5 11/18/5 1/18/6 3/18/6 5/18/6 7/18/6 9/18/6 11/18/6 1/18/7 3/18/7 5/18/7 7/18/7 9/18/7 11/18/7 1/18/8 Dan Norcini: Houston, TX