I have to be honest that I am grappling with a few possible counts since the March 2009 Bull market commenced in terms of the big picture.

With Elliott Wave Analysis, you have to anticipate, monitor, and then adjust.  Most of the time I go with my instinct and then only adjust if it looks like I was way off the tracks.  The only time I tend to get way off the tracks is when I read too many opinions, so I’ve shut myself off from reading other’s opinions and below is my gut  right now:

I know I have labeled one option as the 1074 lows being primary wave 2, with primary wave 3 underway since (1074 to current).  However, I have to admit my instincts still tell me that the 1074 lows may have been primary wave 4, and we are in primary wave 5 up now.

Whether it was 2 or 4 is not super important short term because we would either be in a Primary 3 up or Primary 5 up now which is bullish either way.  However… if it’s a primary 5 up, then it changes the longer term pictures and also 5th waves can be difficult to assess.

There is another rule that says wave 3 can’t be the shortest of waves 1, 3 and 5 (All up waves).  Therefore, if we are in primary 5 up now from the 1074 lows then we can’t rally more than 360 points from the 1074 lows (Wave 3 was 360 points).

So here is the possible count if this is Primary 5 from the March 2009 lows with normal fibonacci relationships:

666 to 1221-  1

1221-1010- 2 (38% of 1)

1010-1370- 3 (61.8% of 1)

1370-1074- 4 (38% of 1-3)

1074-??? – 5 (Normally 50-61% of 1-3)

So if wave 5 cant  be longer than wave 3, and let’s say wave 5 is 50% of waves 1-3… that would put a top target at about 1426 on the

SP 500 index.  That would make wave 5 just shorter than wave 3 following the rules and would complete 5 full waves.

So that is what I’m grappling with because if this is a primary wave 5 up from the Oct 2011 lows of Primary 4… then we would need to be on our toes for a bull market pivot top.  If its primary wave 3 up , then we have much further to stretch.

Right now, the evidence is leaning to this being primary 5 up… below is my chart and I will keep you updated.  The volume, MACD, and other indicators will help point the way.

Note how the volume has been declining on every primary wave rally 1, 3, and 5 so far.  Note how the MACD line uptrends on each primary wave rally as it is now…

Stay tuned

Dave Banister – www.MarketTrendForecast.com

The prevailing universal sentiment is neutral to bearish by advisors and the general investing public.  Who can really blame them given the Euro-Zone mess, the potential bank contagion collapse effect, and the weak economic trends both here and overseas.  However, the work I do is almost entirely behavioral based analysis looking at crowd or herd behavioral patterns.  Right now, things are adding up to a market bottom as early as the October 7^th-11^th window of time and no later than October 28^th . The figures I have had for a long time are 1088 for a bottom with a possible worst case spillover of 1055-1062 in the SP 500.  We are already eyeing the Gold stocks as bottoming out as well and have begun to nibble and will add on further dips.

Let’s examine some of the evidence and then look the charts as well:

1. Sentiment in recent individual investor surveys had only 25% of those polled bullish. Historically that average is 39% or higher.
2. The volatility index has been pegging  the 43-45 window recently and historically markets have major reversals anywhere from 45-50, with rare cases of that index  going over 50 without a major reversal
3. The German DAX index is carving out what looks like a bottom channel, and if it can hold the 5300 plus ranges, it could be a leading indicator of a US stock market run
4. Seasonally, markets tend to bottom in the September-October window with favorable patterns from November into March/April.
5. Historically, markets tend to correct hard with a “New Moon in Libra” which occurred last Tuesday, the same day the market peaked at 1196 and rolled over hard.  They often bottom with the following Full moon, which is scheduled for October 11^th.
6. Elliott Wave patterns I use indicate we are in the final 5^th wave stage since the 1370 Bin Laden highs, with a gap in the SP 500 chart at 1088 from September 2010 still to fill. That gap happens to coincide as 78.6% Fibonacci retracement of the 2010 lows to the 2011 highs.  It’s also has a 50% Fibonacci correlation with the 1356 high to 1101 swing move this summer.

