Bill

Please rest. Sometimes I think a stock is "on the mend" but it turns out to be a head fake. Same can easily happen with pneumonia.

The immediate goal is to get healthy. Your posters will continue to support you and this forum. Their repeated counsel of rest, liquids, taking meds, speaks to their interest in you prioritizing your health.

The last couple of comments I have made here regarded gold. They were bullish setups due to oversold RSI and downtrend line breaks to the upside. They worked. Paul mentioned a comment I made a while back regarding the inverse head and shoulder formation that worked out(glad you were able to profit from that, Paul).

Here is an update.
Gold is soon going to struggle with it's 50% retracement (break above is bullish) and more importantly, it may break above the downtrend line of the symetrical triangle - another bullish breakout if it occurs.
Also, above the 50% retrace, is the neckline of a larger inverted h&s than the one we hit before. The target for this formation is new highs if it should confirm.
Due to the high batting average of the past few months, I have to wonder if this will work out as well. You can't bat 1000, but you can pay attention and continue to trade in higher probabilities, if that makes sense.
Gold daily RSI approaching overbought in 7 timeframe, but has a way to go for 14 and 21. Weekly RSI has a lot more upside, so not worried there.
We'll see where we go from here, but this week should be quite interesting and may be the end of the long (quite long) consolidation. Waiting for confirmation of course.
I am not so sure that gold stocks will lead here (due to a possible stock market topping action and fixed costs may rise if oil is bottoming - earnings are coming out soon so watch those), so some prognosticators may miss this move due to looking at $hui/$gold ratios for confirmation, but getting bad signals.
my $0.02

Get well soon. I don't think you are missing that much! The fun will begin when China (and emerging markets/commodities) start free-falling. Yesterday Asia and commodities enjoyed some sizable upside rallies.

clarification - new highs as in over $730

I was curious about how the 1987 crash actually unfolded on an intraday basis, and in my research came across a great play-by-play for the whole year leading up to it by The Motley Fool:

http://aol.fool.com/Features/1997/sp971017CrashAnniversary1987Timeline.htm

This article was writting in 1997, and my favorite part was when in the summary it stated reasons why it wouldn't be happening at that time (1997):

"...it remains obvious that many of the principal drivers leading to the 1987 crash are not present today. The rise in bond yields, crude oil prices, and the trade deficit combined with the collapse of the dollar and general investor confidence all provided the context for the collapse in stocks."

Seems like the only thing missing now is rising bond yields. Scanning through the article other familiar looking issues at the time:

-Federal Defecits
-Tensions in the middle east
-"Pundits blame a widening foreign trade deficit that is fueling the dollar's descent and consequently weighing on bonds. The Japanese yen and the Swiss franc have both risen substantially in the past two months. "
-"Many pundits blame portfolio insurance for the accelerated decline." - credit default swaps?
-"Former professional gambler Jack Keller decides to trade in his poker chips for a seat on the Chicago Board Options Exchange." - bankers going to hedge funds?
-"The dollar and bond prices both plummet after the House of Representatives passes an amendment to take measures to reduce the trade surpluses held by many Asian nations."

Anyhow, it makes for interesting reading.

does anyone really know when kry will recieve the finnal---finnal permit too get this show on the road??

If we knew we would all be richer, russty1. This is when an ignore button would come in handy. I suggested as such to Bill regarding billcara 2.0. or even a feature where you can only read posts from approved posters, than add onto that list. almost like a custom stock screener.

g034 - Thanks for your take on gold. I hope your batting 1000%.

The XAU has held the 131 line twice and is being tested again today. Lets hope that holds again.

"Merrill Lynch North American economist David Rosenberg recently increased his first quarter GDP growth forecast to 2.7% from his earlier estimate of 2%." - but he does call it the "high water mark" for the year.

http://www.tradingmarkets.com/.site/news/MARKET%20ANALYSIS/498157/

I am still of the mind that it is dangerous to compare market malady similarities from year x to year y, largely given that the N is so small, there can be no real confidence in either the correlation or the timing of such events. Weather people have the advantage of having vastly more data points, and accordingly, can assign some better probabilities to observable conditions. Therefore, we heed their warnings when they call for a gathering of ominous clouds along with a falling barometer and the blowing of ill winds. And though they bear our watching, they may not lead to bad weather.

I've being reading quite a bit, and I don't pretend to understand it all. But something that repeatedly strikes me is that most market downturns occur not due to failure in the economy, but rather the failure in the credit system. (The Depression was a credit failure, not an economic failure). Economy does well; market does well; increased liquidity encourages investment and suddenly you have asset prices that have gotten ahead of themselves—but it's not recognized as that, but rather people point to “it's different this time�.

There can be NO argument that there is a real estate bubble. When an asset class is priced out of the reach of the average profile of a homeowner, as opposed to speculators, then there is a problem—an incontrovertible one. For that reason, and that reason alone, I believe that there has been too much emphasis placed on “subprime� mortgages as being THE problem. It's the symptom of the larger bubble—it's not just real estate, it is treasury markets, with artificially low rates because the system is awash with money and will look for a home, despite its providing a paltry return. It's commodities, though we may be seeing some cracks there. It's emerging markets.

