Gold Still In Bear Cycle?

GOLD- Well, not a merry Christmas for Gold buyers just yet. We have said in our TMTF forecast service to watch 1190 as KEY support and 1241 would also need to be taken out on a closing basis before we could confirm a new uptrend in Gold and the end to the 5 wave bear cycle. Not quite yet, and in fact in my stock service we have avoided Gold stocks entirely even with the recent temptations to get long because Gold to us is key. If we are not over 1241 then we are not buyers of Gold equities, plain and simple. With 5000 stocks to choose from, why not stick with the sectors that are in the stronger uptrends and avoid those mired in the mud like Gold? For example you could be looking at Security stocks given all the cyber attacks worldwide that are only getting worse. Gold is money as we all know, but a downtrend is a downtrend. Trust what you see, not what you think for best results.

So right now the problem is we just gave up the 1190 support and the 30 week MA line on the weekly chart is your guide for key resistance to take out. We remain in the sidelines until its taken out. The chart below shows the blue line with the 30 week Moving average resistance, and you can use this same chart for the uptrend in the SP 500 which we have used recently for our subscribers as well. Don’t suffer from history bias and the hay days of Gold stocks and Gold, which ended in 2011…wait for the next Hay days to arrive, watch the 30 week moving average line before acting.

tmtf gold 1223

The SP 500 meanwhile is in wave 3 up from 1973 38% shallow wave 2 lows. That was a quick correction and the waves now are likely to be faster and shorter as we are in Primary wave 5 of this bull cycle, the last stages of the Bull if I’m right. 2131-2138 is your bogey ahead for first Fibonacci pivot resistance on the way to the 2181 target I had out over a month or so ago.

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Dec 11th State of the Stock Markets

We are seeing normal corrective declines in the broader indexes of late. December has been volatile from day one. Tax selling is obvious to me, and we are seeing extreme oversold set ups in Energy stocks. Insiders have been loading up the last few weeks yet those same stocks are still declining, and we think Hedge funds are taking on heavy losses, and selling is begetting selling.

Also, the percentage of stocks above their 50 day moving averages hit the mid 60’s recently which is pretty high. Currently at 53% still and likely to fall further into year end? We also look at the NASI Summation index, and that is topping and rolling over… another topping signal. So the likelihood is we are in early stages of a wave 2 correction from 2070 SP 500 highs after a 250 point rally. Initial support is at the 1994-2000 area for starters, so let’s see if that area holds.

The DOW we want to see 17000 support, and its not just a number I made up its a key support line. NASDAQ look for initial key support at 4617 and 4457 below that.

Biotech stocks are very inflated here, though I like them and have profited. They seem like the end of season rotation to save some Portfolios and window dressing.

Looking for Energy stocks to be the January rebound winner candidates.

Need to see GOLD over 1241 on Closing basis before I start getting bullish.

tmtf nasiTMTF NAS50R

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Chinese Stocks Pulling US Stocks Higher?

The Chinese Shanghai Composite Index broke to the upside in July and has rallied a good 15% since then. For an Index alone this is quite impressive, equivalent to the Dow Jones rallying 2500 points or so here on a relative basis.

Our opinion is this is Bullish for US stocks as it can only mean commerce is picking up in China after a period of consolidation.  We have been bullish on the US listed Chinese stocks all year long and have traded in and out of them successfully at our ATP service.

Below we have the US SP 500 index chugging along bouncing off the weekly trendlines during this Primary Wave 3 upside move.  We maintain our 2213 target, which is a 161% relationship to Primary Wave 1 which was 704 points in upside length.

Take a look at the SSEC index charts on an 18 month and 3 year basis and you can spot the strength as well…

98 tmtf sp 500

98 tmtf ssec 18 month 98 tmtf ssec


Our opinion is this type of Bullish action in the Chinese names is only adding fuel to the fire that is the Elliott Wave Primary Wave 3 pattern we are in.  Wave 3’s in Elliott Wave Theory are very bullish in terms of sentiment by investors. All dips are bought, good news is great, bad news is good and so forth.  Wars, bombs, bank failures in Europe, deflation and any other pots and pans are deflected as investors feel the euphoria.  This should likely continue until we get in the 2200 SP 500 ranges, and once there the fibonacci relationship of Primary Wave 1 to Primary Wave 3 will begin to exert resistance on the uptrend.

At our Trading Service we have simply continued to ride the Primary Wave 3 trend to the upside, and rotate into the stronger sectors as they rotate.  We began getting aggressive with the Chinese stock names several months ago as we felt they were bottoming out in May of this year. Companies like JMEI, LEJU, TEDU, YY and so forth have been great trading and growth stock names.  Though the Chinese names are a bit extended, the growth rates relative to PE ratios are attractive as compared to their US brethren, and we expect to continue to exploit this until the gap closes or the sentiment exhausts itself.

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Gold and The US Dollar– Where are we at?

Updates on GOLD and the Dollar 8/5/14
The US Dollar has had a powerful relative rally from late June into early August. This has put pressure on GOLD. See the US Dollar chart below: (More notes under the chart)

85 tmtf us dollar

So this has led partially to the fall-off in Gold from 1346 to 1281 recent dip lows. Interesting that at $1281 we have a perfect 61% fibonacci retracement of the prior $106 rally from 1240-1346. We would like to see 1281 area hold for a new rally, and right now the US dollar is overbought as well. The counter balancing issue though is the Commitment of Traders report is showing the smart money commercial traders with very large short (Hedged) positions in GOLD… that is creating uncertainty for traders as well.

Otherwise, on a longer term basis the Stage one base continues over 13 months to build possible power for a big rally this fall. The next level of support comes in around $1263…. keep a close eye on that as key to hold…. 1281 is the 61% support

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85 gold

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Russell 2000 Outlook is KEY- Chart

Lets take a look at the small cap ETF IWM (Russell 2000 index).


The Small caps tend to lead both on the upside and downside.  This index has been hit almost 10% from the highs.


Right now it really looks like a Major 4th wave or Primary 4th wave from the 120.xx highs to the 108.xx lows recently.


Examining the Extension wave 3 from 70 to 120, we would look for a 23.6% fib retrace, 31.2%, or 38.2% retrace of that 50 point move right?


So far we have hit the 23.6% shallow retrace at 108.xx and the IWM is around 110


The next level is 104.50 plus minus 20 cents or so for the 31% fib retracement level


So we would say that if you look at the chart below and examine the LOWER stochastic indicators, you can see where during this Bull cycle the IWM ETF has bottomed each time with similar oversold readings.   Given that we are in a mid year election cycle and the market tends to be choppy to down till July or so, we think the small caps are trying to put in a bottom perhaps in May.


Stay tuned, but there are some extreme values showing up in the space on a stock by stock basis….


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Dave Banister
Active Trading Partners, LLC
The Technical Traders, ltd