Bottom line is the SP 500 has withstood a ton of pots and pans and bad news over the past 8 weeks.  The market tends to price in a soft patch in the economy way before it becomes evident in the data. To wit, when we topped at 1370 in May of this year, it was an exact 78.6% retracement to the upside of the 2007 highs to 2009 lows.  The pullback to 1101 is an exact 38% Fibonacci retracement of the 2011 highs and the 2009 lows.  Markets are not as random as everyone things, and if you can lay out a roadmap in advance and understand where key pivots are, you can swing the opposite direction of the herd and profit quite handsomely.  This is what I do every week at my ActiveTradingPartners.com trading service; go against the crowd for handsome profits.

Below are two charts showing two likely outcomes in the SP 500 index in the coming several days to few weeks:

Forewarned is forearmed as they say.  If you’d like to stay ahead of the curve on Gold, Silver, and the SP 500 on a consistent basis, take a look at www.MarketTrendForecast.com , where you can sign up for occasional free reports and/or take advantage of a temporary 33% off coupon to join us!

David Banister- www.MarketTrendForecast.com

Monday morning, August 22nd:

Just under two weeks ago I wrote about gold likely running to a final top with various levels ranging from 1862 to 1907 per ounce as likely. So far, we bottomed with a pivot at $1730 which I mentioned to my paying subscribers and we have run to as high as $1898 per ounce counting futures trading on August 22nd. What should we expect now as the most likely intermediate trading pattern for Gold?

Clearly, Gold is overbought on traditional technical measures such as RSI, MACD, and Moving Averages and more, so that is one warning flag. To wit, Gold historically pulls back pretty aggressively anytime it has run much above its 20 week EMA line. On a daily chart that stands at about $1730 per ounce, and on a weekly chart around $1580 per ounce. This week marks Fibonacci week #8 from the 1480 pivot lows of a wave 4 pattern I outlined for my subscribers as likely to turn gold higher to 1730 plus. In addition, we are 34 Fibonacci months into this 5 wave Bull Run from the October 2008 $681 lows.  We have been advising our subscribers to short gold in scales at 1862, 1880, and 1907 pivots.  I expect these areas to be a major short term top, followed by a significant drop near term.

I use Elliott Wave Theory combined with sentiment indicators and other measures to help determine major buy and sell pivots for Gold, and this methodology has been extremely accurate and successful for years. Right now I can count Gold as coming into a final 5th wave thrust to all- time highs with sentiment running at huge extremes and technical patterns screamingly overbought. This action in Gold over the last many weeks reminds me of the final blow-off top of the NASDAQ in 2000 as it ran from 4000 to 5000 in a few months and exhausted the buyers. This 5 wave pattern began 34 months ago and the final 5th wave usually drags as many taxi cab drivers onto the back of the Bull just in time to dump them off with a bag in their hand and no ride.

The bottom line is Gold is in a 13 year upwards cycle, and we are in about year 10 and it’s due for a likely pause in the uptrend, and certainly a correction of 10-15% would be normal in any massive bull cycle to kick all the bulls and latecomers off the back of the charging Bull. This pause should be a Primary wave 4 consolidation, where 2 and 4 are corrective and 1, 3, and 5 are bullish cycles.

Below is the latest chart on gold, not counting the overnight $1898 highs last night, but you can see that Gold is above the normal pivot high lines where we have seen major corrections over the past 34 month up cycle. Gold should be at or near a top here.  A major parabolic blow off rise is of course possible, but hedging long positions and or considering shorting gold for the more aggressive players is advised:

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Bears yelling fire in empty theater

Let’s clarify the SP 500 situation here: (Sent to my paying subscribers on August 16th)

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The lows at 1101 were a convergence of fibonacci weeks, months, sentiment bottoms and VIX extremes along with major insider buying all at the same time.

