Forecast

USD - Consolidation - Down C wave in ABC correction to 77.8 (or 78), then bull flag up to 83. That is an 7% up move.

The US Dollar will move up to 83 or so (by mid-late Spring) as equity markets begin their decline some time before the end of January.

AUS/USD - Bullish for next 3-5 days, perhaps mid Jan up to 93. Maybe a double top. Then, in late Jan, it may crash more than EUR/USD (percent wise) because of China crash. At least to 82. (12% crash)

EUR/USD - This is my primary instrument. Up to almost 145 or 146 by Jan 5-10. Then down to 130 over the year as SPX crashes.

GBP/USD - not yet calculated.

SP500 - This bear market rally will top by mid-Jan between 1160 and 1170. Then down to 800-850 or so by late 2010.

2007-10 Bear Market ends by the end of 2010. The SPX decline from 1160 or so will end between 800-850. The decline will stops at around 1020 (W1) and 950 (W3) along the way.

Gold - Correction continues until Jan 8-15, 2010, or so. $1000 Gold should be bought. It will go up to $1350-1400 in Wave 1 of new bull to last through much of 2010. Probably up to $2000 in 2010.

Silver - $16.3 should be bought. This may be my Secondary instrument? This corresponds to SLV $15.75 or so.

TLT (U.S.) Government Bonds) - Big Multiple-year Bear Market has started. Wave 1 will end by mid Jan. Wave 2 will correct 25-38% of Wave 1. TLT will be bullish starting Jan up to late 2010 but probably not super bullish. I may prefer metals or EUR/USD.

TNX (U.S. Government Bond Rates) - Big, multiple-year Bull Market has started.

12/21

I have to figure out exactly what role trading plays in my life, along with writing, yoga and meditation.

I have to make a system for trading.

Part of my system now is buying at support -- as indicated first by trendlines and second by retracements. I would like to buy along the direction of the larger trend.

As part of the system, I need to clarify the time spent on trading (time of day and amount of time), the stops instituted, and what to do when I cannot watch.

I also need to know what kind of trade -- VST, ST, or IT, I am instituting.

And the amount of trading capital used.

One way would be to trade the Euro/USD on two time frames -- VST/ST and intermediate. ST with half capital. One unit when sure, two when very sure. Same with IT.

If a trade against the major trend, get in and out quickly!

If you are with the trend, wait, even if you don't get a great entry. Or build your entry over time, taking profits as you go.

The best is to get in the trend early in the trend.

Aim now is to build a short position in EURO/USD over 2-4 days but to trade it both ways until then, shorting at going long extremes.

12/18

Spx - no targets today.

QQQ: Upside target is 47.50.

TYX (thirty year bond yield): I think this market has begun a move to 5.00%.

TNX (ten year note yield): I think that the market has begun a swing up to 4.30%.

Euro-US Dollar: A drop to 140 is underway. There will be a pause at 1.425, a bounce to $1.46 or so, then a fall to $1.40.

Dollar-Yen: The drop below the 87.00 level looks like a false breakout. A move above 91 will mean that continuation up to 100 likely.

Google: Support at 565. Should go to 610. That should be the top of this bear market rally.

JEFFREY NICHOLS; ROSLAND CAPITAL

MONDAY, DEC 14

Notwithstanding the recent correction - and the possibility that gold may yet fall further before bargain hunters and other buyers (including central banks) reappear - the four pillars of gold-price strength remain intact. We've spoken and written about these often - but they are worth repeating.

These are:

(1) Inflation-fueling U.S. monetary and fiscal policies;

(2) Central bank reserve diversification with the official sector being a taker rather than a supplier of gold in 2009 and the next few years;

(3) Expanding retail and institutional investor participation in the United States, China, and around the world;

(4) Declining world gold-mine production.

We have consistently warned (and continue to do so) that gold's advance would be marked by high volatility and occasional sharp reversals that would lead some to believe the long bull market in gold has ended - and we will continue to hold this view even if the metal falls back yet another $100 an ounce.

Looking ahead to 2010, don't be surprised to see gold at $1,500 or higher by the end of next year!

PM Trades

Bought GLD June 111 calls at $111.5 or so; sold Dec 111 calls. GLD now $108.08.

I'm pretty sure YG will come to $1050 - 1060 or so. GLD to $104 or so.

Before that YG should rise to 1120 or so. GLD to 109.5 or so. Sell Jan 111s at Gold $109.5 or so.

Buy them back at GLD $105 or so.

Bought SLV April 16 calls at SLV $17.08. SLV now at $16.9 or so. SLV much stronger than GLD. Did not make new lows. Still hugging supporting trend line. Will probably go back up to $17.20 or so. Sell April or Jan 16s at that point.

Buy back April or Jan 16s at SLV $16.5?

However, SLV will likely go between $16 and $16.50, and maybe to $15.75. That would be a high probability trade.

