September Dow - Stocks bounced sharply Monday on reaction to the U. S. Government takeover of Fannie Mae and Freddie Mac. It's hoped the takeover will help strengthen the housing market and turn the economy around, but I'm not so sure. Stocks fell last week off of disappointing August retail sales. This falls 'Back to school' shopping was a bust for all but the discount chains, leading many to speculate the coming holiday shopping season will be poor as well. This weekends box office winner, Bangkok dangerous, only brought in 7.8 million. That's it! Consumers have tightened their purse strings and I don't see how the Government's action, concerning Fannie and Freddie, will change that anytime soon. It's expected that the bailout could cost U.S. Taxpayers as much as $300 billion. How's that good for the market? It's time now to move to the December contract. A rally into Tuesday could setup another selling opportunity. Our downside target is 10790.
December Silver - Based on the monthly chart, silver is likely to drop to the August 2007 lows of 11.06.
December Gold - The late night TV commercials are still touting "buy gold" with claims of $1,000 and more. Apparently, they haven't figured out that the game has changed. With the index funds liquidating long gold positions, gold prices are very much in a bear market. A break below $793.00 should generated additional selling pressure. Last week I wrote, "I would expect a three wave sell off from here -- possible knocking gold back to its June 2007 levels of $650." That still holds.
December Canadian Dollar - In the last issue I wrote, "Thursday's rally appears only to have offered a selling opportunity. Technically, we should expect another two waves lower -- possibly to 89.95." The current chart pattern supports those comments. Sell a break below 93.00
October Crude - It's only a matter of time before crude oil drops below the $100 a barrel level. True, the supply and demand picture hasn't changed. In fact, with Russia and Venezuela planning "war games", off the coast of Venezuela, in late November, crude prices should be rallying. Instead, they're falling. I continue to remind you, index funds drove this market up by creating a synthetic shortage. Now, those same index funds are selling and they'll continue to do so, pressuring the market in the process. Currently, October crude is in the 'B' sell wave, which should drop the market to $97.50. In the long range, I'm expecting crude to fall back into $70 range. |