Hang Seng Index (15081)

In my October 13th Blog Comment, I said that I was looking for a bounce once the index fell to its 200-Day Moving Average. An aggressive bounce from the MA is now underway, and we could possibly retest recent highs in the area of 15500.

I had earlier expressed concern that we might put in an important intermediate term top in the 15500 area. The jury is still out on this.

S & P 500 Index (1268)

In my November 7th Blog Comment, I finally moved to a neutral stance from neutral-positive beyond the near term. No sooner had I published this change, than we popped up through the resistance level that had caused me to become concerned. So I'm back to my long standing neutral-positive intermediate term position on the S&P 500 Index.

The index looks substantially overbought on the short term, but we may be reaching for round-numbered 1300 resistance. In any event, I expect we should be into a short term top formation in the coming week or so.

Philly Bank Index (104.88)

U.S. bank stocks have been out of favor with me for some time now. I acknowledged the short term strength of the recent rally (almost like a penny stock), and said that if it penetrated round-numbered resistance at 100 I would review my negative overview. The index easily surged above 100.

As a result, I have moved to a neutral longer term stance from negative. Now I'm looking for a flat trading range, with resistance in the area of the recent high below 105, and support around 92.50

Gold Futures (U.S. $492.80)

On November 1st I expressed the view that we are in the midst of a short term correction in a healthy long term uptrend. A week later I was looking at a buy signal and the short term correction was over.

The abrupt recovery that followed is a testament to the strength of the long term trend, but it takes us right back into overbought territory on the weekly intermediate term chart. I'm left to assume that we build an intermediate term top below the $500 resistance area before moving on up.

I have been a bull on the long term gold trend for some time now, and the metal has consistently exceeded my short term expectations. I cannot run fast enough to keep up with the pace of the uptrend. It's a bull's dream come true. As I see it, the long term recovery still looks like a freight train running at full throttle.

Gold and the U.S. Dollar

My Blog Comments are based on math models I have developed myself, so I can easily explain why I have been a bull on both gold and the U.S. dollar in recent weeks. My models indicated that they would rise together, and I record what the models forecast.

Of course it's happening, but it doesn't make much sense to Wall Street financial analysts. I was an analyst specializing in mining for many years, and when I put on my analyst's hat, it makes no sense to me either. Like most commodities, gold is traded in U.S. dollars, and its trading pattern is normally a mirror image of the value of the dollar.

Until today, there was no adequate explanation for gold and the dollar rising in price at the same time. Today, a CNBC commentator opined that Russia has stopped selling palladium, and because Russia is an important source of the metal, the price of palladium is soaring (described as a geometric progression on the upside). The price of platinum is sharply higher as well.

In my experience, gold has always been a poor cousin to platinum and palladium in pricing terms. When P and P roar, gold should go along for the ride. So the dollar is recovering in step with U.S. economic recovery, and gold is in a bit of a speculative frenzy unrelated to dollar activity for the moment.

The dollar recovery is real. If the Russian palladium story turns out to be accurate, the gold price surge could go along with palladium for weeks, months, or years, but it will end with a thud the day that Russian officials bring their palladium back to the market.

It takes me back many years to the silver bubble that was widely attributed to a single trading group (the Hunts) that cornered the market for a time. Speculators made millions, and many of these same people ultimately lost everything.

I see good news and bad news in this story. The good news is that the U.S. dollar is recovering from an extremely depressed level, so much so that gold producers will prosper for some time whether or not the price of the metal goes into a speculative frenzy (to reflect its close association with palladium). If gold does soar in the shadow of palladium, gold shares will fly too. That's the good news.

The bad news is that there is no way to call the final day of a speculative frenzy, especially when it is totally dependant on decisions made by one person or a small group representing a country or a single brokerage firm. Fundamental analysis is useless, and math models are designed for use with widely traded securities. Conventional technical analysis might help, but without additional tools it will be a difficult call.

I believe that until recently, the price of gold has provided a reasonable reflection of the value of the dollar. Underlying long term price momentum has remained strong throughout. There is no need for a speculative gold price frenzy to justify a positive stance on gold and gold stocks at this time. Having said this, one of two scenarios could possibly emerge from here - -- either the palladium price will collapse, or the price of gold will soar. Stay tuned.

Copper U.S. High Grade Futures (199.90)

In my October 14th Blog Comment I said I was looking for a pause in the 190 area in an otherwise strong longer term uptrend. This anticipated holding pattern is now visible on the daily chart, but it might have been more meaningful to say a pause would be appropriate below important round numbered resistance at 200.

My unique price momentum models appear to be treating the recent shudder in the U.S. housing market as a non-event as it relates to copper. Is Chinese copper demand so overwhelming that U.S. copper consumption no longer matters?

U.S. Dollar Index (91.92)

The U.S. Dollar Index has made a stellar recovery so far in 2005, and the other day it broke free above stubborn resistance in the area of 90.

