Wednesday's steep decline pushed the major indices to levels very close to falling off a cliff. A busy day indeed. Today, a strong GDP report (best in 2 years) re-ignited the bulls. The dollar dropped, commodities popped.

My target on Gold remains 1200-1300. I will however, stretch my time frame from the end of this year to a 3-6 month period. Gold has pulled back to near its high in March. For you Fibonacci followers, Gold hit the the 38.2% retracement level at 1037.3 & stayed above the 50% level at 1027.07. Gold is popping VERY nicely today.

Oil is bullish above 76. This level was ”MAJOR RESISTANCE” & now is “SOLID SUPPORT”. Target is 90 in 3-6 months. Even if the market declines, Energy continues to stand out as a sector with the potential to move against any downtrend and even lead the next leg of the bull market. I am utilizing GLD & USO options. Time will tell.

Post edited 2:57 pm – October 29, 2009 by optimism

Hi Darrel, what's driving both Oil & Gold right now, are the technicals. I'll look at a chart that goes back 25 years or more, all the way to a one day chart.

You have my targets on Gold & Oil but I also like the Emerging Markets, the BRIC's with emphasis on China. Watch the Halter USX China Index which found some trendline support yesterday, but still sits below the 50 day moving average. A recovery of the 50 day m.a. & especially a break and hold above 5538.32 would be considered EXTREMELY bullish.

The number of stocks correcting has grown to include different industry groups in a normal dip within an bullish long-term trend. This is an opportunity to take profits in some of the risky names, and to start making a plan to target stocks to buy for the next leg up, which could begin within the next 2 to 4 weeks. After out-performing on the upside this year, the small cap stocks have corrected more than the large cap issues on this recent pullback. (-10% vs. -6%).

The market has completed the 2nd leg of a 3 leg move to the upside, and the next rally could be the strongest of the 3, in typical Elliott Wave fashion. Short-term, correction target is down the 9200-9400 area on the DJIA, along with comparable moves by the other indices. The next move up can favor the more defensive names in the Consumer Staples, Healthcare, & most high yield stocks, in addition to Energy, Industrials, and Basic Industry stocks.

MAJOR BREAKOUT ON GOLD TODAY!

Stockcrazy, you're always welcome.

With this market as up and down on an almost daily action, I believe that more people are starting to believe that this recovery is in fact, stimulus driven and is a short term deal. Someone tell me that the next GDP numbers aren't going to create a great downfall in stock prices.

In post # 187 on this thread, I mentioned that in the short-term “ The total time of this recent pullback could last somewhere between 3 and 5 weeks, with 2 weeks in already. The magnitude is 5% to 10%, and so far the S&P has pulled back around 6% from its peak” . I also added “ wait for more technical proof that the trend may be ready to head higher.”

Now let’s address the long-term.

The 4 & 13-month moving averages for the market indices have recently crossed to the upside and that is VERY bullish. There have been 6 signals in the last 20 years ( 3 bullish & 3 bearish). The last bearish signal triggered in February ‘08 & the new bullish signal triggered at the end of October ‘09. These are the moving averages that are the MOST RELIABLE in identifying the long-term trend of the market and imply that the bull trend could last a minimum of 6 more months to several years in duration. Opinion are just that…………LET THE CHARTS DO THE TALKING.

Hi SMcGuire45, I'm referring to DJIA 20 year “DAILY frequency” chart. I hope this helps.

The market may be approaching a bottom & turn point, but I’d like to see at least 2 days in a row of positive closes in order to be more convinced that another leg to the upside is beginning.

The market is now more oversold than it’s been since the March low, which means that most stocks have pulled back significant amounts and are at or very close to good support levels. After some bottoming and holding support, quite a few stocks could be ready to rally again. This is a process that could take another 1-3 weeks to accomplish. A correction low is approaching & so it is too late to sell and just about time to buy. Time will tell.

Congrats to the Bronx Bombers on their unprecedented 27^th Title !

I was expecting a pull back too but it seems that gold price hits another record and most gold stocks are up 3~6%. The futures showed a sharp drop initially but pared back the losses by opeing.

Thanks for the pearls of wisdom. I need to stay disciplined.

Darrell, here is a tip on Oil. Still strong as long as it remains above 76. Oil recently formed a classic Downward Sloping Flag. Using Fibs we got close to the 38.2% retracement & now could see a 50% retacement at 96.50 the NEW TARGET. Oil has the potential to hit this level but first it needs some technical confirmation. Look for the MACD to go positive & or a break above 85. We are not there yet but these are VERY important levels to watch.

If you follow this thread, you know I mentioned this pullback can end as early as this week. The pullback has ended & the trend is now back in gear to the upside. Yesterday more than 80% of NYSE stocks were up, led by natural resource & materials ( Déjà vu ). The advance is being tied to the dollar, but other reasons will soon emerge as the strength continues. The market is in an area of low volume resistance overhead. The DJIA is near breaking through a long term downtrend line that cuts through the 10400 area, after which the trend could accelerate, so stay optimistic. Time will tell.

The S&P 500 is approaching the 1100 mark. Here are some key levels to watch. Fibs 50% retracement is at 1119.46 then 61.8% at 1224.39

optimism said:

I mentioned yesterday “the pullback is over and a new uptrend is beginning”. The major indices are moving up together in a powerful trend that can continue to defy the many claims of “ the market has run too far too fast“. When the naysayers find reasons to be bullish at HIGHER prices, then start to worry.

Stay bullish on the Energy sector.

Heads up on Gold, it just smashed through its real resistance at 1110, as well as the psychological 1100 level. Congrats to the Gold Bugs.

Two days in a row, the market went up quite a bit only to be reeled back in by profit takers. I think there is still quite a bit of jitters in the market.

Somehow, gold mining stocks are not able to keep up with the torrid pace of bullion gold.

Thanks Opti for the clear explanation. I think I willl look into GLD and USO.