We rallied up in 5 waves from 666 to 1370 Bin Laden highs.  At that level we had re-traced 78.6% of the entire 2007 highs to 2009 lows, a common turning point.  Since then, we have had a 3 wave decline, also common for correcting a 5 wave move to the upside.  The decline halted at 1101, an exact 38% fibonacci retracement of the 666 lows to 1370 highs.  This is what I call a “fibonacci intersection”. The same thing happened in July 2010 at 1010 on the SP 500, where a huge bottom formed.

The rally since 1101 was a 5 wave rally, this is an early BULL SIGN.

A correction of this 103 point 5 wave rally would be normal, but the lighter the correction the more Bullish.  So far the correction is only 23% of the 104 point rally with a gap fill at 1180.

Let’s review:

13 fibonacci month’s from the July 2010 bottom to August 2011 bottoms

7 Times in history we had the SP 500 double ina short period of time, and in every case it retraced 27-40% of the price movement from lows to highs. We just retraced 40% of our SP 500 double, historically very high retracement.

At 1101 we had 38% fibonacci ABC correction of the Bull leg from 666 to 1370

In 1974-77 we had the SAME pattern, which I outlined for everyone last week.

13 Fibonacci weeks correction from the Bin Laden 1370 highs to 1101 lows. 1370 was a 78% fib of the 07 highs and 09 lows. 1101 is a 38% fib of the 666 lows and 1370 highs. Thats what I call a Fibonacci intersection. The same thing happened in July 2010 at 1010 lows.

Insiders with massive buying, corporate buybacks announced.

VIX at extreme levels

Fear gauges at extreme levels.

5 wave impulsive rally from 1101 to 1204 ensued… now a pullback is due. Same thing happened last summer 1010 to 1130, pullback to1040 in 3 waves, then another 5 waves up.

What am I telling everyone?

Stop yelling fire in an empty theater….

This is options expiration week, trading this week is notoriously difficult…

The Bear case is crowded, the Bull case is not.

I’m leaning bullish as long as I keep seeing this type of confirming price action.

I’m watching 1165 on SP 500 as a pivot low worst case, but as long as we see price action above that I like the set up for a while yet on the long side.

(But Dave, the textbook for Elliott Waves doesn’t agree with you… good, that’s why I use other indicators)

Consider subscribing so that you will be consistently informed, have 24/7 Email access to me with questions, and also get Gold and Silver forecasts on a regular basis. Subscribe now with a 33% discount coupon ahead of our rate increase. www.markettrendforecast.com for details.

David Banister- www.MarketTrendForecast.com

August 10th 2011

Gold hit $1805 tonight in trading, a Fibonacci Fractal figure I gave out a few weeks ago as a possible top. We are close to a near term high in Gold and Investors should be trimming back positions on this run. Back as recently as $1600 an ounce I forecasted a run to $1805 for Gold using fractal and wave analysis and behavioral patterns, now that we hit that figure it’s time to update the cycle and where we are.

Here is the Chart I did at 1599 gold on July 22nd:

I have been a Gold Bull since November 2001, having conducted seminars for public employees on investing back then and advising gold mutual funds and gold stocks very early. I have talked in the past about a 13 fibonacci year Gold Bull cycle that will end around 2014, so there are still three years left in my opinion. However, gold does have peaks and valleys and has moved in very clear Wave and Fibonacci fractal patterns for years.

Given the history of how I have forecasted Gold, I am going to share my short term and moderately long term views on where we are in the up cycle which I expect to last 13 fibonacci years to 2014. Right now it is my opinion that we are completing a MAJOR WAVE 3 up in Gold from the 2001 lows from $300 an ounce. We have had a 34 fibonacci month rally since the October 2008 lows of $681 per ounce. Every Taxi driver, CNBC guest or analyst, and 200 Radio and TV commercials a day are blaring to buy Gold. This is how intermediate tops form.