Short term momentum is strong as I write, and intermediate and longer term momentum suggest the potential for sustained recovery. We are, however, climbing a stepwise wall of worry after a huge earlier correction.

Oil U.S. Light Crude Futures ($57.50)

For the third time since late 2004 we have snuggled down to the 200-Day Moving Average while in a corrective phase in a strong underlying uptrend. On both earlier occasions we briefly pushed below the 200-Day MA before recovering.

My work suggests that the long term outlook remains constructive, but the short term corrective phase is not yet over. I have adjusted my short term downside price target back to the area of $55/bbl.

Canadian Dollar Futures (83.99)

In my September 6th Blog Comment, I suggested the possibility that an intermediate term correction might lie ahead. The beginning of this correction is now visible on the weekly chart. It's grudging at best.

The "petro loonie" (Cdn dollar) has strong resource underpinnings that appear to outweigh the massive third-world-style corruption laid bare at the federal government level in Canada.

No end in sight for the near term corrective erosion pattern, but the long term trend remains healthy in my opinion.

T Bill Yield U.S. 91-Day (3.96 percent)

As I see it, T Bill rates are still attempting to recover from the huge yield crash that occurred between the years 2000 and 2003. This yield recovery has been even more abrupt than the earlier collapse in rates. It looks to me like we are back within the normal trading range boundaries, but we have not lost the powerful short term upside momentum that it took to get us there.

My long term momentum model signalled an overbought condition some time ago, but short term strength continues unabated. Short term trading momentum has not yet responded to the approach to the four percent yield level, leading me to assume that we will push up through it without difficulty. If this happens the 4.5 percent area might offer the next meaningful level of resistance.

Nasdaq Composite Index (2174)

I have been blog commenting about a wall of resistance at 2200 since last May. After my October 13th comment, the index recovered from my suggested short term support at 2000 and it is now re-approaching 2200. Looks to me like the 2200 area is no less a wall of resistance now than it was in May of this year. It would appear that we might already be out of steam at 2174 on the short term.

Beyond the near term, I have commented on the possibility that we could be completing a huge "B" wave recovery, with negative implications. For the time being, we're simply moving sideways, and I'm satisfied with bias neutral.

Nikkei Index (14072)

I'm afraid I have unintentionally sent mixed messages on the long term picture for this index, so I will clarify my comments now. On the long term (monthly) chart, we have seen a recent powerful upthrust to approach a downtrending resistance line that has been in place since 1989. Resistance on this downtrending long term trendline currently stands in the area of 14600.

In recent months, the Nikkei has consistently outperformed my short term expectations. None-the-less, the index appears to be overbought on the short term at this time, and I'm looking for a pause or a brief correction before it moves on toward long term resistance in the area of 14600.

TSX Index (10644)

In my blog comment on October 5th, 2005 (TSX 10820), I said that the index was backing away from important round numbered resistance at 11000, and I expected more of the same on the short term. The index quickly sank to a low of 10145 before recovering to its present level. The quick recovery is a testament to the strength of the underlying long term trend.

I had pointed out that I expected the TSX to take two months or more to work up the steam to push above 11000 (this assumed that the long term uptrend remained intact, as is the case today). It has been five weeks or so since we slammed into resistance at 11000 and backed away, so I'm guessing that the current recovery will get sticky and retreat again soon. In fact I suspect that the index may be a bit toppy short term as I write today.

I'm in "wait and see" mode for the short term. Assuming that all things remain as they are, I still expect upside penetration of the important 11000 resistance barrier once near term backing and filling has run its course.

S & P 500 Index (1225)

In my October 22, 2005 blog comment, with the S & P Index at 1179, I said I was looking for another push toward 1250. For some time now I have been committed to an S & P trading range between 1150 and 1250.

Last week the index pushed higher to touch short term downtrending resistance at 1224, and my unique math models signalled that a possible short term top could be falling into place right there.

I'm satisfied with that for the moment. I would put initial short term downside support in the area of 1165, but would not be surprised to see a selloff to my earlier target of 1150.

Beyond the near term the tepid shrinking trading pattern appears to be eroding, so I'm moving from a neutral-positive stance to neutral at this time.

Gold Futures (U.S. $465.10)

On October 5, 2005 with gold futures at $468.50, I said my unique intermediate term and long term price momentum models both showed gold in a significantly overbought condition in an otherwise healthy long term uptrend. I was looking for a short term correction and waiting for a sell signal from my short term model.

With that short term sell signal now firmly in place, I'm looking for a meaningful correction.

Philly Bank Index (99.60)

On October 13, 2005, I said I still didn't like the bank stocks but I could see that they would soon be in short term oversold territory, implying a bounce ahead whether I liked bank stocks or not. The next day the senior banks and the Philly Index took off like rockets on the upside - almost like penny stocks.

As I write today, the index has slammed into both round-numbered and downtrending resistance in the area of 100.

I still don't like the senior U.S. bank stocks beyond the near term but I will have to reassess this position if we push above the resistance levels mentioned here.