Natural Gas U.S. Futures ($13.79)

In late October I was looking to complete a top in the $15 area and then go lower. Thereafter, the price backed off to $10 as expected. Before I could say "boo", it touched its 200-Day Moving Average on the downside and gapped up to a new high just below $16.

Now we appear to be wedged between long term resistance in the $16 area, and short term support at around $13.50, which is the approximate upper boundary of the recent gap. Looks to me like short term momentum is gaining strength for another assault on the $16 area as I write.
The long term momentum picture is healthy but overbought, so I suspect that the $16 area might prove difficult to exceed for now.

Copper U.S. High Grade Futures (217)

As I see it, copper remains in a powerful long term uptrend. In recent weeks we have witnessed another of many stepwise pause periods, this time below short term resistance at 220.

My unique short and intermediate term price momentum models indicate that we may have to wait for a time to move above 220. In early 2004 a pause with similar characteristics produced a brief price decline that approached 20 percent in magnitude without impairing the longer term uptrend.

In spite of the powerful indicated long term uptrend, this game is not for the faint-hearted.

Stock Comment Newmont ($50.50)

On September 23rd in a comment on Newmont, I said that I was watching to see if we could break out through a downtrending resistance line that extended back to the year 1987. Not long ago, we did break out, and then went on to poke above important round-number resistance at $50 as well.

Looking back, I can see where we spiked sharply above $50 in 1987, and we built a second top just above $50 in 1996, nine years later. Another nine years, and here we are at the end of 2005, again above the $50 mark.

At this juncture, my models indicate powerful upside pressure on the long term, a modestly overbought intermediate term condition, and continuing short term strength in spite of a considerable upside move already seen in recent weeks.

To my way of thinking, it's a healthy picture.

Gold Futures (U.S. $509.70)

In late November I said that the long term gold recovery was so strong it looked like a freight train running at full throttle. However, I thought the price should at least take a rest at $500. Gold didn't even hesitate at $500. It spiked up to almost $540 before settling back to where it is today. On my long term (monthly) chart, I can count five earlier spikes like this one (after the sharp recovery that began in 2001). In each previous case the setback following the spike has lasted two or more months.

If we're looking at another similar setback now, I can repeat my earlier statement that I will be surprised if we don't at least pause in the $500 area before moving on upward.

I often go back to read my earlier comments on a topic before writing an update. In the past, I have spoken regularly of a powerful gold uptrend, and every temporary resistance level I have mentioned has been rapidly penetrated on the upside. That's why I now refer to the gold recovery as a freight train running at full throttle.

Oil U.S. Light Crude Futures ($60.70)

We have recently bounced nicely from my $55 short term price target. My long term outlook remains strong, but for the moment, my intermediate term picture (based on the weekly chart) does not support a forecast for further immediate strong recovery.

In a nutshell, my unique price momentum models are not in sync right now, and until this situation resolves itself, I'll be satisfied if the price crawls along above the healthy rising 200-Day Moving Average.

Canadian Dollar Futures (86.65)

I've been looking for a correction in the value of the "Loonie" since September, and instead it has built an impressive top that is easily seen on the monthly chart.

Some are describing the Canadian Dollar as a "petro-currency". There is no question that the Canadian economy has a strong resource underpinning, and as such, it has been difficult to get the currency into correction mode, even for the short term.

Nonetheless, I'm stuck with models that continue to show a short term overbought condition - so I'll have to wait until time wears it down before I can get enthusiastic again.

The underlying long term trend remains intact and strong.

U.S. Dollar Index (91.26)

My unique price momentum models continue to indicate a powerful underlying upthrust on the longer term U.S. Dollar Index chart. However, short term momentum suggests we need another rest, if not a modest short term setback, in this stepwise recovery process. A pullback to previous resistance in the area of 90 would allow the 200-Day Moving Average to catch up with recovery of the index itself.

In times past, the U.S. Dollar has been a safe haven on the planet during periods of uncertainty, and money fled from the dollar into gold when problems reached the frenzied stage. A flight into gold came at the expense of the dollar and other world currencies.