Dollar is going to 80 minimum, after a pullback, perhaps. This will affect the PM trade. I see PMs as rangebound for 1-2 months.

1. SLV trade: Went in with 100% capital too soon. Only trade with 1/2 of capital. Only go all in when 110% sure.

2. SLV trade: Did not wait for trend line support to go long. WAIT. If it doesn't get there, don't take the trade. Don't take a low probability trade.

3. GLD trade: EVEN WHEN BUYING LT, wait to be sure about support and resistance. Buy when you feel and think it's a bottom, if you're sure about the next support/resistance level. Even with 7 month options, you're losing, because of not waiting for a bottom. What's the point? Only take the best trades.

10 year; 2 year; 6 month

10-year scenario

Big bull market coming in 1-2 years. Led by China, India, Australia, Brazil, Canada and then, later, U.S.

2-year scenario

Mortgage resets will peak in 2010 and then again in 2011, so fed has to keep rates low so economy doesn't crash.

Equities boomed because 1) short covering 2) commitment to low rate policy means they're the only game in town 3) Fed charged banks with buying 4) Dollar was crashing so big firms benefit from exports.

Now the Dollar is rising -- why? Dollar rising now in anticipation of correction in equities? Move away from risky assets at the end of the year? Still no correction in equities. Weird. But this sort of dollar move is big. We have never had this large of a move without continuation. That much is clear. A bell has rung. Listen to it.

Dollar hitting resistance now; dollar go will down for 1-5 days (end of year); Gold will pop. Equities will pop and end 2010 high.

Then for 2010, dollar will rise. There has never been such a large dollar move without continuation.

But why? Bonds are fucked. Where will the dollars go? They will go for safety, but not for long.

Fed will start talking about hiking rates when inflation comes. When market doesn't believe that Fed will hike rates. But Fed won't hike rates for now; maybe slow raise rates in end 2010.

Equities are over-valued.

Corporate profits will surprise to the upside for Q1 2010 and probably Q2.

6-month scenario

1. SPX and global equities should go down in 1-2 months.

2. SPX may hit 1145 or so before it goes down. Maybe 1200? Maybe not.

3. Blow off top in SPX and then GLD.

4. Should I short SPX or long GLD? For now, long GLD.

5. Buy LT (leap) Puts on SPX at 1140-45 or so?

6. China and India are in bull markets.

7. How can you buy LT Puts on the SPX? Why not buy Calls on Indo-Chin?

8. Why is BSE struggling?

9. Why is SSEC struggling?

10. The China guy won't short.

11. Great time for selling call options on equities.

Best-case scenario (in the Very ST)

Dollar rises 1 more day or falls Monday, 12/21; is at resistance.

Dollar falls. PMs rise; equities break out! (1120-1140). 1-3 last dollar down days.

1 week - 1 month out; Dollar rises, equities fall. Gold rises, but more slowly than before?

Leveraged ETFs

http://etf.stock-encyclopedia.com/category/leveraged-etfs.html

Ritholtz

Ritholtz is a rollicking debunker of market shibboleths. Do stocks reliably forecast the real economy? “Bull****. There is no consistent correlation,” says Ritholtz. Where are stocks headed from here? “The data and historical trends suggest the 2009 bull rally is about 75% played out. After that, the market will roll over and saw-tooth sideways for a few years.”

Nice!

LT picture

-- Rates are staying low in 2010.

-- Fed can't raise rates with mortgage resets (peak end 2011) looming and Commercial RE problems.

-- For the next year. Buy the dips in Gold and SPX.

-There will be dips. Buy only below 1040 SPX. Short at 1120-1140 at ST overbought SPX.

-Rangebound for 1 year.

-Look at Soybeans.

Will there be dips? What's the floor? Is there a floor?

Yes, there is a floor. At zero interest rates, I don't want to buy bonds. That means that there is a floor under risky assets like commodities, Gold and stocks. They're the only game in town. As soon as they start to go down, people will buy.

China has already declared that it will buy Gold at the rising trend line. This means Gold is a buy anywhere close to $1100. Buy 4-6 month call options and sell the rips will near-term calls.

Although the fed continues a zero rate policy through 2010, we will increasingly hear noise: fears of the fed raising. This is all it will be: "fears." These will drive the $ up and will be buying opportunities in stocks, commodities and gold.

People will buy the dips until they can't any more. Here's the issue: If interest rates stay zero, there will be liquidity that can't go anywhere except into stocks and commodities -- not into bonds, for instance -- and we will get a huge rise in the stock market led by commodities and gold stocks.

Short-run we may have more correction, but I believe we will stay range-bound. Problem for bulls is that Russell is really tired now. Profit taking by institutions may happen now, but I doubt that we will drop below 1020 or 1000 SPX at the lowest. If something extreme happens and we break that, there is a big floor at the 900-950 level.

Long-term we have begun a 40-year bull market.