"Time is more important than price; when time is up price will reverse."
W.D.Gann
REPORT
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"I knew it Dr Watson. I knew it! There are clues to the left of us, clues to the right of us, clues in front of us and clues behind us."
"Very well Holmes, what do we do with all of these clues?"
"Elementary my dear Watson, elementary, we wait until they commit themselves and then we pounce on them.
"Sherlock, you mean, you mean we wait until they tell us what to do? Brilliant, brilliant Holmes, I knew I could count on you."
Three peaceful, quiet, restful days enabled me to read opinions about the markets from all over the world. I was not surprised to find that the majority of opinions, with a few exceptions, came to the same conclusions that were prevalent 50 years ago. The conclusions and expert analysis stated that the markets will be going up unless certain events take place. If these events take place the markets may be going down. However, the final collective conclusion is that depending on what the sentiment and volatility is the reaction to these events whether they occur or not could mean that the markets may go sideways for awhile. My reading of the expert opinions quoted in the financial media around the world leads me to this conclusion:
When it comes to the future path of the markets my friend, "Benny the Torch," sums it up best, " Nobody knows nuttin." Benny said that his business has been slow for sometime but he has been getting quite a few inquires lately. Benny's business picks up dramatically when recessions set in. As Benny puts it, "Hey, when recession shows up people have too much inventory. Those that have insurance have fire sales. That's when my phone is ringing off the hook."
The few exceptions to those experts who won't jeopardize their world wide standing in the market predicting community are those experts in the precious metals arena. There are usually just two expert opinions in the precious metals markets. One is, "Gold and silver will be going up for fundamental and technical reasons." The other opinion is, "Gold and silver will be going down for fundamental and technical reasons." So, as my friend Benny the Torch says, "When it comes to the future, nobody knows nuttin. All's I knows is when the phone bell starts aring'n business is gonna pick up." Amazing, but true, from the least literate and least educated but most practical oft comes the best opinions.
Let's see if there are any bells ringing in the precious metals complex and related items.
Gold bullion may have completed a Major 5 Wave move that began in 1999. The top was $728 dollars. Since the top at $728 an apparent A, B, C correction may be taking place. A new low below the $563.50 level of the A wave bottom may conclude this correction at what would be considered the C wave low. The B wave high was $30 short of the wave five high of $728. Perhaps the C wave bottom will be $30 lower than the A wave bottom. That gives us a potential final C wave low of $533.50 for the correction. Perhaps is the password. With or without a new C wave low, a new high above the high of $728 should mean the next move up in the gold market is off and running. So, what should we do right now? For the answer read on.
GOLD MONTHLY
Except for the different prices I could write the exact same thing for silver that I wrote for gold. Silver appears to have completed a 5 wave move with wave 5 ending at $15.20 an ounce. Silver appears to be working on an A, B, C correction ever since the $15.20 high. The C leg appears to be underway. As a matter of fact the corrections in gold and silver started 15 months ago in May of 2006.
SILVER MONTHLY
Now for a quick look at that most beautiful double three combination correction that failed to deliver what I expected it to deliver. Surface beauty has failed me before, but this one was not only beautiful, it was exquisite. It was so exquisite that I failed to look underneath and visit its foundations. If I had I would have seen it had no support in the form of volume.
The HUI does appear to have completed a five wave move at the 401.69 high. It is possible that the HUI is also undergoing an A, B, C correction. A very serious problem will exist if the HUI closes below the 258.60 level. If that event occurs it will be the first time in the entire bull market of the HUI that a previous peak failed to be support. So, for the HUI there must be either a new high or a new low. What will it be? For the answer read on.
HUI MONTHLY
What now for the mighty U. S. Dollar? Well, it does not exactly look mighty at the moment. The question is whether the dollar will collapse and move below the low of 78.43 or whether the dollar will be starting a rally. In spite of what some folks say, the dollar has been a good gauge of the progress and direction for the precious metals market. So what will it be, up or down? Will the dollar remain a mighty dollar or will it become a "mini" dollar?
For the answer read on.
U.S. DOLLAR INDEX QUARTERLY
The 30 year T Bond tells us that U.S. treasury bond yields have been coming down ever since September 1981. In September 1981 the 30 year T bond sold for 45.96! 26 years later the 30 year T bond is selling for 111.18. The higher the price the lower the yield is. It is a strange money world we live in. The lower the dollar, the lower the yield on the 30 year Treasury bond is not what is expected. Will the 30 year T bond break below its long term rising trend line or will it continue on up? For the answer read on. Now don't cheat and look at the answer at the end before you complete reading all the questions and examine all the charts. Complete the reading first, please.
30 YEAR T BOND QUARTERLY
The S & P 500 did not make a new high. Is this a double top for the S & P 500? Could the S & P 500 be starting a C leg down in an A, B, C correction? For the answer read on.
S & P 500 QUARTERLY
This is the answer that will help prevent losses and lead to substantial profits.
"We wait until they commit themselves and then we pounce on them."
"I knew it Dr Watson. I knew it! There are clues to the left of us, clues to the right of us, clues in front of us and clues behind us."
"Very well Holmes, what do we do with all of these clues?"
"Elementary my dear Watson, elementary, we wait until they commit themselves and then we pounce on them.
"Sherlock, you mean, you mean we wait until they tell us what to do? Brilliant, brilliant Holmes, I knew I could count on you."
WHEN AND HOW TO PREPARE FOR A BATTLE
NOW? NOW? OR NOW?
Obviously before the battle starts is the time to prepare for the battle. If we are not prepared when the battle starts we may be sunk. We initiated our sell program and are out of the market and on the sidelines with cash waiting for the right time to re-enter. There are too many negatives lurking in the background for us to re-enter the market all at once at this point in time. When the time arrives for us to re-enter the market we will re-enter in several steps and not all at once. We will obtain an average price for re-entry. In that fashion we do not risk all of our capital which has been set aside for the precious metals complex at one price at one time. There are those who say they know exactly when the bottom is in. I say we should listen to our friend and mentor Sherlock and, "…wait until they commit themselves and then pounce on them."
We will re-enter little by little as the markets commit themselves little by little. We will obtan proof that each step of the next move has started for real on the way up before we begin our re-entry program. There will be tests all the way up to new highs. Each test must be passed by the markets before we partially re-enter. A potential bottom may have occurred for the HUI at the 284.85 level. It is much too soon to be confident of that. So, we wait for more evidence. As for gold and silver bullion, they still have a potentially devastating C leg down waiting in the wings. It should be clear to one and all that once the next part of this precious metals bull market gets underway the move will be huge. It will be worth the patience expended in order to avoid premature entry and losses. The S & P 500 and the Dow Jones Industrial Average may be sporting serious hidden internal injuries. If so, the declines between now and year end could be devastating. The insurance premium I have written about in a number of reports is represented by the higher prices we will pay when we re-enter the markets. Insurance premiums protect against loss.
If you would like to read more of my reports that provide timing
for investors and longer term traders they are available at;
Stay well,
Ron Rosen
Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen is not a registered investment advisor Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.
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