-- Posted Monday, 14 December 2009 | | Source: GoldSeek.com
By: Dr. Christian Normann, Chief Strategist, Normann Financial
When gold reached our short-term target of about $1200, we closed our gold and silver futures trading positions. We have since been looking to reenter our long gold and GDXJ junior gold miner trading positions whenever gold traded close to its 10 week (50 day) moving average (currently around $1102 and rising about $2 per day), and we did so on Friday at equivalent to $1110 spot when gold came within less than one percent of its 10 week moving average.
We keep our long term investment position in gold at all times, but the odds absolutely did not favor maintaining our long trading position with gold stretched about as far above its 10 week moving average as it normally ever gets. However, at this point, odds again favor holding a long trading position as the short-term correction in gold likely has hit bottom or soon will do so around $1080 or higher.
Our expectation is for gold to move much higher over the coming months and years. Only a close below $1080 would make us favor a deeper correction toward $1033.90 - $978. The long-term view of gold is that it broke out of a 19 month long base when it had a weekly close at $1048. Gold is thus expected to have major support between the two red lines at $1033.90 and $978. It would take a weekly close below $970 - which we do not consider likely - to indicate a failed breakout and possible end to the major bull market in force since the 1999/2001 lows.
We expect gold to trade well above $1400 by some time in the spring of 2010.
Crude Oil Near Significant Support - Second Attempt at Breaking $80 Coming Up?
After crude oil broke back up through the $50-55 area, it quickly ran up to major resistance between $69 and $80. It eventually worked its way up to attempt a break of the significant $80 level. Important levels are usually not broken on the first attempt, and a pullback was most likely.
Crude oil is now very near significant support at $69, and may be at or close to a bottom which could lead to a second attempt at breaking $80. We are looking for a weekly close at least 1 percent above the 2006 high, and will add to our long crude position at that point.
Increasing the odds that the major bull market in oil that began in 1998 has resumed is the fact that the 10 week average (green) has crossed the 43 (blue) and 65 (red) week moving averages to the upside. From 1999 to 2008, that always indicated a resumption of the secular uptrend.
Have a very good week in the markets.
Always remember that proper risk management is essential.
All the best,
Christian Normann
dr.normann@post.harvard.edu
www.normannfinancial.com
For the complete version of our weekly analysis including many additional and significantly larger charts (as well as potential setups in commodities, currencies, stocks and ETFs) please click here
Dr. Normann is a graduate of both Harvard University and Florida Atlantic University, with one of his degrees in Finance (summa cum laude and 4.0 GPA).
Previously, he was a financial advisor with Morgan Stanley Dean Witter, but left ten years ago because he wanted the freedom to do completely independent research and focus on perfecting his own trading style and investment skills.
He first entered the financial markets in 1995, trading currencies for his own and his family's accounts. Later, he expanded into equity, commodity, futures, and bond investment and trading, and has extensively studied the history of financial markets going back to their origin centuries ago (covering multiple extraordinary mania periods and subsequent busts).
Please visit the About Normann Financial page for important information about risk management and position sizing. We provide analysis in good faith and to the best of our ability, but all information on the Normann Financial website is provided solely for educational purposes and does not constitute investment advice. Learning to operate successfully in the financial markets is not easy - it takes a substantial amount of time, effort, and discipline. Your trading and investment decisions are exclusively your own responsibility. Proper risk management is crucial.
-- Posted Monday, 14 December 2009 | Digg This Article | Source: GoldSeek.com