The rough wave count is below:
Wave 1- 300 to 1030
Wave 2- 1030 to 681 (October 2008 lows)
Wave 3- 618- 1805 currently, 34 Fibonacci month cycle. *Likely high is 1862-1900*
Wave 4- Due up next… a multi month consolidation

It is my opinion that at the top of a Major wave 3 in Gold, that everyone should be univerally bullish, that gold radio and TV commercials would be all over the place, and that everyone on CNBC would be talking about and recommending Gold.

Sound familiar?

So the likely conclusion to this massive parabolic blow off top of Wave 3 is nigh. Most recently I upped my estimates to as high as $1900 per ounce with $1805 already here as of tonight, which was one of my figures by the way many weeks ago. Gold should under normal circumstances top between 1862 and 1900 per ounce fairly soon should the 1805 level not hold as a high. At that level we will be dramatically overbought. We are already running 15.7% above the 20 week moving average line which historically is about as high as Gold will get before correcting hard and consolidating. A final lift to the 1862-1900 ranges should lead to a fairly good sized correction to the downside designed to kick all the late comer Taxi Cab driving buyers off the bull’s back. With that said, at $1805 I would be trimming my position and or hedging my long positions aggressively.

Watch for a Maximum Gold top at 1862 -1900 per ounce and keep in mind 1805 is being hit tonight and that is a qualifying fibonacci fractal top as well. Investors should be trimming back positions and looking to re-deploy back into Gold at better prices. We could get a huge blow off top over 1900, but it would be very very rare if it happens.

If you’d like to stay ahead of the peaks and valleys in Gold, Silver, and the SP 500 (Recently called a tradable bottom at 1101), then check out www.MarketTrendForecast.com for a 33% 48 hour coupon or sign up for the occasional but infrequent free updates.

David Banister- www.MarketTrendForecast.com
The markets bottomed last Friday at 1168 roughly on the SP 500, then violently reversed with a 47 point rally to 1215. I had forecasted a likely short term bottom at 1176/1188 ranges with a possible 60 point rally coming. With that said, I didn’t think it would all happen in nearly 1 trading day.

On Friday night, as most now know… Standard and Poor’s downgraded the US Debt rating to aa+ from AAA. I would suspect that the bigger players already knew this a few days prior and were short the market with that information. My pure speculation here is that within the first hour that some of these same participants will have covered their shorts and probably be looking to buy some calls or get long certain stocks if there is short term panic and we reach oversold short term extremes.

Clearly though the patterns suggest we are in a bear cycle as evidenced by the 1233 break last week, but there will be tons of trading opportunities with violent rallies along the way as well, trying to time those will be the hard part.

One of the downsides to owning shares in companies in the public markets is that panic and hysteria can very quickly mis-price a security that represents shares in a company to well below where it would be valued as a private ongoing business. This however also represents opportunity for those with the right time horizon and the stomach to accumulate when there is a mis-pricing of those securities.

I can already find many samples of small cap firms where they are not trading dramatically above cash per share and certainly below total fair value per share given their assets. I will be looking at some point to scale into a few of these companies given that they are trading below a fair private value in the public markets.

With that said, where does the broader market go on Monday? Nobody knows, and certainly the sentiment gauges as of last Wednesday had turned historically very bearish prior to the Thursday and Friday drops.

Note below we have an increase as of last Wednesday of Bears by 18% to historically extremely high levels. Bulls were down to 27%, which is historically about 12 points below the average. Source: American Association of Individual Investor’s August 3rd survey:

Many traders who were formerly clinging bullish were caught in a stop loss and margin call induced liquidation late in the week. I would guess that hangers on will be equally caught on Monday this week in margin calls and possible stop loss sweeps.

The smart thing to do is not panic and make sure you understand the valuation of the business you own shares in if you have stocks, and decide how crazy the market participants may get in their voting near term.