In recent months my unique price momentum models have insisted that gold and the dollar should rise in value in unison, and this has of course come to pass. Money panicking into both world safe havens at the same time? What manner of negative news is world capital running from?

At this point, a return to "normal" would require a sharp setback in either gold or the dollar. Neither has shown any indication of doing this. My concern is that a world event will take hold so quickly that my math models will provide no adequate warning. Something has to give.

Nikkei Index (15404)

The Nikkei has paused above 15000 but I don't expect the quiet period to last long. We have broken above long term downtrending resistance without even flinching, and my unique price momentum models still show an impressive head of steam on the upside.

We are in the second leg of a recovery that began in 2003. If this leg turns out to be proportionate to the first upleg in percentage terms, the index could reach above 17000 before slowing down to make a top.

The Nikkei continues to exceed my expectations on the upside. I'm hoping to catch the next top before it turns down, but it's a wild ride and things are happening quickly.

TSX Index (11132)

We have been struggling with an 11000 area resistance problem that I have referred to in my earlier blog comments on this index, but we're still in a powerful underlying long term uptrend as I see it. The other day we poked above this resistance level without impairing short term rising price momentum. If we pull back to 11000 and hold, this resistance level could be history.

What's next after we tear loose above the 11000 area? My charts indicate that the TSX Index recorded an all-time high previously at 11424 in September of the year 2000. All-time high resistance should not be ignored, but my unique price momentum models remain strong as we approach this important area of potential resistance.

T Bill Yield Index U.S. 91-Day (3.93 percent)

So we finally stalled at 4 percent on this wild upward ride, and that resistance level could hold for a few days or weeks from here, but it looks a bit early to call 4 percent anything more than a pause in a continuing uptrend. If and when we move above the 4 percent resistance level, my next target would be an important downtrending line now in the 4.5 percent area on the long term chart.

Nasdaq Composite Index (2256)

We finally pushed above the 2200 resistance barrier that I have been talking about since last May, but my unique price momentum models have suggested that we ran out of gas as we did so. There may be an explanation for this lack of enthusiasm about what would otherwise be considered a meaningful breakout. Since early 2004, we have witnessed a succession of modestly higher highs as the index struggled with what I had labelled as resistance at 2200. The latest upthrust was another in this succession of higher highs, only this time it took us above 2200 for the first time.

So far, I don't have a short term sell signal, but we are overbought both short and intermediate term, so it looks to me like either a pause or a correction ahead on the near term. Beyond the near term, I'm still satisfied with bias neutral.

CRB Index (343.21)

The CRB Index paused below 340 in the area of its all-time high (1980), and it has now moved above this important barrier with no apparent difficulty.

The index continues to exceed my bullish expectations.

Hang Seng Index (14910)

I had called for a bounce from the 200-Day Moving Average to possibly retest the recent high in the area of 15500. I got the bounce I wanted, but I think it might have run out of gas for the short term without making it back to my 15500 target. It's showing signs of once again setting back to its uptrending 200-Day MA in the area of 14500.

I had expressed earlier concern about the possibility that we could be looking at an important intermediate term top in the area of 15500. With the passage of time, the long term outlook remains strong enough to suggest that we will ultimately push above 15500. Indications are that we will continue to ride along above a healthy uptrending 200-Day MA line.

Gold, The Euro, and the U.S. Dollar

I was surprised when my unique price momentum models forecast that Gold and the U.S. Dollar would recover in unison. I reported these forecasts at the time, but pointed out the dichotomy. I'm pleased that my models proved useful in such difficult circumstances, but I'm gradually coming to recognize a darker side concerning this new reality.

The U.S. Dollar is the world reserve currency, and as such it has historically reflected the intrinsic value of Gold. Gold up, the U.S. Dollar down, and visa versa, until now.

Let's hope that the recent aberration is just that. The EEC is pushing hard to promote the Euro as the world reserve currency in place of the U.S. Dollar. It seems to me that Gold (or Oil)expressed in Euros has potentially negative implications for us in North America.