Four Pillars Finance

Chinese astrology cycles for market timing

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Archive for June, 2010

Outlook for Nasdaq and Gold Stocks

Posted by Danny on June 22, 2010


Current level: 2289

We are coming out of the Metal months bottom period for Nasdaq stocks, so let’s have a look at the situation.

Our most recent outlook of March 23 has been right on the money, now what next?

Here is our updated prediction chart (click for larger image):

Nasdaq outlook june 2010

First of all, notice how the current situation is very similar to the October 2008 top (circled in blue).

After the sudden drop in May we are now rebounding and have recouped some 50% of the losses. But if this market advance stalls in the 2300-2400 area, which I think it will, then we will be left with a massive head and shoulders pattern on the chart.
Our cycles point to bottoms in May and September for this year, so that would fit the picture.

I have marked the most important resistance levels on the chart, which will come into play if we get another decline in the second half of this year (and possibly well into next).
Look for 2050, then 1900 and then 1750.
This bearish scenario will be off the table if the market takes out the recent April high by moving above 2550.

Gold Stocks (XAU)

Current level: 182

The Gold Stocks have moved up gradually, and the XAU is now up about 20% since we bought in February.
While the gold price has moved to new record highs once again, the XAU Index continues to fail to make new highs. Also the price of silver is failing to confirm the new highs made in gold.
This are two red flags already.
Thirdly, I see too much news about central banks buying gold.

Our Chinese cycles pointed to a high in June and the gold price has done so.
That’s why I prefer to get out.
We can always re-enter if the XAU breaks out above 210 (the year 2008 high).
That would mean we missed out on some 15% extra profit.
But currently I think the bigger risk is for some 30% decline.

Good Luck, Danny


Posted in Market Commentary | 4 Comments »

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