When the SP 500 fell below my 1233 line in the sand, it pretty much confirmed a new Bear Market for me, even with the 1168 pivot on Friday. The last very outside shot for Bulls intermediately was for 1168 to hold and run, but we may or may not do that on Monday or this coming week. The Elliott Wave patterns are confirmed bearish with the 1233 break, and so other than some miraculous turnaround off the 1168 pivot that holds…we must remain cautious. I was looking for a trading range from 1176-1260/80 for a while as MOST LIKELY…. but all we can do is find out to what extent cool heads prevail or not this coming week and I’ll update from there. Right now the weekly charts are super oversold like November of 2008. With that said, I make a case for a possible bottom around 1096 now on the SP 500 as possible worst case.

In this history of the markets, we had a major bottom on the SP 500 in 1974 which was followed by a 25 year bull cycle to 1999. On March 9th 2009, we bottomed at 666 and re-traced a Fibonacci 61.8% of that entire 25 year bull cycle over 8-9 years in ABC Fashion, which would makes sense.

Just prior to that I forecasted a major bottom on February 25th with an article, “Is the Market about to Bottom and Nobody Knows It?” You can Google it to find it.

Now with hindsight, we see 1370 hit on the Bin Laden killing and that was a 78.6% retracement of the 07 highs to 09 lows. However, dialing back to the 1974 low, we rallied into 1977 in 3 wave fashion to the 1977 highs, went sideways awhile… we then had a major drop from 107 to about 87 on the Index over about 12 months… corrected a good 20%. Does history repeat in 2009-11? We rallied in 3 waves, we have gone sideways… and then we drop 20% or so? If so, that takes the SP 500 to about 1096… Another 104 points. At 1096 that would represent a 38% Fibonacci retracement of the Bull cycle from 666 to 1370.

Food for thought… if you’d like to get more frequent forecast updates on the SP500, Gold, and Silver please look at www.MarketTrendForecast.com and take advantage of our 33% discount option.

There are only two valid counts left for either a continuation of this Bull Market from the March 2009 lows, or a new Bear Market that began in 1370 on the SP 500.

1.  Bull Option:  Most bullish counts have been eliminated in the past several weeks, but especially just in the last 8 trading days.  We went from 1347 to 1250 in a hurry and that eliminated the bullish views I had leading up until then.  The Elliott Wave patterns were still valid at 1347 for much higher levels to come until this recent downdraft or mini-crash.

Bull Option Left:  There is only one valid count left, and that to me means we need to pivot around 1258 or 1223 as the two likely options of a major wave 4 ABC pattern correction off the 1370 highs.  A drop to 1223 would be a 38% fibonacci retracement of the rally from July 2010 to the 1370 2011 highs.  That would be a typical 4th wave retracement level, and would fit in with a continuing bull market structure.  That option is outlined below in a chart:

Bear Option:  Right now, a very valid Bear count shows 1370 as the end of an ABC rally from the March 09 lows.  That ABC rally is called a “Zig Zag” pattern, where you have 5 waves up, 3 waves down, and 5 waves up to end it.  In addition, at 1370 we hit resistance on the Bin Laden rally which hit the exact .786% retracement (FIbonacci ratio) of the 2007 highs to 2009 lows.  Folks, this pattern is now looking the most likely after the recent 8 day drop.  That pattern is outlined below in a chart as well.

We will have to let the market tell us, but if we get much below 1223 on the SP 500 then that Bear Count is virtually assured and we will want to be trading ETF’s mostly and reducing stock trades or only scalp trading quickly in and out.

