Reaction – phase 1

We monitor both sides of the aile because we feel it’s important to do so to maintain a balanced approach. Last week Elliotwave International warned of a pullback in gold, which we got today. (which of course jived with the poor COT numbers). The same goes for the general market as a whiff of fear hit the markets again which resulted in a nice sell off. Consequently the VIX spiked up.  For a frame of reference, we look to a reading below 20 to assume it’s safe to go long (for 401k, long long term investors). So a reading above the cloud, VIX below 20 would be ideal.

This from a posting at 321 Gold – courtesy of the Aden Sisters:

‘Since then, a C rise has begun. It’s been quietly forming a coil and gold looks ready to take off. Gold’s been rising this past month and it’s strong above $935. It reached a nine week high and it would be very strong above $985. A super strong C rise would be underway above $1004, the record high.

Keep in mind, C rises tend to be the best rise in the pattern. By hitting a new record high, gold would confirm that the bull mar­ket is entering an even stronger phase and it could then rise to near $1200. It would also confirm that the 8 year low indeed happened last November.

Since November, gold’s been posting higher lows which is also positive action. For now, if gold stays clearly above the July 8 low at $909, it’ll be reinforcing its strong uptrend since November and all systems will continue to be go!’

In order for the above scenario to be the more likely, we need to see Gold break above 975. If the bearish scenario is more likely, then gold must close below 925, and preferably 905. The trading range is steadily decreasing so a break one way or another is expected. But Gold is swinging in both directions with big moves lately, so we’ll know pretty soon what our outlook is.

Inversely, we’ll keep an eye on the dollar as well. 79.40 is a key level that must be broken, and once we get a thrust over 80 we know the dollar is on the up. Conversely, this would result in lower gold prices, and more than likely lower stock prices for not only all the indexes, but the miners as well.

Oil has pulled back as expected – and we should expect it to get pushed down to 60 at least, and 55 if the downtrend continues.

Once we get set up for a new major move we’ll post the charts and assess what moves to make.