I'm left to wonder ,then, that it isn't the stock market that accurately forecasts the demise in the economy, but rather it is the fallout from these excesses that doom the economy. Maybe that sounds stupid, but it has some merit. An over-leveraged system when it receives a shock clamps down. A clamped down credit system has no juice to lubricate the economy, and the gears wind creakingly down.

So if excessive speculation, which leads to excessive leverage, is the root of all financial market evil (and I'm beginning to believe that it is), then the question really isn't whether or not we'll have a hard or soft landing. Rather, it is whether or not market participants will continue to have confidence in the underlying financial structures. Currently, it looks like money is falling out of one asset class into another (e.g. commodities, into tech). But when there is a stumble and a scraped knee, the other side of liquidity, as Bill reminds us, is the debt that is created. And once the perception of the asset is one of declining value (whether stocks, bonds, real estate, commodities), then that debt is going to get satisfied to maintain appropriate debt/asset ratios. To be satisfied, the asset class must be liquidated, and prices must come down. And that is the prick in the balloon. So the question is not a hard landing or a soft landing. The question is whether or not it is a pop or a hiss. If we get a pop, we will have a hard landing. If we get a hiss, we'll get a soft landing.

But I don't know a thing, and all of this represents a view rooted in ignorance and inexperience. But this is how I make sense of it.

Even as Bill recovers he continues to make headlines.

http://gold.seekingalpha.com/article/24575

Leisa,

Thanks for the thoughtful post. Though no expert myself, I believe you are correct. The key to major reversals seems to be loss of investor confidence after excessive risk taking. I have been reading Pring's book Technical Analysis Explained, as recommended by Bill. He has a chapter on the credit markets and their relation to equity markets. He says that every bear market has been preceded by a change in the credit markets, specifically a peak in short-term rates. These are bid up as speculators leverage themselves. Once they lose confidence, 3-month rates start declining as demand for speculation subsides. At some point after the peak in short term rates - could be some months, the equity markets reverse (usually, though not always).

Check out Mish's site here for article to be published tomorrow: http://globaleconomicanalysis.blogspot.com/. (I got it through a Whiskey & Gunpowder email). He points to some stories about credit tightening in the subprime mortgage markets and how this likely will spread to other credit markets. This is potentially the loss of confidence that you are getting at. A substantial number of subprime lenders have already closed their doors.

Also, there are indications that Ecuador intends to default on their international debt. From what I've read, this would be the first time a country in good financial condition with the ability to service the debt has refused to do so. They claim that debt enterred into by a military dictatorship is not valid. Interest payments are due February 15th. If Ecuador defaults, there may be a mass repricing of risk in the credit markets, especially regarding emerging markets.

I feel like we are at a major turning point. There seems to be a lot of indecision now, with players waiting for the next shoe to drop before they commit more capital or reduce risk.

Estimated hedge funds (HF)are roughly between 8,000-9,000 per Alan Abelson in Barron's. Now he's usually bearish so you take that into consideration when reading; however, with that number of hedgies reflecting the popularity of the funds, Abelson cites the increase of "unskilled laborers" entering this HF market including former Treasury Secretaries Snow & Summer, former government official Richard Breeden and now Madleleine Albright, former Sec of State.

Who's next? A hockey star? Barry Bonds of baseball? How about Madonna?

Leisa,
Alan Greenspan felt the same (if I think I understand what you are saying)

This is the only (but not charitable) reference I could find right now
"Throughout his career as Fed chairman, Greenspan has relentlessly propagated the view that the business cycle is a mysterious phenomenon, the result of imponderable forces operating deep within the market economy and inaccessible to human reason."
http://www.mises.org/story/620

So let's get this straight:
- Ecuador, a country in good financial standing is going to default on international debt,
- Russia is expropriating Shell assets,
- Venezuela is nationalizing everything in sight,
- Canadian government changes the rules on income trusts and causes billions in losses to investors,
- Goldman Sachs changes their indexes (not once but twice) and causes billions in losses to the oil industry and/or hedge funds.

So in North American and maybe the world, Mexico is the safest place to invest? Go figure. (Obviously said tongue in cheek but it is showing the real risks of being invested long anywhere.)

g034 agree with your overall gold comments, has firmed-up however $ 640 was a bitch today. One observation I have here is that P.M. stocks have not kept R.S. with product noting that just 6-8 weeks ago Gold was at the same level with many contigent equities 10+% lower now (e.g. GFI, SLW); my juniors seem to be holding-up better but nothing to brag-about. Overall market is VERY toppy; however have noticed strength in some areas here I wouldnt have expected (e.g. some retailers, I.B.'s-has the recession we are already in been canceled due to lack of enthusiasm?). Until crude tests $ 48 well hec that 5 handle in 90% of my cash lookin just fine. Really have missed the fun of an old fashion sell-off frankly.

Rick, there is nothing "old fashion" about this market anymore and absolutely no old fashion sell-offs in stocks allowed ;-)