Consider joining us at TMTF and benefit from our forecasts on Gold, Silver and the SP 500! Get a 33% discount today by going to www.markettrendforecast.com

David Banister- www.MarketTrendForecast.com

Back in Mid-May of this year we had a big rally in the Dollar and Gold was correcting hard. There was a bit of Dollar Bull hysteria at the time which I felt was quite unfounded. I wrote an article entitled, “The Dollar Bull Monkey Dance Will Soon End Badly, QE3 Next?” You see, the collective herd psychology at that time, just a short ten weeks ago, was that Gold would drop hard at the end of QE2, and The Dollar would of course rally as high as 82, maybe more against the weighted index.

The dollar has dropped hard since mid-May as I expected and Gold has continued to rally as well. I had forecasted $1627 for Gold back when we were under $1,500 and last Friday we closed at $1627 on the nose! During the mid-May time, most disagreed with my QE3 forecast, and probably still do but I think the ships is soon leaving port. This could blast Gold up to a target of $1805 on the high end and certainly into the low 1700’s to the $1730 per ounce range.

Gold has had a powerful 5 wave rally (Elliott Wave Theory) since the October 2008 lows of $681 per ounce, and certainly one could argue that a correction would make sense fairly soon. However, the fundamentals for Gold are only getting stronger as we have inflation climbing at an 8-9% real rate and interest rates continuing to drop. This is creating a “negative” real interest rate environment amidst a continuing weaker US dollar. Hence it is hard fundamentally to argue against Gold at this time, creating difficulty in forecasting the intermediate highs and lows.

With that said, assuming QE3 or some form takes place soon then my $1805 target is quite likely to be hit before we can look for any meaningful correction in the precious metal complex. With the ISM manufacturing index turning down sharply as reported this morning and other economic indicators and GDP report rolling over, a QE3 ship horn is likely to sound soon. Below is my latest chart dated July 22nd with Gold at $1599 at the time, outlining the likely interim moves in Gold using my crowd behavioral methodology that I employ at my forecasting service.

The combination of crowd behavior and fundamental analysis often delivers stunningly accurate forecasts in advance on the SP 500, Gold and Silver at TMTF. Consider signing up for our regular updates and use our 72 hour coupon code at www.MarketTrendForecast.com

David A. Banister- www.markettrendforecast.com July 20, 2011

How many times have you scratched your trading head wondering why gold or silver were either rallying hard or dropping hard on seemingly bearish or bullish news? How about the general stock market represented by the SP500 Index? Has it ever rallied when the headlines were horrible or tanked when the news seemed good? Well, welcome to crowd behavioral dynamics and investing!

At my TMTF service, I use Elliott Wave Theory combined with a few other indicators like sentiment gauges and Fibonacci relationships to forecast the coming bottom and top pivots in Gold, Silver, and the SP 500 indexes in advance. In doing so, I often ignore the day’s headlines completely and rarely if ever use them to forecast the next movements in the precious metals or broad stock markets.

Let me give some examples of why you should learn to ignore economic indicators, headlines, and talking heads on CNBC and elsewhere and focus on crowd behavioral patterns. Learning to scale in long when everyone is getting bearish and taking profits when everyone is universally bullish is much easier if you follow Elliott Wave Theory, and apply that theory correctly. If the matter between your ears is unabashedly biased, it will not work… one must be objective and open minded to change to survive these volatile markets.

Recently with Gold, we had a major drop from $1557 to $1482 over brief window of time. When I last wrote about Gold several weeks ago publicly, I presented a bullish and a bearish case. I had said Gold must close over $1551, otherwise it may have a truncated top and correct hard. Sure enough, a few days later Gold hit $1557 intra-day and could not get over $1551 on that close. Within days it collapsed and dropped below $1500. How did I know this in advance? Crowd Behavioral Patterns are repeated throughout the markets over and over again and again. Here is the original chart I sent out many weeks ago showing the possible drop:

