SCHEDULED GUESTS FOR TUESDAY, January 8, 2013
Segment 4 – Anthony Cherniawski, Chief Investment Officer – www.thepracticalinvestor.com
CLEAR CHANNEL DALLAS – KFXR/1190-AM And Streaming Live @ www.yorbamedia.com
Gold dropped beneath its mid-Cycle support/resistance line and its 200-day moving average at 1663.18 last Friday. Yesterday it bounced but failed to achieve a position above resistance. We are now in the decline that I was looking for in mid-December. Two serious bearish pattern are waiting for activation. The first is the Orthodox Broadening Top, with a bearish trigger at 1625.00. The neckline at 1575.00 has even more bearish implications.
There is a lot of wishful thinking about the price of gold going higher. Bloomberg carried an article today, stating, “Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present, said Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011.”
This may indeed take place, but government bureaucracies are very slow to act.
Despite QE4, the bond market has broken down beneath its September 14 low last week. Today the Long Bond is in a brief consolidation just above its Head & Shoulders neckline. Should it decline beneath the neckline there may be an outright panic in bonds..
The scenario as I have described it so far is alarming, since it shows that liquidity is being absorbed faster than it is being injected. Ben Bernanke may be hiding another banking crisis in the making.
The rally in the SPX was stopped last Friday at the top trendline of its Orthodox Broadening Top. This appears to be a decisive turn without a new high in the SPX. The Cycles Model suggests yet another week-long decline as we saw in the last week of the year. This time it will be much more severe. The minimum target may be Cycle Bottom at 1299.91. However, as ZeroHedge points out, “… not only are equity futures traders the most net long in six years but NYSE Margin Debt is also near four year highs. Add to this the fact that VIX futures are the most net short they have ever been - crushed by an all too visible hand – and it appears that equity market participants were critically unafraid of the fiscal cliff uncertainty.”
The Euro completed a double zigzag correction and Primary Wave  on December 18. Trading Channel support was finally broken on January2 and a small touch-back retracement followed yesterday. Intermediate-term support is being challenged today. Once the 50-day moving average is broken we may see a long overdue free-fall decline in the Euro.
Good luck and good trading!
Anthony M. Cherniawski
The Practical Investor, LLC
P.O. Box 129, Holt, MI 48842
Office: (517) 699.1554
Fax: (517) 699.1558
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