Gold did end up dropping to the 20 week Exponential moving average at $1480 range, and as it did I noticed a clear “ABC” weekly pattern. Now this is an Elliott Wave pattern that can warn you of an imminent bottom in Gold in this case. In late June, after this major correction I wrote up another chart and showed a potential bottom coming in Gold around 1480, and then on July 5th I confirmed the Bull views on Gold were coming back into play, which you can see with the June 29th chart I did below for my TMTF subscribers:

We were able to adjust our views from short term bearish to moving back to bullish and still catch the big swing in Gold. The precious metal rallied from $1480 ranges to $1610 recently, and now is likely to go through a minor correction to $1568 or so. All of this is the crowd’s action together pushing positions into overbought stages of hysteria, and back to oversold stages of pessimism…I simply track those patterns and try to forecast the next move ahead of the crowd running in or out.

Another sample is Silver as it collapsed from $49 down to $32-$33 per ounce not long ago. After the dust settled I sent out a chart and told my TMTF subs we would likely see Silver trade in the $34-$41 range for quite a while, before mounting another attack back towards $50. Right now I see Silver soon running to $45-$47 per ounce once it takes a breath. Below is the original early June silver chart I sent to my TMTF subscribers: We had an ABC strong rally which we forecast at TMTF in late August 2010 ahead of time, and once those rallies are over it takes quite a while to work off the sentiment.

Silver has indeed consolidated as forecast for about 7 weeks now between 34-41, having recently hit $40.80 and backed off. I expect Silver to break out over this range soon and attack $60 by year end as possible, but certainly $46-$50 by the fall. Last Wednesday I finally went bullish again based on crowd patterns and told my subs to go long at $37 as you can see below in the chart sent out then with a target of $46 likely coming. The herd of investors had formed yet another ABC weekly pattern, and it was time to go long.

Finally we look at the SP 500 which I forecast on a regular basis as well using Elliott Wave Theory and other indicators. This past week or so we saw a huge drop in the SP 500 and broader markets supposedly on Italy concerns and Eurozone issues. Although I am well aware of these issues, they are used to explain what just happened in the stock market, but not forecast it. Late last week I sent out the chart below to my subscribers and said as long as 1294/95 pivot holds, I remain very bullish on the markets. The SP 500 hit 1295 and has since rallied 31 points in a few days catching everyone off guard. That is Crowd Behavior 101 if I ever saw it!

The bottom line is understanding that the precious metals and broader markets tend to move based on major swings in sentiment from optimistic to pessimistic. The collective psyche of the herd is the most important because we can have periods of very bad news where the market will continue to rally, and also periods of seemingly great news when the market is dropping. The perception of the news of the day and how the crowd decides to react is more important than the news itself! If you’d like to try the TMTF service and take advantage of a coupon as well, go to www.MarketTrendForecast.com and check us out. You can also sign up for an occasional but somewhat infrequent free reports.

The Canadian Venture Index has been in a multi-month correction pattern from the 2465 highs 13 Fibonacci weeks ago to the current levels of 2058, with a low 2 weeks ago at 1957.

The index is important to watch because it represents the markets views of exploration and speculative stocks in general, as well as the markets possible longer term views of Gold, Silver, Copper, etc.  You’ll notice the Gold and Exploration stocks in general have been lagging the metals movements in the last several months.

The high to low correction was about 407 points, which is a near 38% retracement of the July 2010 lows (With the market) and February 2011 highs.

An 8 fibonacci month rally of over 1100 points on the Index.  Now followed by a current 13 Fibonacci week correction with a rough 38% fibonacci corrective low of the entire 8 month move up.

Sounds like crowd behavior to me

Now, looking at the chart you can see extreme oversold situations like we had in Spring 2009, and again in July 2010.  What we want to see near term is a strong rally up in this Index and the Junior stocks.  Otherwise, this index has the potential to roll over and run down to 1400 from 2050 levels.

Below is the chart, and we want to see this 3 wave correction hold at 1957 and not go lower. If it does,  a possible major sell signal will be confirmed.

CLICK TO ENLARGE CHART IN NEW WINDOW